August 7, 2022

Once Again, Floor Plans Are Making the Sale

That changed once the market crashed. Off-site showrooms disappeared, and buyers became deeply skeptical about floor plans and fancy brochures. Developers realized that buyers would no longer buy a home without first running a hand along a kitchen counter and standing by a window to take in the views.

In recent months, though, several new developments around the city have once again sold apartments off floor plans. The practice is not widespread, and the examples tend to be in neighborhoods where there is very little new inventory. But at least one high-profile building that is under construction plans to sell off floor plans: the Extell Development Company’s 90-story hotel/condominium tower across from Carnegie Hall — One 57, at 157 West 57th Street.

Apartments will not be ready for move-in for another two years, but sales will start soon after the offering plan is approved, which will probably be some time this summer, said Gary Barnett, the president of Extell. “We have had such a strong reaction with people wanting to buy that we expect to get a fair amount of sales even before the sales office opens,” he said. “There’s definitely a shortage of product right now, especially with views of Central Park and hotel services.”

The lower floors of the building will house a Park Hyatt, and the building’s Web site boasts that “New York has never seen residences that see New York like this.” Apartments range from one- to four-bedrooms, with prices from $5 million to upward of $30 million.

At the height of the market, developers couldn’t file offering plan amendments quickly enough to keep up with price increases for their apartments. Now, though, Mr. Barnett is more circumspect. “We think our prices are reasonable given where the market is today,” he said. And, he added, once the building is sold out, “we’re hopeful that prices will go up.”

He said that while there are plenty of “scare stories” about condos that haven’t been completed or have been finished with substandard construction, “for the right design and location, there’s very little inventory, and if people want to lock into something, they’ll buy off of floor plans.”

For the recent developments that have already sold apartments without model units to show, developers and brokers say they initially intended to test the market and were surprised at how quickly the apartments sold.

“We never thought we would be selling off of floor plans,” said Justin Ehrlich, a partner of VE Equities, which is building two small condos in TriBeCa. “We underwrote these buildings with big budgets for marketing.”

He said he had expected it would take a year after opening the buildings at 471 Washington Street and One North Moore to fill them. Instead, sales started in April and each building now has only one unit left, even though neither will be ready for occupancy until late summer or early fall.

“It helps that they’re boutique small buildings and that’s what people are looking for in TriBeCa,” Mr. Ehrlich said, and there is very little else coming to market. VE Equities took over both projects after they had stalled under a previous developer. The building at Washington and Canal has 12 units, ranging from $2 million one-bedrooms to a $15 million penthouse; and the building at North Moore and West Broadway has five four-bedroom units, ranging from $5 million to $9.5 million.

For marketing materials, One North Moore had floor plans and an exterior rendering, but for 471 Washington, “we splurged and hired a renderer” to do drawings of the exterior and the interiors, said John Gomes, an executive vice president at Prudential Douglas Elliman, who helped market the buildings.

There were some skeptics. Some “people who showed up at the site couldn’t believe that that was how we intended to offer the units and they just left,” Mr. Gomes said. But others were willing to plunk down deposits after looking at floor plans, reviewing descriptions of the finishes, and looking at two-by-two squares of imported marble.

At two other buildings in different neighborhoods, limited new development inventory also helped early sales.

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