April 26th, 2015
Posted by Leonard Steinberg, president of COMPASS on April 26th, 2015
Yesterday a literal forrest invaded West Chelsea: numerous massive, fully grown trees were being installed at 500 West 21st Street, the almost completed building by Sherwood Equities……Sherwood Forrest perhaps?
The massive scale of the trees, some over 40ft in height, had on-lookers mesmerized. I could think of nothing more wonderful than instant forests sprouting up all around the city! The engineering and infrastructure necessary to install this was very impressive indeed. The best landscapers in town (Reese Roberts and Partners, who also designed our magnificent penthouse terrace at 7 Harrison Street in Tribeca, also with large mature trees) designed this installation of a bank of mature trees as a buffer between the building and the Highline Park which it abuts, providing privacy to those apartments that will be confronted by heavy foot traffic on this prized elevated park.
As someone who works with developers daily, I always stress that it is the actual plantings that matter most when landscaping. Nothing is more wonderful than a controlled view, and a view of a park always commands a premium. West Chelsea welcomes its new forest!
April 20th, 2015
Posted by Leonard Steinberg of Compass on April 20th, 2015
Shockingly, the politically fueled non-story about how people who qualify for affordable component rental housing within a large market-rate condominium would have to use a separate entrance, has resulted in over 88,000 applicants for just 55 units at 470 West 62nd Street. Further proof that regular, intelligent human beings care a lot less about an entrance to a building than the affordability of the home, contrary to the tiring misplaced banter of political hacks whose political agendas trump all reason. Did these 88,000 people DEMAND access to all the identical facilities of those paying significantly more to buy in these buildings? Of course not. Why? Because they are practical and realistic. They would be only too thrilled to have the opportunity to live in a wonderful new building in a solid location for low rent. Only unrealistic, self-entitled deluded politicians would believe they should have EVERYTHING that everyone else has just because.
Does Mayor DeBlasio offer to pay the same real estate taxes than others in New York who for similar valued property pay double, triple or more? Of course not! For those applying for this affordable housing, the chances of ‘winning’ are 0.14%…..in short very slim. I do wish those who ‘won’ the right to live in these apartments signed a contract that encouraged them to elevate their earnings and move out over a set time period to allow the thousands who did not win this lottery to get a break, but that may be wishful thinking on my part in a city that chooses a few select lottery winners and seems quite comfortable with everyone else footing the bill or suffering. The U.S. Constitution says we should all be treated fairly and equally: some politicians simply choose to ignore this.
April 12th, 2015
Posted by Leonard Steinberg of COMPASS on April 12th, 2015
A recent visit to the highly anticipated new mall at BROOKFIELD PLACE left me cold: Granted the designers inherited some rather bland architecture to begin with, but what they have done with it is truly disappointing. Nothing about this mall is much different or enticing than a bland mall anywhere else in the world. Time Warner Center benefits by striking architecture, but even that cold mass of steel and granite feels warm and cozy to Brookfield Place where they have achieved new heights in sterility. Surely being set alongside the water’s edge could have influenced some form of human charm? This place feels so cold to me, so un-inviting. Miles of boring granite or marble. Those massive palm trees while novelty for sure could be interesting…. but feel like a Floridian suburb to me. Huge open spaces that could be ANYWHERE MALL AMERICA…..
The LE DISTRICT food court looks more like a newly minted Starbucks than anything remotely as interesting and vibrant as Eataly. It repeated the dating design language of white subway tiles, steel, wood and concrete in a manner not unlike fifty other retail environments around the city….and hundreds (if not thousands) around the globe. It is about as French-charming as an Eiffel Tower T-shirt, although the smell of the food is beyond incredible. But where is the French charm we all love so dearly? There are thousands of French design elements that could have been inspiring and this is all they could muster? Disney-Parisian is not the style I am referring to, but surely there is something that could be both authentically New York AND French?
If you are looking to buy a Michael Kors handbag or a pair of Ferragamo shoes, this mall will deliver. The food quality is strong. The environment needs help. It needs CHARM. Right now its as cold as a Battery Park City winter.
March 21st, 2015
Posted by Leonard Steinberg, president of Compass, on March 21st, 2015
New Yorkers like to think of themselves as innovative, individualistic and original: unfortunately many of them often follow trends like a herd of sheep. An article in this weekends Wall Street Journal showcases how a world once possessed by owning an Hermes Kelly bag, now confronted with the reality that THOUSANDS own this same bag that costs $10,000+, is turning towards something more individualized and less obviously excessive: Carrie-Bradshaw-think appears to be fading.
I see a similar trend emerging in New York real estate. Granted there will always be a market for the most fashionable building of the moment, but buyers of previous ‘of-the-moment’ buildings are learning the cost of fashion in real estate. Unless the attributes and features of a building are truly substantive, the cosmetics can fade fast. There are buildings that were once ‘it’ buildings rather recently that already look rather tired. I shudder how those poor buyers were conned into believing what they were buying was so great when in actuality they were buying something rather ordinary.
Today I am seeing a new trend where wealthy, educated buyers are looking for more than just a trend or moment. The mass production of an ‘it-product’ automatically diminishes its value in my humble opinion. Formulaic design has its limits. A home should allow for individuality and self expression. Too many properties are either dull and repetitive or dictatorial in design. This is changing. We will soon be launching a building at 152 Elizabeth Street in Nolita designed by master architect Tadao Ando with interiors by Gabellini Sheppard that speaks to this subject beautifully. In a sea of sameness, creating a product that is very difficult, if not impossible, to reproduce, let alone mass-produce, is a challenge, but if properly delivered becomes an instant collectors item.
‘It-buildings’ are great up to a certain price-point, but when the majority of people are spending a huge percentage of their net worth on a home, asking them to believe in fashionable of-the-moment possibly-soon-to-be-out-of-style real estate is somewhat dangerous from an investment perspective. Lets see what this next round of New York buildings can produce to see if it mimics a trend thats already happening in a much more affordable market….fashion.
March 14th, 2015
Posted by Leonard Steinberg, president of COMPASS, on March 14th, 2015
Traditionally, couples who lived in New York City migrated to the suburbs, or at least to the Upper East Side, to raise a family. This has changed drastically over the past decade. With the gentrification of Downtown neighborhoods, schools, parks, services, amenities and property have adjusted to the demands of raising a family.
Avenue’s School, the private international school located in West Chelsea, has heightened the real estate industry’s need to build larger apartments that can accommodate a growing family. Three and four-bedroom apartments that were virtually non-existsent 5 years ago, are common place in most new buildings. Townhouse pricing in the area has soared. Schools alone are not enough of a draw: having great parks, play areas, sporting facilities, restaurants that accommodate strollers and noisier, messier kids, sidewalks that allow for easy walking, etc all play into the picture. The appeal of the suburbs has always been about quality of life…..as this quality of life continues to improve in New york, the more families are staying and moving to the City. The costs are still enormous, and unfortunately our governments make virtually no acknowledgement of cost-of-living in their tax structures. Someone earning $300,000 in Manhattan is considered equal to someone making the identical income in Memphis. Its quite insane. People who live in a $2 million apartment in New York are termed rich, yet for what their dollar buys on big-city standards, this is truly middle class, as crazy as that may sound to those who live outside of a large city.
While the media focusses its attention on mega-deal, ultra-priced properties, the reality is there are some properties for sale in-between that are actually attainable. Not AFFORDABLE necessarily, but attainable. If $ 2,500/sf is the new benchmark for a new building apartment, a 3,000sf apartment should cost upwards of $7.5 million. With some compromise, there are alternatives: We are listing a 4,100sf+ apartment in Greenwich Village at 345 West 13th Street, a top quality, doorman, condominium building for under $1,400/sf. Granted, a chunk of the space is below grade, but its completely usable with natural daylight and an additional full bathroom and separate entrance…..very usable space and perfect for that need to stretch out: a games room, hang-out area, etc. For the more monied buyer, we have four bedroom, full floor apartments at 560 West 24th Street that are the equivalent of a 4-story townhouse, but on one floor….with services….for under $8 million. You cannot find a fully renovated townhouse that size anymore for under $10 million. There are also very good buys in the co-op arena: I know of a 4,000sf loft coming to market in the heart of Chelsea that hovers around $1,250/sf: no-one in the press is talking about these great buys, but they should. All around town there are some great buys in the re-sale arena, that with some compromise and a little TLC, can provide great housing at a fraction of the price of the much touted more glamorous new buildings.
These prices are still well beyond most buyers, yet when you compare the cost of a large house in the suburbs along with the cost of time for commuting….for some that cost is priceless (time is the last real luxury)….combined with the escalation potential only a big city with higher inflation guarantees, the big city alternative becomes more enticing.
As real estate professionals, the New York Department of State prevents us from discussing schools or using terms such as ‘family sized’ as they are deemed potentially offensive or discriminatory against those who do not have a family. I think this is bureaucratic insanity. If a buyer were to ask me if other families live in the building, we are not allowed to refer to ‘familial status’ at all. Surely as a buyer it would be nice to know who your neighbors may be? It is left to the buyer then to do their own research and fact-finding. Is this another excess of ultra-liberal-thinking that serves no-one? I don’t have a family and would have absolutely no problem with discussing families, their needs, schools, whether there are potential play-mates in the building, etc. I simply don’t see the insult or any form of discrimination in doing so……maybe I am deluded?
The absolute suburbanization of the city is somewhat exaggerated: Too many gripe about how the city has lost its gritty edge. To those I say evolve. Would the original American Indians prefer this whole island returned to farmland? Manhattan will never ever remotely resemble a traditional suburb and will always contain the elements of an urban environment with great museums, public transportation, in-your-face diversity, taller building, greater density, etc. However, we all benefit by improving the quality of life for all in all large cities, and New York has done an exceptional job in re-shaping the quality and future of neighborhoods, especially Downtown, for those seeking the attributes of a suburban life mixed with the delights only a large city can deliver.
March 7th, 2015
Posted by Leonard Steinberg, president of COMPASS, on March 7th, 2015
As unemployment figures continue to drop, the likelihood of rising interest rates strengthens……and this may cause a spike in pricing as buyers rush to buy to capitalize on the current low (but rising) interest rates. Rising prices may force some to turn to renting, which would further create the imbalance between supply and demand in the rental markets and push renting pricing up. The next 4 months will be very telling indeed.
March 5th, 2015
Posted by Leonard Steinberg of COMPASS on March 5th, 2015
New records are about to be set in New York City: At the much-anticipated 83-unit 220 Central Park South designed by Robert A.M. Stern, storage rooms will be priced starting at $111,000 for 44 square feet ……or $ 2,522/sf. This number was very recently associated with record priced properties elsewhere in Manhattan, but now just a few weeks later will be the cost of storage space without windows. An 84sf storage space will be asking $211,000.
Even more shockingly, wine cellars will start at $133,000 for 38 square feet….or $3,500/sf. and go up to $287,000 for a larger 82 square feet space. Parking spaces will cost $750,000.00, a thorough bargain when compared to the parking spaces in Soho located at 42 Crosby Street that made headlines by asking $1 million per space. The apartments at 220 Central Park South will be asking a little over $ 7,000/sf and up and will be competing against remaining units at 432 Park Avenue, One 57 and the other new buildings such as the Steinway Tower, the Nordstrom Tower, 520 Park Avenue and 53 West 53rd Street, the MOMA Tower.
February 21st, 2015
Posted by Leonard Steinberg, President of COMPASS, on February 21st, 2014
Everyone should read this well written article by Stephen Smith that highlights the absurd obsession with the mega-wealthy who constitute a fraction of a percentage of all real estate transactions. All writers and editors should take note of this article to see how they have been lured into the tabloid-esque world we live in and in doing so are losing credibility as reporters of news that really matters.
Earlier this month, the New York Times published the results of its year-plus-long investigation into the buyers of condos at the Time Warner Center and other buildings around the bottom of Central Park. The city’s paper of record poured an enormous amount of resources into the piece – Louise Story hadn’t had a byline in the paper since August 2013, and Stephanie Saul since January 2013. Twenty other people contributed reporting, research, design, graphics, illustrations, and productions, not counting the editors involved.
What was revealed, though, was little more than high-brow tabloid reporting. There are a lot of wealthy people from all over the world living in the Time Warner Center, and as anyone with a passing familiarity with wealth in developing countries knows, it’s tough to amass a fortune in many parts of the world without attracting controversy of some sort or another.
What the authors could not do, despite the hundreds of thousands of dollars that was poured into the project, was put the story into any sort of context. The goings-on at the Time Warner Center and the buildings around Central Park are all well and good, but those are only a small handful of housing units in a city with more than 8.2 million people, that sits within a greater region of over 20 million. The authors quote James Parrott with the Fiscal Policy Institute as saying that these buyers are bidding up housing prices throughout the whole market – no doubt true, but to what extent? Impossible to say, given the lack of context.
Andrew Rice, who wrote a similar story for New York magazine last year, ran into the same problem. The only data point he found that could put the story into perspective was an estimate by PropertyShark of how many “condo sales in large-scale Manhattan developments” – already a big and somewhat ambiguous qualifier – “have been to purchasers who either listed an overseas address or bought through an entity like a limited-liability corporation.” The number was 30 percent, but even that obscures more than it clarifies – it includes plenty of domestic buyers, which Rice tried to downplay, though the city’s other real estate reporters weren’t buying it.
And the New York magazine piece wasn’t the only one that used shaky statistics to prove a point about ultra-luxury Manhattan real estate. A Times story on the city’s “emptiest co-ops and condos” lumped together all non-primary residences, whether they were truly empty pieds-à-terre, or merely condos that were rented out – a somewhat interesting phenomenon, but nowhere near as controversial as apartments that actually sit empty. (The distinction was lost on many, who, in their tweets and reblogging of the story, misinterpreted the “nearly one quarter of the apartments in New York City are not used as primary residences” line as “nearly one quarter of the apartments in New York City are pieds-à-terre.”)
And if there’s any real estate topic that attracts as much attention from the mainstream media as the uppermost tier of the luxury market, it’s gentrification. Gentrification is no doubt an important and often alarming phenomenon in New York City’s market, but the focus occasionally seems misplaced, and often crowds out reporting on everything else going on in the city’s property markets.
Case in point: another article in New York magazine by Andrew Rice, this time on East New York. Much of the discussion on gentrification focuses on the neighborhoods on the other side of the Broadway Junction, in Ocean Hill and eastern Bushwick. But the implication is clear: gentrification will eventually hop the firewall of Brownsville housing projects and the East New York Industrial Business Zone, and head into East New York proper.
But in focusing on gentrification, Rice missed the real source of demand bidding up rents in East New York: immigrants. With three-quarters of the housing units in East New York being rented out, it’s rental rates, not sales prices, that are the real cause of concern when it comes to rising housing costs. While sales prices may be bid up by speculators anticipating fixie-riding hipsters invading during the next market cycle, actual rents can only be affected by people currently renting in the neighborhood.
And for all the talk in the story of the gentrification that might come – “We don’t want to sell this as the place the hipsters should come to,” a local development corporation official tells Rice – East New York is losing what few non-Hispanic whites it had. From 2000 to 2010, their numbers in greater East New York – from Pennsylvania Avenue to City Line, Cypress Hills to Starrett City – were down 30 percent to just 6,250, while the total population grew by nearly 10,000 to 184,000.
It’s not whites who are flocking to the neighborhood and bidding up rents, but immigrants – namely those from the Dominican Republic, South Asia (especially Bangladesh), Mexico, and Central and South America. (To say nothing of immigrants from the West Indies, most of whom are not counted due to the Census’s frustrating practice of lumping together all black ethnicities into one group, obscuring what are likely to be flows of African-Americans out of the neighborhood and West Indians in.)
And for the most part, the incoming immigrant groups don’t even seem to be displaced from other neighborhoods. The number of Dominicans, the ascendant East New York group (that we can count) with the longest history in the city, is rising much faster in Crown Heights, Bed-Stuy and Bushwick than it is falling in Williamsburg. Ditto with Mexicans and the other Latino groups who are growing in East New York. And Asians are on the rise nearly everywhere – their growth in East New York is entirely a story of immigration, not displacement.
But these are all trends that New York Magazine – and, for that matter, nearly every other publication writing about East New York – missed, with their obsessive focus on the white New Yorkers who might someday pour into the neighborhood.
And there are other trends that the real estate media is missing while they hyperventilate over oligarchs and gentrifiers. Non-luxury market-rate construction made up a pretty largely chunk of the city’s new construction during the early and mid-2000s, and all but evaporated as the recession took hold, with no sign of returning, even as the broader market has largely rebounded. Meanwhile, the South Bronx is attracting more market-rate construction than it’s seen since the 1920s.
Most of New York’s rental apartments are rent-regulated in some way, but the city and state keep little data on what the rents in these units are, and release none publicly on what they legally should be. To say nothing of the fascinating and dynamic markets in southern Brooklyn and eastern Queens, where the lack of white hipsters, yuppies, and gentrifiers means little in the way of coverage in the city’s mainstream real estate press.
Gentrification and the ultra-luxury market are increasingly important trends in New York City real estate, but they aren’t the only stories to be told. And if the media is as concerned about these phenomena as they claim, it’s just as important that they cover middle-class real estate topics, if only to understand what needs to happen to encourage more housing for the vast majority of New Yorkers who are neither rich enough to afford luxury new construction, nor lucky enough to win a housing lottery.
February 19th, 2015
Posted by Leonard Steinberg, President of COMPASS, on February 19th, 2015
Each morning I start the day by writing a letter to my company on a topic of interest. I thought I would share this morning’s, all about the emerging “Affordable Luxury” market that I feel should be termed ATTAINABLE LUXURY. After all, what is so affordable about any real estate in a large city?
In my books buying a home is a luxury for most people at every price-point, especially in a big city. Too many agents poo-poo the buyer who ONLY can spend $1 million on a home, when to that buyer a million dollars seems like a ridiculous fortune. Remember when you bought your first pair of real expensive shoes? That feeling of ‘wow, I am really going all out here’ pales in comparison to the magnitude of a home purchasing transaction. For the VAST majority of home-buyers buying is highly stressful, involves tremendous second-guessing and ranks up there with death and divorce o the stress-meter.
With many large city developers focusing almost exclusively on larger expensive apartments over the past few years, it comes as a relief that some are now as focused on what they call ‘AFFORDABLE luxury’. For most this is simply inaccurate: the vast majority of these buyers will not consider these apartments affordable…….most will still see them as a luxury that is attainable, but the word affordable may be a stretch. Affordable also diminishes the meaning of the word LUXURY and in my opinion should be avoided.
Condominium median pricing in New Developments trades at an approximate 35% premium: This pricing premium is magnified in the ultra-luxury area of the market. The pricing spread between new development and resales may not be sustainable over the longterm. While everyone focuses on price per square foot, at the end of the day it is the absolute price that matters most to the majority of buyers. If they can only afford $2 million to buy a home because that is what their assets, income and bankers will allow, attempting to buy a $2.5million property is pointless. The $2million property will probably deliver less than the more expensive one, so they may not be getting anything terribly affordable at all at the end of the day. More attainable properties that deliver the required room count will probably be less luxurious, in lesser locations and have shrunken dimensions.
Another important factor in this ‘attainable luxury’ market are real estate taxes and monthly carrying costs that keep rising each year. Most cities are subject to rising costs, much of them attributed to labor and unions, not to mention inefficient governments. Unfortunately governments do not make any allowance for cost-of-living in the tax structures: someone earning $500k annually in Memphis would need to earn approximately $826k in Washington DC to live a similar quality of life….about 65% more!
So while the world tries to push the word AFFORDABLE, remember for most this word is inaccurate and simply insulting.
February 17th, 2015
Posted by Leonard Steinberg of COMPASS on February 17th, 2015
Property price escalations have soared over the past few years in cities such as London, Miami, Aspen, Beverly Hills and New York, in some areas coming off lows caused by the GREAT RECESSION: Many of the super-wealthy are now asking whether its realistic that pricing escalation can continue at this pace, or if the ‘real-estate-luxury-super-yacht’ has already sailed.
Some very wealthy clients of mine told me a story about their search for an apartment and how they (mistakenly) tried to time the markets…..and lost. Several years ago at a similar time when many were wondering whether the pricing escalation of that time could continue, they decided to put their apartment search on hold, instead deciding to rent till things cooled off and they could buy into the market at reduced pricing. They learned a painful lesson once the recession hit. Firstly, the majority of the best properties were removed from the market as those wealthy owners could weather storms and hold on till the markets recovered. Secondly, when construction ground to a halt, the inventory of great properties started to shrink. Thirdly, obtaining financing was impossibly difficult, even with superb credit and assets. Fourthly, they had wasted substantial time and effort: their kids had grown up in a less stable home environment than one achieved through home ownership. They were running out of space. They had worked hard and were not enjoying their wealth in a way only an owned home can deliver joy, and time was their worst enemy.
Ultimately they resumed their search, found an amazing property, and spent slightly more than had they bought at the ‘peak’ of the market that halted their search. Will the same be true for this market? Its almost a certainty that at some point sales and pricing escalation will slow. This may not be good for speculators, but will it stop home buyers? I doubt it.