The New New York Housing Bubble: Park Avenue "Maids Quarters" Studio For $3.9 Million

Tyler Durden's picture

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.

Visually:

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.

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ABG LINE's picture

Nice view of the Chemtrails.

realtick's picture

nice view of chemtrail park

SafelyGraze's picture

every apartment comes with facebook already *built in*!

 

Stackers's picture

Weezy, pack your bags. We're moving on up to a delux apartment in the sky

Flo never had it so good

DeadFred's picture

If you're going to buy sight unseen be sur tp get the whole floor elsewise they'll stick you with a view of the Bronx.

economics9698's picture

It must be pretty fucking nice to sit around all day printing cash, bribing politicians, and paying $3.9 for a maid residence.  

mkkby's picture

This is the dumb money coming in at the end of a bull market.  Sold to you!

Buckaroo Banzai's picture

Well, it's either buy a $95 million apartment, or buy wildly overpriced stocks, or get 3% in T-Bonds, or leave the money in the bank where it will get confiscated.

Out of all those choices, the penthouse with unmatched views looks like the "smart money" buy to me.

SafelyGraze's picture

also, the steel frame is guaranteed not to melt in the event of a fire.

kaiserhoff's picture

I'll take things that go splat, for 500, Alex.

bank guy in Brussels's picture

Trailer for the classic 1974 disaster film, 'The Towering Inferno'

Great line at the movie's end ... the building as a "monument to all the bullsh-t in the world"

http://www.youtube.com/watch?v=zsRnQQpklPM

Jaspergers's picture

sorry for the off topic but can anyone verify or share info on the HKMEX shut down tomorrow? 

The Heart's picture

"also, the steel frame is guaranteed not to melt in the event of a fire."

Or fall at the speed of gravity when there is a fire at the very top.

One of the towers actually fell a few tenths of a second faster than the speed of gravity. Beat that!

Oh, yeah, building 7.

post turtle saver's picture

"the speed of gravity"... so, what is the "speed of gravity"?

long-shorty's picture

this is just proof that when your mom told you "you'll use math for a lot of things when you grow up," she was right.

well, maybe not your mom. or if she did, maybe you should have paid better attention to her. and to algebra and calculus.

 

jbvtme's picture

won't the penthouse be above them?

kaiserhoff's picture

Top six floors reserved for mechanical equipment..., and drone pads.

Designed by your friends at Google Translation Services,  An affirmative action employer.

PT's picture

Top six floors reserved for mechanical equipment... so the maintenance crew gets the best view!  Yay!

Bobportlandor's picture

9500 square feet and can't seem to find any space to put a bedroom closet and bathroom.

 

prains's picture

The Oligarchs are winning, Glitchez!

HD's picture

3.9 million and the damn maid STILL won't do windows.

 

realtick's picture

that's the tower that QE built - when i look at that view i ask myself this question

What The Fuck Is The Stock Market Thinking?

IMA5U's picture

So that's where the Oligarchs are stashing their $$$ after Cyprus

q99x2's picture

Utah is planning a solution to the FEDs irresponsibility. Check it out. 

Rep. Ken Ivory & Dan Griffiths: Creating A Financial Emergency Plan for States

I'm only for replacing national governments with open source software not State or City governments. The FEDs are very much like an invading force that is attacking the United States of America. It is time to obsolescence it. 

The Heart's picture

Stopped reading when they mention NGO's.

Never ever drive to utah unless you want to be caught up in their court system. The state cops pull over every out of state vehicle to engage them and look for something to ticket, or take them to jail for.

STAY FAR AWAY FROM UTAH.

 

mkkby's picture

Been there many times and never even saw a copper.  STFU you asshole.

Dewey Cheatum Howe's picture

You only get pulled over for driving while black in Jersey by the Troopers.

marathonman's picture

What!?  They didn't take kindly to the choom wagon rolling through?

Taint Boil's picture

 

 

95 million for a what???? ……. WTF, just go buy an island for Christ safe. I just don’t get it and probably never will.

 

Temporalist's picture

Seriously or a huge piece of property within 10,000 square miles of anywhere.

machineh's picture

Tulips didn't have that much intrinsic value either.

It's a Keynesian beauty contest. 

Don't buy what you love, buy what the next media-misinformed fool has been told is 'hot.'

holdbuysell's picture

I don't think the concept of a bubble matters anymore. This is hyperinflation at the ultra rich level: just get out of ANY fiat currency.

The ultra rich are buying anything that's nailed down. Or, in this case, what is expected in the future to be nailed down. Did you see the art auctions lately with pieces going at record prices?

This all speaks volumes.

Coming soon to a more-mundane neighborhood near you.

css1971's picture

So you can feel like a god looking down on the ants.

bonin006's picture

But it worked so well for the Japanese in the 1980's, why not try again?

Spectre's picture

+100 %.  The mangement could kiss my ass, a monthly maint fee of $17,800, fucking joke.

Buckaroo Banzai's picture

If you have $100 billion you need to put to work, $17 large a month is a popcorn fart.

h0oS's picture

This shit will stain...

Atomizer's picture

When you can’t find any more change under the sofa cushions, use Alan Greenspan principles to inflate housing prices which dribble new property tax revenue streams to cover dried up G/L accounts that were raided thru theft.

MFLTucson's picture

Nice to see the work Obama has done for the stupid middle class who voted for him. Remember the 1% he so opposed??  Well, those are the only people who have done well under this clown act!  

edifice's picture

And so has been the case under every president since Wilson.

Buckaroo Banzai's picture

Anybody on welfare has done spectacularly well also.

It's people who work for a living that are getting fucked.

Henry Hub's picture

***Anybody on welfare has done spectacularly well also.***

I think you forgot the /sarc tag. Other wise you need to be re-educated!

http://www.dailymail.co.uk/news/article-1159677/Pictured-The-credit-crun...

http://www.huffingtonpost.com/2012/05/30/us-child-poverty-report-unicef_...

Zola's picture

mhh , last time the tallest building wasnt so safe. Just sayin'

repete's picture

ya did they ever get the issue with the free fall collapse straightened out.  Seems to be a local issue.  Has only happened in NYC.  Two planes three buildings.  

Waterfallsparkles's picture

The sad truth is that I am paying for all of it and I am not rich.

I am paying for it thru my .03% interest on my savings.

I am paying for it thru my higher energy bills and food costs.

I am paying for it in increased Taxes to pay the Debt that is being created to make all of those people Rich beyond belief.

I am paying for it by everyone trying to take away the CPI increases on my Social Security.

I am paying for it by the increase in my Health Care costs and lower coverage.  As they need to reduce my coverage because the National Debt is too high.  I may even pay for it with my life as with Obama care some procedures will  not be available at certain older ages.

Yet, I am the least that can pay for it.

 

HD's picture

Krugman will tell you that it's for you're own good.  Ben will tell you it's transitory. Draghi will tell you that you don't understand. Abe will just tell you to grab your ankles.

 

 

Waterfallsparkles's picture

I do not even get to benefit from my Savings or my hard work thru the years do.  It is all being taken away from me by Bernanke and given to the Uber Rick.  So sad.

They are making Billions on my slow deterioration.