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.

New York City Real Estate forecast for 2012

Ah, 2012. Mayan scholars predicted the world would end in December. Nostradamus pinpointed it as the year when a comet would collide with earth, causing Armageddon.

I’m far less pessimistic.

The upcoming year won’t end life as we know it, nor will it crush New York City’s real estate market. Rather, the recession-depression-downturn-stagnation-retrenchment of the American economy will, I believe, leave things looking a lot like they do today.

 Interest rates: Bizarrely low for the last few years, interest rates are likely to remain at rock bottom levels through 2012. The only possible change would be a slight increase.

Unemployment levels: New York City seems poised to hold on to its unfortunate place in the national unemployment picture. At present, the jobless rate hovers around 8.9 per cent in the five boroughs, well above the statewide average of 8.0 per cent. (The full statistical details are at: http://www.labor.ny.gov/stats/pressreleases/pruistat.shtm.)

Bonuses: With employers reluctant to add new positions in an unpredictable economy, bonuses won’t increase. Plus, the European Crisis and other global economic uncertainties keep wages at current levels. Read that: less money to spend on housing.

Inventory: With sellers hesitant to enter a market that may be near its absolute bottom, inventory is tight. I wouldn’t be surprised to see prices climb in 2012 as demand inevitably rises.

It may all sound dismal, but I see a silver lining.

New York City boasts a thriving rental market. With a vacancy rate of less than one per cent, sellers willing to lease their abodes while they wait for the rebound could do quite well.

Plus, high-end properties – listed for $5 million and above – are strong and healthy. After all, housing looks like a great investment when measured against other financial instruments. 

And, at some point, fence-sitting buyers will likely act on a hard, cold fact, that in 78 cities it is now cheaper to buy a house than to rent.

So 2012 doesn’t sound too horrible. Definitely not Armageddon.

Happy New Year.