Is New Development Dead?!
Building: 101 West 14th Street (Photo Cred: Compass New Development)
I have recently done some research on the Manhattan New Development market that was quite eye opening and is not widely reported.
This subset market is quite different and unique from the resale market. *Sponsors operate under a completely different set of rules, information is strategically kept close to the vest, there is intentionally a lack of information, reporting and transparency.
Bet you didn’t know that Manhattan has 7600 total units of ND inventory which includes a significant shadow inventory of units that the sponsor owns and are not currently active or advertised (no building actually launches all their apartments at once), and many apartments are also being rented out until market conditions improve.
101 West 14th Street (Photo Cred: Compass New Development)
Out of this inventory an astonishing 67% remain unsold and one of the fascinating details is that the unsold inventory is distributed fairly evenly across all unit types, from studios to 4+ bedrooms. How long can this amount of unsold properties be sustained? It actually depends on the specific project and the financing stack each developer has created which will drive their pace of sales and negotiating position.
Manhattan did record 120 New Development signed contracts in March out of a total of 1005 which includes the resale market or about 12%. The average listing discount disseminated for New Development was over 11%, however there are many other variables and factors besides price that can be negotiated for a new development purchase. These additional incentives are never reported publicly and could have a significant impact on the net purchase price.
I would love to share more insights and strategy with you, please reach out if you want to learn more, I can’t emphasize enough the importance of teaming up with a professional broker that understands the nuances and pitfalls when purchasing in a New Development project.
I will continue in future blogs to discuss some of my favorite New Development projects, ones that are having difficulties in addition to showcasing other aspects of the real estate process in NYC.
* A sponsor often referred to as a developer may or may not be one person. It may be a conglomerate of people that formed an LLC or the property owner that initiated the condo/coop project.
Written by. Andy Feiwel | (E) andy.feiwel@compass.com , (M) 917.226.8429
