Ultraluxury NY Real Estate Market Cracking As Legendary 740 Park Duplex Sells 45% Below Original Asking Price

Tyler Durden's picture




 

Even as the media desperately tries to whip everyone into a buying frenzy in an attempt to rekindle the second housing bubble, the marginal, and less than pretty truth, is finally starting to emerge. Over the weekend we presented the first major red flag about the state of the housing market - in this case commercial - when we exposed that "New York's Ultraluxury Office Vacancy Rate Jumps To Two Year High As Financial Firms Brace For Impact." What is left unsaid here is that if demand for rents is low, then, well, demand for rents is low: hardly the stuff housing market recoveries are made of. Today, on the residential side, CNBC's Diana Olick adds to this bleak picture with "Apartment Demand Ebbs as ‘Avalanche’ of New Units Open." In other words rental demand for both commercial and resi properties is imploding. But at least there is always owning. Well, no. As we have shown, the foreclosure, aka distressed, market is dead, courtesy of the complete collapse in the foreclosure pipeline as banks are effectively subsidizing the upper end of the housing market by keeping all the low end inventory on their books (who doesn't love the smell of $1.6 trillion in fungible excess reserves to plug capital holes in the morning. It smells like crony capitalism). But at least the ultra luxury, aka money laundering market was chugging along at a healthy pace. After all there are billions in freefloating dollars that need to be grounded in the US, courtesy of the NAR which is always happy to look the other way, another issue we discussed this weekend. Now even that market appears to be cracking, following the purchase of a duplex in New York's most iconic property: 740 Park, by, who else but a former Goldman partner, at a whopping 45% off the original asking price.

Now this is not some recently built, nouveau riche Central Park West abode populated by the abhorrent "new money", living in condos. This is the New York Co-op, one which has an entire (quite fascinating) book written about it. The only limiting factor here is if an apartment, most of which are kept as legacy trophy pieces by their owners, is on the market, not what the asking price is. As a reminder, the tower has been home to former Merrill Lynch & Co. Chief Executive Officer John Thain and cosmetics billionaire Ronald Lauder. Just 5 months ago, Howard Marks, chairman and co-founder of Oaktree Capital Group LLC, set a record when he bought a 10,000 square foot duplex in the building for $52.5 million, the highest price ever paid for a New York City co-op.

That 5 months later a duplex, one which may not be on as high as floor, but a duplex nonetheless, has sold for a scant $19.3 million, compared to the $35 million originally demanded is hardly a good indication of what awaits the ultraluxury residential segment both in New York, and everywhere else.

As for the buyer, it is perhaps highly ironic that it just happens to be Jonathan Sobel, a former partner of Goldman Sachs, and the man who led its mortgage trading from 2011 to 2006, right around the time when every conceivable evil the firm was doing by selling CDOs to unwitting idiots, was the fault of just one person: Goldmanite Fabrice Tourre. And nobody else's.

From Bloomberg:

Jonathan Sobel, a former Goldman Sachs Group Inc. (GS) partner who oversaw the firm’s mortgage division, bought a duplex on Manhattan’s Park Avenue for $19.3 million, a 45 percent discount from the original asking price.

The purchase of the co-op at 740 Park Ave. was completed on Aug. 31, according to records filed yesterday with the city’s Department of Finance. The 6,700-square-foot (620-square-meter) apartment was owned by Randolph Speight, the late investment banker, for more than 40 years. It features a private elevator and landing, four staff bedrooms and a butler’s pantry, according to the broker’s listing.

 

In June 2011, the estate decided to shoulder the cost of renovating the property to appeal to more buyers. The bathrooms and kitchen were gutted and redone, and all the wiring was replaced, Smith said in a telephone interview. The strategy resulted in the duplex receiving multiple offers, she said.

 

“They turned what was an estate-condition apartment into something that was in move-in condition,” Smith said. “And that was the key to the lock.”

 

Sobel, who was Goldman’s mortgage chief from 2001 to 2006 and left the firm in 2009, declined to comment on the purchase.

Now if anyone has a sense of what fair value for the marginal ultraluxury real estate market in New York is, it would be Sobel. That he paid nearly half per square foot ($2,880) compared to what Howard Marks paid just 5 months ago ($5,200) is probably an even bigger red flag than the freeze that has currently gripped the luxury new your commercial rental market.

Expect the mainstream media to be all over these developments promptly after the election, but not before. After all, the public will need ammo for yet more QEtc+1 justification. Especially when said media, now with a post-election agenda, finds the Transunion 60 day delinquent real estate data for New York:

In the meantime, this is what $19.3 million buys you:

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Wed, 10/03/2012 - 11:47 | 2851976 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

RE bottom!

Get 'em while they're hot!

Wed, 10/03/2012 - 11:52 | 2851999 spastic_colon
spastic_colon's picture

I would have held out for "furnished"

Wed, 10/03/2012 - 12:02 | 2852036 NotApplicable
NotApplicable's picture

Howard Marks the top?

Wed, 10/03/2012 - 12:14 | 2852073 markmotive
markmotive's picture

NYC has a decent rental yield and price to rents aren't that bad compared to some places inthe world. Still bloody pricey.

15 most expensive cities:

http://www.planbeconomics.com/2012/07/24/real-estate-most-expensive-citi...

...and yes, Toronto is on the list.

Wed, 10/03/2012 - 13:15 | 2852293 ParkAveFlasher
ParkAveFlasher's picture

When you add in Northern New Jersey, Long Island, Rockland County, Queens, etc the numbers get a little thinner.  The Manhattan Luxe market is NOT Western Queens, is NOT Brooklyn, is NOT Northern New Jersey, is NOT Pennsylvania, etc. 

That's only half the entire Atlantic corridor.

I fail to see how the author mixes that chart in there with a sotry about penthouses.  Apples and oranges.

Maybe the Brit contingent of Tyler Durden is tad bitter over London's collapse in property values. 

THAR SHE BLOWS

Wed, 10/03/2012 - 13:47 | 2852429 phyuckyiu
phyuckyiu's picture

I love the smell of a butthurt Park Ave. resident in the morning.

Wed, 10/03/2012 - 12:42 | 2852170 jazze
jazze's picture

Where's the front door on the layout? :S

Wed, 10/03/2012 - 15:00 | 2852758 Bicycle Repairman
Bicycle Repairman's picture

It's got four chandeliers.  Four.  Sweet.

Wed, 10/03/2012 - 12:32 | 2852140 Henry Hub
Henry Hub's picture

I'm trying to picture how my Ikea furniture would look in there.

Wed, 10/03/2012 - 13:44 | 2852415 ParkAveFlasher
ParkAveFlasher's picture

hint: shitty

Wed, 10/03/2012 - 13:50 | 2852438 phyuckyiu
phyuckyiu's picture

Hint: Butthurt Park Ave. resident post.

Wed, 10/03/2012 - 12:21 | 2852108 Monedas
Monedas's picture

Seems cheap .... what's the replacement cost in Bloomerberg's Socialist Metrosexual Utopolis ?

Wed, 10/03/2012 - 12:41 | 2852166 Ruffcut
Ruffcut's picture

I bet that tickles the pickles of the one percenters. Poor babies and candy asses.

Fuck New York and their yankees.

Wed, 10/03/2012 - 11:48 | 2851977 CrimsonAvenger
CrimsonAvenger's picture

Well sure, the pictures are nice, but it's going to take forever to get that sulphur smell out.

Wed, 10/03/2012 - 12:10 | 2852030 Skateboarder
Skateboarder's picture

I can build you a home 100x better than that, and it would come along with a 20,000 sq. ft concrete skatepark, a plant farm, an animal farm, a barn with a wooden halfpipe inside, a giant lake, a zen garden, a sweet obstacle course, and a few acres of "let's go for a walk, honey" land.

Of course, it would have to be in the middle of bumfuck nowhere lol. =P

EDIT: Whoops, I forgot the state-of-the-art R&D facility for you to invent cool shit. That's included in the 20 mil also.

Wed, 10/03/2012 - 12:33 | 2852141 iDealMeat
iDealMeat's picture

I'll take one.. Provided I get to help build it.. I'm a little particular on the drop in for my halfpipe..  Also want a lazy river for a pool..

Wed, 10/03/2012 - 12:55 | 2852209 Skateboarder
Skateboarder's picture

Sure thing. Would that be debit or credit?

Wed, 10/03/2012 - 13:41 | 2852401 iDealMeat
iDealMeat's picture

neither..  my labor, whit, and charm is my money  ;-)

Wed, 10/03/2012 - 15:09 | 2852792 Skateboarder
Skateboarder's picture

It's a deal. I'll let you know when the prototype for ranchtopia has been made. Depending on how things go globally over the next decade, it should be ready by 2020 at the latest. I think I would quite enjoy a real community of folks who enjoy living, where everyone works toward, cares for, maintains, and uses all the facilities.

I do want to have neighbors. ;)

Wed, 10/03/2012 - 17:17 | 2853409 Heyoka Bianco
Heyoka Bianco's picture

What about the dinosaur park? And the underground hangar for my hypersonic interceptor plane and my super-stealthy submarine?

Wed, 10/03/2012 - 18:59 | 2853865 neidermeyer
neidermeyer's picture

I'll go one better ,, I'll sell you my castle ... see "castle on the mississippi" on faceplant ... 12 acres , about 85,000 sq ft. total (all buildings) , including a full NBA size court with stadium seating for 1,100 of your closest friends and a concession stand with room for 20+ kegs and I'll remodel it anyway you want (at your expense) . AND it's in the middle of corn country far from any areas expected to have zombie outbreak problems.

I don't know about parking for hypersonic transports but you can easily park over a dozen cars/trucks in the "shop" building and there's a private airport about 30 minutes away for your Cessna Centurion.

This is a dead serious offer ,, first $120k gets it... as-is where-is ,, can be yours in less than a week as I have clean title (only one owner transfer in the last 117 years) , no debt and can execute a quit claim... I'll pay the $35 "closing costs" to record the transfer. 

Wed, 10/03/2012 - 20:24 | 2854081 jerry_theking_lawler
jerry_theking_lawler's picture

Awesome! Start mine....stop when you get to $525 worth (that's all I have).

Wed, 10/03/2012 - 11:49 | 2851980 EscapeKey
EscapeKey's picture

*sniff* I feel so sorry for our poor, rich bankers.

Couldn't the Federal Reserve print and give them some more money, so it can trickle down to us?

Wed, 10/03/2012 - 11:49 | 2851982 slaughterer
slaughterer's picture

The kitchen looks like a good place to have sex with Mary Louise Parker and Marla.  Where can I buy one of these apartments?  

Wed, 10/03/2012 - 11:49 | 2851984 spastic_colon
spastic_colon's picture

yes well, we cant be bothered by this [sarc] gas and oil prices are down and stock markets are up, there is an election to win!  The very clear defense of the equity trendlines are intact!  watching for a spike tomorrow  and friday on fantastical economic headlines!

Wed, 10/03/2012 - 11:50 | 2851990 Mercury
Mercury's picture

How much less tax is that to Bloomberg each quarter?

Wed, 10/03/2012 - 11:54 | 2852006 spastic_colon
spastic_colon's picture

this unit will be leased to one of those luxury vacation clubs to cover the tax at least

Wed, 10/03/2012 - 11:50 | 2851995 JustObserving
JustObserving's picture

Banksters are not able to steal as much as usual?  New York levies a tax on the rest of America with its corruption.

Wed, 10/03/2012 - 11:52 | 2852001 LongSoupLine
LongSoupLine's picture

A 45% discount over original fullfucktard pricing is still not a good deal.

Wed, 10/03/2012 - 12:30 | 2852028 Mercury
Mercury's picture

45% discount plus the renovation bill it sounds like.

I can only imagine what it costs a motivated (estate no less) seller to gut six bathrooms and a kitchen, then rewire the whole place...on Park Ave.

Wed, 10/03/2012 - 11:59 | 2852003 tahoebumsmith
tahoebumsmith's picture

Yeah look out all those big windows and what a 19 million dollar view? Got to stare at all the other Jews staring at you wondering if you have something better then them? I would rather live in a $10,000 dollar trailer in Montana on 20 acreas then have to be subjected to that Zionist fish bowl!

Wed, 10/03/2012 - 12:00 | 2852029 Racer
Racer's picture

Yeah, only windows staring back at you in every room that I can see. Very claustrophic despite the size of the rooms and you would need net curtains on the lot unless you like as you say, living in a fish bowl

Wed, 10/03/2012 - 12:33 | 2852142 Waterfallsparkles
Waterfallsparkles's picture

I thought the same thing.  Windows looking at windows.  It may be beautiful but I would prefeer my quaint home on 1.4 acres with grass, woods and all of the wonderful creatures.  Like the Deer, Squirrls, Foxes.  They are so much more fun to look at.

Wed, 10/03/2012 - 15:10 | 2852795 kaiserhoff
kaiserhoff's picture

Even as a kid, I can remember looking a photos of Manhattan, and thinking it was the most depressing place on earth.

Of course, I hadn't seen Queens.

Wed, 10/03/2012 - 12:13 | 2852070 Skateboarder
Skateboarder's picture

Houses are glorified cardboard boxes...

Wed, 10/03/2012 - 13:00 | 2852228 RiverRoad
RiverRoad's picture

Houses are headstones in a cemetary today.

Wed, 10/03/2012 - 12:15 | 2852080 Miss Expectations
Miss Expectations's picture

Those windows look exactly like the shitty replacement casement windows that were in my 425 sq ft studio.

He overpaid.

Wed, 10/03/2012 - 12:40 | 2852147 Mercury
Mercury's picture

There is nothing better on the face of this earth than (now illegal) old-fashioned, wooden, double-hung windows.

Every other fancy material, double pane, gas or vacuum filled, energy efficient, unrepairable window on the market, no matter what the price point, will eventually deteriorate and cause you to replace it.

And the all-in cost (and probably the energy cost required to make the damn things) will dwarf whatever savings you think you're getting by "going green".

Just another way the government tries to force you into a semi-disposable, crap life.

Wed, 10/03/2012 - 12:42 | 2852172 Miss Expectations
Miss Expectations's picture

Agree...the old-fashioned, wooden, double-hung windows were what they took out...along with the charm of my tiny studio.

Wed, 10/03/2012 - 12:50 | 2852200 robertocarlos
robertocarlos's picture

Why are those old windows illegal?

Thu, 10/04/2012 - 00:05 | 2854770 Mercury
Mercury's picture

Well because they aren't "green" of course.  Can't buy them any more.

"Energy efficient" is the claim but they're only energy efficient until they start to fall apart and then you have to buy new ones.

Half decent, old fashioned windows with storms are good enough plus you can repair them. Also there are downsides to having your house air-tight and most heat loss occurs through the roof, not the windows anyway.

Wed, 10/03/2012 - 12:43 | 2852171 Arthur
Arthur's picture

Um, that building traditional does not allow jews in.

Why don't you crawl back into your trailer and feel sorry for yourself.

Wed, 10/03/2012 - 17:14 | 2853383 jbvtme
jbvtme's picture

zionist fishbowl.  perfect

Wed, 10/03/2012 - 11:54 | 2852007 10mm
10mm's picture

Can i get one of those joints with a room full of guns?

Wed, 10/03/2012 - 11:54 | 2852010 youngman
youngman's picture

The site plan is nothing fancy..you can buy that same plan in Des Moines Iowa for $300,000....with a huge yard....a garage....and a much lower cost of living

Wed, 10/03/2012 - 12:05 | 2852046 tiwimon
tiwimon's picture

and a helluva lot lower tax exposure than in one of the most damning tax locations in the US

Wed, 10/03/2012 - 15:14 | 2852810 kaiserhoff
kaiserhoff's picture

And you won't need a $300,000 security system.

Wed, 10/03/2012 - 11:54 | 2852011 Blazed
Blazed's picture

Selling New York, blahaha.

Wed, 10/03/2012 - 11:55 | 2852012 azzhatter
azzhatter's picture

Damnit- I wanted that one

Wed, 10/03/2012 - 11:55 | 2852013 Shizzmoney
Shizzmoney's picture

Curt Schilling is selling his house in Medford (that he bought from Bledsoe) for $3.4 million. 

He bought it for $4.5 million.  LOL

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