The New New York Housing Bubble: Park Avenue "Maids Quarters" Studio For $3.9 Million
To those who have already submitted their applications to launder their cash buy an apartment or better yet, have already wired the money to purchase any of the still to be built residences at 432 Park, the 84-story giant that is set to become the tallest residential building in the Western hemisphere, congratulations.
Although that is technically inappropriate: for full effect we would have to say "congratulations" in the buyers' native tongue, be it Russian, Mandarin, Spanish or Arabic, because it sure won't be English in the ongoing scramble to park trillions in cash away from a global banking system now hell bent on confiscating it, especially away from Europe's insolvent and massively levered banks as shown yesterday, and in the Cyprus template aftermath, the cleanest dirty shirt has once again emerged as midtown Manhattan real estate just as we said would happen last September.
However, to call the emerging, full-blown panic scramble to park cash sight unseen, with zero regard for asking price "a bubble", would a slap in the face of all calm, cool and collected bubbles everywhere. Because any time someone is willing to pay $95 million for a non-duplex one-floor apartment, $44.8 million for a 4-bedroom apartment, $10 million for a two-bedroom, or a paltry $3.9 million for a maid's quarters studio (no really), something far more profound is going on beneath the surface than a simple asset bubble.
The NYT explains:
Only 10 floors have been completed in what is intended to be the tallest residential building in the Western Hemisphere — a slender, 84-story tower on Park Avenue at 56th Street in Manhattan. But the top penthouse is already under contract for $95 million.
Other buyers have snapped up apartments on lower floors for prices that are almost as breathtaking. While their identities are not known, it is likely that many are the rootless superrich: Russian metals barons, Latin American tycoons, Arab sheiks and Asian billionaires.
Ultraluxury housing and construction is booming across Manhattan, which is now beginning to rival London in popularity with the world’s wealthy. The number of condominium buildings in the borough with apartments selling for more than $15 million has risen to 49, up from 33 in 2009, according to CityRealty.
In a sence, New York has joined the rest of the world's "wealth parking" capitals, where the only two profitable construction projects are those targeting the uber-wealthy or the mega poor. Middle class: sorry, you are out of luck
“There are only two markets, ultraluxury and subsidized housing,” said Rafael Viñoly, the architect who designed the tower on Park Avenue at 56th Street, which is called 432 Park.
The rush to build these towers underscores the gap between rich and poor in New York City, said James Parrott, chief economist for the Fiscal Policy Institute, a liberal research organization supported by unions. He said that median family income in the city had fallen 8 percent since 2008.
“Manhattan’s superluxury condo boom, along with rocketing foreclosures in Queens and record homelessness, present an unobstructed view of accelerating polarization in this recovery,” Mr. Parrott said
Recovery? Tell that to those countless middle-class New Yorkers (whose annual income as marginal as it may be in the City is what the rest of America can only dream of) for whom stagnant wages will mean an ever greater portion of income has to go to paying rent with little left for boosting the velocity of money.
Of course, for those close to the banking system's proximity to ZIRP, and the trillions in free reserve-based money (all of which is going into the stock market if not the economy) the current bubble is unlike anything seen before:
Izak Senbahar, the developer of 56 Leonard, a 60-story tower in TriBeCa where penthouses are going for more than $20 million, signed contracts with buyers for 70 percent of the 140 apartments in just 10 weeks.
“We were all surprised,” Mr. Senbahar said. “This was not what we expected. There’s a pent-up demand for condos with helicopter views.” A decade or two ago, luxury buildings were largely confined to Park and Fifth Avenues.
Today, they are rising all over Manhattan — from One57 and the Baccarat in Midtown Manhattan to 825 First Avenue on the East Side, 150 Charles Street in Greenwich Village and 30 Park Place downtown.
“It’s not that location is unimportant,” said Nancy Packes of Signature Marketing Services. “But it’s now all about bigness, lifestyle and views.”
But back to what is set to be the most recent residential crowning glory in the city: 432 Park.
In an interview, the developer of 432 Park, Harry B. Macklowe, said he and his partner, CIM Group, already had contracts for nearly $1 billion worth of apartments at the building. Total sales are expected to surpass $3 billion for a building that will cost about $1.25 billion to complete, he said.
The cheapest apartment in the building, a 351 square-foot studio, costs $1.59 million, according to the offering prospectus.
Of course, it is unclear what foreign money-laundering conglomerate baron would want to be seen in polite public having bought their in house butler a meager $1.6 million apartment. Luckily, there are maids' quarters studios in the same building for nearly $4 million, which we expect there will be a biddin war for.
“This is the building of the 21st century, the way the Empire State Building was the building of the 20th century,” Mr. Macklowe said.The penthouse has six bedrooms, seven bathrooms and a library. A sculptured bathtub sits in front of a window, offering IMAX-like views of the city. A buyer can also pick up a $3.9 million studio for the housekeeper and a private wine cellar for $300,000.
To summarize the conditions of modern-ray Rome, a world of unprecedented wealth for some, where real estate has become a simple proxy for parking capital (at least until such time the administration reminds all foreign buyers you don't really own, you lease from the government, a government which may and will hike property taxes to any level it desires at a moment's notice) most of it lying unused, yet where living conditions for "everyone else" are at Great Depression levels:
- About half the buyers are foreigners, Mr. Macklowe said.
- As with many of these buildings, only about a quarter of the units will be occupied at any one time.
Surely, high fives are due to all 1%'ers, even if, on the other end of the social spectrum, it means this:
New York's Homelessness Worst Since The Great Depression
State and local governments nationwide have struggled to accommodate a homeless population that has changed in recent years - now including large numbers of families with young children. As the WSJ reports, more than 21,000 children - an unprecedented 1% of the city's youth - slept each night in a city shelter in January, an increase of 22% in the past year; as homeless families now spend more than a year in a shelter, on average, for the first time since 1987. New York City has seen one of the steepest increases in homeless families in the past decade, advocates said, growing 73% since 2002, and "is facing a homeless crisis worse than any time since the Great Depression."
Homeless advocates said the Obama administration has focused on more visible problems, such as those sleeping on the streets, taking resources away from families. The steep rise has reignited questions about whether New York's economic turnaround of the past two decades has helped the city's poorest residents as they note (despite today's Dow record highs), "the economy is nowhere near where it was."
The blame apparently lies at the cessation of 'entitlements' as the DHS adds, since the end - in Spring 2011 - of a state-funded program that subsidized rent for people leaving shelters; homeless families have gone up 35%; but they also added that the city was working to find employment for the homeless, "a long-term solution." Boston and Washington DC are also seeing homeless numbers surge.
But why end on a depressing note.
Instead, take a look at what those living at the top of the building (at least on those rare occasions they come to visit their "assets") and breathe the ultra clean air some 1271 feet above street level, will see as they do their best to avoid any interaction with a world mired ever deeper in a global recession... but only for others.