Home Business New New York Real Estate: More Floors, Fewer Apartments

New New York Real Estate: More Floors, Fewer Apartments

by SuperiorInvest

Benson, a 210-foot, limestone-clad tower on the Upper East Side completed last year by developer Naftali Group, had 15 units ranging from $12.75 million for a 1,770-square-foot three-bedroom to $35 million for more than 6,600 square foot penthouse, according to the developer. The building is sold out, said Donna Olshan, president of Olshan Realty, which tracks the luxury market.

“It was a wild success,” she said, but also a risky strategy because the investment was tied to so few units. The development site, which used to be a series of pre-war apartment buildings, could accommodate up to 83 apartments according to territorial calculations.

Developers have little incentive to squeeze so many units into projects in affluent markets because larger units command higher premiums, said Ryan Schleis, senior vice president of Corcoran Sunshine Marketing Group, a development consulting and marketing firm. “Space is the ultimate luxury,” he said, with top dollar units on the Upper East Side exceeding $4,000 per square foot.

In addition, most of these projects are being built “properly” on sites that don’t require zoning changes or public scrutiny that might otherwise require a builder to match or exceed the number of units previously on the site, said George Janes, a city planner who has studied a number of new towers.

“You have a scarce resource of floor space that could be used to house people, and it’s being used basically for people who are super rich,” he said.

The developers say they are trying to get the best return on their investment.

“It’s a very simple answer: It’s market demand,” said Miki Naftali, whose firm Naftali Group is building several high-rise, multi-unit apartments in Manhattan.

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