Why so low?

Original contract/sale in 2006/2007 was $10.7M. Then a resale in 2014 for $13.5M. Put on the market for $10.5M 6 months ago, with no takers. So they just put it up for rent at $35K.

https://streeteasy.com/building/40-bond/rental/4023510

Why no takers on the sale?

I think the below from my other post may be partially the reason.

"Any new developments with tax abatements declines in prices relative to the market as they get closer to expiration of abatement. After-all initial price reflects the value of the tax abatement. On top, there is a newness premium of say 5-10% which declines in the first 10 years except for a few buildings which become highly desirable."

https://streeteasy.com/building/40-bond/th-5

Aside, in my opinion, TH condos have the worst of both condo and townhouse world. You do not get the view, removal from the street and resulting increased security (pluses of condos) but get stuck with the common charges, loss of freedom, and having to deal with the other residents. That said, it did trade higher.

I agree with 300. A townhouse buyer will want an actual townhouse, with the associated freedom and cache. Personally I do not understand the appeal of condo or co-op townhouse setups. They seem risky and unpleasant IMO.

Pinecone, This a way for the developers to sell street level space which is not that desirable in a condo or coop. At least 40 Bond Street is set back from the street with a beautiful design giving some privacy from the gawkers.

Another example of street level privacy issues and price cuts. I have frequently seen people stop and peep in through the metal railing into this. Finally the owners put some planters blocking the light from the front.

https://streeteasy.com/building/37-east-12-street-new_york/th

Looking at other sales in the building, the trajectory on this one seems consistent with the rest of them. 2006 => 2014/2015 had a 30% bump, inconsistent with the rest of the market. And then since then, the 30% bump deflated, inconsistent with the rest of the market.

The 2006 => 2023 trajectory wasn’t all that unusual, I suppose. It’s the building’s accumulated 2014 premium that subsequently deflated.

If MCR were here you could ask her what Bond St was like when we lived there.

40 Bond was an Ian Schrager developed, Pritzker Prize winner Jacques Herzog and Pierre de Meuron designed "ultra luxury" downtown Limestone Jesus, wasn't it?
https://www.vanityfair.com/culture/2010/10/ian-schrager-slide-show-201010

What has been said regarding the arcs of such buildings?

>>Pinecone, This a way for the developers to sell street level space which is not that desirable in a condo or coop<<

Ah--I wasn't familiar with this building. Thought at first it was a brownstone/low-rise conversion.

>> What has been said regarding the arcs of such buildings?

I guess I’m just so used to people listing “aspirationally” that pricing TH1 in the right ballpark from the start was shocking. E.g., note TH5’s journey from $14.9M to $8.4M between 2016 and 2022.

Something like this is more normal:

https://streeteasy.com/building/175-west-10-street-new_york/ph

- Buy peak-ish in 2017 for $9.5M.
- List in the absolute depth of the pandemic in 2020 for $12.25M.
- Hold the line for most of 2021, missing the Fed-special rally.
- Chop… chop… chop…
- To $9.6M by the end of 2022.

So much for the notion of prime units in prime locations commanding top dollar….

"Ah--I wasn't familiar with this building. Thought at first it was a brownstone/low-rise conversion."

Pinecone, If this were to be condo conversion of a townhouse, the conversion has very little new development premium as famous architect etc are not used and there is a rarely an tax abatement related issue.

To make my statement clearer:

Aside, in my opinion, TH condos ** in doorman buildings ** have the worst of both condo and townhouse world. You do not get the view, removal from the street and resulting increased security (pluses of condos) but get stuck with the common charges, loss of freedom, and having to deal with the other residents. That said, it did trade higher.

"Why no takers on the sale?"

Because they are ground floor (partially below street level, I believe), dark, with minimal privacy, and poor floor plans (well, the upstairs is ok), in a neighborhood that is now insufficiently chic for people with $10m and a modicum of common sense. And on a cobblestone street that once was lovely, but is starting to look as ratty as all the other patched and repaved streets in the city. And that generates a lot more traffic noise than asphalt paving.

I'm sure there's a buyer at $7.5m.

@300 - interesting take on worst of both worlds
I have seen some townhouses attached to larger condos in Brooklyn which intrigued me as a "best of both worlds" in that you'd have your own private drive-in garage & no up/down neighbors, but still have the gym/pool/staff to deal with packages/deliveries/service/etc issues.

But I suppose, and this may surprise you from my posting history, I was not sufficiently cynical on the concept. It probably is worst of both worlds, haha.

Given the challenges in the city of permitting, rats, etc.. I don't think I'd ever want to be responsible for exterior maintenance nor live on ground floor, let alone sub-level.

@Aaron - I'd agree that this area has somewhat regressed since 2019, at least if you were someone with $10M to spend on housing, you have a lot of other options that haven't.

In BK Townhouse attached to larger condos: It depends on a few factors.
- Biggest being how much are the common charges due doorman which doesn't really provide as much of a security to the street level townhouse.
- How much of the space is mostly below ground and if the pricing, CC and taxes are discounting sufficiently for that.
- Is it a mostly townhouse block in a prime hood with low traffic and if this townhouse condo cheaper than a full townhouse price on that block? Positive as you get to live on a townhouse block at a lower $ entry point.
- Are you at the back of the building with only garage from the street? Positive.

Lastly, if the whole building is set back from the street by more than 10 feet. Positive.

Evaluation comes to how much services are costing you, light, and distance from the street.

I wonder how that ornate aluminum gate will hold up long term.

Perhaps maisonettes are a comp here. There's a reason why ground floor and sometimes first floor space is given to doctors, and it's not the convenience of having a urologist in the building.

George, Welcome back. Maisonettes with a nice garden and a set back entry?

Aaron2>> I'm sure there's a buyer at $7.5m.

You may be right. And I don’t disagree with your analysis in a vacuum. But how did it get so far from $13.5M in 2014? You gotta figure there has not been a bid at $9.5M, which is 30% down. OTOH, $2500 ppsf for ground floor, no matter how nice, is still pricey even if someone paid $3500 ppsf 8 years ago.

Nada, 2015 is when the high-end condos start to flood the market. 220 CPS. 432 Park Avenue to name a few.

40 Bond a beautiful building in a great location in my opinion. But you can’t fight ultra-luxury supply. It is not just DeCaprio who goes for new.

Greenwich Lane 2015-16.

Yeah, I certainly pushed on that point for at least 10 years here. At $3K+ ppsf, you can develop a lot of shiny stuff.

Speaking of Greenwich Lane, what do you think is going on here?

https://streeteasy.com/building/155-west-11-street-new_york/14a

Looks really quick to buy (6 days), really slow to close (4 months), and then really slow to relist (5 months) given amount of work (remove wallpaper & paint, replace one set of random-taste light fixtures with another).

Nada, Ultra-luxury segment decline is where the two of us have been in agreement as long as the ultra-term started to become common place in NYC real estate after 157 W 57th. The difference is that you actually benefited by renting this type at 1-1.5% cap rate.

14a is fake pictures. I suspect nothing has changed since the previous listing.

I think buying in top locations will still serve you well especially if you're buying something that appeals to a much larger percentage of the buyer pool than a 10 million dollar townhouse or penthouse. Especially the units trading in the $3,000 a square foot range.

Meaning there's a limited buyer pool for $3,000 square foot properties compared to properties in the $1200 to $1,800 square foot range.

And there is limited supply at lower $ per sq ft range in hood location.

And there is limited supply at lower $ per sq ft range in “good” location.

I'm not sure why you're shrugging off so easily the similarities in pricing arcs to other "it" buildings when they are no longer "it."

PS Greenwich Lane remains an "it" building. And you can see the difference that makes.

However, very recently some celebrity owners have sold (like Jon Bon Jovi). Historically this has been the first leg of becoming an ex-"it" building.

30yrs, I’m with you on the loss of it-ness. I didn’t mean to give the impression of shrugging that off.

My impression of the arc is:

1) Developer does development at a high but reasonable price relative to market.

2) Buyers flock.

3) It-ness sets in, but too late for the developer to take advantage (beyond original pricing meeting their best projections).

4) Resale buyers bid up prices.

5) It-ness wanes, prices come back down to market levels.

So in my head, #1 tends to be at market levels and #5 tends to be at market levels. Maybe I’ve got the wrong notion in my head about this. But here #5 vs #1 is 20% off from market levels.

This unit is the Bon Jovi property. The flipper is Michael Ovitz/Tamara Mellon.

Thanks, nyc_sport. I had tracked an address to Tamara Mellon but then lost interest. I appreciate you connecting the dots.

I guess they changed their minds about wanting a place there? Weird, given the news report that she had once owned and then sold a similarly-priced apt there. You figure that would’ve given a clue about what they were getting themselves into.

Buying very overinflated real estate in vanity condos in New York City is a game for the very wealthy like bon Jovi or ovitz/mellon. They want to live where they want to live and they can afford it.

It's a much more dangerous proposition for the average investment banker with aspirational motives and a significantly less robust financial statement.

In the case of 40 Bond the it-ness was from the beginning due to Shrager/Herzog and de Meuron connection.

I think it's a beautiful building and it is exactly what I mean by a quintessential 'it' building. It depreciates like a Maserati Ghibli. But if you've got the money, please enjoy living in this wonderful piece of architecture.

We always warn clients of this obvious fact of buying in such new developments. Some thank us and say they didn't know, assumed it would go up with time like clockwork. Others tell me thanks for the advice, however I want to live here, can afford, it so no worries.

Sold a similar unit nearby to a young man, explained all this to him and his father. The son wanted it, the father shrugged "that's why I've worked so hard". To each his own.

My dream place would be a maisonette with a private pool attached to a full service building. Just saying -

At market bottoms some of the hardest bank foreclosures to sell in my experience have been these multi-level first floor large spaces in full service loft buildings. American Felt Building, American Thread building, etc. One reason is when prices crash the cc + ret tend to kill deals because the sheer size makes for high monthlies and anyone who is is attracted to the low price for big square footage can't handle that aspect. Similar to the story I've told before about our deal at 288 West St.

https://streeteasy.com/building/american-thread-building/12c

BTW Cindy Lauper bought this unit in 1993.

Keith, it seems like you have a broad view that ultra-luxury new developments will underperform the rest of the market price-wise, where one defines ultra-luxury as ~2x the ppsf compared to typical homes in that area of NYC. Is that about right?

How would you quantify that underperformance? “This type of thing will likely underperform the rest of the market by 10-20% over the next 10-20 years?” And how do you communicate that to your clients. I know you are averse to giving financial advice to your clients about the outlook of the RE markets, whether a purchase makes sense financially based on fundamentals, etc. This sorta seems in that realm; how do you draw the distinction? (Not that I necessarily disagree with your assessment.)

30yrs, what do you think drove the $10M => $6.5M trajectory on the American Thread unit between 2014 and 2021? The monthlies barely budged from $17.5K => $18.5K, well below inflation. The broad market was plenty peaky in both cases, around the same level. Rates were lower. Keith Haring artwork values were up. So what gives?

I understand your point that the intersection of people who’d be able to pay $10M + $17.5K/mo and those interested in sprawling / awkward ground floor apts is small. But how did that change in the 7 years?

I think it's very hard to quantify much about residential real estate purchases for primary use. I think it's at least a 50% financial/50% emotional when you're purchasing a home you're going to live in. With most people emotions tend to carry more weight, in my humble opinion. And of course there are many variables and many of them are not quantifiable.

I look at the spread between a typical condo and the so-called ultra luxury condo. Have they really added three times the value with amenities and design choices that will be out of fashion in 5 to 10 years? Many of these luxury purchases are vanity purchases, like walking around with a birkin bag, makes you feel good (I guess?). Maybe there's also something to not wanting to be the biggest best and shiniest house on the block?

And of course you have to take into account the current market cycle which plays a big part in driving price and demand. It's still amazes me that many people in the industry and consumers think the market can ever falter when it's rocketing up. Even though historically we know it absolutely will.

If I remember correctly 40 Bond Street came on the market not to soon before the most recent financial crisis. I'm not sure if they sold out before Lehman crashed or went to market post the crash? Apologies , I don't have time to look this up I'm traveling today. One way or another this would have a significant influence on early trades.

We may not give personal financial advice. However when somebody sends us a listing they're interested in bidding on, we provide a fairly detailed report on where we think the property should trade and why. If we're on the same page as the client, there's not much to talk about. If we're not on the same page, we typically schedule a call to discuss. One thing I will stress, we're not emotional about this either way. Then it's up to the client to decide whether they want to move forward and under what terms. We never shy away from being critical about a property either. This is not rocket science. We're in this for the long run, and you won't succeed in a referral based business if you're giving people s***** advice and service.

inonada,
Go back farther https://streeteasy.com/sale/146377
https://streeteasy.com/sale/61476
https://streeteasy.com/closing/3303

Maybe someone just overpaid for a unique/white elephant property in a peaky market and in a doubtful market no one would.

I did a little digging to earlier today. It seems like the 2014 $10M purchase was by someone who had legal issues, leading to a 2016 seizure. The 2018 sale for $9M seems like an entity related to the lender, on the hook for $7M. After 4 years, they sold for $6.5M in 2022. Quite the trajectory from the $4.5M sale whose contract was signed in 2005. End-to-end, not that different than the market, particulately if there was some reno work in between (which seems likely given some of the pics). But a fun ride in the center.

The trajectory was not terribly unlike this other unit in the building we discussed here circa 2020, only more dramatic.

https://streeteasy.com/building/american-thread-building/11a

Keith>> However when somebody sends us a listing they're interested in bidding on, we provide a fairly detailed report on where we think the property should trade and why.

So where do you think the Greenwich Lane PH should trade? You implied it is “very overinflated real estate in vanity condos”. Fine, but is the $22M it traded at recently “right”? Or the $19M it sold as new dev? Or something that would have rendered it undevelopable and off-market, like $9M?

You left out the sad part of the story re:9/11

I’m unaware of it.

Was this an “it” building in Dec 2009?

https://streeteasy.com/closing/946833

Print looks like it’ll come in at least 25% down, probably more, if/when it closes:

https://streeteasy.com/building/100-11-avenue-new_york/1718a

Sad situation where owner (husband half, anyways) passed at 63 just 10 days after contract date:

https://pagesix.com/2022/08/31/miami-socialite-j-r-ridinger-dies-suddenly-at-63/amp/

Nada, Almost all ultra-luxury (ish) new developments got priced and sold as "it" buildings before 2015-17 flooding of the market. Very few remained "it". St Vincent's conversion benefits from a lack of supply in that area of similar buildings.

https://streeteasy.com/talk/discussion/43143-price-prediction-for-ultra-luxury

2006 sale was an estate sale - the owner worked at Cantor Fitzgerald.

Thanks for filling me in, Aaron2. Sad indeed.

300, 100 11th Ave sold at $2000 ppsf as new dev. Calling every new dev built pre-2015 at $2K an “it” building makes the term meaningless to me.

What am I to make of the American Thread units? First, they were not “it”. Then they became “it”. Then they lost “it”.

There was certainly, for a time, severe under-supply of ultra-lux apts in the housing stock relative to demand in the 2000’s. So prices for these shot up to a level where developers started profitably supplying the demand, meeting the market in the 2010’s. I don’t think demand for ultra-lux has waned. Calling the whole market segment a fad sounds weird.

Take the UES, for example.

I used to view it as a neighborhood I had no interest living in, with a stale and uninspiring housing stock.

Then some savvy developers figured out that putting ultra-lux next private schools where wealthy people like to send their kids might sell.

Now I look at the UES, and it’s in a different light. Sure, I still don’t want to live there. But at least the high-end housing stock has something more to offer than awkward combos of 3 small apts in a building from the 70’s.

Not fad, Just overpriced in 2015-18. A lot of air has come of that segment and people have seen 30% down trades. So it is hard to call the whole segment over-priced.

"Calling the whole market segment a fad sounds weird."

The demand for ultra-luxury has not waned in absolute unit terms but at what price level is the demand. There are still many unsold sponsor apartments in that segment.

My dirty demand and supply using Streeteasy. >15mm and $4k+ condo in Manhattan. 114 listings.
482 such units sold since 2007. Appx 100 such units sold in the last 2 years.

If I use $3k+ cut off.

192 listings.
740 units sold since 2007
Appx 150 units in the last 2 years.

This seems ultra-luxury of the time but in a second grade location.

https://streeteasy.com/sale/90330

I think there are so called "it" buildings and just what you seem to be calling ultra luxury, that's how I see it. You also have so called ultra luxury that's in price/appearance only.

There are many variables, a well built UL condo in a prime UES location is much less concerning than say a UL building in the boondocks of lower Manhattan or some equivalent location.

All I'm saying is if you're paying 2x + a sqft than most of the housing stock in the hood, tread carefully. But it's not black and white, again there are many variables to consider.

Easier to have this conversation over a coffee, as there are many nuances than can be expressed, discussed.

>>Easier to have this conversation over a coffee, as there are many nuances than can be expressed, discussed<<

Keith are you suggesting an SE meetup?

I'd like to see a more solid numerical definition of luxury & ultra-lux: I'll start by saying: Luxury: top 10% by price; ultra-lux: top 5% by price, as calculated by the offerings in any particular neighborhood, borough, or overall city, or on a different metric such as sq. ft. (state your criteria, show your work). Special consideration perhaps for particularly unique properties.

Is there a good source for data showing all available market prices (asking and/or actuals), so those ranges can be determined? I'm not finding it on SE.

The word luxury is probably one of the most misused adjectives in real estate.

Aaron, Jon Miller, in his market reports for Elliman, talks about a luxury segment that is defined as top 10% by price. For 4Q 2022, the entry price threshold was $3.95mm. Inventory (I have no idea how that's calculated, because we all know that at this price there are units that don't seem to be listed, but IYKYK) 1,459 units, 256 closed sales, 17 months of supply. Mix is 55% co-ops with a median sales price of $3.75mm, and 45% condos with a median sales price of $11.1 mm.

Decades ago there was a tenement Condo conversion on 8th Avenue (about a block from my current office) with a big banner on the facade proclaiming "Luxury Condos!"

I immediately thought to myself "whose concept of 'luxury' apartments doesn't include an elevator?"

Re: Upper East Side
It was always a desired neighborhood. But for a very long time you could only get premium prices West of 3rd Avenue. The brilliance of Naftali was figuring out the market shift away from exact location and towards finish, ceiling height, etc especially if you are offering condominium ownership.

But it's not that different than all of Billionaires Row. That used to be a very tough sell location wise. Look at how big a discount (relative to the rest of the market) sellers had to give at buildings like The Osborne and Alwyn Court. Don't bother looking on StreetEasy I'm talking actual history not the internet.

The "Jean Nouvel Building" was definitely marketed as an "it" building. Plenty walked away from deposits there (including one of the owners where I park my license).

Ali,
You've seen my rants about the move to "off market" listings and the impotent responses by REBNY/NAR. I think it's bad for the market and regressive. There's a funny set of videos produced by an Australian MLS I've reposted elsewhere in a thread about pocket listings.

https://www.businessinsider.com/new-yorkers-buying-luxury-real-estate-off-market-2022-3?amp

Apparently Hugh Jackman loves the Westside Highway.
https://therealdeal.com/2022/08/09/hugh-jackman-buys-ph-at-jean-nouvel-tower/amp/

>> I immediately thought to myself "whose concept of 'luxury' apartments doesn't include an elevator?"

They said luxury condos, not luxury building. Means of entry/exit were clearly excluded!

@f_p: Thanks! I thought I had seen that 10% number somewhere. $3.95m seems low to me, but I trust their math. Interesting difference on the condo/co-op median sales price.

More news on this unit:

https://streeteasy.com/building/100-11-avenue-new_york/1718a

Owners wanted to donate a yacht, but rather than donating to a charity that regularly accepts boat, lawyer neighbors at 100 Eleventh took them down another route. The route involved a charity co-founded by one of the lawyers, didn’t pass the IRS sniff test (IRS claimed the lawyers “planned a fraudulent transaction”), and resulted in back taxes / interest / penalties. Owners then filed a lawsuit against the lawyers.

https://www.wsj.com/articles/these-millionaires-tried-turning-a-yacht-into-a-tax-break-the-irs-sank-their-plan-adb533b7

From above: Response by 30yrs_RE_20_in_REO
about 1 month ago
Posts: 8737
Member since: Mar 2009
If MCR were here you could ask her what Bond St was like when we lived there.

I'm here now, and I can tell attest to the fact that Bond St 2023 is unrecognizable when compared to Bond St 1984 when my mother was living there in an artist loft. I like both incarnations, but nostalgia certainly compels me to prefer the 1984 version. It.was.awesome. Nothing like anything my 15-year-old self had seen before, and I immediately fell in love with NY.

The 40 Bond TH1 listing that started this thread found a renter in a reasonable amount of time (47 days to contract) at a healthy ask of $35K. So from that, one can say the neighborhood & building still have “it”.

Cap rate based on asking rent & asking price is 2.6%. I don’t know about others, but I think the sale would have found a bid near $10.5M had it gone to market a year earlier in mid-2021 instead of mid-2022.