We see an interesting opportunity to purchase smaller, one and two-bedroom units in pre-existing premium buildings as a unique value-play.
Manhattan’s residential real estate developers continue to build increasingly larger units across prime neighborhoods. This recent surge in new developments’ increased square footage is reflective of sustained demand for more contiguous space and the effect this demand has had on the rising cost of land and construction costs.
At the peak of the real estate boom in 2007, the average size for a new condo, ranging from studio to penthouse, was 1,265 square feet. In today’s market, new condos average 1,564 square feet, which is an increase of 24%. The premium for more contiguous space is driving new development, as it’s the only way developers can make these projects work economically.
A survey by the Wall Street Journal found that the mix of units coming to market in 2014 and 2015 was 41% constructed as studios to 2-bedrooms and 59% being built with 3 or more bedrooms. The apartments in the new luxury tower One57 on West 57th Street, which with an average of 3,600 square feet, are 70% larger than those in the Time Warner Center, another of Manhattan’s premier condo buildings which went on the market in 2001. The surge in development of larger contiguous space is a direct response to demand from both foreign and domestic purchasers looking for investment-grade properties and long-term asset preservation.
Mercedes/Berk has over 30 years experience in Manhattan’s luxury real estate market and we would be glad to help you with your real estate needs.
SOURCE (Wall Street Journal)