Manhattan’s growing inventory of ultra-luxury condominiums has another big developer seeing signs of a glut.
Toll Brothers Inc., the largest U.S. luxury-home builder, is zeroing in on smaller apartments with lower prices in Manhattan after watching expensive units sit on the market, said David Von Spreckelsen, the New York division president of the company’s City Living unit. Its latest project, at 55 W. 17th St. in Chelsea, will have an average asking price per square foot less than at new buildings in the rest of the borough.
“The days of super pricing and of raising prices every other week, I think, are probably past,” Von Spreckelsen said in an interview. “Supply has started to catch up with demand.”
Toll Brothers is switching gears as sales of new Manhattan condos slow -- and prices continue to escalate -- in a building boom. Developers have focused almost exclusively on larger and lavish apartments as a way to capture demand from ultra-wealthy investors who view New York real estate as a secure place for cash.
While record-shattering sales such as the $100.5 million penthouse at Extell Development Co.’s One57 tower have grabbed headlines, there’s a limited pool of billionaire buyers. Newly constructed apartments that sold in the second quarter spent an average of 130 days on the market, up from 117 days a year earlier, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.
“We’re starting to see an oversupply of really large units and really expensive units, and we think those are sitting on the market,” Von Spreckelsen said.
Other developers have cited a possible oversupply in the market that’s affecting their decisions. Ziel Feldman, chairman and founder of HFZ Capital Group, said he didn’t want to “be hostage to a $10-to-$20 million condo market” at his full-block site near the High Line in West Chelsea. Plans call for apartments of 1,500 to 2,000 square feet (139 to 186 square meters), with prices starting at less than $4 million, he said in May.
Steven Roth, chief executive officer of Vornado Realty Trust, which is building condos starting at more than $12 million at 220 Central Park South, said at a Bloomberg forum in April that he thinks luxury condos are at risk of being overbuilt.