(Bloomberg) -- Manhattan’s biggest new condo tower has reached a milestone: Buyers have signed contracts for more than 100 units at the property that Extell Development Co. is building on the Lower East Side. Only 700 or so more sales to go.
In a market brimming with luxury construction and wealthy buyers holding back amid so many choices, Extell is tasked with selling out a veritable neighborhood at its One Manhattan Square project on South Street. At 815 units, the tower has the second-largest number of condos in any single Manhattan building and the most for a newly built property.
Extell began sales in late 2015 with an outreach to Asian buyers, and then cut prices on many of the homes. Now, with a new sales office open, the $1.4 billion construction tab fully financed and the tower more than halfway to its 823-foot (251-meter) height, the developer is pushing harder, enticing brokers to bring in clients by promising to pay half their commissions upfront. At the same time, Extell is raising prices.
“It tells the market that we’re confident about our product and that we are selling well, selling fast,” Raizy Haas, Extell’s senior vice president of development, said on a tour of the 8,000-square-foot (743-square-meter) sales gallery, carved inside an active self-storage warehouse. “We feel there’s still room for future price increases.” She said more than 100 units at the project are under contract and have deposits from buyers.
Extell, which set off Manhattan’s luxury construction boom with its One57 skyscraper, where a penthouse sold for a record $100.5 million, is now charting a course through the aftermath. Instead of aiming for the elusive high-net-worth investor, Extell is broadening its reach at One Manhattan Square, where one-bedroom apartments, which make up almost half of the project, can be had for about $1.2 million.
It’s a strategic pricing plan in a year when 4,282 newly built units are expected to reach the Manhattan market, about double the number that were listed in 2016, according to brokerage Corcoran Sunshine Marketing Group. But Extell’s got competition: “mid-market” apartments, those priced from $1,800 to $2,400 a square foot, are expected to account for more than 1,000 of the new listings in 2017, the brokerage said.
Extell faces other hurdles at the project, a 2-acre (0.8-hectare) site east of Chinatown and beside the Manhattan Bridge, according to Donna Olshan, president of luxury brokerage Olshan Realty Inc.
“I’ve never seen anything that large, and in an area in Manhattan that would be considered remote,” said Olshan, whose firm isn’t connected with One Manhattan Square. “This is a new location -- an untested, unproven location -- and they’re trying to build a community around it. It’s gutsy any way you slice it, no matter what the market is.”
Extell is giving residents at its development, at 252 South St., reasons to stay and hang out, including a 75-foot swimming pool, a communal herb garden, an outdoor tea pavilion and and an adult tree house, furnished and accessible by a staircase. A dog-washing room and covered run are also built into the project, along with a putting green and observatory.
“We thought this was the next frontier,” Haas said of the tower’s location. “The entire west side is basically done. So this is really the last frontier with waterfront views, where we were able to develop something of this scale.”
In September, Extell disclosed in a filing with the Tel Aviv Stock Exchange, where the firm sells debt, that it sold its first 60 units at One Manhattan Square for a total of $125 million. Since then, the developer has been raising prices on the smaller apartments. The increases have inched up the building’s average to about $2,360 a square foot, from $2,311 in December, Haas said.
In the most recent pricing documents available at the state attorney general’s office, a 1,162-square-foot two-bedroom home on the 23rd floor is listed for sale at $2.47 million, up from an earlier price of $2.46 million. The building’s most-expensive one-bedroom -- a 688-square-foot apartment on the 77th story -- is seeking $1.86 million, or $90,000 more than last year.
The costliest unit in the building, a $13.2 million, five-bedroom duplex that includes portions of the 79th and 80th floors, is among the apartments that are under contract, according to Haas. Buyers at the project are spanning a wide range of life stages and interests, she said.
“We have singles, we have people starting out with a new family, people who are selling their homes in Long Island or in the suburbs and seeking a new life in the city, empty nesters, pied-a-terres,” Haas said. “It’s been really everyone and anyone.”
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