At Brownstoner, a principal and an associate from the Hudson Companies, real estate partners with the Related Company in the Riverwalk buildings on Roosevelt Island, are blogging about the development of Hudson's townhouse condo project located in Gowanus Brooklyn. This installment from the Hudson bloggers is on the importance of sale prices from comparable properties in determining the pricing for a new condo development. According to the Hudson bloggers:
Comps are critical from the beginning to the end of the project. Initially, we look at comps to see what is selling in the market and for how much. This information helps us set our offer for a site. During the design process, we use comps to talk about what demographic to design to – how many bedrooms are they looking for? Will they pay extra for a roof cabana? Banks like to see comps when loaning money for construction – they want to be convinced that we’ll sell at the targeted price (or better) so that they will be paid back quickly. You can’t get a loan without an appraisal, and all appraisals using the sales approach need to analyze comps for their valuation (as opposed to the replacement cost approach or income-production approach). At the end of the project, buyers are using comps to determine which project should be their new home and/or investment.
For comps to be good, they need to be recent (6 months to a year is best), from a similar neighborhood, and ideally should be for similar projects. A single family house or a 17-story elevator building are not the best comps for Third & Bond, though information on sales is still useful. Likewise, projects similar in size, amenities, and finishes that are located outside of Carroll Gardens & Gowanus, but in a similar type of neighborhood (e.g., access to transit and type of retail) could be a good comp.
What comparable sales comparisons will the Hudson/Related developers use for the Roosevelt Island
Riverwalk Court condos now being built and about to go on sale as soon as the offering plan is approved by the Attorney General's office? I would think the most useful comparison would be
Riverwalk Place, the only other market rate condominium on Roosevelt Island. Riverwalk Place is located at 455 Main Street, about the equivalent of one block from Riverwalk Court, and was built by the same Hudson/Related development team approximately two years ago.
Here is a sample range of comparable sales data for Riverwalk Place at 455 Main Street, Roosevelt Island from
Property Shark:
Penthouse 1 Bedroom 751 sq. ft. sold for $665,000 in November 2006
14th Floor 1 Bedroom 714 sq. ft. sold for 650,000 in June 2007
12th Floor 1 Bedroom 737 sq. ft. sold for $605,000 in March 2007
11th Floor 1 Bedroom 737 sq. ft. sold for $628,000 in February 2007
4th Floor 1 Bedroom 737 sq. ft. sold for $613,000 in May 2007
14th Floor 2 Bedroom 970 sq. ft. sold for $755,000 in February 2007
14th Floor 2 Bedroom 996 sq. ft. sold for $778,000 in December 2006
12th Floor 2 Bedroom 996 sq. ft. sold for $745,000 in October 2006
5th Floor 2 Bedroom 996 sq. ft. sold for 722,500 in July 2006
1st Floor 2 Bedroom 1263 sq. ft. sold for $853,000 in November 2006
16th Floor 3 Bedroom 1374 sq. ft. sold for $1,275,000 in September 2006
3rd Floor 3 Bedroom 1395 sq. ft. sold for $975,000 in June 2006
Again, according to
Property Shark, the most expensive condo sale at Riverwalk Place was for a 3 Bedroom, 1340 sq. ft. apartment on the First Penthouse level with a very large terrace facing Manhattan that sold for $1,650,000 in August 2006. Current condo apartments for sale at Riverwalk Place on Roosevelt Island are listed here from the
NY Times,
Streeteasy and
Craigs List.
Image is of Roosevelt Island's Riverwalk Court.
UPDATE - 11/29/07 - NY Sun article,
Prices cut at new condo developments.UPDATE - 12/2/07 -
Wall Street Journal on Manhattan housing market (subscription required):
Fewer apartments are being sold -- 858 went into contract in September, a 9.9% drop from a year ago and the lowest total in two years, according to brokerage Corcoran Group -- and the inventory of unsold apartments is increasing.
And:
Developers used to seeing yet-to-be-built apartments get snapped up sight-unseen are increasingly offering incentives, from help with closing costs to museum memberships, to jump-start sales. "Buyers are more hesitant," says Hall Willkie, president of brokerage Brown Harris Stevens.
On the other hand:
Some brokers say they haven't seen a drop-off at all. Pamela Liebman, chief executive of Corcoran Group, says the brokerage is on pace for a record year and says that after a September slowdown, October showed an increase in sales. Jacqueline Urgo, president of the national real-estate firm The Marketing Directors, says sales in most of the company's Manhattan properties improved in mid-September after a brief lull. Even many brokers who have seen a falloff say the shift says less about the current market than the frenzied one that preceded it. "We're just seeing the market return to normal," says John Burger, a broker at Brown Harris Stevens.
According to NY Times there is a
stalemate between buyers and sellers: ... No one really knows where the market is headed. Manhattan is apparently full of sellers who think foreign buyers, or bankers who might still get big bonuses, are ready to pay full price for their apartments. These sellers do have recent history on their side. For the first three quarters of this year, Manhattan apartments over all continued to sell at record prices.
Now, brokers say, they see a stalemate developing between buyers and sellers in Manhattan, especially for apartments in the $1 million to $5 million range. Sales in this range made up more than half of the total dollar volume in the market in the third quarter of this year, according to data tracked by Radar Logic.
UPDATE 12/3/07 - Blogger and Real Estate Broker
Property Grunt comments on the above NY Times article:
Manhattan has been able to weather the storm, however the question on everyone's mind is not if but when the s**t hits the fan for Manhattan. The reason why these buyers are going bargain hunting is not because their douchebags but because they want to hedge their bets and not get caught with their pants down.
And:
Sellers, if you want to be taken seriously, well you need to sit down with your broker and put together a new game plan. If the product is not moving, then some drastic price cutting maybe needed or sellers may decide to take it off the market till the next cycle which looks like it won’t be happening for quite awhile.
Brokers, keep the faith. This is not the time for despair. This is the time to find good buyers or have a sit down with your sellers. You have to figure another plan of attack.
