Posted by Leonard Steinberg on October 27th, 2013

A report released recently shows that many houses in the Hampton’s are being torn down again to be replaced by much larger ones, fueled by a very strong high end market. I have often heard buyers of old dilapidated houses wishing they had torn down the old structure and built a new one which is mostly easier, faster and cheaper to build. Then again, re-creating old-world charm is hardly ever easy or effective (think those new-build Superior Ink townhouses!)

This same phenomenon is being seen in Manhattan: most existing buildings simply cannot cater to the needs of the very high end buyer. Greenwich Lane for the most part replaces hundreds of thousands of existing square footage to be replaced by brand new construction that’s more efficient. The same will happen at the PARK LANE on Central Park South. Until recently, new construction in the Downtown market was in the minority: it was always perceived as being cheaper to restore an existing building and add (often hideous) penthouses. Not only is new construction more cost-effective time-wise, but it also fuels the ability to create homes that cater to the specific needs of the high end consumer. More importantly, with banks and developers focused on price per square foot, apartments in new construction buildings often deliver more efficient floor-plates with more windows to allow higher room counts that are shrunken, thereby boosting the absolute price point and the price per square foot. A 3,400sf 4-bedroom new-build apartment is always going to be more profitable than the 4,200sf 4-bedroom version in an old building.

There are a few exceptions: 7 Harrison is a scarcity in the Tribeca market where most buildings are brand new. Walker Tower in Chelsea retained the existing structure and created beautiful, very expensive homes. 140 WEST will achieve the same thing because of its unusual volume of windows. But these are exceptions to the rule: for many, a beautifully renovated and restored home in a historic building will become a collector’s item in a sea of new construction.