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New York's posh penthouses become people's playgrounds
FALLING real estate prices, like toppled statues of despots, can have a democratising effect. In the overheated New York apartment market, a case in point: penthouses for the people.
Long reserved for the largest, most expensive apartments, the top floors of several new rental and condo buildings are instead being dedicated to shared amenity spaces with a suite of perks for residents - and sometimes even the rabble outside - including so-called sky lounges, exclusive restaurants and rooftop pools at towering heights.
Developers, not typically known for their largesse, are making a wager: A penthouse perch for all will add value in aggregate, even as it cuts potential earnings from pricey would-be apartment space.
And with the high end of the market flagging, it may also be the safest bet, as developers refocus on smaller but still costly apartments designed to move faster than the multimillion-dollar behemoths popularised in the last cycle.
The luxurious common spaces might help take the minds of residents off their shrinking apartments.
The shared spaces could also mean new revenue streams through membership fees, while a hard-to-move penthouse apartment might lower asking prices elsewhere in the building.
It is a design trend seldom seen since the 1980s, when health clubs and plastic lounge chairs found a place on the penthouse roost.
As then, the market is saturated, but today's developers are hoping that their high-level offerings will age more gracefully.
There is ample cause for the shift, as the city's sales and rental markets have experienced recent declines.
In the second quarter, Manhattan's springtime sales volume dropped to its lowest level since 2009, according to a Douglas Elliman report, and the median sales price fell 7.5 per cent to US$1.1 million, compared with the same period last year, as inventory grew and buyers dragged their feet.
In June, the median asking rent fell 2.9 per cent from the same period last year, to US$3,400 a month, and almost a third of all leases included some kind of concession, such as a month or more of free rent.
Some projects were ahead of the curve. At the American Copper Buildings, a recently completed pair of connected rental towers that rise 41 and 48 stories above the East River in the Murray Hill neighbourhood of Manhattan, some of the best penthouse space is not for rent.
On the east tower, the developer, JDS Development Group, installed a one metre deep rooftop pool, outdoor showers, a bar, grill and dining areas, all with sweeping views of the East River and the city skyline.
On the west tower, natural gas generators, with enough juice to power the buildings through another Hurricane Sandy, take up valuable space.
That is in addition to the sky bridge, a three-storey engineering feat that connects the two towers on the 27th floor and is filled with amenities such as a gym, a chef's kitchen, a hammam-style spa, a juice bar and a 23 m pool.
Management charges residents US$150 a month for access to the bridge, while the new rooftop deck will carry an additional seasonal cost yet to be revealed.
In total, there are 761 units, priced between US$4,055 a month for a studio and US$30,000 for the choicest three-bedroom.
In exchange for tax breaks, the developer has included 160 units with below-market rates, available through an affordable housing lottery.
"We looked at the building as a holistic package," said Michael Stern, the managing partner at JDS. The high-floor amenity spaces could have been scaled back to make way for bigger apartments, he added, but the market is trending toward studios and one-bedrooms.
Still other developers are finding alternative ways to sell the view at the top.
At 70 Pine, the former AIG headquarters converted to luxury rentals with a hotel on the lower floors, the developer sacrificed about US$25 million worth of potential condos to create a four-floor restaurant at the top of the 66-storey Art Deco tower.
Marc Ehrlich, chief investment officer at Rose Associates, the developer, said that the company considered going condo at the top, but decided instead to lease the 7,600 sq ft space, as well as some of the base of the building, to create two restaurants led by James Kent, of NoMad fame. The as-yet unnamed restaurants will be open to the public, but will offer special treatment for residents of the tower.
"It's almost becoming a prerequisite" to have penthouse amenities, Mr Ehrlich said, because so much of the competition thinks the same way.
Doug Steiner, the developer of the Hub in downtown Brooklyn, is one of the few who seems to regret yielding to peer pressure.
His project - currently the tallest rental tower in Brooklyn, with 600 market-rate units - had nearly an acre of amenities on the third floor, including a pool, a home theatre and a dog run.
But halfway through building, he decided to nix two apartments at the top to create an indoor-outdoor sky lounge with a glass parapet to dampen the whipping winds 186 m above the street.
"I'm not sure we get more for it," Mr Steiner said, as his company finally opened the space to residents this month. "We didn't want anybody to have something we didn't have," Mr Steiner said. But "in the same circumstances", he added, "I wouldn't do it again." NYTIMES