Future Shock

Real estate trends are bucking the old traditions

A few weeks ago, two five room apartments around 86th Street in Manhattan hit the market. One, a three bedroom in mint condition, sits on a low floor in a pleasant prewar building on West End Avenue. It has good light and approximately 1550 square feet. The other, in good condition but on Madison Avenue, enjoys a corner placement in one of the fancier prewar co-ops in the neighborhood. Located on a mid-level floor, it has a wood-burning fireplace, two bedrooms and a big dining room, and a similar square footage of approximately 1550.

The West End listing, which was priced below market, received over 20 offers and sold for 30 percent above its asking price. The Madison listing, priced more appropriately but not above its level, took several weeks longer to sell and has gone to contract for approximately $100,000 less than listing number one.

Several things about this situation strike me as relevant. First and foremost, the idea that a similarly sized apartment on West End could sell for more than one on Madison Avenue demonstrates conclusively how much our real estate world has changed over the last years. Before the recession of 1989 to 1991, there was no question but that the Upper East Side was New York's pre-eminent neighborhood. That edge gradually eroded over the following two decades, but the fact that a prewar apartment in lower Carnegie Hill with a fireplace is worth less than one of a comparable size on West End Avenue, and is of interest to many fewer people, requires a paradigm shift about what today's buyers want in New York City.

As Broadway between Lincoln Center and Columbia becomes more of a Champs Elysees, lined increasingly with luxury emporia and high end condos, it both reflects and elevates the streets around it. Earlier this year, a Warburg agent sold a large co-op on Riverside Drive in the 80s for $9,000,000. As a relative price, the notion that Riverside could outsell Park Avenue on a per square foot basis would have been unthinkable two decades ago!

And then there is downtown, where one of our agents literally has people in hand to hand combat over her listing overlooking Gramercy Park, while the new condos at Greenwich Lane, where St. Vincent's used to be, are selling so fast that prices have already been raised five times in three weeks. These prices seem set to rival or surpass those at 150 Charles Street, where many of the higher floor units sold in excess of $4000 per foot (the apartments described in the first paragraph above, to compare, sold for closer to $1500 per foot.) And all of these sales in the new condos are made from plans. The buildings won't be ready to occupy for years. A striking number of the buyers looking at these units currently live uptown, particularly on the Upper East Side. When asked recently why she was contemplating such a move, one of them told me succinctly, "Life is moving downtown. So are we."

It's fascinating to watch the city cycle away from the notions of value so familiar to many of us who have lived and worked here a long time. Condos on the Bowery? The Upper East Side as a value play? Although we know that nothing is constant except change, these days the rate at which the future rushes in upon us can leave us racing to catch up.

Frederick Peters is a licensed real estate broker and president of Warburg Realty.