In 2012, a property in Manhattan on West 57th Street sold for more than $100 million. The sale price of the duplex penthouse in One57 Tower was such an eye-popper that it gave a new name to the stretch of Midtown in which the property was built: Billionaire’s Row. Here at Texas Monthly, we ignored it, because what do we care about Manhattan real estate?
But late last week, we learned that the buyer was a Texan: Michael Dell, the second richest person in Texas (with a net worth of $25.2 billion), who made the acquisition of the entire 89th and 90th floors at a price of $9,000 a square foot.
As we take a moment to gawk at the purchase, let us first consider what Dell got for his money: 11,000 square feet, six bedrooms, seven bathrooms, and two “powder rooms,” as well as building amenities that include a gym, a pool and Jacuzzi, a steam room, a library, and a screening room, according to the New York Daily News. The property is also outfitted with “soaring ceilings, rosewood floors, and custom Italian marble baths.”
That’s all nice enough, but it also highlights just what you’re actually buying when you make a purchase in Manhattan. Location, as they say, is everything, and the fact that Dell’s property comes with views of Central Park and the New York City skyline is obviously the primary selling point. Consider: In Dallas, a 9,350-square-foot penthouse with an additional 5,600-square-foot rooftop terrace listed in January 2016 at $24 million is still on the market, currently listed at more than 40 percent off with an asking price of $13.5 million—more total square footage, nicer amenities, a fraction of the price, and still unsold.
When you play Lifestyles of the Rich and Famous by looking at these absurd properties and their absurd prices, the contrast between what you get in different places is striking. It makes sense, of course, that a property like Dell’s Manhattan penthouse might be worth north of $100 million. In Texas, we don’t see residential property in that range—but it’s worth comparing how far that money would go here.
For instance, in Austin—an absurdly expensive real estate market relative to most of Texas, but a thrifty bargain-hunter’s paradise compared to New York City or urban areas of California—$45 million (or less, if you pay in Bitcoin) gets you Ultima Online creator Richard Garriott’s property outside of Austin. That spot includes unusual amenities such as a 300-seat outdoor replica of London’s Shakespeare’s Globe Theatre, a lighthouse, a 1,000-square-foot guesthouse, the foundation for a 25,000 square foot residence (Garriott never completed construction on the house itself), and a “haunted forest” for Halloween parties.
The acreage of properties gets crazy when you start looking further outside of cities—$52 million will get you an area of land roughly two-thirds the size of Brooklyn out by Balmorhea, with the all-important mineral rights intact. But even in urban areas in Texas, you can get a fair amount of land along with your home. With $35 million, you can get 14,000 square feet in Houston proper, for a house on nearly eight acres, which is just a little smaller than Union Square Park. That property, on Mott Lane, is the most expensive non-ranch property in Texas listed on the market, and the number of similarly palatial estates in the $10-$20 million range in Texas cities will enable you to lose a few hours to ogling expensive properties.
In other words, there’s a gulf between what Dell got for his $100 million in Manhattan and what you’d get for $20 million in Houston—say, a nine-bedroom, eleven-bathroom estate on three acres in a walkable stretch of the city. This helps explain why the kind of high-end penthouse living that Sotheby’s tried to make happen in Dallas has seen its price drop by more than $10 million in two years.
In Manhattan, penthouse apartments are most of the high-end real estate that exists; you’re simply not going to get acreage on the little island, and most of the large single-family homes were converted to museums and other public buildings a century ago. So if you’re Dell, you know that if you want space to stretch out, you’ve got your property in Austin (not to mention the “Raptor Residence” in Hawaii), with a Manhattan spot on par with other high-end Manhattan apartments. In Dallas, however, there are plenty of opportunities to own land, green space, large residences, and still be in the heart of the city, for a lot less money (although the prices are still in the millions).
None of this affects most of us, of course—few people are in the market for a $13.5 million penthouse in the Dallas museum district or a similarly-priced mega-mansion in Old Preston Hollow. But as we think about the forces that shape a city’s real estate, it’s worth considering why a $100 million apartment in Manhattan can’t fetch even a quarter of that price in Dallas—and what living in Texas cities gets you that New York doesn’t, no matter how much you pay in rent or for your mortgage.