March 12th 2015
New York Daily News
It’s time to get real about real- estate prices.
Sellers of some of the city’s most expensive properties are dramatically slashing prices, even as developers keep trying to push the boundaries of the luxury market with pie-in-the-sky price tags of up to $175 million.
“Million Dollar Listing New York” star Fredrik Eklund and business partner John Gomes of Douglas Elliman are cutting the price on their ritziest listing — the stunning 7,061-square-foot penthouse at 11 N. Moore St. in Tribeca — by more than 25%. Initially, they were seeking $40 million. Now it can be yours for $29.95 million.
“We made a decision to get real and sell it,” Eklund said of his listing.
He and Gomes aren’t the only ones axing prices.
Embattled hedge-fund billionaire Steven Cohen, who heads the Wall Street firm formerly known as SAC Capital Advisors, recently reduced the listing price of his palatial One Beacon Court penthouse to $82 million from an ambitious $110 million.
And the owner of the penthouse at the storied Pierre Hotel on the Upper East Side has cut the listing price on the unit by almost half, to $63 million.
It’s not that these apartments aren’t top-notch — it’s simply that they’re overpriced.
Eklund’s property has 28 massive windows, soaring ceilings, a spectacular terrace overlooking Lower Manhattan and even a private pool.
Plenty of prospective buyers, including Leonardo DiCaprio, toured the penthouse after it was listed last December, but they could not get their heads around the $40 million price tag.
That was exactly the kind of reaction Eklund and Gomes were prepared for, they said.
“Fredrik and I love, love, love to break records. That’s what we were trying to do here,” Gomes said. “We were treading new waters and trying to determine the limit for pricing for these one-of-a-kind penthouse apartments. We don’t actually know what the limit is.”
It’s the real-estate equivalent of throwing everything against the wall and seeing what sticks.
“At the beginning of the sales process, you have nothing to lose when you list your penthouse at a pie-in-the-sky price,” Gomes said. “You have a lot of time. You never know when someone will fly into New York City on a G5 (private jet) and just has to have your penthouse. Sometimes you get lucky, and when you don’t, quite frankly, you get realistic and you adjust the price to meet market expectations.”
And, sometimes, miracles do happen.
“There are situations where developers have gotten numbers that left everyone scratching their heads,” said Jason Haber of residential brokerage Warburg Realty, referring to a recent $100.5 million penthouse sale at 157 W. 57th St. “When the numbers at One57 first came out, everyone said, ‘No way.’ But, for the most part, they got them.” (One caveat: The buyer of that penthouse got a tax break so large, the law that created it is under fire from state legislators.)
The string of high-profile price cuts is a bad omen for the luxury market, particularly as developers of new towers continue to make headlines and raise eyebrows with their asking prices.
It’s a dichotomy that arises after several years of a hot market for uber-luxury properties, paired with a more recent dropoff in demand from the Chinese business magnates and Russian oligarchs at whom such pads are targeted.
A massive, 21,504-square-foot penthouse encompassing three full floors of the Sony building at 550 Madison Ave., is slated to come on the market for $150 million, and there’s a $130 million penthouse in a tower going up at 520 Park Ave.
A penthouse in one of the most buzzed-about new buildings in years, a glitzy skyscraper at 220 Central Park South, is rumored to be asking a jaw-dropping $175 million.
None of the properties have even been built yet, and if any of them sell for close to their asking prices, they would smash the $100.5 million record paid on Billionaires’ Row.
“Being a developer is kind of like being a character in ‘Star Trek,’ ” Haber said. “Sometimes you can bend the laws of physics, and sometimes you can’t.”
But those with boots on the ground, and listings currently on the market, say things are getting out of control.
“It’s starting to get to the point where it’s nauseating to people. It’s like, ‘Why don’t you just put a number like $250 million on it if you’re going to be ridiculous?’ The numbers are meaningless,” said Andrew Gerringer of the Marketing Directors, a new-development sales firm. “Unless your country is physically crumbling and you need to get your money out, or you’re getting ready to go to jail, I can’t think why you would put $175 million down for anything.”