July 20th 2010
The Wall Street Journal
The sale of a sharply marked-down townhouse on one of Manhattan’s most exclusive blocks could deflate sale prices for townhouses throughout an elite neighborhood.
Brokers were in disbelief when Shelley and Donald Rubin, founder of a giant health-care network and proprietor of a Himalayan art museum in Chelsea, slashed the asking price of their East 70th Street townhouse by 25% to $14.9 million in May after it had sat on the market for about a year.
The $14.9 million sale of an East 70th Street house, above, may curb bids for homes such as that next door, below.
That was one of the steepest one-time markdowns for a high-end residential property in recent memory, but it did the trick: the Rubins accepted an offer this month and the deal is in the contract stage, according to a person familiar with the matter.
Listing broker Kathy Sloane of Brown Harris Stevens declined to comment.
Some say this deal, in effect, re-prices the market for East Side townhouses because buyers and brokers will now use the Rubins’ pricing as a benchmark for similar properties.
“That sale is going to color any buyer’s impressions on the Upper East Side,” says Wolf Jakubowski, a Brown Harris Stevens agent who specializes in Manhattan townhouses. “Owners are going to need to pay attention. If they are not already planning markdowns, they should at least expect to see lower offers.”
Two properties that brokers say are in superior condition to the Rubins’ home but are still expected to feel the pinch: a neighboring townhouse on East 70th Street with an asking price of $27 million; and a mansion on East 71st Street that is asking $28.8 million.
The Rubins purchased their townhouse in 1995 for $5.05 million, according to Streeteasy. Mr. Rubin is the founder of MultiPlan, a managed heath-care network, and known for his philanthropy and large collection of Tibetan art.
He bought the former Barneys building on Seventh Avenue for $22 million during a 1998 bankruptcy sale and transformed the one-time fashion emporium into the Rubin Museum, which features Asian art.
Through a representative, Mr. Rubin said it wasn’t appropriate to comment because there was not a final sale.
Within the brokerage community, there’s some debate about whether the Rubins’ markdown reflects a new reality or if the couple sold on the cheaper side. Mr. Jakubowski says he and other brokers who toured the townhouse last year—viewing its roof deck, garden, hot tub and wood-paneled library—offered appraisals between $16 million and $18 million. Those assessments suggest that the property eventually might have attracted a richer offer.
Others say the market tends to find the right level. Most anyone asking more than $20 million for a property is expecting more than the market will bear, says Frederick Peters, president of Warburg Realty Partners. “There’s no justifying those prices in light of this sale,” he says.
Moreover, the block of East 70th Street between Park and Lexington avenues where the Rubin house is located is widely considered one of the most desirable blocks to live, with brokers praising the well-maintained buildings and attractive limestone facades.
That suggests similar townhouses on nearby streets might not be able to command the same price.
Only a handful of residential properties have sold for more than $25 million this year, Mr. Peters says, and sellers shouldn’t expect that to change anytime soon.
“Not only are most people less rich than in 2007,” he says, “it’s not that cool to be seen to be throwing money around.”