Manhattan luxury co-ops fall out of favour as new condos beckon
The luxury Manhattan co-op, a longtime sign of real estate prestige and exclusivity in New York, may be losing its appeal. Blame a glut of newly built high-end condos.
Contracts for co-op apartments priced at US$4 million or more fell 25 percent this year from 2015, as buyers with means opted for newer homes with more amenities and fewer restrictive rules, according to a report published by luxury brokerage Olshan Realty. It was the biggest annual decline since the firm started tracking luxury co-op contracts a decade ago.
“The data right now has a big, red circle on it that says this sector is in trouble,” said Donna Olshan, president of the firm that bears her name. Many buyers see co-ops “as completely outdated and they reject the notion that their equity is tied up at basically the vagaries of a co-op board.”
Buyers at co-ops, usually older properties with fewer amenities, get shares in a corporation that owns the building and don’t hold deeds to their units. The boards can approve or reject buyers, and have a say on everything from how much cash purchasers must have in the bank, to how much their dogs can weigh. Newly built luxury condos – with gyms, pet spas and yoga rooms – are proliferating in Manhattan and giving home shoppers more choices.
Some of Manhattan’s priciest co-ops achieved mythic status over the decades for their exclusivity and the pedigree of their buyers, such as Oaktree Capital Group’s Howard Marks and Millennium Management founder Israel Englander, both owners at 740 Park Avenue, a 1931 limestone tower on the Upper East Side. Now there’s competition from new condo skyscrapers including One57 and 432 Park Avenue in Midtown, where Pershing Square Capital Management’s Bill Ackman and Lewis Sanders, former chief executive officer of Alliance Bernstein Holding, respectively, have bought penthouses.
