It sounded like a good idea at the time: build a bunch of luxury condominium towers in downtown Manhattan so people who work in the booming Financial District could walk to work. Then COVID-19 came to town.
The late, lamented boom in luxury-condo construction has saddled the Financial District with the most unsold inventory of any neighborhood in New York City, Crain’s reports. Some of those units haven’t even come to market yet. One project alone – Macklowe Properties’ One Wall Street, in an iconic Art Deco tower – is promising 565 apartments when sales start later this year.
Meanwhile, lower Manhattan office life is shrinking, with available space downtown reaching its highest level in data going back to 2000, according to brokerage Savills. Companies such as Conde Nast and Uber Technologies, which made headlines when they moved into new World Trade Center towers, are now trying to sublease chunks of their real estate. Other tenants are also scaling back, an acknowledgment that employees will work at least partly from home in the post-COVID world.
That raises the question of what will happen to all those new condos if buying a place near the office is no longer a priority, according to Kael Goodman, founder of new-development data firm Marketproof Inc. “That part of Manhattan is very specifically about work,” Goodman said. “And if our relationship to work has changed, then things down there are going to change.”
Once a neighborhood of banks, government workers and quick-serve delis, the Financial District evolved into a more-residential area in the years since the 9/11 attacks, when apartment developers swooped in after office tenants vacated historic buildings, including the one at One Wall Street. From 2000 to 2019, the number of lower Manhattan residents nearly tripled to 64,000, including an influx of families with children, according to an estimate by the Downtown Alliance. While COVID-19 sent many fleeing, the area’s population has returned to 85% of its pre-pandemic level, the group said this week.
For anyone seeking a home in the Financial District, there’s plenty to choose from. The neighborhood has 1,433 newly developed, unsold condos, more than half of which haven’t yet been listed for sale, according to Marketproof.
One Wall Street developer Harry Macklowe, who is undertaking the largest condo conversion in New York history at the landmarked Irving Trust Co. Building, is sticking to his pre-pandemic plan for a 565-unit tower, where the starting price for a one-bedroom is $1.93 million, according to legal filings.
Some condos in the area – particularly those with units priced below $2 million – have fared well, even during New York’s lockdown. Lightstone’s 130 William St., where move-ins started in December, sold 23 units in the past 30 days, with a market value of $70 million, a spokesman said. Its studios are sold out as are a majority of its one-bedrooms, all at the full asking price, including some deals signed last year after virtual showings. The 242-unit building, where sales began in 2018, has found buyers for an estimated 54% of its units, according to Marketproof.
The great unknown, of course, is what form Manhattan office work will take after the pandemic. As of late April, just 16% of New York office employees were reporting to their desks, said Ruth Colp-Haber, a partner at Wharton Property Advisors. But there are signs of a coming turnaround: Goldman Sachs Group, based in lower Manhattan, announced this week that employees would return to the office as early as next month.
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