Robert Reffkin, co-founder of URBAN COMPASS on BLOOMBERG TV this morning:
Posted by Leonard Steinberg of URBAN COMPASS on July 25th, 2014
The entire USA real estate market is revealing a trend that we have witnessed in New York for some time now: brand newly constructed properties are selling for a significant premium over re-sale existing homes. The pricing variable is large. The supply is not great, but in Manhattan it is growing. Concerns exist over how many developers seem to be going after the exact same market….very high end, even in areas that are over-supplied or do not warrant a premium. Several brand new buildings, some complete and ready for move in even, are not selling mostly because they are priced too high. Some brokers in their desperation to represent a smaller inventory are over-pricing, or are succumbing to the forceful nature of some developer to price high or else.
Now more than ever it is critical for smaller building to have a completed, furnished model apartment to compete with the large buildings whose sales offices are exquisite and extensive in there ability to demonstrate what they will be delivering……often the fantasy is better than the reality.
As a broker I feel it is my obligation to price where the market is, not where I would like it to be. Pricing based on unrealistic expectations is bound for failure and disappointment. Waiting years for inflation to escalate pricing can be extremely costly, especially once interest rates start to rise.
Posted by Leonard Steinberg of URBAN COMPASS on July 23rd, 2014
Pricing in Hong Kong remains high, with some penthouse apartments selling for over $ 14,000/sf. Buyers from Hong Kong should look at the pricing of the mega-towers of the 57th Street corridor and consider them relatively good buys…..but are there enough Hong Kong buyers for these mega-priced-apartments? The question of what will happen on the 57th Street corridor where buildings such as One57, 432 Park Avenue, the Steinway Building, the Nordstrom Tower, Moma Tower, etc are being built remains un-answered. It is likely that 220 Central Park South will suck the air out of its competition: who wouldn’t prefer the Central Park South address, not to mention the immediate visual association to 15 Central Park West? Time will tell.
Now the time has arrived for us to re-classify the luxury market: lumping these uber-buildings in with the rest of the market is distorting and skewers the figures.
Limestone, a facade material most associated with tony Park Avenue and Fifth Avenue uptown buildings has emerged in……of all places….West Chelsea, Downtown New York! Very few buildings Downtown boast this beautiful material: 15 Central Park West clad its entire facade in Limestone to emulate the cachet of 740 Park Avenue. Now we see this material being used on the Sherwood Equities building located at 500 West 21st Street…..soon to be followed by the magnificent Steven Harris-designed condominium across the street from Gagosian Gallery at 560 West 24th Street. West Chelsea is becoming awfully chic!
It is just a matter of time before the sidewalks of New York will be lined with charging stations for electric vehicles: I have always resisted the urge to get a car and driver as the thought of a car idling in front of a building for hours truly disgusts me. All to often I see lines of limos running idles, spewing the city with pollution and consuming energy that ultimately makes all our lives miserable, not to mention the noise.
Soon car manufacturers will be bringing electric/hybrid cars to the market to provide transportation that is both comfortable and not dismissive of the environment. Hopefully the electricity will be generated by solar panels and wind turbines so that the creation of the electricity is not polluting our streets and city.
The other day while observing the views from the West Side of Manhattan across the Hudson River to New Jersey, it was striking to see how similar the New Jersey skyline looked compared to Manhattan’s. Does Manhattan dictate the ‘look’ of a large city throughout the world? It certainly has influenced every major center in that it is largely credited for inventing and embracing the concept of the skyscraper. George Post’s New York Equitable Life Building of 1870 was the first tall office building to use the elevator, while the Produce Exchange of 1884 made substantial structural advances in metal frame design. The Home Insurance Building in Chicago, opened in 1884, is most often labelled the first skyscraper because of its innovative use of structural steel in a metal frame design. While Chicago was the earliest adopter of the skyscraper concept, Manhattan in my opinion owns the concept.
In this weekend’s Financial Times, a story addresses San Francisco’s concerns that the construction of new very tall buildings will make their City look too much like Manhattan. This is a huge challenge for all cities around the world: how to be distinctive and unique as a City. Often, the buildings we see constructed in New York are simply bland and dreadful. Manhattan should embrace its status as the world’s standard for big city appearance. Now Manhattan has to be careful to maintain those unique qualities and invent new ones that become the instantly recognizable hallmarks of the Manhattan landscape. Other cities around the world should follow suit, drawing on their own cultural and visual references to maintain a sense of uniqueness and distinctiveness. Sameness is a nagging topic that permeates throughout all designers offices: the safety of sameness has to be weighed up against the value of distinctive, bold, authentic design to avoid the world becoming one big monotonous repetitious mess.
This week’s profile in the NEW YORK OBSERVER…… http://observer.com/2014/07/leonard-steinberg-urban-compass-profile/
A Long Island Railroad strike is looming and at the core of the problem is a simple truth: commuters who use the LIRR cannot afford to pay more for the service in raised fares, there is a budget, and salaries cannot be raised in that budget if fares are not raised. The average salary of an LIRR employee is $ 87,182 per year including overtime pay.
The average monthly LIRR ticket costs $ 245.
Its that simple.
Yet, the union simply cannot accept this and insist they should earn more, even if those using their less-than-stellar service are not earning more. The negative economic impact on New York could be huge, not to mention the misery it would cause thousands of commuters who depend on this public service.
The MTA last month offered LIRR workers a 17% wage increase over 7 years….about 2.42% per year. The union was seeking 17% over 6 years….or 2.83% per year, a position that was backed by two federal mediation boards. The current inflation rate in the USA is 2.1%.
To help pay for the increase in labor costs, the transit system wants current LIRR employees to contribute 2% of their salary to health insurance; they currently make no payments. New workers would direct 4% to health care and, unlike current employees, would contribute to their pensions after 10 years.
This strike makes for a strong argument for living in the city and being able to walk to work.
Transportation systems around the world are held hostage frequently by their employees, so we are not alone: these demands make for a strong argument for automation and computers to replace unrealistic demands on those consumers who can least afford it. Think Detroit.
Posted on July 13th, 2014
It amazes me how large organizations such as the Federal US government are grossly mis-managed: A government watchdog agency said an estimated $106 billion in payments were made in error last year (thats about $ 350 per American, and much more for those paying Federal taxes): meaning they were the wrong amount, went to the wrong person or lacked sufficient documentation. There is something to be said for lean, efficient, organizations. Then again, its a lot easier to waste money when you have not earned it. Next time a politician talks about tax increases, they should be forced to talk simultaneously about where they plan to cut waste and mis-management. Often examples stare you in the face: for instance in New York, I often walk in bright daylight while street lights are left on, often in the middle of the day. There is a sports field across the street from my apartment where massive floodlights stay on all night for no good reason at all. I see government vehicles idling for no good reason across the City. Each instance is minor, yet collectively, multiplied over 365 days, the waste is extreme. The next political candidate who proposes a task force to cut waste and minimize inefficiencies will get my vote.
London is experiencing some BUYER-BLUES on the very high end and today its reported that home-price gains in London’s most-expensive neighborhoods are trailing the rest of the city because buyers are deterred by high asking prices and the possibility of new taxes. Values in prime central London rose 8.1% in the 12 months through June, yet home prices in the entire city jumped 26% in the second quarter from a year earlier, the biggest gain in 27 years: does this mirror what is happening here in Manhattan versus Brooklyn? At what point do price large gains cause buyers to become increasingly nervous that this is either unsustainable or unaffordable?
London’s Mayfair and Chelsea have risen by more than 70% since the 2009 GREAT RECESSION. Next year a capital-gains tax on homes sold by people living abroad is further dampening spirits and the Labour Party wants to implement an annual tax on homes worth more than 2 million pounds. Apartments and houses valued at less than 2 million pounds increased by about 14% in the 12 months through June, while those 10 million pounds or more climbed 3.5%.
Soon we will discover whether BUYER-BLUES are:
1) Frustration at limited inventory and choices.
2) Resistance to pricing out of concerns of a bubble.
3) Exhaustion at being unable to meet unrealistic expectations.
4) A realization that their incomes have not kept apace with housing inflation.
5) A pause to catch your breath.
6) Anger that they keep being out-bid by all cash buyers.