Living The High Life

Luxury real estate is reaching new heights.

Developers are betting big on residential skyscrapers, building them at record-breaking heights—with record price tags to match. Changing the skyline in New York, London and Dallas, the tallest new residences will stretch over 90 stories, with at least one penthouse asking over $100 million.

In New York, the current chart topper at 870 feet is New York by Gehry at 8 Spruce Street, a rental building in the Financial District that was designed by Frank Gehry. The 76-story building's first residents moved in last year, but coming soon is a building with residences even higher up. Under construction in Midtown is One57, a condo building with a hotel that will have apartments as high as 90 floors up, or just over 1,000 feet.



"From here you have all the icons of New York," said Dan Tubb, One57's director of sales, looking at a wall-size screen that shows a simulated view of the upper floors' helicopter-like vistas. But One57's moment at the top may also be brief: Plans are in place for a nearly 1,400-foot-tall condo and retail complex on the site of the former Drake Hotel on Park Avenue and 56th Street, according to people familiar with the project.




Many of the newest residential skyscrapers are marketing overseas, aiming to attract wealthy foreign buyers. At least 10 units in One57 have gone into contract with Chinese buyers. For foreign buyers, buying into a newly constructed building in New York is easier than getting approval from cooperative or condominium boards, says Edward Mermelstein, a Manhattan-based lawyer who advises wealthy Russian and Eastern European clients purchasing real estate in the U.S. "There's another level of anonymity," he says.


The race to the top is happening in cities around the world. Soon to open in Tel Aviv is Meier-on-Rothschild, a 37-story building that will become the city's tallest residence, designed by architect Richard Meier. Martin Franklin, the founder and CEO of Jarden Corp., parent company of brands including Crock-Pot and Sunbeam, says he decided to buy an apartment on the 30th floor there, partly because he liked the design and because "views in tall buildings are very important." One of the building's penthouses is still on the market for $50 million.



A two-story apartment in the Shard, London's tallest building that's expected to be mostly completed later this year, could hit the market for an estimated £50 million, or about $80 million. (The building, which has 10 residences, also has offices and a hotel.) Princess Tower in Dubai recently became the world's tallest residential building with 763 apartments going up 107 stories, or 1,358 feet, according to the Council on Tall Buildings.




Living at 1,000 feet does have drawbacks. Outdoor terraces are generally impossible above 40 or 50 stories, because of the wind. Though most of the new buildings have walls of mostly glass to capture the views, the windows only partially open at the highest floors. Experts say that while asking prices go up with every floor, views improve only marginally above a certain height, depending on how tall the surrounding buildings are. "People are paying for the status and the exclusivity of living on that next higher floor," says Nancy Packes, a New York-based residential development consultant and marketer who has worked with many skyscraper developers. "There's a psychological component to living on high floors in a building. Even though views don't change materially."



Michael Berman, who owns car dealerships in Chicago, moved from the suburbs to a four-bedroom condominium on the 57th floor of Chicago's 92-story Trump International Hotel and Tower in 2009. Though he was one of the building's first buyers, he wasn't interested in living on one of the very top floors, noting that 30 years ago he and his wife lived in a different high rise and often lost the views on a cloudy day.

The one downside Mr. Berman noticed about living in Trump Towers, which houses the highest residences in the U.S., is that opening the windows means letting in a swift breeze, and on the windiest days, the usually ultrafast elevators slow down somewhat. "But everything else more than makes up for it," he says, noting the building's five-star restaurant below and optional hotel maid service.

Thomas Guss, a New York real-estate broker who currently has a $39 million penthouse listed in a 19-story building, the Centurion, says he typically warns buyers that the taller the building, the more it naturally sways toward the top. "Not many people think about that until the first storm comes." Mr. Guss says a 45th-story rental unit he owns in the Financial District has views of the Statue of Liberty—but waves appear in the bathtub during thunderstorms. "A lot of people are very uncomfortable with that," he adds.


Source:  Wall Street Journal