Articles on Manhattan Real Estate Trends

Attracting Foreign Buyers in the Middle of the Eurozone Crisis

WThe uncertainty surrounding the eurozone threatens to further hurt the Manhattan luxury real estate marketait-and-see. For many foreign buyers whose fortunes hinge on the outcome of the European debt crisis - even those who aren’t from Europe - these words neatly sum up their attitude towards the future. This potentially disastrous impasse threatens to slow sales of luxury condos in Manhattan even further, but who can blame people for waiting? The fate of the world’s economy is up in the air. In case you’re wondering why this is immediately relevant for us, look at the numbers: foreign buyers made up one-third of sales in Manhattan over the past year, and from March 2010 - 2011 8% of home sales nationwide came from foreign buyers. In other words, foreign buyers have been keeping the Manhattan luxury condo market afloat, so this wait-and-see attitude could prove to be devastating; the market is already bogged down in a sales slump. However, new legislation introduced in the U.S. Senate might stimulate sales of luxury condos in Manhattan to unprecedented heights, if it passes. And that’s a big if.

In Manhattan, Luxury Condos and Luxury Rentals Blend Together

A rental apartment in Silver Towers that was originally designed to be a condoWhat’s the difference between a luxury condo and luxury rental in Manhattan? These days, barely anything. The average size of a 1-bedroom luxury rental in Manhattan is 600-675 square feet, while the average size of a 1-bedroom luxury condo in Manhattan is 700-800 square feet. The units in 8 Spruce Street in FiDi and Silver Towers in Midtown West are newly constructed luxury rentals that are indistinguishable from newly constructed luxury condos and subsequently attract wealthy buyers who would’ve only considered condos before; Silver Towers in particular was originally going to be a luxury condominium. This trend is no accident; the uncertain economy has made developers antsy about the future, leading them to adopt the strategy of designing luxury buildings in Manhattan that could convert easily from rentals to condos or vice versa. Consequently, these newly constructed luxury buildings have made the distinction between the two thinner than ever.

Autumn Real Estate Sales are Fading Fast

EvLuxury real estate in Manhattan just isn't selling in Autumn anymoreen though, traditionally, autumn has been a strong season for sales of luxury condos and real estate in Manhattan, sales these days have been harder to come by. This decline has put brokers and real estate pros in a bind, because many buyers and sellers are waiting until the spring to make their moves. Over the past few years, New Yorkers have turned their attention towards spring in lieu of buying or selling Manhattan luxury real estate during the fall. According to Streeteasy.com, Manhattan October sales have declined from 868 in 2009 to 371 in 2011. This precipitous drop may not be as bad as it as sounds - this isn’t a long-established pattern - but as of right now it appears that a slow autumn season may become the norm, as the market shifts from autumn to spring. But is there a benefit to this slowdown for Manhattan buyers?

Revival of the Harlem Condo Market in Full Swing

The Harlem condominium market is on the upswingWhen Lehman Brothers went bankrupt in the fall of 2008, perhaps no neighborhood was more greatly affected than Harlem. The ill-timed flurry of construction in Harlem that preceded Lehman’s collapse left about a dozen new developments stranded, so to speak. In other words,  those new luxury condominiums either on the market or about to be on the market at that time suddenly had no buyers and a bleak future. So, almost overnight, the new construction revival in Harlem created a glut of luxury condos that no one wanted to live in. This unfortunate turn of events had defined Harlem real estate for the past few years, but it looks like the damage wrought by those events has finally abated: in the third quarter of this year 150 condos sold in Harlem, marking the fifth quarter in a row where condo sales in Harlem exceeded 100 units. Despite the odds, sales of new luxury condos now exceed pre-Lehman levels. Granted, this is due to greatly reduced inventory and an extreme shortage of quality inventory elsewhere in Manhattan, but this recovery is still impressive, and it spells good news the Manhattan luxury real estate market as a whole.

The Lessons of Manhattan Real Estate History

Wall Street created a crisis in the Manhattan real estate market in 1929Easy credit, rapid development, rising values, rising demand, resales aplenty: does this sound familiar? The Manhattan real estate boom of 2007 and 2008 for luxury sales exhibited all of these characteristics in spades, but this was nothing new for Manhattan. During the roaring 20’s, the exact same boom took place, although everyone knows how that scenario played out. The stock market collapsed, the real estate market followed suit, and property prices (when measured by square foot) declined for a decade. While the parallels are undeniable, very few people are willing to draw them, and for good reason - the real estate market depends heavily on consumer confidence. Nonetheless, the similarities between now and then far outweigh the differences.

Manhattan Developers Relying on Condo Conversions

The inner courtyard of the Apthorp, a high-end converted condoWith a dearth of new construction, developers in Manhattan have shifted their tactics. 2011 has been the year of the condo conversion, and this wave of conversions seems likely to continue as long as financing for large projects remains difficult. In lieu of working with banks to loan them the large amounts of money required for new condo construction, developers are electing to simply convert rental buildings or office spaces instead. So far the tactic is working, although this strategy is heavily dependent upon the continuation of a healthy New York real estate market. If global financial insecurity or the recent woes of Wall Street begin to turn the current seller’s market into a buyer’s market, these converted condos might prove to be unwise investments.

No Price Too High for High-End Apartments

Luxury apartments are selling at pre-recession pricesThe high-end luxury market is back. For the past 3 years, high-end real estate was something of a black sheep among an otherwise healthy real estate market in Manhattan, but no longer. After the recession sent high-end condo sales into a precipitous slide for 2 years, the market began to reassert itself last year, albeit slowly. Recently though, the luxury condo market is making up for lost time. According to a Wall Street Journal analysis of city property filings during the third quarter, sales of high-end apartments in Manhattan reached their highest level since mid-2008, the peak of the real-estate boom.

Condos Revisiting the Market Find Buyers

Buyers are eager to purchase luxury condos in ManhattanThe New York City luxury condo market is generally recognized as its own real-estate niche. Certainly, national real-estate market forecasts have repercussions on NYC's real-estate beat--but they're limited. So don't write off the Manhattan luxury condo market to broadcasted waves of statistics just yet. Yes, according to The Wall Street Journal the national housing inventory crashed into rocky lows this year; but refocusing the real-estate market lens to apartments for sale in Manhattan, the city has seen units going up, and several buildings being re-launched after bitter 2010 presales, according to The New York Post. Manhattan is proving yet again to be the exception to the rule.

Brokers on the Buyer's Side

A broker attempts to sell an apartment in NYCMost people think that, in a nutshell, a broker is a broker is a broker. Buyers pay good money for the brokers that work for them because of their excellent knowledge of Condominiums and Co-ops in Manhattan, but that’s only half the story. Consumers often fail to realize that most brokers are seller’s brokers and as such their primary responsibility is to represent the seller’s interests. After all, the sellers pay their commission. Sometimes seller's brokers leave out important information about building problems, apartment defects or poor resale value, for instance, or negotiate unfavorable contract terms for the buyer. These practices aren't common but they are possible in these situations.

No More Behemoths: New York Condos Go Small

A rendering of 949 Park Ave, one of the many smaller condos being builtThe days of massive condos that were a staple of the boom period in New York City condo construction are over, at least for now. An extremely difficult loan market has forced developers to adjust their strategies and abandon earlier efforts to build condos with hundreds of units. The result is a sharp drop in size: according to data compiled by StreetEasy.com, new condo projects in 2005 and 2006 averaged 83 units per building, while so far in 2011 the average is 34 units. Additionally, StreetEasy.com reports that developers built 10 condos of 100 units and over in both 2005 and 2006, but this year there is only one such condo being built.

The crux of the problem is that the money just isn’t there. New York City’s overall real estate market may be healthy – at least in comparison to the rest of the country - but financing large projects is difficult at best. Extell Development Co. president Gary Barnett told the Wall Street Journal that, "It's extremely difficult to finance large condos. Rentals you can get done, you can get small projects done." The residential high rises that define many neighborhoods, such as Midtown Manhattan, have also tapered off severely for similar reasons. In the eyes of the banks the market demand for these kinds of buildings is simply not strong enough to justify their creation. Loans in the ranges of $25million – $75 million are now the norm, a far cry from loans of $500million+ needed to build larger projects.