New York's property market back with a bang as GCC buyers eye deals

Developers behind restoration projects One Wall Street and Waldorf Astoria expect international buyers to return in 2022

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No expense is spared at One Wall Street’s marketing suite for the 566 apartments on sale at the luxury regeneration project in the heart of Lower Manhattan.

Not only is the sales office located in the Red Room – a grand lobby containing a restored 836-square-metre floor-to-ceiling mosaic by muralist Hildreth Meiere – but the technology used to show off this office-to-residential conversion is new age.

Gaze at the intricate detail on every floor of the illuminated models of the 56-storey building and it brings the sheer scale and opulence of the regeneration of this Art Deco landmark to life – from the dumbbells on the gym floor and the 23-metre indoor pool to the fruit and vegetables on sale in the Whole Foods shop in the retail space.

To ensure potential buyers from New York as well as visitors from the GCC, Asia and Europe truly understand what they are buying, the floors of one model levitate upwards to unveil the layout in even more detail.

New York's red-hot property market

With New York’s property market as red hot as the Red Room right now, such attention to detail is necessary to stand out from the crowd.

More apartments were sold in the third quarter of this year than at any other time in 32 years, as the city’s market recovery from the pandemic speeds up.

There were more than three times as many sales in Manhattan – the city’s most densely populated borough – as in the same three-month period in 2020, when the market grappled with lockdown, and 77 per cent more sales than the same period in 2019, according to real estate brokerage Douglas Elliman.

“We've really seen an explosion in terms of luxury properties,” Matthew Chook, senior vice president of sales at Macklowe Properties, the developer that bought One Wall Street in 2014, told The National.

“The number of transactions and total dollar volume have far exceeded anything this city has seen in the past.”

The surge in activity comes at a pivotal moment for the sales team behind One Wall Street, which sits in the centre of Downtown Manhattan at the intersection of Wall Street and Broadway opposite the more than 300-year-old Trinity Church.

The Red Room in One Wall Street, where the sales suite is currently housed. Photo: Macklowe Properties

Transforming office buildings into residential

As addresses go, you cannot get closer to New York’s financial heart. Descend on to Wall Street from the red-carpeted staircase outside the Red Room, head to the right and then take another right and you are in front of the New York Stock Exchange with the fearless girl, a bronze statue commissioned by State Street Global Advisors in 2017 to symbolise female empowerment, next to you.

Transforming the building into a luxury residential development where prices start at $1.5 million for a studio was no easy task – the project is the largest office-to-residential conversion in the city's history.

The company wanted to add five extra floors to the building – which was originally built for American commercial bank Irving Trust Company by prominent architect Ralph Walker in 1931 – something it got past planning regulations by taking out the third floor.

It also relocated the elevators to the middle of the building as part of a “complete gut renovation”, according to Lilla Smith, director of architecture & design at Macklowe Properties, and included 16,165 square metres of residential space, with 4,645 sq m dedicated to Manhattan’s favoured grocer, Whole Foods.

The result is a faultless restoration that has not only retained the limestone facade and distinctive Art Deco metal-framed windows, but allows the building to retain its dominance on the Lower Manhattan skyline.

The Fearless Girl statue stands in front of the New York Stock Exchange in New York's Financial District, Tuesday, March 23, 2021.  Stocks are off to a solid start on Wall Street as banks made up some of the ground they lost a day earlier. Industrial companies were also strong early Wednesday, March 24 helping to push the benchmark S&P 500 index up 0.5% in the first few minutes of trading. (AP Photo/Mary Altaffer)

Bringing this project to market in June became a case of “spectacular timing”, according to Mr Chook, because it coincided with the city returning to life along with the acceleration in demand for real estate.

“This is the best time to come to market with a property like this,” he said.

“You've never seen a conversion of 1.3 million square feet into residential apartments in Manhattan and the historic nature of this building makes it the first of its kind.”

While a discreet marketing drive began with a pre-pandemic roadshow to Shanghai and Hong Kong with a few units sold off-plan, more than 10 per cent of the project has now been offloaded with five deals closing at the start of the month and more in the pipeline.

New York was battered by the Covid pandemic

Like all developments in New York, the project was hit by the Covid crisis, with its workforce of up to 600 downing tools at the peak to comply with strict regulations.

New York was battered by the pandemic, with scenes of ambulances queuing outside stricken hospitals beamed across the world as the city became, at one point, the epicentre of the health crisis.

Bodies are moved to a refrigeration truck serving as a temporary morgue at Wyckoff Hospital in the Borough of Brooklyn on April 6, 2020 in New York. - New York Governor Andrew Cuomo on Monday extended a shutdown in the epicenter of America's deadly coronavirus pandemic until near the end of the month. Cuomo said the COVID-19 death rate in New York was "effectively flat" for the past two days but announced that schools and non-essential businesses must stay shut until April 29. (Photo by Bryan R. Smith / AFP)

But the city fought back, getting on top of the virus and later sharing its expertise with other hospitals. Then life slowly returned to normal with the exodus of workers that fled the city in search of safety in New Jersey, Connecticut, the Hamptons and Florida slowly trickling back into town this year bringing with them a thirst for larger, more lavish apartments.

“Everyone left and then they came roaring back. The market right now in Lower Manhattan and Manhattan is almost the opposite of what it was 18 months ago,” Jeffrey Yachmetz – executive vice president construction at Dilmon, a partner with Macklowe on the venture, told The National.

“We saw a very similar situation happen after 9/11 where people were skittish about an urban environment and they all dispersed. Then they realised they missed the vibrancy of city life with its activities, restaurants and culture."

Kird Rundhaug of Compass real estate and the sales director for One Wall Street, said the great return has encouraged the 30-somethings to buy for the first time while others are upsizing to bigger apartments.

“Sales and rentals have skyrocketed and it's not just about the volume, it's also about the amount of money that people are spending," he said.

“Covid shook everybody up. A lot of people in Manhattan passed away, so there were new apartments on the market too and people realised ‘what am I waiting for? Let me move to Manhattan’."

Timing the market has been key for developers

While One Wall Street’s entry on to the market could not have been timed better, The Towers Waldorf Astoria Residences was not so fortunate.

The luxury hotel is currently undergoing a top-to-toe renovation, restoring the bottom half of the 1931 building on Park Avenue to its 1930s heyday with 375 hotel rooms and the top half of the building transformed into 375 branded residences, including two penthouses.

The development launched on to the market in February 2020, two weeks before New York shut down.

While Dan Tubb, senior director of sales at The Towers Waldorf Astoria, concedes that was “not what we planned”, the sales team quickly switched tack, using video presentations put together for international sales to reach buyers in the US as well those based in Asia and the Gulf.

“When Covid hit, it was a very dark, depressing period where we thought, are we ever going to get out of this?" Mr Tubb said.

“So we just spent a few weeks reaching out to people saying ‘how are you’, just checking they were doing OK. And then after several weeks, we reached out with online presentations.”

The move paid off with some sales made in those early months of the pandemic and the pace picking up in recent months in line with the rest of the market.

“What you find in periods like that in history is that people realise it's an opportunity,” Mr Tubb said. Interest from the GCC is on the increase too, he said.

Waldorf Astoria “never acquiesced to the big discounts” seen elsewhere in the city as developers desperately tried to sell units as people fled, Mr Tubb said, with some buyers realising they might be able to acquire something that might not be available later.

“The market has come up underneath those people that were patient and, in the third quarter, we hit $11 billion in sales in the luxury market in Manhattan. That surpassed 2014, so there is pent-up demand and with the cash people have on hand, they're they're looking at these types of investments as alternative asset classes. Real estate is obviously an inflation hedge."

Slow return of international investors as borders open up

While the domestic buyer is driving much of the activity in New York, with local interest in One Wall Street rising after the scaffolding came down and new signage went up, the reopening of international borders on November 8 led to the return of the international buyer.

“We had a guy come in from the UK that once rented an office here because it was a New York-based company," Mr Chook said.

However, a rise in enquiries from investors farther afield, including the GCC, has not translated into a surge in transactions yet.

“We have a lot of interest from GCC, from Singapore, from China and also Thailand, Indonesia and the UK, but It's been a little slow and not as quick as we would have anticipated,” Mr Chook said.

One Wall Street apartments offer views of Lower Manhattan. Photo: Macklowe Properties

Step outside One Wall Street and there are signs the tourists are coming back.

“That’s the first few I’ve seen,” said Mr Yachmetz, pointing at a tour group outside NYSE.

The Middle East has always had a love affair with New York City real estate, he said, specifically for "trophy assets” But while there have been enquiries from the region, particularly from the UAE and Saudi Arabia, visits have been limited to those already in the US.

Mr Rundhaug said a few GCC families who already own in New York are buying apartments for their college-going children.

"It's also just a great investment to have and hold – just getting property in Manhattan is becoming harder and harder every year,” he said.

At 199 metres tall, the limestone facade of One Wall Street certainly stands out. Take a boat tour of the harbour and it is easy to spot the building among the kaleidoscope of skyscrapers that soar into the skies of Lower Manhattan.

However, with the emergence of Omicron and the tighter travel restrictions elsewhere in the world, Mr Rundhaug said it will be a while before the international buyer returns in full force.

“It’s going to come. This new variant is going to stop it for another month while we wait to see what happens, so we will focus on the locals first," he said.

"But once the development is complete and people can see they can move in, we will sell one a day. Buyers want to touch it, feel it, see it and buy it.”

The skyline of Lower Manhattan. The financial district is becoming more attractive for residents to live in now. AFP

From a financial hub to a residential community

While turning offices into residential spaces might seem like a smart pre-pandemic play considering only 40 per cent of New Yorkers are back at their desks, Macklowe made the decision long before Covid started because of the way the former financial district has changed over the past 20 years.

Once the stomping ground of figures resembling the fictional Gordon Gecko from the 1987 film Wall Street, the area has transformed since 9/11 when two planes crashed into the Twin Towers and brought the city to a standstill.

Many major financial companies relocated uptown with a threefold increase in Lower Manhattan's residential population as offices turned into homes and the regional government revamped the surrounding landscape, installing hectares of parkland along the river as well as walkways, cycle paths, new bus routes, bikeshare stations and subway lines.

As a result, 16,165 square metres of One Wall Street will be dedicated to retail space alone, while purchasers of apartments, will also receive priority membership to LifeTime, a 6,967 sq m gym and spa, which is also open to the public.

One Wall Street's indoor pool is on the 38th floor. Photo: Macklowe Properties

For those who prefer their own space, there are additional fitness rooms for residents along with a 23m indoor lap pool on the 38th floor encased in glass and offering views across Manhattan.

And it is the views that will ultimately make One Wall Street an easy sell. While a couple of apartments offer a direct view into the NYSE trading floor, go up a few floors to the glass-roofed lofts and you are gazing at rooftops across Manhattan.

Meanwhile at the Penthouse, you have panoramic views across the city including clear sight of the Statue of Liberty.

While Lower Manhattan might be considered slightly cheaper than other areas of New York such as Tribeca or Soho, the Macklowe team are expecting prices to continue in line with the higher demand.

“We have everything that we need for a banner year," Mr Yachmetz said.

Mr Rundhaug agrees.

"It's going to be a very busy year for Manhattan," he said.

Updated: January 10, 2022, 12:56 PM
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