Not Even a Famed Frank Gehry Building Was Safe from 2020’s Real Estate Downturn
It’s certainly been an eventful 10 months in the real estate business. Pandemic-induced shifts in the market have inspired would-be renters to leave cities for homeownership in the suburbs, to say nothing of the logistical hurdles that have been introduced to everything from construction to closings. Despite all that, one might think that a lower Manhattan high-rise designed by one of the biggest names in architecture might be insulated from 2020’s unique set of market forces.
As it turns out, that may not be the case. According to data from Trepp LLC cited in reporting by the Wall Street Journal, the Frank Gehry–designed residential tower at 8 Spruce Street in Manhattan is a bit short on tenants at the moment. About 25% of the 898 units in the building sat unoccupied during the third quarter. That’s higher than Manhattan’s overall vacancy rate, which reached 6.14% in October, according to data from Miller Samuel Real Estate Appraisers & Consultants.
The tower, which helped usher in a sort of luxury high-rise arms race in Manhattan, is not short on starchitecture power or amenities. Instantly recognizable from its undulating facade, Gehry’s design stood as the world’s tallest residential building when it opened to tenants in 2011, although it’s since been eclipsed by multiple luxury high-rises on 57th Street. Inside, unique amenities include a spa, golf simulator, grand piano–adorned drawing room, and an in-building elementary school.
But at a time when Wall Street offices are closed and international jetsetters are less interested in buying property abroad, demand has taken a dive. A one-bedroom apartment in New York by Gehry, which once commanded $4,900 a month, now goes for a net effective price of $3,600, once three months of free rent is factored in.
Gehry’s high-rise is hardly the only luxury building in Manhattan to take a hit in 2020. Real estate appraiser Miller Samuel notes that the borough’s luxury home sales were down 20% year on year in Q4 of 2020, with rentals facing a similar decline. However, a December 2020 increase in sales of co-ops and condos over the previous year suggests that things may be starting to bounce back.
As a result, Brookfield Asset Management, which owns the Gehry building in a venture with TIAA and the National Electrical Benefit Fund, is viewing the current downturn in occupancy as an aberration. “Occupancy at 8 Spruce has been on the rise, and we anticipate that accelerating dramatically in 2021…we think 8 Spruce will be among the more highly sought-after buildings in the city,” a spokesman said in a statement cited by the Journal.
Still, the number of supposed vacancies suggests that not even a towering name like Frank Gehry’s can transcend the market forces currently playing out across the country.