The Laurel open house

I haven't seen the apartments, but I wonder if the location will be a problem. It's right near three hospitals and it's located on the corner of a street near a million fast food restaurants.

Near the hospitals was supposed to be a draw. They were hoping to get the Drs. to move in. I think the triathalon training gym is a problem because it just screams "amenity that we added during the real estate bubble that nobody really needs"

My mistake. I just checked the SE listing on this building and many units have sold at very high prices. I guess the appeal to doctors is working. The apartment prices are incredibly high.

lobster, working how? started sales in 09/07, started closings in 12/08. have closed approximately 38 units out of 129, with SE showing only one since June. not my definition of a rousing success thus far.

these prices are way too high for most doctors.

Doctors in those hospitals get subsidized housing

Aboutready, I was just looking at the listings and noticed that there have been some sales at very high prices. Thanks for the data. I wasn't aware that only 38 units out of 129 have sold. At those prices, I'm amazed that 38 units have sold.

stunning, isn't it?

If you want to live on the UES, and you're not a co-op person, what inventory is there? a bunch of '80s conversions which arguably look dated, and a bunch of recent conversions where the buildings aren't fully sold.

I know you'll take this with a grain of salt coming from an agent, but the Laurel at least has very high-quality finishes, worth checking out if you haven't seen 'em.

ali r.

Ali, I think we've seen almost every condo building on the UES from East 68th to East 96th Street and I agree there aren't many condo buildings as compared to coops in this area. Besides the type of buildings you've mentioned, there are a few buildings that were built as condos which are pretty nice and less expensive than the Laurel. The Oxford, 422 East 72nd Street, is also right near the hospitals and has many amenities including very good security, a very nice gym, children's playroom and outdoor desk with lounge chairs.

at close to $1800 psf for a building that's less than a third sold on first avenue i'd hope the finishes would be high end.

Correction- outdoor deck.

The Oxford and the Laurel, IMHO, are going to have very different buyers. (I consider myself downtown-focused, and don't work the UES much).

I love the Oxford but it's 20 years old. I'm not even talking stylistic things like the herringbone floors--let's take as one example window technology, and the noise leak versus a newer building.

ali r.

Ali, from a realtor's standpoint what don't you like about herringbone floors? I think they look classic even better than strip floors.

Yes, I saw the herringbone floors and they are terrible, but most of the Oxford apartments that we've seen have replaced with wood floors. I'm very noise sensitive and even the 3 apartments that I saw on the third floor didn't have street noise with the windows closed. I've never seen the Laurel apartments and I'm sure that they are much nicer than the Oxford apartments with more advanced technology. I didn't look at the Laurel because the location didn't work for me, but for a doctor who works at the hospital, it's ideal. I'm actually curious to see the Laurel now and may take a walk over one day (not that I can afford the 2 bedroom there), but just to see.

skippy, I think they might mean basket-weave floors, the squares with little 1' strips going in alternating directions. Herringbone has 2'-3' strips laid in opposing diagonals.

I know very little about flooring, but the description for 3C which I saw describes the floors as heringbone.

Ah Ok, I should've looked at the pics to begin with. The floors in 3C at the Oxford are herringbone, but the on-the-cheap kind where you don't have to make any angled cuts.

Thinking "what's not to like?" I just assumed it was basketweave, the kind you see in all those '60s buildings.

I like both herringbone and basketweave floors, but I'm pretty much the exact opposite of a new condo buyer ...generally when I work with one, I just try to put my brain in opposite land.

ali r.

What would be a realistic offer for a 2 bed + 2.5 bath, if one was a serious buyer?

They just closed another unit that could herald a new level of pricing. To recap our story to date, they started closing in 12/08 and closed 37 of 129 units by June, as follows:

Dec 08 10 units
Jan 09 5
Feb 09 2
Mar 09 8
Apr 09 7
May 09 3
Jun 09 2

31 of the 37 closed at list/last ask, while the other six were done at discounts between 2.7% and 6.6% (average 4.6%).

There were no closings in July through September, then one in October at a 10% discount to ask, none in November and finally one in December at 19% off. With that trade now in the public record, my rhetorical question is, "Why would any buyer see 19% below ask as anything other than a ceiling on price/starting point for negotiation?" If this sale is the first of a wave at a new price level, we may learn something in the next few months about where the market clears for this product. If not, then we continue to wait.

One more thing. I count:

39 closed sales
4 in contract (although three date to last August and may not be real since they haven't closed in 5 months)
24 active listings (26 listings in SE but two are for resales)

67 sub-total of identifiable listings

62 shadow inventory

129 total units

30% sold/closed and 48% shadow inventory after 13 months of closing. Look out below!

sls: i wouldn't underestimate the stupidity of the buyer. The Rushmore sold 5 apts at about 20% down yet a few apts closed afterwards just a few points off. They could have been buyers that were under contract early in the game and just getting to closing. Or they were hopelessly uninformed. But eventually everyone will get the word. I would say you are correct that 20% plus is the new normal in this building. Also, I have had two brokers volunteer that the Lucida in anxious to make deals and I bet they are.

apt23 - When I see a mixture of down 15-25% closings with flat (or close)-to-listing-price closings in a building, I assume that the latter are contract - a.k.a., deposit - situations where the developer holds a lot better cards than in the new buyer off the street case and can use the threat of pocketing the deposit to induce a closing with a modest concession off list (plus perhaps some behind the scenes stuff like closing costs). Of course they could also be hopelessly uninformed/stupidity situations, but I really think that would be a minority.

Sometime in the not too distant future, and certainly within 2010 in my view, we are going to get to a point where the 2006 to mid-2008 (pre-Lehman) contracts are essentially done (either closed or buyers have walked and developer pocketed deposit or settled in some fashion) and most new dev sales reflect current market. I'm sure some legacy contracts will remain in limbo for a long time for various reasons, but I'm really talking about the point where they aren't any longer a large enough proportion of closings that they significantly distort apparent prices in the market. I'd say that by second half 2010 prices will be a lot cleaner in this sense.

Lucida is interesting. They closed a bunch quite quickly with a bit of noise (up and down) in the pricing, but now haven't got one closed (or at least recorded in ACRIS) in 2 months. It sort of looks like they have run out of buyers willing to close.

With Lucida and a few other high end places (Brompton, probably some of the UWS buildings) I wonder if developers are holding out for bonuses, and not only for the hope of new buyers but also (or more) for their impact on the ability/willingness of in-contract buyers to close. Total speculation, but I'll be watching ACRIS in Feb-Apr for evidence of any trend.

where could this end?
the agent on site claims over 50% sold!
to the developer?
How long could they hold out?
how much is a business center and a kiddy play room worth to you?
In a time when kitchens and bathrooms are everything how could this high end development screw up both?
The kitchens are reminisent of 80's style closet kitchens found in the corinthian and the horizon.
The folks at the Laurel could learn alot from the Spitzes.
Make better kitchens and stop fu*king around!

Is this new development getting "stale". Will it become a rental if it gets too tired? Where is the bottom? Have they found it, yet?

They are already renting out some of the units, but even their rental prices are way too high. Expect this one to sit mostly empty for a while longer.

great apartments
can do well there

I am sure they would entertain lower offers, unless of course they plan on trying to ride this storm out. Nobody wants to bleed cash though.

lobster - are you sure you dont want to look at my 3BR unit? lol

gcondo, why don't you show the link to your apartment so we can all view the floorplan and photos online? I have no idea where your apartment is located or anything about it. I'm not looking for a 3 bedroom because the maintenance/taxes are too high for me, but maybe someone else will see the link and want to see your unit. Best of luck to you.

Does anyone have any news on what's going at Laurel? ...Seems like recent sales trickling in at ~10% discounts, which still strikes me as above market ... S/E data shows 70 units sold, but some are repeat sales like 9C (first buyer didn't close?) ... I guess what I'm wondering is, how long can they hold out? They must have a mortgage to pay too. I read online that they were in dispute regarding payment of their old sales office (at the St. Tropez). Do they start doing deals at some point, or does that not happen until the banks take the keys? How does this play out???

it seems that they close still above 1200/sq feet for lowest floor facing north and 1300-1400 aove or not facing north
any other news?

I hate commenting on specific buildings because I'm always involved with one or the other of them, but one point that's worth raising is that sellers price off their competition. If a buyer doesn't buy at the Rushmore, it feels like there's a competitive set of new dev condos with nice finishes in the neighborhood -- Avery, etc. But if a buyer doesn't buy in the Laurel, what's the alternative on the UES as far as that level of finish? The Brompton? A rental?

Lack of competitive inventory might be making prices stickier on the UES than on the West Side.

ali r.
DG Neary Realty

I finally had the chance to see a 2 bedroom apartment at the Laurel. When I walked to the elevator, the concierge had the elevator door open waiting for me with the floor I requested already lit. Apparently, my standards are too low. I'm happy when my doorman holds the door open for me. The sales associate took us to see 2 apartments as well as to view all the building amenities.

First of all, the gym is unbelievable. It's divided into different sections including a triathlete room with special treadmills and a resistance pool. They have a movie screening room, a business center and several children's playrooms. The sponsor bought the air rights over the neighboring church.

The apartments were very nice. Each apartment had 2-1/2 baths with each full bathroom having an extra deep soaking tub and the spacious master bathroom having a larage stall shower with a Grohe (?) showerhead. Many many deep closets in the apartment. The kitchen wasn't very large - kind of a galley kitchen, but had Poggenpohl white cabinets, a high induction range, a 4 burner gas top, a steam oven, a convection oven, a wine cooler and a special venting system which vents outside the building. I wouldn't even know how to use some of these features. Floors were light medium oak throughout the apartment.

Yes, besides the apartment prices, there were definite negatives IMO. Bedroom sizes were not very large and the combined L/R and D/R was small. And the location is a definite negative - I live in the neighborhood, but wouldn't want to live on this particular block and side street. I suspect that the resale market for these apartments would be somewhat limited due to the building's location. And once the tax abatement is over, the taxes rise considerably.

Checking in on Laurel closings and prices, my "Look out below!" prediction about a dozen posts up has not come true. The developer is getting some crazy pricing by holding the line on price and accepting that slow sales are the trade-off.

At the start of the year, the building was 31% closed (40/129 units) and shadow inventory was 48% (62/129). Status as of June 19 is:

57 closed sales (44%)
9 in contract (although 2 date to last August and may not be real since they haven't closed in 10 months)
25 active listings (27 listings in SE but two are for resales)

91 sub-total of identifiable listings

38 shadow inventory

129 total units

44% sold/closed and 29% shadow inventory after 18 months of closing is better than where they were at the beginning of the year, but still a long way from done. At the recent rate of 3.5 closings per month (avg of Feb-May 2010), it will take another 20 months, into early 2012, to close the remaining 72 units.

What really stands out to me is price. There have been a couple of closings in the high teens % off ask and a few more in the single digits to low teens off an ask that was lowered 7-10% in a round of cuts last fall (so total is high teens % off original ask). However, there have also been some closings at discounts well inside 10%. Or just forgetting about ask and all the embedded bs and looking at ppsf (arguably bs in its own way, of course), YTD closings have ranged from about $1,200 psf to over $2,000 psf. Five of the seven closings since April 1 have been large, high floor units with ppsf between $1,900 and $2,100. As long as those prices last, I expect that the developer will be fine with the pace of sales dragging on. The thing to watch out for is a slowdown in closings - say a three month period with a total of a half dozen closings, give or take - that could push the projected sellout back another year or two. I expect that in that case we'd start to see more movement on price to get things moving again.

The developer of the Laurel is having worse trouble at The Mark Hotel. And they don't seem to be doing that well at 230 RSD. It's probably attributable to the timing of their projects more than execution. How deep are their pockets?

So here is the latest in the continuing series that we might call "Sidelinesitter's Lousy Predictions". The previous issue can be viewed on one of the Georgica threads. But back to the Laurel, where I predicted a couple of posts above that a few months of very few closings could cause the developer to cave on price. Not so far.

To recap, by mid-June ACRIS had recorded 57 closings (44% of the building) up through the closing of #25A on May 21. Closings were running at an average pace of close to one a week through the spring. There were 5 more closings in each of June and July, including 2 large, high-floor units at $2,000+ psf and the rest at prices that look broadly comparable to earlier closings. Most of these closings were converting 'in contract' listings to closing, with only a few new contracts signed in summer/fall 2010. By the end of July, they were at 67/129 sold (52%) and were looking at ~15 months to sell out based on the average of ~4 closings per month in Feb-July.

Since then the closing pace has dropped to exactly one in each of August September and October. #21A moved from 'in contract' to 'no longer available', in a pattern that usually indicates that the closing has happened but not yet hit ACRIS. Let's call that one closing for November. One more went into contract in November, so thet's probably teed up for a Dec or Jan closing, at which point if nothing else has moved they'll be getting on toward 6 months of stagnation. They did do a round of price cuts, ranging from 2% to 15%, on the active listings in early November, but in many cases these just undid one or more 2007/08 price increases and got the units back to roughly their original 2007 asking prices, so it remains to be seen whether this does much to get the momentum going again.

My current breakdown of inventory is as follows:

71 closed sales (including #21A) (55%)
3 in contract (although 2 still date to August 2009 and look spurious at this point)
22 active listings (24 listings in SE but two are for resales)

96 sub-total of identifiable listings

33 shadow inventory

129 total units

Given that 1) current asks are well above where most units have closed to date, 2) very little is moving and 3) both resale listings are asking below 2009 basis, it feels like prices have a long way to come down to get this building sold out. However, at this point the developer seems willing to play chicken with the market and live with the glacial pace of closings. They should be thankful for a patient construction lender.

How many of those closings were a bulk sale?
what % will the developer hold on to as rentals?
How would you like to pay this kind of money to end up in a rental?
This building is a bit full of itself and a hard dose of reality medicine is in order.

I don't think any were a bulk sale (at least they don't show up in ACRIS as such). Are you thinking of the Azure?

Wow, the 21A closing is now in ACRIS at $2,000 psf. And 23D went straight to closing out of shadow inventory at $1,850 psf. More rewards for the developer's patience. Is is just me, or is this a hell of a lot of money for 1st Ave?

The building turned out well, I think. See my above point about the lack of competitive inventory.

ali r.
DG Neary Realty

ali - I wasn't so sure about your theory when you posted 7 months ago, but a recent review of UES new development inventory has changed my perspective. Except for the Azure (with its attendant location/legal structure quirks), there just isn't a lot, and even with only a handful of closings per month at the Laurel/Georgica/Lucida/Isis taken together, what little inventory there is is getting whittled away because there is no pipeline at all. Now that the Azure and Isis are complete, I can't think of a new development of more than boutique size that is in the pipeline.

the charles - although it has not and probably will not start anytime soon, if at all. I guess that proves the point.

gcondo - never heard of that - just looked it up. that wouldn't really count - those aren't apartments, they are 'bespoke homes'.... who makes us this crap?

SS,

I am generally considered a co-op specialist, but when I show buyers who want new condos the UES co-op inventory, they can't stand it -- it's like trying to sell a dog to a cat lover.

So even with the recent ruling at the Brompton that will allow some of those buyers to rescind, there just aren't that many UES cats -- I think that's what's helping the new condos hold the line on price.

ali r.
DG Neary Realty

Things are changing , check out the sales volumes now