New Real Estate Developments in NYC: More Floors, Fewer Apartments
At the Benson, a 210-foot, limestone-clad tower on the Upper East Side completed last year by the developer Naftali Group, there were 15 units, ranging from $12.75 million for a 1,770-square-foot three-bedroom to $35 million for a more than 6,600-square-foot penthouse, according to the developer. The building is sold out, said Donna Olshan, the president of Olshan Realty, which tracks the luxury market.
“It was a wild success,” she said, but also a risky strategy, because the investment was tied up in so few units. The development site, which used to be a row of prewar apartment buildings, could have supported up to 83 apartments, according to zoning calculations.
Developers have little incentive to squeeze in so many units on projects in affluent markets, because bigger units command higher premiums, said Ryan Schleis, a senior vice president at Corcoran Sunshine Marketing Group, a development consultant and marketing firm. “Space is the ultimate luxury,” he said, with top-dollar units on the Upper East Side exceeding $4,000 a square foot.
Moreover, most of these projects are built “as of right,” on sites that don’t require zoning changes or public review that might otherwise require the builder to match or exceed the number of units previously on the site, said George Janes, an urban planner who has studied a number of the new towers.
“You have a scarce resource of floor area that could be used for housing people, and it is being used, essentially, for people who are super wealthy,” he said.
Developers say they are chasing the best return on their investment.
“It’s a very simple answer: It’s the market demand,” said Miki Naftali, whose firm, the Naftali Group, is building several high-rise condos in Manhattan with few units.