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Topic: Price of 'Wow!' Keeps Rising

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[quote]Quote: from Edward on 12:53 am on Sep. 29, 2003[br]http://www.nytimes.com/2003/09/10/nyregion/10APAR.html September 10, 2003 For New York's Best Digs, Price of 'Wow!' Keeps Rising By NADINE BROZAN There was a time when Kirk Henckels, director of private brokerage for the tony firm of Stribling & Associates, would refer to an apartment on the market for $10 million as "a trophy property." No more. "Now I just call it a $10 million property," Mr. Henckels remarked. The term trophy does not enter his vocabulary until the asking price hits $20 million. The boundary between ultra-high luxury prices and routine high prices depends, of course, on who's drawing the line and from what vantage point. But by and large, brokers, developers and appraisers agree that it lies somewhere north of $10 million. "It used to be that you would walk into a $10 million property and it would be like seeing someone wearing a 25-carat engagement ring," said Michele Kleier, president of Gumley Haft Kleier. "Now you look at something at $10 million and say, `Where do I start gutting?' and `How many more millions do I have to put in?' " Jonathan Miller, president of Miller Samuel, a firm that appraises about 5,000 properties a year, also sets the bar higher. "I think that $10 million is not high enough for the `Wow' factor," he said. "It's probably more like $12 million to $15 million." But there is "wow," and there is "Wow!" To Mr. Henckels, " `wow' with a small `w' is $10 million to $20 million while capital `W' `Wow' is over $20 million." Wherever "wow" rests, it was certainly uttered more than once when word spread about a $45 million transaction the highest ever recorded in Manhattan in the AOL Time Warner Center on Columbus Circle. The purchase of a gargantuan (12,000 square feet) loft assembled by combining one entire floor and part of another there remains breathtaking, even for movie stars and corporate tycoons. The buyer was David Martinez, a London financier who made his fortune buying the debt of nations and companies. But he remains in a class by himself. As Stephen Kotler, executive vice president of Douglas Elliman, put it, "There is no rash of $45 million buyers." If there were, they might find some latitude on asking prices, which slipped in the upper reaches last fall, Mr. Miller said. But that was due more to overpricing, he said, than to real decline. "List prices were being set as if the market were continuing to see double-digit increases," he said. "Now we are seeing prices at this level remaining flat, but there is a modest uptick in the number of transactions." There is a good inventory of properties for people able to bid $10 million or more. Mr. Kotler conducted an informal online survey of $10-million-plus apartments last week. Above that cutoff, he said: "Our database shows there are 144 available apartments, with an average asking price of $16,286,000 for an average of $2,680 per square foot. The average square footage of these units is 6,100." Some specialists believe that price per square foot is a more sensitive barometer of high-end luxury than absolute price. "At $1,000 per square foot, you get something very nice; $1,500, something extravagant; and $2,000 plus, hotel quality service, concierges, parking, five-star restaurants with catering and usually premium addresses with views," said Bret Bobo, senior vice president of sales and marketing for the Athena Group, a development firm. So what can buyers crossing the $10-million-and-up threshold expect to get that they would not for a single-digit million? "Five million dollars or $6 million can buy you a great location, a terrific apartment, a beautiful home, but they are not palaces," said Hall F. Willkie, president of Brown Harris Stevens Residential Sales. "It's like the difference between buying a Mercedes versus a Rolls-Royce." In general, Ms. Kleier said: "What you're getting is more space, larger rooms, higher ceilings and views. If you're buying at Trump World Tower or the AOL Time Warner building and you're spending that kind of money, you won't buy on the 15th floor but on the 70th. You want to walk in and have drop-dead airplane views. If you are buying in a prewar co-op, you will be getting something that will never be built again, an Old World building with snob appeal." No matter how unusual any particular residence may be, real estate specialists agree that there are three essential factors in catapulting a property into the megamillion range: location, size and view. The way those factors balance one another is different for stately old co-ops (for which location, and all that it implies, is paramount) than they are for glamorous new condos (views are essential). For town houses, width more than 20 feet dominates all other considerations. The most expensive and exclusive buildings sit on Fifth and Park Avenues from 59th to 96th Streets. Although there are certainly other neighborhoods and streets with prestige, like Sutton and Beekman Places, Central Park South, Central Park West and Gramercy Park, none command quite the same cachet. Though many consider Central Park West to be as desirable as Fifth and Park, "there are not as many really expensive apartments there," said Dolly Lenz, executive vice president of Douglas Elliman. "For the most part, you only get humongous apartments when they are combined. On the East Side, they were built huge." In the town house market, the gap in prices between East and West Sides has been narrowing in recent years. "But they are still 25 percent higher on the Upper East Side blocks between Fifth and Madison," said Jed Garfield, the managing partner at Leslie J. Garfield & Company. There are, to be sure, some multimillion dollar properties downtown as well, but not in the concentration of the Upper East Side. Still, it takes more than a high-status address to escalate prices. "It must be an apartment in a very fine building," said Kathy Sloane, a broker at Brown Harris Stevens. The most recent buzz around Fifth and Park concerned the contract reportedly signed for the duplex at 770 Park Avenue owned by Giovanni Agnelli, the chairman of Fiat and elder statesman of Italian business, who died in January. "It is not big, 6,000 feet, but it is one of the best apartments in New York," said Alice Mason, a broker who was not involved in the sale. "There were 22 appointments to see it the first week it came on the market." Sotheby's, the brokerage firm handling the sale, declined to comment. Though the duplex is rumored to have gone for $20 million, "in that same building you can find something for $6 million," said Roger Erickson, senior managing director of William B. May. "They share a location. What they don't share is the location within the building and that, along with size, is the key factor that vaults you to $15 million." The building at 838 Fifth Avenue, at 65th Street, is known as the "Love Thy Neighbor" building for the biblical injunction carved into its limestone facade for its previous owner, the Union of American Hebrew Congregations. It is both a condo in a sea of co-ops, and a gut renovation. Among the amenities at 838 Fifth, which commanded $10 million to $20 million per apartment: quarters on the ground floor for employees. "With square footage so expensive upstairs, over a million per bedroom, it was decided that staff didn't have to live in the same apartment," Mr. Bobo said. "So we put in one staff room for each floor, and they sold out at $500,000 each." It would be hard to find views more spectacular than those visible from the two behemoths soaring into the skyline across town from one another: the AOL Time Warner Center at Columbus Circle and One Beacon Court at 151 East 58th Street. Prices in the AOL Time Warner Center start at $2.5 million (for a two-bedroom 1,283-square-foot unit facing west). The largest single sale there registered at $30 million. Though Mr. Martinez's purchase was for $45 million, he bought two units. The towers, one to be known, because of the hotel at its base, as the Residences at Mandarin Oriental (65 apartments) and the other as One Central Park (135 apartments), are equal in height to a building 80 stories tall but because of the unusually high ceilings, and the retail complex at their bases, they actually have only 55 floors. "This is five-star living, and money is no object," said Louise M. Sunshine, president of the real estate marketing company bearing her name. The developer has trademarked the phrase "five-star living." The aim, Ms. Sunshine said, is to provide a remarkable array of services and facilities and be ready to fulfill any request, no matter how challenging. As the promotional literature breathlessly says, "Discover how expectations are surpassed; whether it's 3,000 roses upon request or monogrammed pillow shams for your house guests, here the comforts of home have been exquisitely elevated." In Ms. Lenz's opinion: "If you are marketing a new building today and don't have really great services, it's a hard sell. People are purchasing lifestyle. They can afford everything and want everything." It is not unusual for buyers of these properties to rip out kitchens and bathrooms and to redo finishes, but Donald Trump, who has put up some of the more opulent condos around town, said that purchasers tend to leave well enough alone in the kitchens of his Trump World Tower at 845 United Nations Plaza. In an advertisement currently running in several magazines, Mr. Trump stands over a pizza in a box in a kitchen there equipped with G.E. Monogram appliances. The penthouse apartment is described as "90th floor 10 rms w vu, New York at your feet $17 million." He is beaming as he holds out a slice. "People very rarely tear out what I build," he said. Whatever the extravagance of luxuries offered, at some point they become irrelevant. As Ms. Sunshine put it, "They are for the $3 million to $10 million buyer, not the $45 million buyer. Those people come with their own luxuries. They have their own major-domos, drivers, concierges. If they want to exercise they put in their own gyms, but they still want to know that the building's gym is there." [/quote]
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Thread Review for Price of 'Wow!' Keeps Rising (newest post first)
Edward Posted on 12:53 am on Sep. 29, 2003

http://www.nytimes.com/2003/09/10/nyregion/10APAR.html
September 10, 2003
For New York's Best Digs, Price of 'Wow!' Keeps Rising
By NADINE BROZAN

There was a time when Kirk Henckels, director of private brokerage for the tony firm of Stribling & Associates, would refer to an apartment on the market for $10 million as "a trophy property." No more.

"Now I just call it a $10 million property," Mr. Henckels remarked. The term trophy does not enter his vocabulary until the asking price hits $20 million.

The boundary between ultra-high luxury prices and routine high prices depends, of course, on who's drawing the line and from what vantage point. But by and large, brokers, developers and appraisers agree that it lies somewhere north of $10 million.

"It used to be that you would walk into a $10 million property and it would be like seeing someone wearing a 25-carat engagement ring," said Michele Kleier, president of Gumley Haft Kleier. "Now you look at something at $10 million and say, `Where do I start gutting?' and `How many more millions do I have to put in?' "

Jonathan Miller, president of Miller Samuel, a firm that appraises about 5,000 properties a year, also sets the bar higher. "I think that $10 million is not high enough for the `Wow' factor," he said. "It's probably more like $12 million to $15 million."

But there is "wow," and there is "Wow!" To Mr. Henckels, " `wow' with a small `w' is $10 million to $20 million while capital `W' `Wow' is over $20 million."

Wherever "wow" rests, it was certainly uttered more than once when word spread about a $45 million transaction the highest ever recorded in Manhattan in the AOL Time Warner Center on Columbus Circle. The purchase of a gargantuan (12,000 square feet) loft assembled by combining one entire floor and part of another there remains breathtaking, even for movie stars and corporate tycoons. The buyer was David Martinez, a London financier who made his fortune buying the debt of nations and companies.

But he remains in a class by himself. As Stephen Kotler, executive vice president of Douglas Elliman, put it, "There is no rash of $45 million buyers."

If there were, they might find some latitude on asking prices, which slipped in the upper reaches last fall, Mr. Miller said. But that was due more to overpricing, he said, than to real decline. "List prices were being set as if the market were continuing to see double-digit increases," he said. "Now we are seeing prices at this level remaining flat, but there is a modest uptick in the number of transactions."

There is a good inventory of properties for people able to bid $10 million or more. Mr. Kotler conducted an informal online survey of $10-million-plus apartments last week.

Above that cutoff, he said: "Our database shows there are 144 available apartments, with an average asking price of $16,286,000 for an average of $2,680 per square foot. The average square footage of these units is 6,100."

Some specialists believe that price per square foot is a more sensitive barometer of high-end luxury than absolute price. "At $1,000 per square foot, you get something very nice; $1,500, something extravagant; and $2,000 plus, hotel quality service, concierges, parking, five-star restaurants with catering and usually premium addresses with views," said Bret Bobo, senior vice president of sales and marketing for the Athena Group, a development firm.

So what can buyers crossing the $10-million-and-up threshold expect to get that they would not for a single-digit million? "Five million dollars or $6 million can buy you a great location, a terrific apartment, a beautiful home, but they are not palaces," said Hall F. Willkie, president of Brown Harris Stevens Residential Sales. "It's like the difference between buying a Mercedes versus a Rolls-Royce."

In general, Ms. Kleier said: "What you're getting is more space, larger rooms, higher ceilings and views. If you're buying at Trump World Tower or the AOL Time Warner building and you're spending that kind of money, you won't buy on the 15th floor but on the 70th. You want to walk in and have drop-dead airplane views. If you are buying in a prewar co-op, you will be getting something that will never be built again, an Old World building with snob appeal."

No matter how unusual any particular residence may be, real estate specialists agree that there are three essential factors in catapulting a property into the megamillion range: location, size and view.

The way those factors balance one another is different for stately old co-ops (for which location, and all that it implies, is paramount) than they are for glamorous new condos (views are essential). For town houses, width more than 20 feet dominates all other considerations.

The most expensive and exclusive buildings sit on Fifth and Park Avenues from 59th to 96th Streets. Although there are certainly other neighborhoods and streets with prestige, like Sutton and Beekman Places, Central Park South, Central Park West and Gramercy Park, none command quite the same cachet.

Though many consider Central Park West to be as desirable as Fifth and Park, "there are not as many really expensive apartments there," said Dolly Lenz, executive vice president of Douglas Elliman. "For the most part, you only get humongous apartments when they are combined. On the East Side, they were built huge."

In the town house market, the gap in prices between East and West Sides has been narrowing in recent years. "But they are still 25 percent higher on the Upper East Side blocks between Fifth and Madison," said Jed Garfield, the managing partner at Leslie J. Garfield & Company.

There are, to be sure, some multimillion dollar properties downtown as well, but not in the concentration of the Upper East Side.

Still, it takes more than a high-status address to escalate prices. "It must be an apartment in a very fine building," said Kathy Sloane, a broker at Brown Harris Stevens.

The most recent buzz around Fifth and Park concerned the contract reportedly signed for the duplex at 770 Park Avenue owned by Giovanni Agnelli, the chairman of Fiat and elder statesman of Italian business, who died in January.

"It is not big, 6,000 feet, but it is one of the best apartments in New York," said Alice Mason, a broker who was not involved in the sale. "There were 22 appointments to see it the first week it came on the market." Sotheby's, the brokerage firm handling the sale, declined to comment.

Though the duplex is rumored to have gone for $20 million, "in that same building you can find something for $6 million," said Roger Erickson, senior managing director of William B. May. "They share a location. What they don't share is the location within the building and that, along with size, is the key factor that vaults you to $15 million."

The building at 838 Fifth Avenue, at 65th Street, is known as the "Love Thy Neighbor" building for the biblical injunction carved into its limestone facade for its previous owner, the Union of American Hebrew Congregations. It is both a condo in a sea of co-ops, and a gut renovation.

Among the amenities at 838 Fifth, which commanded $10 million to $20 million per apartment: quarters on the ground floor for employees. "With square footage so expensive upstairs, over a million per bedroom, it was decided that staff didn't have to live in the same apartment," Mr. Bobo said. "So we put in one staff room for each floor, and they sold out at $500,000 each."

It would be hard to find views more spectacular than those visible from the two behemoths soaring into the skyline across town from one another: the AOL Time Warner Center at Columbus Circle and One Beacon Court at 151 East 58th Street.

Prices in the AOL Time Warner Center start at $2.5 million (for a two-bedroom 1,283-square-foot unit facing west). The largest single sale there registered at $30 million. Though Mr. Martinez's purchase was for $45 million, he bought two units.

The towers, one to be known, because of the hotel at its base, as the Residences at Mandarin Oriental (65 apartments) and the other as One Central Park (135 apartments), are equal in height to a building 80 stories tall but because of the unusually high ceilings, and the retail complex at their bases, they actually have only 55 floors.

"This is five-star living, and money is no object," said Louise M. Sunshine, president of the real estate marketing company bearing her name. The developer has trademarked the phrase "five-star living."

The aim, Ms. Sunshine said, is to provide a remarkable array of services and facilities and be ready to fulfill any request, no matter how challenging. As the promotional literature breathlessly says, "Discover how expectations are surpassed; whether it's 3,000 roses upon request or monogrammed pillow shams for your house guests, here the comforts of home have been exquisitely elevated."

In Ms. Lenz's opinion: "If you are marketing a new building today and don't have really great services, it's a hard sell. People are purchasing lifestyle. They can afford everything and want everything."

It is not unusual for buyers of these properties to rip out kitchens and bathrooms and to redo finishes, but Donald Trump, who has put up some of the more opulent condos around town, said that purchasers tend to leave well enough alone in the kitchens of his Trump World Tower at 845 United Nations Plaza.

In an advertisement currently running in several magazines, Mr. Trump stands over a pizza in a box in a kitchen there equipped with G.E. Monogram appliances. The penthouse apartment is described as "90th floor 10 rms w vu, New York at your feet $17 million." He is beaming as he holds out a slice. "People very rarely tear out what I build," he said.

Whatever the extravagance of luxuries offered, at some point they become irrelevant. As Ms. Sunshine put it, "They are for the $3 million to $10 million buyer, not the $45 million buyer. Those people come with their own luxuries. They have their own major-domos, drivers, concierges. If they want to exercise they put in their own gyms, but they still want to know that the building's gym is there."