The new development market has been booming in cities across the country, with cranes dotting the skyline in likes of Miami and New York. Some truly exciting and exceptional product has been introduced to the market over the past few years including many projects by “starchitects” and the introduction of over-the-top amenity offerings.
Sentiment among real estate professionals seems to be that we may see continued strength in the new development market or, perhaps, even a slight uptick if the Trump Administration enacts proposed loosening of Dodd-Frank regulations and supports infrastructure spending. Both of these particular aspects could make the origination of construction loans easier and propel new construction projects forward, and make beginning them more appealing for developers.
As with any transaction or large purchase decision, there is certainly a list of pros and cons, however, as a buyer in today’s luxury real estate market, new development is quite appealing. Here a 5 reasons why you should consider buying a new development project.
1. Opportunity to Buy Pre-Construction
Once developers file the appropriate plans for their project with the city, they can begin to sell their project to prospective clients. This means as a buyer, you have the flexibility to buy pre-construction, signing a contract well in advance of the projected closing. Often, buyers that get in during pre-construction receive a discounted price. This, of course, does come with risks as the project may not go as expected or the market may take a downturn between contract signing and closings. However, you could find yourself well rewarded by buying pre construction at a favorable price per square foot in a rising market, rendering your apartment worth more by the time the project closes.
2. Everything is New
Who does not love something brand new? Buying a new development project means that you are purchasing a home that has never been lived in by anyone. Additionally, all appliances and amenities will be brand new as well.
3. Amenity Packages
There are certainly units in older buildings on that market that offer amenities, but the newest projects on the market have unparalleled offerings. The current market is quite competitive given the amount of new development inventory, so developers are using their amenity packages as a key differentiating factor to increase their project to the pool of buyers in the luxury market. Amenities in the hottest new development in the city include items like private wine cellars, swimming pools, curated libraries, spas, and porte-cocheres, to name a few. These features are not only appealing to buyers, but they are a favorable aspect from an investment standpoint when looking to secure tenants in the unit and also from a resale standpoint as well.
4. Potential Tax Abatements
Many new development projects coming to market have a tax abatement under the 421-a program. This program, which incentivized developers to build, recently expired, but was renewed under different conditions. As long as a new development project broke ground prior to the expiration of the original program, the building will receive the reduced tax benefits that are passed along to owners. Tax abatements lower the monthly carrying costs for the duration of the abatement which is a huge plus for property owners. For example, One Manhattan Square, a new development project on the Lower East Side, has a 421A abatement, making the monthly taxes on an available 1 bedroom unit $13/month for the duration of the abatement.
5. Investment Opportunity
Buying new development at a favorable price point can be a lucrative investment opportunity. New development comes with a premium price point which is not accessible for everyone, however, this premium price point can be valuable when it comes to resale and is even more valuable in buildings by “starchitects.” Research has shown that buildings with a premium architect’s name on it hold or increase in value more than buildings that do not. Buying in to a product like this means buying a brand name, and consumers generally trust brand names. Additionally, new development tends to be quite liquid when it comes to resales as it always has its buyers and sellers.
There is a great selection of new development inventory currently on the market and coming to market in New York City. Below is a selection of a few of our favorite projects currently underway.
If you are interested in exploring new development projects in New York City, or would like updated availability for a building, please contact us to schedule your appointment.
70 Vestry Street
Situated on the last undeveloped waterfront parcel in TriBeCa, 70 Vestry is a Robert A.M. Stern masterpiece that offers a luxurious downtown living experience. The building will be done in Beaumaniere Limestone sourced from France, a stone known to glisten in the sunlight. 70 Vestry Street offers a vast array of amenities including library, café with private resident lockers, billiard room, lounge, and wellness level with fitness by The Wright Fit and a pool.
Madison Square Park Tower
Madison Square Park Tower, located at 45 East 22nd Street, is changing the Flatiron skyline as it rises to 777 feet tall. Designed by renowned architectural firm Kohn Pedersen Fox Associates with interiors by Martin Brudnizki Design Studio, 45 East 22nd Street is a unique architectural masterpiece with a base that is narrower in width than the top. The residences on upper floors offer simply spectacular panoramic Manhattan views. The 5 levels of amenities will include a library, fitness center with basketball court, terrace, leisure rooms, and an upper club on the 54th floor.
One Manhattan Square
One Manhattan Square is a new sleek glass tower coming to the Lower East Side, rising next to the Manhattan Bridge. The project, by Extell, is bringing a new concept of luxury living to the neighborhood as it will have over 100,000 square feet of indoor and outdoor amenities. Given the amount of amenities, many are dubbing the building a "vertical village." Interiors are designed by Meyer Davis. The building has a 20 year tax abatement with availability starting with 1 bedrooms.
15 Hudson Yards
The Hudson Yards project is completely transforming the far west side of Manhattan, bringing new life to once desolate locale. The entire development of the Hudson Yards projects encompasses residential and commercial. The area will include new luxury condo and rental buildings including 15 Hudson Yards. The building, an innovative design by Diller Scofidio + Renfro in collaboration with the Rockwell Group, will stand 88 stories tall with 285 condominiums. The building will bring a new level of luxury-living to the far west side of Manhattan. Residents will have access to all the amazing benefits of the Hudson Yards project. The building will feature a unique 2-level lobby with soaring ceilings and offer spectacular views of the Hudson, Manhattan skyline, and center piece by Heatherwick Studio. Residents will also be steps away from the new 14 acres of parks that are being constructed. Residences range in size from 1-4 bedrooms with duplex penthouses.
221 West 77th Street
This new Upper West Side building is situated on a newly transformed section of West 77th Street, located between Central and Riverside Parks. The project is a mix of old-world charm and contemporary designs by designer Thomas Juul-Hansen. Residences will feature floor-to-ceiling windows, offering abundant light and luxurious details and finishes throughout such as hand-painted kitchens. Amenities will include a spacious landscaped roof with gas fire pit, billiards room, basketball court, and state-of-the-art fitness facilities.