Heating Up in the Hamptons
Southampton challenges East Hampton for the top spot on the real estate hot list.
For years, East Hampton has reigned as the glitziest of this summer playground's many villages and towns, drawing not only New York bold-facers but a preponderance of Hollywood names, including Steven Spielberg and Kate Capshaw and Jerry Seinfeld, to tony streets like Lily Pond Lane and Further Lane and around Georgica Pond. Lately, however, the historically blue-blood Southampton area -- where billionaire-heavy Meadow Lane is second home to David Koch, Leon Black and Calvin Klein -- is gaining ground, at least on the numbers front.
During the recession, overall numbers in the Hamptons -- which lies about 90 miles east of Manhattan on Long Island -- certainly went south, and sales have yet to return to the fever pitch of the mid-2000s. In 2011, sales volume was down a modest 1.7 percent from the previous year, according to appraisal firm Miller Samuel, while average prices fell 2.1 percent in the same period. "The Hamptons didn't get clobbered like the rest of the country; it got bruised," says Dottie Herman, CEO of Prudential Douglas Elliman real estate and a Southampton homeowner.
Southampton township, which encompasses Southampton village, Sagaponack, Water Mill and Bridgehampton, has seen a number of big sales. Apollo Global investment firm co-founder Marc Rowan got $28.5 million for his 9,000-square-foot Meadow Lane mansion -- the most expensive deal so far this year -- which he bought for $16.3 million in 2005.
Last year, New York Mayor Michael Bloomberg shelled out $20.4 million to purchase an 11-bedroom Georgian mansion in Shinnecock Hills. Supermodel Christie Brinkley quietly unloaded her beachfront bungalow in Water Mill earlier this year, after first listing it in 2007 for $7.9 million. And Water Mill resident Matt Lauer is increasing his holdings. He is said to be planning to build a horse farm on a 47-acre property he recently purchased, which had been listed at $10.5 million.
Now, in a surprise, median sale prices in Southampton township are more or less on par with those in East Hampton town, which also covers Amagansett, Montauk and Wainscott. For 2011, Southampton's median sale price of $865,000 was up 8 percent from 2010, while East Hampton's $875,000 median price was down 9 percent in the same period, according to real estate data provider Suffolk Research Service. Southampton prices are just 6.5 percent below the 2007 peak of $925,000, while East Hampton is 20.5 percent off its 2007 peak of $1.1 million.
Also on Meadow Lane, the five-acre estate of buyout king Teddy Forstmann, the IMG chairman who died in 2011 from brain cancer, is on the market for $34 million. The six-bedroom house comes with two hot tubs and an oceanside pool.
Stronger Southampton sale prices may have something to do with the greater availability of high-end listings there. "There are many more oceanfront sales in Southampton, typically pushing up Southampton numbers," says Corcoran Group broker Gary DePersia.
Adds Town & Country Real Estate founder Judi Desiderio: "It does appear that the estate area of Southampton has drawn a greater audience than that of East Hampton. My hypothesis is that the demographics of the buyers of homes over $10 million is younger than ever. And to that end, the 'easier commute' to New York City is the impetus to this shift." But one knock against the town (which is located about 13 miles west of East Hampton) is that "Southampton kind of rolls up the streets at 7 o'clock," says one resident.
THE EAST HAMPTON MARKET
East Hampton -- more accessible since hotelier Andre Balazs launched StndAIR last year with in-season flights to East Hampton Airport on an eight-passenger Cessna 208 (2012 prices unavailable) -- hardly is declining in desirability. Kramer vs. Kramer director Robert Benton sold his 5,000-square-foot Mediterranean residence on a peninsula near Georgica Pond for $23 million in November. And a buyer pounced within a month on the Charles H. Adams estate built by Carnegie Hall designer William B. Tuthill. The 14-bedroom house was listed for $24.5 million in November. "A lot of people had money to buy the last two years; they just didn't have the confidence to buy," says Saunders & Associates broker Jay Flagg. "Those people have come into the market."
But some feel East Hampton village has become too commercialized. "I mean, it's like East Hampton mall now," says fashion designer Nicole Miller, a resident of the quaint village of Sag Harbor to the north. And there may be signs that the disruptive party scene that's unfolded at rented mansions over the years has hit a turning point. Last year, the Dunes, a luxury rehab facility ($105,000 for three months), opened in an eight-bedroom East Hampton mansion.
Some sellers have had to become more realistic about prices. Reality TV star Kelly Killoren Bensimon has chopped the asking price of her five-bedroom on Further Lane (where Bill and Hillary Clinton rented last September) by one-third to $8 million; it was listed in January at $12 million. "To be honest with you, I feel like my house is worth $12. But it's not a mega-mansion and size matters to people out here," says Bensimon.
Among those who have been spotted shopping for real estate in East Hampton are Jeff Zucker and his wife, Caryn, who currently own in Amagansett. Meanwhile, some are purchasing in traditionally undesirable areas north of the highway (Route 27), either for better deals or bigger spreads. The most expensive Hamptons sale in 2011 was billionaire investor Jeffrey Greene's $36 million acquisition of the 55-acre Tyndal Point estate near Sag Harbor, an eye-popping sale made all the more surprising for not being in one of the more coveted areas to the south.
With spring's warm weather, "the rental market started early and strong," says Prudential Douglas Elliman agent Dawn Neway. And, according to Corcoran Group's Susan Breitenbach, almost all oceanfront property is spoken for. "They go very quickly, and people are going to the houses that are for sale to see if anybody will rent," she says. "I have a couple of oceanfronts on the market for $30 million and the owners of one turned down $1 million to rent it." Those are not unheard-of numbers for the Hamptons. Last year, billionare Igor Sosin -- part of a wave of wealthy Russians laying down bucks on East Coast real estate -- spent $860,000 to enjoy July and August in a mansion with a 3,000-square-foot master bedroom in Southampton. (By contrast, in Malibu, rentals rarely top $100,000 a month.) Many lower-priced options -- in line with the five-bedroom house in Bridgehampton Gayle King is said to have taken at $70,000 for the summer -- still are available, according to NestSeekers International agent Mohna Hoppe. "People were sort of lowballing the market," says Hoppe. "Now homeowners are staying a lot firmer with the prices they are asking and they are getting rented."
Sotheby International Realty's Harald Grant says some potential buyers are opting to rent. "My brother's house is on the market for $9 million," he says. "He rented it for $450,00 for the summer and, guess what, the guy who rented saved $8.5 million."
Or why not pay $550,000 to spend two weeks at the Sandcastle, developer Joe Farrell's 11.5-acre gated property in Bridgehampton? The newly built 31,000-square-foot residence, on land purchased from the estate of late Atlantic Records founder Ahmet Ertegun for $4.5 million in 2007, is outfitted with a rock-climbing wall, baseball field, bowling alley, walk-in refrigerator, and a full bar and disco.
Although Farrell also is listing the home for sale at $43.5 million, he apparently wants to add new amenities, including equestrian facilities. Those plans already have sparked tensions with locals who have complained about the potential impact on noise levels and property values. One concerned citizen wrote a letter decrying Farrell's supposed "blatant bully tactics."
It just goes to show that Southampton and East Hampton still have one shortcoming in common: neighbors.