By
yearend, Manhattan renters with a taste for luxury will have more than
2,000 newly built apartments to choose among. Almost half will be in
just one building on the far West Side.
Exteriors of the Sky Building is photographed in New York, NY, U.S., on Wednesday, November 18, 2015
Photographer: Chris Goodney/Bloomberg
Next week, the first tenants will move into Moinian Group’s Sky tower at
42nd Street and 11th Avenue. It's the borough’s largest single
multifamily building, with 1,175 units. Leasing of about 300 apartments
at the luxury property—featuring two outdoor pools, a pet spa, and a
regulation basketball court—began in June. Rents start at $3,000 for
studios, $4,200 for one-bedrooms, and $6,200 for two-bedroom units.
The project's opening just as soaring rents send Manhattan's vacancy rate
to its highest level in more than nine years. It also precedes the
biggest wave of Manhattan apartment development in a decade. The
71-story tower is Moinian Group’s bet that leasing demand—and
prices—will continue to rise as would-be buyers remain shut out of a
sales market that offers few choices for residents who aren’t
multimillionaires.
“It’s not easy to buy
in New York, and that’s true more than ever today,” Mitchell Moinian, a
senior vice president at the firm run by his father, Joseph, said last
month during a tour of the site. “That’s leading to a lot of renters.
It’s a renter’s world.”
Demand from a growing pool of tenants has
pushed Manhattan rents up more than 18 percent since the recession
ended in June 2009, according to Jonathan Miller, president of appraiser
Miller Samuel. The
apartment vacancy rate in November was 2.87 percent, up from 2.31
percent a year earlier and the highest since August 2006, according to a
report issued on Thursday by Miller Samuel and Douglas Elliman Real
Estate.
Sky's developer Mitchell Moinian (left) and broker Sachs.
Photographer: Chris Goodney/Bloomberg
Construction Surge
Next
year, more than 6,700 newly built apartments will be listed for rent at
market rates, the most since 2005, according to data from the
new-development research division of brokerage Citi Habitats.
Most of the units will be priced in the top 10 percent, or luxury tier,
of the market, said Gary Malin, president of Citi Habitats.
“The
stuff that comes online is obviously going to be at or close to the
highest possible price point,” said Malin, who isn’t involved with
Moinian’s project. “All of these buildings will do well. It’s just a
matter of how high can they push rents and how fast can the units be
absorbed.”
Workers prepare the ceiling for a chandelier installation in Sky's lobby.
Photographer: Chris Goodney/Bloomberg
At
Sky, 941 of the apartments will command market rates, meaning they’ll
be priced based on the developer’s judgment of what people are willing
to pay. The remaining 234 units are designated as “affordable,” reserved
through a city lottery system for residents who fall below certain
income levels.
Tenants of the market-rate apartments will get one
month free when they sign a one-year agreement, said Jordan Sachs,
president of Bold New York, the brokerage that’s marketing the project.
Masons lay stone for the driveway of Sky, New York's largest rental building, at 42nd Street and 11th Avenue in Manhattan.
Photographer: Chris Goodney/Bloomberg
Picking Finishes
Bold
New York started leasing the first 300 apartments while the building
was under construction and its lobby and common areas were mere shells
of concrete. More than six months before move-ins could begin,
prospective renters donned hard hats to tour the tower, pored over some
of its 72 floor plans, and were able to select units with either light
or dark cabinetry and flooring. (What the developer calls “Dawn”
or “Dusk.”)
“Everybody wants to buy and can’t necessarily afford
it, and we’re catering to that experience,” Sachs said. “They want to
have that feeling of living in a condo—‘I’m in a hard hat, I’m picking
finishes.’ It plays into the egos a little bit.”
A model unit overlooking the Hudson River.
Photographer: Chris Goodney/Bloomberg
The
project contains mostly studios and one-bedrooms, appealing to a
demographic that might eventually buy but already has the income to pay
for added flourishes, Sachs said. The top five stories will have 83
apartments, branded the “penthouse collection.” Tenants in those units,
available next year, will have access to additional amenities. Among
them will be the building’s only three-bedroom unit, which hasn’t been
priced yet, he said.
Sky is promising enough perks for a
stand-alone city, including a hair and nail salon and a café offering
three meals a day. Among other enticements are a billiards lounge, a
landscaped garden, and a concierge to help residents sort out such
technology issues as hooking up Apple TV.
Renderings
of Sky's under-construction amenities (clockwise from top left): a
regulation-size basketball court, a private park, a water club with
Turkish-style hammam, and outdoor pools.
Source: Moinian Group
The
list of amenities helps make Sky stand out from the crowd, despite the
Manhattan-wide rise in vacancies, Moinian said. About half of the
tower’s currently available apartments have found tenants, he said.
“Sky
is the most impressive rental building ever built in New York City, and
we believe the market will continue to respond to that very well as
they have since we opened for leasing,” Moinian said.
Luxury Influx
Luxury-minded tenants will soon have more choices in Manhattan, including JDS Development Group’s 622 units on First Avenue near East 35th Street and Rose Associates’ 70 Pine St., which last week began leasing
its 515 market-rate units. That may weigh down rents in a category
whose prices have already started to decline, said Miller, the
appraiser.
Luxury rents, the top 10 percent of the market, fell
1.4 percent in November to a median of $8,537, Miller Samuel and Douglas
Elliman reported. For all the rest, the median climbed 3.7 percent, to
$3,196.
“This influx of thousands of luxury development units over
the next year more than satisfies the need for luxury housing,” Miller
told us.
A model unit bedroom, facing south.
Photographer: Chris Goodney/Bloomberg
Moinian
Group has owned the Sky site—one block from the West Side Highway and
two blocks from the entrance to the Lincoln Tunnel—since 2005 and
briefly considered building condominiums there. It sits at the northern
end of the city-designated Hudson Yards development zone, an industrial
area that’s being transformed with plans for millions of square feet of office and residential skyscrapers.
About 10 blocks to the south, Related Cos. is at work on its $20 billion Hudson Yards project,
what the company calls the biggest private real estate development in
U.S. history. And Moinian Group is planning an office tower at 3 Hudson
Blvd., near West 34th Street. It would be visible from the southern
windows of Sky’s apartments.
“We all know what’s going to happen
the next few years—and what’s going to happen when you walk out of this
doorstep and look straight or look southeast, or look anywhere around
this building,” Moinian said of Sky. “We plan to keep this and maintain
this as our trophy residential development.”
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