Manhattan builder Extell Development Co. is retreating from a plan to list 38 units at its One57 tower for lease, choosing to sell them instead as demand for luxury rentals slips amid an abundance of supply.
The apartments, on the 32nd through 38th floors of the West 57th Street skyscraper, will be listed for sale as condominiums at prices starting at $3.45 million, Extell said in a statement on Monday. The builder has concluded that the market for condos in that range, toward the lower end of what's considered luxury, is better than the one for high-end rentals.
"We recognize the demand for efficiently sized, luxury inventory below $10 million," Gary Barnett, president of Extell, said in the statement. "There is absolutely no comparable product currently on the market."
Luxury rentals are proliferating in Manhattan as buyers of pricey condos, in many cases out-of-town investors, take possession of their apartments then quickly list them for lease. The added supply is pushing down rents for the most-expensive units. The median monthly rent for a Manhattan luxury apartment—the top 10 percent of the market—fell 3.5% in March from a year earlier to $8,228, appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate said in a report last week.
"I would be under the assumption that they had no traction on the luxury-rental tack," Jonathan Miller, president of Miller Samuel said of Extell's plan. "The weakest segment of the rental market is luxury rentals."
Extell, which initially planned to reserve the lower floors of the 1,004-foot tower for rentals, tried marketing units for lease on the 37th floor last May, according to listings website StreetEasy. Prices ranged from $13,350 a month for a one-bedroom apartment with 1,021 square feet to $50,366 a month for a three-bedroom home.
Extell had also sought to sell all 38 rental units in a single package to outside investors for $250 million, the Wall Street Journal reported in November.
The units now listed for sale—the largest of which is a 4,635-square-foot, four-bedroom duplex—will be delivered fully furnished, according to the builder's statement. Seven of the 38 units will be priced at more than $10 million, said Anna LaPorte, a spokeswoman for Extell.
The sale prices will be lower than much of what's already been purchased at One57, where a penthouse that sold for $100.5 million is Manhattan's most expensive completed residential deal. Like residents on the higher floors, buyers of the new units will have access to hotel services from the Park Hyatt New York at the base of the building. Amenities at One57 include a screening room and performance space, on-site parking, an indoor swimming pool and library.
"This is a great opportunity for buyers to have access to the One57 quality, lifestyle and amenities, all at this price point," Barnett said in the statement.