The penthouse overlooking Manhattan’s Central Park listed for $250 million drew attention as the most expensive home to hit the U.S. market. Now, the developer has slashed the condo’s price to $195 million in an acknowledgment that the shock-and-awe figure didn’t land a buyer.
The 22% price cut—and a 15% reduction to $149.5 million on a duplex at the same building, Extell Development’s Central Park Tower—are reminders that selling in one of the world’s most rarefied housing markets isn’t simple. Luring the richest buyers for ultra-luxury condos can be particularly challenging in a market that’s cooled from its frenzied pandemic pace.
“There has been a tendency to hike prices further, further, further—assuming that those prices just go up 10%, 20% every year regardless, and that’s just not realistic,” said Leonard Steinberg, a luxury sales executive at Compass Inc. “The wealthy market is not easily persuaded to spend a lot more than something is worth.”
Buildings along Billionaires’ Row—a stretch of high-rise towers built after the financial crisis near the southern end of Central Park—have been trying for years to attract buyers. The area gained a reputation for having swaths of empty space, but many properties have filled up more units in recent years.
Penthouses can be the most challenging to sell given the need to attract the wealthiest individuals like Ken Griffin, who set a record with his $238 million purchase at 220 Central Park South. Extell is now sharpening its focus in hopes of attracting the right shoppers for the Central Park Tower units.
“The original pricing on these units were headline prices,” said Gary Barnett, founder and chairman of Extell. “We have recently sold a significant amount of inventory at the top of the building and now want to get serious about selling these two showcase homes as well, so we lowered the prices to closer to where we think they will trade.”
The top of the market as a whole isn’t nearly as strong as it’s been in the past few years. Jonathan Miller, president of appraiser Miller Samuel Inc., has tracked 13 home sales closing for $50 million or more across the US so far this year, well below the record 49 sales in 2021. This year, three of the high-end sales have been in Manhattan, compared with 12 deals in 2022.
Miller said this year’s performance is less of a crash and more of a return to pre-pandemic levels, when the average number of sales of $50 million-plus homes often fell in the teens or 20s.
“I would look at ’23 as normalizing rather than the outlier of the last three years,” Miller said. “That applies to this market and also to housing for mere mortals.”
While the market for nine-figure properties is sluggish, luxury real estate that’s a little bit cheaper is actually selling well. Sales at the supertall buildings on Billionaires’ Row are stronger than they’ve been in years, boosted by deals for condos priced below $50 million. An average of 3.7 apartments have gone into contract each month so far this year, according to Marketproof. That’s the most since 2019, when new-development inventory was significantly higher.
Price Cuts
Owners of other luxury units have slashed prices recently. A roughly 8,000-square-foot (743-square-meter) unit at Macklowe Properties’ 432 Park Ave., once listed for $135 million and later reduced, is now in contract for around $70 million, the Wall Street Journal reported in August.
The building’s uppermost penthouse, listed for resale two years ago at $169 million, was recently reduced to $130 million. An apartment at Extell’s One57 went into contract last month, not long after the list price was reduced to $34 million, from $45 million in 2022.
“There was a perception that the market was a lot wider and deeper than it actually was for this density of high-end pricing,” Miller said. “The evidence of that is sales are coming with big discounts.”
It’s not like the ultra-luxury market is dead. A unit at Vornado Realty Trust’s 220 Central Park South, where park frontage and developer Steve Roth’s hand-selected buyer pool have kept prices high, sold earlier this year for $80 million.
Central Park Tower has sold about 55% of its condos, according to Marketproof. The penthouse now listed for $195 million spans roughly 17,500 square feet across three stories, beginning on the 129th floor.
“The original asking price was a marketing gimmick,” Steinberg said. He does see that home, and the duplex below it, ultimately selling for the right price.
The most expensive unit may need another big price cut before it finds a buyer, according to broker Donna Olshan.
“I’m sure they’d be thrilled to take $150 million for it,” said Olshan, whose Olshan Realty produces a weekly report on New York luxury sales. A $150 million sale would reflect a 40% discount off the original asking price.
Miller said homes with “aspirational pricing” often sell with even deeper cuts. Many have found buyers when sellers were willing to accept reductions of around 60% to 70%, he said.
“There’s still lots of units to sell” on Billionaires’ Row, Miller said.
This article was provided by Bloomberg News.