New York condo developers were riding high in the first half of last year as the city’s flourishing housing market, boosted by historically low mortgage rates, carried over from 2021.
As the calendar flipped from June to July, everything changed. Booming sales through the first half of the year — when two-thirds of all deals for new development condos took place — succumbed to interest-rate hikes, and activity fell back below pre-pandemic levels.
“The sugar high of cheap money ran out in the middle of last year,” said Kael Goodman, CEO of Marketproof, which tracks sales of new development condos in the city.
Still, the hot first half was enough to power a 20 percent jump in signed contracts for new development condos compared to the annual pre-pandemic average recorded from 2015 to 2019, according to Marketproof’s year-end report.
Sponsors reported 1,701 deals for new development units in Manhattan for a gain of 15 percent over that pre-pandemic average. Brooklyn and Queens increased their market share, posting gains of 20 and 51 percent, respectively. Brooklyn saw 1,213 deals and Queens saw 364, 78 of which were at Skyline Tower in Long Island City, the borough’s tallest building.
Median asking prices remained higher across the board, at $2,096 per square foot Manhattan, up 6 percent from pre-pandemic times, while Brooklyn was up 19 percent to $1,405 a foot and Queens up 10 percent to $1,300.
The properties that reported the most contracts included the Solaire, a Battery Park City offering by the Albanese Organization, which closed 84 deals; Extell’s Brooklyn Point which sold 80 units in Downtown Brooklyn; and Risland U.S. Holdings’ Skyline Tower.
Vlad Doronin’s Aman New York Residences at 730 Fifth Avenue struck the priciest deal of the year in early July when a sponsor unit went for nearly $76 million. And although the luxury market also suffered a second-half slump in 2022, a penthouse at Vornado Realty Trust’s 220 Central Park South placed a close second when it sold for $72 million in November.
Among buildings with fewer than 200 units, Related Companies had the best-selling offering with 49 deals, or more than a third of the inventory, at The Cortland in Chelsea. That building was followed closely by CIM Group and LIVWRK’s 111 Montgomery in Crown Heights, Brooklyn, which saw 47 contracts.
With 50 contracts, New Empire Real Estate’s boutique offering at 208 Delancey Street on the Lower East Side was a surprise seller, according to Goodman.
“Despite its location pretty far on the east side, buyers were not deterred,” he said.
Now squarely in an era of higher borrowing costs, Goodman said he expects things to remain slow in the coming months, but doesn’t necessarily see developers being left in the lurch. New condo inventory remains limited at about 12,700 units citywide, down about two percentage points from its high, and the financing environment is more stable than in overheated markets like Miami or Phoenix, he noted.
“We’re projecting that, by the middle of this year, demand will be back to historical norms,” Goodman said.