Sales slowing at New York’s top condo tower

Bill Ackman's $90 million flip
Bill Ackman's $90 million flip   

The building known as One57 has ruled over New York real estate when it comes to height, price and public relations. But now, sales at One57 may be coming back down to Earth.

The 1,004-foot tower looming over the southern edge of Central Park held the title as the highest residential tower in New York until this month, when it was eclipsed by the 1,396-foot luxe tower 432 Park Ave.

Some of the buzz around One57 sprung from reports that its two penthouses each sold for $90 million—said to be a record.

The exterior of One57. Source: One57.

Bill Ackman, the billionaire hedge funder, told The New York Times that he and a group of friends bought one of the penthouses "just for fun"—and for flipping.

But the reality of One57's sales may be a little less stratospheric than its image.

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According to public filings from One57's developer, the building only sold two units in the entire first half of 2014. Yes, about 75 percent of the building's 92 units are sold, but at the current sales rate, it would take more than six years to sell the remaining units, according to Jonathan Miller, president and CEO of appraisal company Miller Samuel.

And that's at a time when a half dozen other big condo megaprojects are going up nearby, including 432 Park which boasts higher floors.

Prices for new luxury developments in Manhattan fell 8 percent in the third quarter, according to a report from real estate management firm Douglas Elliman. At the same time, listing inventory from new development has nearly doubled compared with the year-ago quarter, to about 1,400 units.

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The developer of One57, Extell Development, doesn't disclose sales figures.

"Almost all of our projects slow down at the 70 percent to 80 percent mark, until we can complete the building and show the units finished and clean," said Gary Barnett, Extell's president.

He did, however, acknowledge the possible effects of growing inventory and competition, saying that "there are certainly more buildings that are being built now that are slowing potential sales."

Tour inside $85M spec home
Tour inside $85M spec home   

Miller retrieved the numbers he cited from debt-issuance documents that Extell filed in Israel. He said Extell probably wasn't expecting the numbers would find their way to the New York media and take away some of the shine from the building's previously glowing coverage.

"Despite the media saturation, price increases and significant competition slowed the pace of sales within the building over the past year," Miller said. "Demand remains high marketwide but new offerings have reduced the sense of urgency for potential buyers in the super-luxury market."

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The building, however, remains a hit with one of its buyersAckman. The hedge funder told the Times that the penthouse was "the 'Mona Lisa' of apartments" and said someone will buy it for more than the $90 million he reportedly paid.

Yet it's unclear what Ackman and his "friends" truly paid. Several brokers said privately that they believe the purchase price was less.

The closing documents haven't been filed with the city yet, and some of the closing prices in the building that have been disclosed differ from the initial reported contract amounts. It's also unclear what terms, considerations and trades are included in the sales contracts.

Meanwhile, it's in everyone's interest to suggest a higher sale price for the penthouse. Extell wants higher prices for other units. Ackman and his group don't want potential buyers to know how much they're making with the flip.

Of course, the $90 million price may be entirely accurate—and it may sell for far more in the coming months or years. But as one broker told me, "Ackman is way too smart to pay $90 million for an apartment that he'll have to flip for $100 million or more."

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