There’s lots of scaffolding, cranes, and hammering in New York City these days. Construction spending has nearly returned to pre-recession highs when accounting for inflation, with nearly $11 billion spent on residential construction this past year.
However, these buildings aren’t for just anyone.
“They’re usually very tall, very large, and in the tens of millions of dollars in asking prices,” says Richard Anderson, president of the New York Building Congress. He says the construction here is now dominated by ultra luxury apartment buildings; a big change from 5 or 10 years ago. “Then it was more a range of housing, more outer borough housing, more affordable housing. Now, we’re spending more money but getting less housing units.”
There’s even something now referred to as Billionaire’s Row in midtown.
“This apartment is over 4,000 square feet,” Jeannie Woodbrey says casually, entering a half-floor apartment on the 58th floor of One57, a residential tower in Manhattan where she’s a senior sales executive. Central Park stretches out before the windows like a private runway.
“This one starts at 27, up to about 29, depending on the floor,” she explains, referring to the price tag (in millions).
All those millions buy three bedrooms, a big open living room, and a slew of amenities, including access to a pool that has music from Carnegie Hall piped in underwater.
“I describe this phenomenon as, ‘We’re building the world’s most expensive bank safety deposit boxes,’” says Jonathan Miller, president of Miller Samuel Real Estate Appraisers. “Essentially, the consumer buys one of these units, puts their valuables in it and then rarely visits. And it’s not unique to New York. Miami is seeing this, San Francisco, Los Angeles.”
Miller says the uber wealthy, many of them foreign, are looking for a place to park their money — many recent luxury sales have been all-cash deals.
High demand and high prices have encouraged developers to build lots of these super-lux buildings — perhaps too many.
“The Manhattan development market has a problem,” Miller says. “It’s facing too much supply with a steady demand. So when people say the market’s been softening, what they’re really saying is we’ve been building too much. The demand hasn’t really changed.”
He doesn’t believe it’s a bubble, but says the pace of sales is slowing and that may leave some planned projects on the drawing board.