Real Estate

No bubble here: Developers on NYC's luxury condo boom

New York's real estate boom
New York's real estate boom

The Manhattan skyline is morphing by the minute. Both commercial and residential towers, sliding up like sleek needles amid the old, are commanding a new top dollar. From Hudson Yards across the city to United Nations Plaza, the developers behind these projects are brushing off talk of bubbles and froth and pointing to simple demand.

"Pricing is always a question of supply and demand," said Harry Macklowe. He added there is plenty of demand.

Macklowe, a New York real estate icon who lost big in the recent recession, is on the comeback (although he says he doesn't like that characterization). His latest play is in ultra-luxury residential, just topping off 432 Park Avenue, the tallest residential tower in the Western Hemisphere.

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"The location, the architecture and the interior finishes of the building are found by the market to be extremely attractive," said Macklowe. "The buyers, the buyer groups that are interested in the building, even if they can't afford it or if it doesn't work for them, they are very supportive."

A few blocks up from Macklowe's soaring accomplishment is 520 Park Avenue, a project from brothers William and Arthur Zeckendorf, third-generation New York real estate developers. Once complete, the asking price for the triplex penthouse at 520 Park will be a record $130 million.

A view of 432 Park Avenue October 15, 2104 the day after it earned the distinction of being the country's tallest residential skyscraper.
Timothy A. Clary | AFP | Getty Images

"The New York City economy is a world-class economy. We're attracting jobs from around the world, and the building boom—we're just following the trends in the marketplace," said Will Zeckendorf.

The Zeckendorfs already had great success with 15 Central Park West, and they are modeling their new project after that, using the same architect, Robert A.M. Stern.

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While high-end real estate in major cities like Miami, Los Angeles and New York has been fueled by international buyers who often just spend part of their time in those cities, the windows will not be dark from absentee owners at 432 Park, claims Macklowe. Both Zeckendorf and Macklowe agree the international buyer is only a small fraction of their customers and gets far more play than they deserve.

"Based on our past success, say at buildings like 15 CPW, roughly three-quarters of our buyers are domestic, 25 percent overseas, so I'm hoping one of those two groups will be buying at 520 Park Ave. next year," said Will Zeckendorf.

Zeckendorf, who also owns Halstead Property, one of New York City's premier real estate brokerage firms, said he is watching inventories closely and isn't particularly worried about all the new product coming on line.

"I like the place that the market is in today. Prices are moving upward, but calmly upward," he added.