Taking the multifamily plunge: the water’s fine!

With all the talk of a fiscal cliff it’s easy to forget another precarious situation that wrecked havoc in recent years: the investment gap. Financial markets rocked, the stock market roiled, and even ‘safe’ instruments became dangerously unpredictable, while more ‘creative’ funds proved to be totally worthless.

 

Interestingly, there is one time-worn investment that has remained stolid and strong. It’s multifamily property. 

Even in troubled times, everybody needs a place to live. And with the uncertain housing market convincing more families to rent, multifamily property is proving to be a powerful renewable investment.

 

 

Here’s why:

 

• Those who sat out the housing market have now accumulated cash. They have the means to acquire property and no end of reasonably-priced inventory available. Early movers can avoid the rush, and still negotiate great deals. But this could be a limited time offer.
• Having weathered the financial storm, NYC multifamily real estate offers an unusually desirable proposition; an ongoing and increasing rate of return. Not only does an apartment ownership bring in a reliable monthly income but it is one of the few investments that can actually increase in value, given even the smallest improvements. Stocks and bonds can’t be enhanced, they don’t amortize, and the investment has no control over their growth potential.
• Having been ultra-conservative in their lending policies to date, financial institutions are itching to reenter the mortgage market. Banks are becoming more confident about the economy, and are eager to serve qualified real estate buyers.
• Multifamily building ownership allows an investor to enter the real-estate field while getting paid; it’s the ultimate ‘on-the-job training’.
• Over the sweep of time, property value has climbed an average six per cent a year, while many stocks – and the companies they belong to – have lost value or vanished entirely. Long story short, buildings endure.

 

These arguments represent the very tip of a large iceberg; the many reasons multifamily property is a wise investment. My advice is to take the plunge now. Icebergs aside, the water is amazingly warm and clear!

 

 

 

 

 

 

 

Houston, TX is coolest according to Forbes. What???

For most of the eight million people in the New York City metropolitan area, the Big Apple is, always will be the coolest city around. Sadly, Forbes Magazine and Sperlings Best places didn’t get that message.

 

In a recent survey of cool cities, they actually designated Houston the coolest city in the USA. 

 

The Texas city ranked far, far ahead of New York City, which only nabbed number ten, and outperformed Chicago, San Francisco, Washington, DC, and all the happening places in the Pacific Northwest. They just barely bested several other Texas cities.  

When the number-crunchers of  Sperlings, a livability rankings organization based in Portland, Oregon, were done, Houston had outperformed every other place in a weighted average that considered job growth, entertainment options, number of recreation and food venues, and green spaces.  

Hey. Hold on just a Texas minute.  

First of all, NYC and Houston are quite similar in some ways.  The Texas city’s median age is 33 (drawing from the same Sperlings statistics), while ours is 37 – hardly geriatric. True, our largest single population group has a few years’ jump on theirs. Our biggest demographic includes people from 35 to 44 years old, while their largest slice of the population pie is made up of individuals between 25 and 34. But that’s hardly revolutionary.

Houston is unquestionably getting fatter, happier, and more prosperous every year. The job growth, a booming oil and gas industry, and a wave of eager young professionals are injecting new life into the city. But nothing can touch the sheer opportunity, entertainment potential, cultural significance, and intellectual stimulation of a New York City. With four times as many people as Houston, and the virtue of a long and storied history, we have a uniquely inexhaustible supply of things to do, see, and talk about.  And the best may be yet to come.

Thanks to some amazing recent developments, New York City is poised to take imagination and entrepreneurship to an entirely new level. Our very own Silicon Alley, located between Broadway and Fifth Avenue between Union Square and Madison Square Park, is catapulting the city right into the new century – and sprouting new ‘mini’ Silicon Alleys in Queens and Brooklyn. New public-private partnerships are giving web start-ups and genuinely running start. And those exciting new businesses are attracting new professionals, new funding, new opportunity, and the new housing that’ll keep our innovators comfy, cosy, and close at hand. 

Houston may have its 2.6 job market growth rate, but New York posted a 28.7 per cent increase in information technology jobs over the last five years; the stuff that cool is built on. From Shelby.tv, to Tumblr, ETSY, Bit.ly, Foursquare, Socialflow, Food52, and Reddit these places are not only more sustainable than old-and-gas related multinationals, they are downright chill.  

So let’s be gracious and congratulate the Bayou City for topping the Forbes list knowing that New York City, the place that gave cool its cache, won’t be cooling its own heels for too long.

What makes world's ugliest buildings ugly

The eye of the beholder 

The Guggenheim, the Chrysler building, the Empire State buildings are among countless New York City structures celebrated for their grace, style, and distinction.

But for every iconic structure there are just as many duds. 

Ten of the most unfortunate constructions were recently listed in a Reuter’s news ranking of the world’s ugliest buildings. Among them are several iconic American buildings (including, notably, the Rock and Roll Hall of Fame),

a smattering of Asian sites, and a single location each in Australia and the UK. They range from the downright outrageous (Australia’s crazy-quilt Pixel building)

 to the terrifyingly cold (The Royal National Theatre in London). With a thin line dividing the campy from the simply catastrophic, architecture often blame a combination of unfortunate factors for the worst eyesores: excess, ego, and exceedingly bad judgment. 

Reuters proclaims the J. Edgar Hoover Building (FBI HQ) in Washington, D.C. as the worst among them.

The poured-concrete stalwart was imagined as a powerful structure, meant to appear as solid as the organization it housed. Since then, most of DC – including the majority of its own occupants- has deemed it destruction-worthy. In fact, the building’s demise is likely if and when the FBI relocates to another headquarters. 

Function, structure, and beauty 

While ugly comes in many and interesting varieties, though, truly exemplary architecture incorporates three essential qualities: function, structure, and beauty. 

Function describes the building’s ability to meet its original purpose (if it’s an airport terminal, for example, does it truly accommodate the planes and passengers well?) Structure is a matter of sheer physical soundness and durability. Beauty, clearly dependent on the beholder’s eye, is harder to pin down.  

I’ve always loved buildings that endure and delight – like the Chrysler Building. The pre-war skyscraper tastefully incorporates elements from the 1929 Chrysler (the hubcaps and hood ornaments), without veering into the realm of excess. Even today, almost 80 years after its debut, the Chrysler’s shiny Art Deco ornamentation is graceful and inviting rather than gaudy or garish.  

Interestingly, the Reuters list included only one New York City site: Trump Tower at 725 Fifth Avenue.

Once considered the signature building of its time (circa 1983), the Trump is, according to Reuters, “downright dull on the outside, dizzyingly gaudy on the inside,” and “generally only visited by tourists - as it is almost universally avoided by actual New Yorkers”. 

Do tell 

So if we hate the Trump, who do we love? What constitutes well-executed design – and why? And where, among out many streets and avenues, are the real architectural gems lurking? 

Leave us a comment below, and I’ll share some of our discoveries in the weeks ahead. Happy hunting!

Is it good, bad or ....?

It’s still a fragile real estate world, but the trend is up – in a shaky, unpredictable way.

What that means is that not every segment of the market is experiencing the same return to health in the same way, at the same time, or for the same segments. Those of us in the industry are so busy trying to figure out what it means that we don’t know how it looks to the ‘real’ New Yorkers. That is, once we leave the ‘experts’ behind, do most people sense a boom is coming? Are they still hanging back, waiting on the sidelines – or at their poised to jump back in?

I’m hoping you can help me answer those questions.

Frankly, to me the current situation looks positive - mostly. Sellers are now pricing their residences appropriately, buyers are energized by rock-bottom interest rates, and real estate hiring is on the upswing; all signs of a more robust, raring-to-go climate. But how do we explain some strange inconsistencies?

Take the top tier of the market.  Listing prices for super-chic residences seem to set – and break - new records every day. The latest offering is being listed for an eye-popping $52 million. The East Side duplex of the late Time Warner chairman Steve Ross, being sold by his widow , features eight bedrooms, 10 baths, six terraces, and two libraries. If it fetches the sought-after price tag, it will set a new high-water mark for NYC coops.  

Still, amidst the chart-topping listings, inventory remains painfully thin. The number of available dwellings is down by 12 per cent from the same period last year. The resulting dearth of options is leaving apartment-seekers – many of whom are just now warily re-entering the market - vying for almost a thousand fewer places than last year. Well-priced apartments sell quickly, but there just aren’t enough around of them around to get the market sizzling.

Still, the real estate industry is apparently quite bullish on itself. The ‘Real Deal’ website recently reported that industry employers are ramping up their hiring efforts. The Director of the Center for Urban Real Estate at Columbia University, Vishaan Chakrabarti, characterized the real estate jobs situation as having “improved substantially from the last couple of years”.

The U.S. Bureau of Labor Statistics apparently agrees.  Their statistics auger a 23 percent climb in real estate industry jobs through 2020.

All this brings me back to the future. Clearly there’s growth, but does it indicate a gradual return to pre-recession health or a different kind of market entirely? Is this going to be a spotty – good here and bad there – kind of recovery? Or a readjustment, rather than a full-blown boom? Or is prosperity right around the corner?

What say you? How things look from your vantage point?

Feel free to post below.

Paying premium to live in a green building

When the Javits Center goes green on April 21 - 22, it’ll come at a perfect time for the New York State real estate industry. 

 

For one thing, the annual Green Festival coincides with the highest gas prices ever recorded for this time of year. That makes Manhattan, which has already nicely weathered the economic storm, even more attractive to people who want to skip the commute.

 

For another, sustainability is showing up as an attention-worthy amenity - alongside river views and exercise rooms – in New York apartments, condos and coop marketing pitches. 

 

 

 

PlaNYC

 

And, finally, the yearly eco-fest jibes with the findings of the NYC master plan, which suggests that developers, builders and retrofitters should paint the town even greener. The PlaNYC document outlines the ways the city can accommodate a projected one million new residents. It reveals that residential and commercial structures currently generate 75 per cent of the city’s greenhouse-gas emissions. Considering that most of these buildings will still dominate the skyline in 2030, it argues that efforts to cut the city’s carbon footprint should begin soon.

 

That said, retrofitting an existing building is tough, expensive, and can run afoul of NYC’s 50-year-old zoning codes. Try to add insulation, and you could violate guidelines for floor space. Add a roof garden, and you might exceed the building’s allowable height. Or tack on awnings for shade, and you could broach the building’s geographical footprint.

The old and the new

Some existing structures take the plunge anyway. The 16 story Citizen on West 23rd Street is being renovated by the same folks who upgraded Harsen House on West 72nd Street in 2008. There, they added hot water radiant heat, FSC-certified oak floors, ducted kitchen hoods, and energy-efficient, floor-to-ceiling windows, all according to code.

It’s easier, albeit still pricey, for new construction. Not surprisingly, many new glass-and-steel towers are seeking a LEEDS certification, literally the gold standard for sustainability. One such building is the Helena - 39-sparking stories hugging the Hudson on 57^th street. It ranked among GreenHomeNYC.org’s most energy-efficient structures, alongside the enormous Via Verde project in the Bronx.

GreenHomeNYC, an all-volunteer nonprofit, will field a team at the Javits Center eco-fest, and at the many meetings, seminars and green networking events occurring all over the area. Their mission – to create genuine momentum for sustainability in real estate – is clearly gaining ground.

 

DO tell!

 

But the question remains: are buyers and sellers as willing to part with some of their greenbacks as advocates suggest? Would you pay a premium to live in a green building? And, if so, how much more? Five per cent above its plain vanilla counterpart? More? 

As a seller, do you find it worthwhile to add – or advertise – green gadgets to would-be buyers?  

And which amenities matter the most? Sustainably-sourced building materials or rooftop solar panels? Energy saving appliances or low-water commodes? 

Please post your comments or drop me an email, and I’ll follow-up in the weeks ahead with a summary of your comments.

 

What say you?

The thriving ultra-chic New York City real estate segment

What does seven million dollars get you? Access to the hottest New York City real estate segment; the ultra-high end market. 

This stratospheric sector is on a rockin’ roll with properties “selling for prices not seen since the headiest days of the boom”, The New York Times recently observed.  No flash-in-the-pan, this top-tier phenomenon has endured throughout the global financial downturn.

The latest example is the penthouse apartment at the super-chic One57 skyscraper. Initially listed at $90 million, the sprawling abode recently hiked its asking price to $115 million, as I noted in my last blog. The cheapest units in the luxe structure list for around seven million dollars, the figure at which an apartment graduates from there mere ‘lux’ designation to become ultra-luxury.

True to the age-old aphorism - “a rising tide lifts all boats” – top-of-the-line urban palaces have helped establish New York City as a strong and stable real estate haven in a global economy roiled by uncertainty. The promise of a solid return on a livable (and re-sellable and rentable) investment has lured scores of well-heeled foreign investors to the island. It’s also contributed to a general propping up of mid-priced condos which, at $3 to $5 million each, are also increasing their offering prices. In addition, several current reports point an increase in the number of new mortgage applications, accompanied by a decline in mortgage delinquencies.

In the midst of this scenario, Manhattan’s sky-high prices are fetching record-breaking sums, they’re also solidifying New York City’s reputation (at least, among the wealthiest New Yorkers) as a stable and solid investment site. As one real estate executive understated in the February 10^th Times article, “Most people would say that the top end of the market is bulletproof”.

But that still just the tip of the iceberg, in my opinion. The real benefit from all these new developments is reducible to a single word: confidence. People are beginning to believe the real estate market is headed for recovery.

With conviction comes power. Sheer faith in a real estate resurgence wields a strong-enough force to bring at least some laggard buyers back into the marketplace. They also lure reluctant sellers back. More people take action, prompting a virtuous cycle of sales of increased activity. And that, in turn, generates additional optimism. If we are convinced that feel good times are coming, our ‘as if’ behavior helps generate them.

So while we can’t really predict what will happen, we can look at some basic facts and take heart. And they go like this: Manhattan is among the most desirable places on earth. And its still a small, fully occupied space. With about 22 square miles of land (13.4 miles long and 2.3 miles across at its widest point), real estate on the island really represents a limited time offer, and a rare coveted gem – whether you’re buying thousands of square feet of penthouse views, or a cute little pied a terre.

Who needs gold when you’ve got Manhattan?

10-year assessment of New York City’s property market

Manhattan real estate: Still reaching for the sky

Consider it a towering vote of confidence.

Buyers are snapping up the pricey dwellings at One57, the 90-story apartment building (and hotel) rising above west 57^th street.

Almost a third of these ‘trophy apartments’ have already been sold or are under contract, despite the fact that it’s still 18 months from completion. If the nearly structure’s 11,000-square foot, six bedroom penthouse fetches anywhere near its $115 million dollar asking price, it will be the most expensive New York City apartment sale ever.

Most expensive apartment sale

Nearby, at 15 Central Park West, another recent sale holds the current record. After a mere three weeks on the market, the tower’s $88 million dollar penthouse went to a Russian billionaire seeking a landing pad for daughter, a 22-year old student in Manhattan.

Those are just two of the many recent – and dramatic - signs of New York City’s robust real estate health. Another comes in "The Elliman Report: Manhattan Decade 2002-2011," a 10-year assessment of the city’s property market.

The probe reveals that New York apartment prices increased almost 89 per cent since 2002. Last year, 10,161 properties changed hands, establishing 2011 as the third busiest year real estate sales year of the decade. The 2011 sales represented the most transactions since the 2008 credit crunch. In addition, the listing discount – the difference between the asking and the final sales price - was down to 4.3%, well under the 7.1% of 2010.  

True, the average Manhattan apartment remained on the market 127 days in 2011, eight days longer than during the previous year. But that’s just one day beyond the average market days for 2002.

A solid market

It’s no surprise, then, that the report finds Manhattan real estate remarkably stable “even in the wake of the worst financial period”.

New York City property holds its value, recession or not.

Foreign buyers don’t need to be convinced of that. Roughly 20 per cent of the property deals tracked by Elliman during the first decade of the 21^st Century involved purchasers from outside the United States. These savvy shoppers already knew what their American counterparts are now rediscovering; that few investments can offer both a solid nine per cent return, and a great place to hang your hat.

All this has would-be buyer wondering: Will $115 million for a penthouse apartment with double-height windows and a sweeping Central Park vista look like a bargain in a few years?

Q4 2011 Manhattan RE Market Report. Welcome to 2012

Remember when ‘not so bad’ didn’t seem like a positive? Welcome to 2012.

The New Year brings some pretty good New York City real estate news, and some same old not-so-great stuff. Long story short: while things are generally picking up, the recovery’s pace is maddeningly slow.

That’s the take-away from the Fourth Quarter Manhattan Real Estate Sales summary from Prudential Douglas Elliman. The report documents a modest increase in offering prices for properties in NYC when, as compared to the same period during 2010. Even better, sellers only had to shave 4.9 per cent off the original listing during the final days of 2011, an impressive change from the 8 percent drop they faced during the previous year. Overall, properties remained on the selling block for a mere five more days than in 2010.

At the same time, the number of New York City properties available for purchase is fairly steady, while apartments are becoming scarcer and pricier. Last year, Manhattan rents rose a staggering 9.5 per cent, driven by would-be homeowners who opted to sit out the uncertain economy.  The current numbers point to an equation that’s beginning to tip the argument back towards buying, rather than leasing.

Home orders up

Just last week, major national home builder Lennar Corp reported an astonishing 20 percent hike in orders for new houses 2010’s final months, an upturn nobody would have dared to forecast a year earlier. On Bloomberg.com, a company spokesman credited soaring rents for the climb. At the same time, the number of National Association of Home Builders Improving Markets nearly doubled from 41 to 76.

To be sure, problems are still aplenty. Chief among them – on the national level - is an inventory of well over a million homes in foreclosure with several million more bound for the auction block. Although a relative few are in Manhattan, it’s definitely not time to do a victory lap.

But for the discerning and dedicated New York City condo or coop buyer or seller, 2012 is starting to look downright viable. With the market quietly reawakening, plenty of bargains remain. Sellers, meanwhile, can expect to take a less painful hit while standing out amongst a diminished inventory of properties.

The key for those on both sides of a purchase is to proceed with care – and knowledge. Choose a capable broker, price the property well, offer a reasonable bid and be clear about your must-haves. Something is out there for everyone.