May 1st 2012
The Wall Street Journal
One bidding war is begetting another on the Upper East Side, as New York billionaires compete for the most expensive co-ops in a heated rebound of the high-end co-op market.
A few weeks ago a 4,000-square-foot Fifth Avenue penthouse owned by the late Ted Forstmann, the Wall Street financier and philanthropist, went into contract at just over $40 million. That was $4 million more than the asking price, after multiple bidders competed for the duplex Fifth Avenue co-op.
Now some of those same bidders are circling a second, larger penthouse about two blocks away on Park Avenue, brokers said. The co-op faces Central Park, with four bedrooms, five terraces, including one that wraps around an entire floor. Even one maid’s room has a terrace.
The Forstmann penthouse at 2 E. 70th St. was never officially listed and instead was marketed as a so-called whisper listing. Brokers said the second co-op at the top of 730 Park Ave. at East 71st Street may also go into contract without being publicly listed, since they said billionaire would-be buyers have already been sometimes crossing paths in the lobby.
Brokers said they were told that the seller, a former banker at Goldman Sachs Group Inc. who hasn’t been publicly identified, was seeking a deal in the “mid-30’s,”—or in the area of $35 million—in cash.
The swarm of interest in these expensive apartments is part of a big rebound in top prewar co-op sales this year, after a long dry spell when the segment lagged behind top sales in modern, postwar, glass-and-stone condominiums.
Since 2008 and the onset of the world financial crisis, there had been only a handful of sales of co-ops for $30 million or more. There were two related sales in the same building in 2009, none in 2010 and two sales in 2011, according to city property records.
So far this year, brokers say there have been four co-op sales, either closed or in contract, in the same range, including a record-setting $52 million contract for two duplex co-ops near the top of 740 Park Ave. The seller was Courtney Sale Ross, the philanthropist who founded several schools.
“There are a handful of these very wealthy individuals who are kind of looking for the same thing,” said Bonnie Chajet, a broker at Warburg Realty. “They want the best views and the most space they can get and of course the best location.”
Ms. Chajet just sold a ninth-floor six-bedroom co-op at 1030 Fifth Ave. at East 84th Street with the living room, library and dining room facing Central Park that was first listed in January. The sale closed in mid-April for $31.5 million, she said. The seller was George S. Blumenthal, a consultant and investor in communications, especially the cellular phone industry.
One of the problems that Ms. Chajet cited was a shortage of listings for these trophy apartments, but there are some signs that might be changing.
The seller at 730 Park Ave. decided to put the penthouse co-op on the market now, to take advantage of the opportunity presented by the bubbling market, including intense bidding in the Forstmann co-op.
The idea was to attract the same waves of wealthy investors who made offers on the Forstmann apartment for a larger one on a higher floor, with park views, though a bit farther from Central Park.
The brokers who sold the Forstmann apartment, Serena Boardman and Meredyth Smith of Sotheby’s International Realty, were hired to sell the listing at 730 Park, along with a third broker from Stribling & Associates. A Stribling manager declined to identify the broker.
Asked about the listing, Ms. Smith said: “I can’t speak about this, but I am hoping that lightning strikes twice.”
The co-op has 12-foot ceilings on the main level, with a grand staircase, a solarium with two glass walls and a greenhouse breakfast room with a glass ceiling and a planting terrace outside. The living room is nearly 37 feet long by 28 feet wide.
Brokers said that while some co-ops at lower price points linger, wealthy Americans have decided to put cash into luxury real estate, both as an investment and as places they can also enjoy.
“I think that the upper-crust people are sitting with an awful lot of cash,” said Nancy Elias, a broker at Brown Harris Stevens. “Because of the situation with the market, they are looking upon it as an opportunity to invest in real estate.”