The luxury real estate market that sizzled in 2014 and 2015 has flatlined. And this has caused selling prices to come down dramatically right as a new influx is hitting the market. David Craig for USA TODAY.
NEW YORK — Pity the poor penthouse owner.
Hedge fund manager Steve Cohen has been back in the headlines, and it has had nothing to do with regulatory investigations.
The billionaire is having trouble finding a buyer for his Manhattan penthouse and had to lower the asking price to $72 million, according to real estate blog Curbed. That looks like a lot, but Cohen originally listed the four-bedroom apartment for $115 million in 2013. No need to feel sorry for Cohen. He only paid $24 million when he bought the penthouse in 2005 and still has a lot of meat left on the bone.
Still, he’s a high-profile example of the malaise that has settled over the once red-hot Manhattan luxury real estate market.
The luxury market, which the real estate website StreetEasy defines as the top 20% of the Manhattan market, or anything $2.58 million and up, is the only segment of the market that has failed to grow the past year.
Alan Lightfeldt, data scientist at StreetEasy, says this is a simple matter of supply and demand. The luxury market sizzled in 2014 and 2015 when hot global demand was chasing limited supply. Monoliths towering more than 1,000 feet sprouted in midtown. Eight-figure prices for apartments were common as brokers targeted the world’s wealthiest investors. The 57th street corridor near Central Park earned the nickname Billionaire’s Row. A duplex penthouse sold for a record $100 million at a skyscraper named One57 in January 2015.
Developers of course saw that as a reason to break ground on new projects that are just now coming to market – just as demand is slowing. Lightfeldt says prices are beginning to correct.
And now developers are seeing the writing on the penthouse wall.
The developers who had planned to convert the famed Sony Building in midtown Manhattan into ultra-luxury apartments instead recently sold the Chippendale-topped building for a reported $1.4 billion to $1.5 billion.
The new owners promptly said they planned to keep the building as office space.
“That spared them the black eye of super luxury price cuts,” Lightfeldt says.
Follow USA TODAY’s David Craig on Twitter: @davidgcraig.