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The REAL DEAL sample

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A herd of white elephants waits around

October 25, 2007
By Cody Lyon

Like a plaster wedding cake gathering dust in a bakery display case, the tiered Beaux-Arts mansion at 8 East 62nd Street languished on the market for seven years before going into contract this May for its most recent asking price, $35 million.

It was a long wait for the pedigreed property, just steps from Herm s. The six-floor, 23-room limestone home was built in 1902 by John Duncan, the architect of Grant’s Tomb. In 1992, the mansion was purchased for $3.2 million by architect Emilio Ambasz, but was put back on the market in 2000. Prospective buyers looked at the place — Madonna checked it out in March — then passed.

If there was a waiting room for extremely pricey properties on the market, the Duncan mansion would have had some company among the city’s most high-profile homes. While many luxury properties in Manhattan are selling very well, a subset of super-high-end homes can sit on the market longer for several reasons. Many are “white elephants.” Some are simply overpriced; in other cases, the rich don’t feel the need to sell right away and can afford to hold out for the price they feel is right.

For example, the Milbank mansion at 14-16 East 67th Street, made famous by a recent owner, Penthouse publisher Bob Guccione, has been sitting for over a year. In May, the New York Post reported that the broker for the listing, Corcoran Group agent Leighton Candler, had quit, seemingly out of frustration with current owner Laurus Funds, which was hanging on to the $59 million price tag.

Brown Harris Stevens broker Paula Del Nunzio picked up the listing in May for the 22,000-square-foot property. She wouldn’t comment on how often it is being shown, but she said “as the largest and most expensive mansion on the market, it gets a lot of attention,” thanks to its width and “utter grand scale.”

Del Nunzio said identifying potential buyers of these ultra-luxe properties requires a different skill set than brokering other listings — just because someone is interested doesn’t mean they get in the door. “Our job is to make sure buyers are qualified,” she said.

Then there’s the $35 million, 12,000-square-foot, 13-bedroom house built for sugar tycoon Thomas Howell in 1920. Located at 601-603 Park Avenue, it has been on and off the market since 1989. It is being marketed by Dolly Lenz at Prudential Douglas Elliman. Finally, there’s the most expensive of them all, the $70 million penthouse at the Pierre Hotel at 795 Fifth Avenue, on the market since 2004 and listed with Brown Harris Stevens’ Elizabeth Lee Sample and Brenda Powers.

In the very wealthiest sector of the Manhattan real estate market, finding the right buyer often wins out over any sense of urgency to sell. Yet the fact that some properties sit on the market for years, waiting for the right buyer, seems to strain the bounds of reason.

“The right buyer is someone who is very rich and has great taste,” said Lisa Simonsen, a broker at Corcoran who also worked with the $59 million Milbank mansion until recently. She calls that particular property one of the “most fabulous, magnificent houses ever.” But in spite of what she says was a lot of hard work, the house has yet to meet a buyer who has the deep pockets to pay for it.

White elephants that spend a year or more on the market are clearly in a class of their own, even when compared to other luxury properties. According to data from Miller Samuel, properties in the luxury market (representing the top 10 percent of all Manhattan condo and co-op sales with an average price of nearly $5 million) spent 128 days on the market in the second quarter. That’s down one day from the average in the first quarter and down 22 days from the year-ago quarter.

By comparison, for the overall market in Manhattan, the figure for average days on the market in the second quarter was 117, two weeks faster than last quarter and four weeks faster than the same period last year.

Currently, there are around 45 co-ops, condos and townhouses listed in Manhattan at over $20 million, representing 0.78 percent of available residential listings in the borough. They include 15 townhouses, 14 co-ops and 16 condos, according to Jonathan Miller, president of appraisal firm Miller Samuel.

The majority of the over-$20-million listings, 69 percent, are located on the East Side. Downtown follows with 20 percent, and the West Side is a distant third with 11 percent. On average, these properties have spent 209 days on the market.

Among these listings, 38 percent saw price increases, while another 38 percent held steady. Only 24 percent saw a reduction in price.

“Every time there’s a sale at a certain price range, it helps establish what that current value is for a similar property,” said Hall Willkie, president of Brown Harris Stevens. Willkie noted that when a penthouse at the Time Warner Center sold for $42.5 million in 2003, it created a new plateau in the very-high-end market.

It appears that some sellers believe you can always get what you want.

“Some exuberantly priced property sellers believe they can hold out and eventually get the price they want,” said George Van der Ploeg, a senior vice president at Prudential Douglas Elliman.

Kirk Henckels, executive vice president and director at Stribling Private Brokerage, added that in this segment of the real estate community, one rarely has sellers who are desperate to get rid of a co-op, townhouse or condominium.

“A lot of times these are global people. They have residences all over the world,” said Henckels, adding that the available liquidity — not just in New York, but on the global scale — allows for greater flexibility, but it can also contribute to greater languishing time.

Van der Ploeg noted that there simply aren’t that many buyers out there who can be matched with the small pool of very-high-end properties that are available.

Lee Summers, a senior vice president at Sotheby’s International and one of the brokers who handled the Duncan mansion contract, says that in the end, patience often pays off.

“The very-high-end properties may sit for a while, but they will get the full asking price if they have a good product,” said Summers.

Thanks to a weakened dollar, potential buyers from foreign countries see some of Manhattan’s priciest properties as a good buy.

“In the currency market, the dollar continues to decline in value against the euro and the pound, so high-end buyers from Britain, Italy, Ireland and Germany keep coming to the New York market,” noted Pablo Montes, vice president at the Corcoran Group.

But even though a buyer may have the necessary means to purchase one of New York’s priciest properties, other obstacles — like a picky co-op board — can stand in the way of a buyer’s desires, according to one broker who offers the Pierre penthouse as an example.

“At the Pierre, there is one person controlling the board, and all of us in the brokerage community know that,” said Jacky Teplitzky, an executive vice president with Prudential Douglas Elliman.

Teplitzky said that even a multibillionaire who is seriously interested in the “most wow apartment” can find himself being held up by a fussy co-op board, and this will ultimately result in the property sitting on the market.

“You have to find that one person,” she said.

Teplitzky and other brokers point out that very-high-end property owners will often exercise greater discretion when they decide to sell. This could be because the seller doesn’t want family or friends to know about their intentions.

“You have to do it hush-hush, so you can’t go to other brokers; instead, I have to go to my Rolodex and seek out prospective buyers quietly,” she said.

But “people can’t buy what they don’t know about,” said Henckels, who added that in particular, prewar co-ops (of which there is already a limited supply), usually appear on the market very quietly.

Henckels himself exercised discretion in describing two properties available at the moment in the Manhattan market for “let’s just say $60 million.”

Brown Harris Stevens’ Willkie concurred. “Some of the most desirable homes are many that you don’t know about,” he said. “They shy away from publicity, they don’t want it, so they are not really known to the public.”

An oft-repeated scenario is the property owner who might want to play the market with a wait-and-see attitude. They will sell, but only if they can get the number they want.

“There might be an owner who says, ‘I love my apartment. I bought it for $10 million, but if you can sell it for $50 million, I’ll consider selling,’” said Teplitzky.

Teplitzky said that most brokers understand when this game is being played. From the get-go, they sign an exclusive, not for just six months, but for a full year, because a sale will surely take longer to come to fruition.

“We want to make sure time is on our side,” she said.

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Written by codylyonreporter

February 13, 2012 at 3:11 am

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