Prospective buyers at one Upper East Side condo project are quietly being offered a 5 percent discount. At an almost-completed Midtown building, five-bedroom homes will be divided into smaller units. Brokers whose clients sign deals at a downtown tower before Labor Day are getting $5,000 gift cards.
Such tactics have become more common in Manhattan, where developers are coping with a luxury-condo glut and adjusting to a new reality after years of building to meet seemingly insatiable demand. With the market now sputtering, they’re altering sales plans and making behind-the-scenes deals in an attempt to create momentum at their projects before an onslaught of even more competition.
“Right now, time is your enemy,” said Jacky Teplitzky, a luxury broker with Douglas Elliman Real Estate. “The first question that people ask is how long has an apartment been on the market?”
Global economic turmoil, slumping oil prices and the uncertainty of this year’s presidential election are weighing on luxury-home buyers’ decision-making across the U.S. In New York, where more than 3,500 new apartments are hitting the market this year, developers have to work even harder for a sale. It’s a turnabout from the boom days just a few years ago, when investors quickly plunked down record-shattering sums for homes still in the planning stages. Wealthy buyers now are taking time to browse multiple options and negotiate before committing to a purchase -- if they make one at all.
For the first 35 weeks of the year, contracts to buy Manhattan homes at $4 million or higher tumbled 21 percent from the same period in 2015, data compiled by luxury brokerage Olshan Realty Inc. show. The 758 properties in those deals spent an average of 291 days on the market, or 54 more days than a year earlier.
Developers have postponed plans to add even more apartments. The 3,574 units slated to reach the market this year are 38 percent fewer than what was estimated in January, according to brokerage Corcoran Sunshine Marketing Group. Of the units that have or will be listed in 2016, more than half are considered luxury, or priced at more than $2,400 a square foot.
“We’ve never had a buildup of housing inventory that has been so skewed to the high end,” said Jonathan Miller, president of appraiser Miller Samuel Inc. “There’s too much development being built at 2014 prices, and that buyer isn’t there. Conditions have changed quite a bit since then.”
Delaying Sales
Some builders with projects close to completion are touting their within-reach move-in dates, while for others, the answer has been to delay a marketing push until the chance of success seems greater.
At 111 W. 57th St., where a penthouse with direct Central Park views will be listed for $57 million, a formal sales effort won’t kick off for about a year, until the building reaches roughly 800 feet (244 meters) and can catch the eye of potential buyers. Still, two contracts were signed in June and a third is being negotiated, with the buyers getting “exceptionally good value,” said Kevin Maloney, principal and founder of co-developer Property Markets Group.