Average price for digs in Manhattan: $1.2 million

Media king Murdoch reportedly paid $45 million for his Fifth Avenue co-op

June 19, 2005|By Lisa B. Anderson | Lisa B. Anderson,CHICAGO TRIBUNE

NEW YORK - The cardinal key to real estate long has been location, location, location. But here in Manhattan lately, it's all about price, price, price.

From way uptown in increasingly fashionable Harlem to far downtown even around Ground Zero, what you will find are apartments with price tags so consistently breathtaking that you feel like you need an iron lung after reading the real estate section.

And, so titillating is the real estate section that some call it pornography for the property-obsessed. Not to mention all the glossy real estate inserts, some as thick as small-town phonebooks, which come tumbling out of the morning newspaper. With enticing color pictures and tantalizing descriptions, such ads used to offer a glimpse into the luxurious lives of people who could afford homes priced in seven figures.

But these days that would be just about anyone who buys an apartment here.

In the first quarter of 2005, the average sales price of a Manhattan apartment was a record-breaking $1,214,379, according to a quarterly survey published by Prudential Douglas Elliman Real Estate.

Fueled by a tight inventory of apartments, heavy demand, higher Wall Street bonuses, improvement in the economy and fear of rising mortgage rates, prices for all kinds of apartments set records in the first quarter, according to Prudential.

If such conditions persist, the company cheerily predicts prices will rise in this quarter too.

Clearly the state of real estate is weighing on many people's minds. A recent cover of New York magazine spelled out in bright red letters what many apartment owners are thinking: "Worrying About a Real-Estate CRASH. Is It Coming? How Bad? How Soon?"

Who knows?

Meanwhile, the mystery is how high will Manhattan prices go? Prices have soared to $45 million; this is the figure reportedly paid by media magnate Rupert Murdoch for a cooperative penthouse at 834 Fifth Ave., one of the city's most desirable old-money addresses. But, a stone's throw away on Fifth Avenue, a triplex penthouse co-op apartment at the Pierre hotel is rumored to be on the market for $70 million.

Can prices rise that high or higher? The Sky's the Limit, according to the title of a just-published book by Steven Gaines. Juicy and highly detailed, the book has movie stars, fashion designers, illicit sex, and lots of conniving and cavorting socialites - and it's all about real estate. Or, more precisely, as its subtitle puts it: "Passion and Property in Manhattan."

"Real estate is an American passion now," said Gaines, whose last book, Philistines at the Hedgerow, peeked into life in the mansions of the Hamptons on Long Island, Manhattan's most fabled summer sandbox.

"There has been a huge psychological shift about real estate and what it means. Years ago, my father wanted to have a Cadillac. Now, people want a trophy home. People don't have the same attachment to real estate that they used to," said Gaines, who bought a Greenwich Village townhouse in 1976 for $62,500 and sold it five years ago for what he will only describe as "seven figures."

He now lives in the Hamptons.

Few houses in the Hamptons have the rich and storied past - and present - that many of the old so-called "good buildings" on Fifth Avenue conceal behind their limestone facades, as Gaines pointed out during a walking tour up the avenue.

There are, of course, other longtime elegant addresses on Park Avenue, Sutton Place and Gracie Square. But, as Gaines writes, "Fifth Avenue is the address against which all others are measured."

Good buildings, or GBs in real estate shorthand, are invariably co-ops where a finicky board rigorously reviews every applicant - in depth - and sometimes the applicant's dog.

They are far less flashy than the new, skyscraping condos like the Time Warner Center, but far more difficult to get into. Many require all cash, no mortgages. And some, like 960 Fifth, send their in-house chef to Paris every summer to polish his prowess.

Gaines recalls the history of each building. Here is 810 Fifth Ave., where former Vice President Nelson A. Rockefeller had a triplex, with his first wife, Mary, living on the top two floors and he and his second wife, Happy, living below her, said Gaines.

There is 834 Fifth Ave., where the first apartment to crack the $1 million mark was sold in 1980 for $1.6 million. And in between is 820 Fifth Ave., considered by some the best and most exclusive of the good buildings with a brutal board. Thus, real estate agents were shocked to see Tommy Hilfiger, who made his fortune designing low-rise, baggy men's pants, allowed to buy a $12.9 million apartment in 1999.

Even though Hilfiger later fought with the board over renovations and never moved in, his acceptance was a sign that things were changing, according to Gaines.

"I don't want to call these people parvenus," he said, "but this is a whole new generation of wealth."

Many of them also don't care to submit to the examination by a board, and so many are now heading to more glamorous and less nitpicking condominiums.

Although many now are priced out of Manhattan, Gaines isn't troubled.

"There's no cure for that or no blame," he said. "This is a little island. More people will start living in the other boroughs. I'm not sad because everyone can't live on Fifth Avenue."

Lisa Anderson is New York bureau chief for the Chicago Tribune, a Tribune Publishing newspaper.

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