Not all is well at this glamorous piece of real estate.
The iconic mixed-use 58-story Trump Tower, on 721 Fifth Avenue, in Midtown Manhattan, with top-dollar retailers such as Tiffany’s nearby, was the ultimate in condo living when it was built in 1983. Now it’s even more iconic as President Elect Donald Trump holds court there, among enormous security measures and the daily flow of potentates, moguls, Big Oil CEOs, the occasional Silicon Valley wunderkind, billionaires, retired generals, Goldman Sachs folks, and the like.
But not all is well at this piece of glamorous real estate.
Of its 238 apartments – located on the top 38 floors, including nine duplex and triplex penthouses on the top nine floors – 11 are actively listed for sale, according to CityRealty, and another 12 are listed for rent. Asking prices and asking rents have been slashed to get the units to move, and it’s not working very well.
The table below shows the 11 apartment listed for sale. Three of them consist of two units that have been combined: 42BC, 58CD and 37D/38D. Five sellers have cut their asking prices, with reductions ranging from -7.8% to -26.8%. And note for how long they’ve been on the market (right column), in a market that isn’t exactly ideal:
For some units, asking prices have been cut more than once. For example, 37D/38D, with 2,184 sq ft, was originally listed over a year ago, in August 2015, for $6.9 million, according to StreetEasy. In February 2016, the asking price was cut to $6.5 million, in June 2016 to $6.2 million, and in October 2016 to $5.995 million for a total reduction of 13.1%. And still no takers.
The potential buyer can expect to pay common charges of $3,620 per month and taxes of $3,328 per month, according to StreetEasy. This would come on top of the mortgage. At current asking price, with 10% down, financed with a 30-year fixed rate mortgage at 4.2%, the monthly payment would be $26,400. So that would amount to monthly outlays of $33,348. But the views are nice.
Unit 32H was first listed for sale in January 2016 for $2.999 million. In March, the asking price was slashed to $2.5 million, and in May it was slashed to $2.195 million, in total 26.8% in reductions, and still no takers.
And there is a lot of competition. Zillow lists 6,330 apartments for sale in Manhattan alone. And the trend has not been the friend recently. Trulia figured that the median selling price of New York City apartments dropped 4.1% from a year ago, as sales volume has withered:
There are another 12 apartments for rent at Trump Tower, including one with two original units combined (34EF). In the table below by CityRealty, note the reductions in asking rents, ranging from -1.7% to -11.8%. These are just asking rents and do not include any concessions:
These units have a lot of company. Apartments.com lists 11,014 apartments for rent just in Manhattan. As I reported earlier this month, according to Zumper, the median asking rent for a one-bedroom in New York City dropped 7.4% from a year ago, and for a two-bedroom 7.9%.
But that’s just the asking rent. They’re kept as high as possible for appearances’ sake. To motivate potential tenants, rent concessions are piled on separately. These rent concessions just set a new record in Manhattan, according to the Elliman Report, with concessions now offered on 25.1% of all new rentals, up from 13.5% a year ago.
Is all this just a dip in New York City’s real-estate boom? Maybe not – as ominous clouds are forming. The New York Post, citing data from Attom Data Solutions, reported the foreclosures are once again surging:
More than 1,100 NYC households fell into foreclosure in October, a 32% increase from September, and a 37% increase from last year. Queens, which has been hard-hit since the foreclosure crisis began in 2007, had 400 new cases last month, nearly double the number of a year ago.
Brooklyn also took it on the chin, with 365 new cases, a 20% increase. Statewide, the number of new cases jumped 15%…..
“We’re definitely seeing a spike,” Westchester-based attorney Linda Tirelli told the New York Post.
So Trump Tower may be getting hit a little harder than other buildings in New York, given the brouhaha about the election campaign and now the even greater brouhaha around the President Elect holding court in it. But the entire Manhattan housing market, after years of booming at a blistering pace, is seeing the sudden and very unpleasant arrival of second thoughts.
And not just in New York, but now also in San Francisco, Boston, Chicago, Washington DC, and perhaps a city near you. Read…. The Great Unwind Unravels Hottest Rental Markets in the US