LuxuryBlurb
Archive for August, 2010
Monday, August 30th, 2010
 It is now certain that within the next 10 years, the Manhattan skyline will look very different. Plans for a spate of significant high rise buildings appear to be moving forward now as the economy slowly un-locks.
Developers are readying two residential towers that will rise above most of Midtown. The massive mixed-use development planned west of Penn Station would transform Manhattan’s skyline as viewed from New Jersey. Downtown, the transformation is already happening, with the warped, metallic skin of Frank Gehry’s Beekman Tower looming over the neighborhood around City Hall and, at Ground Zero, 1 World Trade Center already rising to 36 stories.
Some of the proposed alterations to the city’s skyline have been opposed. Vornado Realty Trust’s plan to build a tower near Penn Station attracted criticism from people wanting to preserve the Empire State Building’s iconic spot.
But the new projects are being propelled by powerful forces. The City Council’s near-unanimous approval of the Vornado project is a sign that elected officials are much more concerned about producing jobs than aesthetic concerns. “They were saying New York needs new buildings,” says Carol Willis, director of the Skyscraper Museum. “Before that, I would’ve said that New Yorkers like their city just fine the way it looks right now.”
“Politics trumps everything in development,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and leader of the LUXURYLOFT team. “When politicians need to create jobs, huge buildings that employ thousands become desirable, something that also caters to the Unions. Remember the midtown Jean Nouvel tower that was proposed a few years ago? Jobs were not a political issue then, so the Tower was scrapped.”
From a residential perspective new towers are definitely in demand, especially in the Midtown area: they offer the views, services and amenities that this buyer craves. Aside from the Bloomberg Tower and the Time Warner building, there are not too many options.
From the commercial perspective, businesses are demanding super-efficient high-tech spaces with high security and quality space. It is very difficult to retrofit existing buildings to achieve this.
And if you don’t think this will happen, look at West Chelsea to-day compared to 10 years ago…..100 Eleventh Avenue, 456 West 19th Street, 200 Eleventh Avenue, 231 and 245 tenth Avenue, Gehry’s IAC building, HL23, The Caledonia, all viewed from the Highline Park…..
Sunday, August 29th, 2010
 The USA may indeed be following another European trend: The birth rate has dipped due to the recession according to a report on Yahoo news. This is an alarming trend: While reducing population that may require welfare, it is usually the more educated , wealthier citizens who cut back on family size thus reducing the number of future consumers (and taxpayers!). Then again, fewer kids could translate to more disposable cash for adults, especially of benefit to the luxury market. Maybe its time to re-evaluate our immigration policies and invite more, educated, smart, hard-workers into the country? They usually end up buying high end real estate too….
ON YAHOO NEWS to-day…..Forget the Dow and the GDP. Here’s the latest economic indicator: The U.S. birth rate has fallen to its lowest level in at least a century as many people apparently decided they couldn’t afford more mouths to feed.
The birth rate dropped for the second year in a row since the recession began in 2007. Births fell 2.6 percent last year even as the population grew, numbers released Friday by the National Center for HealthStatistics show.
“It’s a good-sized decline for one year. Every month is showing a decline from the year before,” said Stephanie Ventura, the demographer who oversaw the report.
The birth rate, which takes into account changes in the population, fell to 13.5 births for every 1,000 people last year. That’s down from 14.3 in 2007 and way down from 30 in 1909, when it was common for people to have big families.
The situation is a striking turnabout from 2007, when more babies were born in the United States than any other year in the nation’s history. The recession began that fall, dragging down stocks, jobs and births.
“When the economy is bad and people are uncomfortable about their financial future, they tend to postpone having children. We saw that in the Great Depression the 1930s and we’re seeing that in the Great Recession today,” said Andrew Cherlin, a sociology professor at Johns Hopkins University.
“It could take a few years to turn this around,” he added.
The birth rate dipped below 20 per 1,000 people in 1932 and did not rise above that level until the early 1940s. Recent recessions, in 1981-82, 1990-91 and 2001, all were followed by small dips in the birth rate, according to CDC figures.
The Great Recession “is definitely a deterrent” to people having more children, said Dr. Michael Cabbad, chief of maternal health at the Brooklyn Hospital Center, where births declined from about 2,800 in 2008 to about 2,500 last year.
Even Cabbad’s son said he’d like to have more children “if his business plan works out.”
Nearly half of low- and middle-income women surveyed a year ago by the Guttmacher Institute said they wanted to delay pregnancy or limit the number of children they have because of money concerns. Half of those women also said the recession made them more focused on contraceptive use. Guttmacher researches reproductive health issues.
Besides finances, experts said a decline in immigration to the United States also may be pushing births down.
The downward trend invites worrisome comparisons to Japan and its “lost decade” of economic stagnation in the 1990s, which was accompanied by very low birth rates. Births in Japan fell 2 percent in 2009 after a slight rise in 2008.
Not so in Britain, where the population took its biggest jump in almost half a century last year and the fertilityrate is at its highest level since 1973. France’s birth rate also has been rising; Germany’s birth rate is lower but rising as well.
Cherlin said the U.S. birth rate “is still higher than the birth rate in many wealthy countries and we also have many immigrants entering the country. So we do not need to be worried yet about a birth dearth” that would crimp the nation’s ability to take care of its growing elderly population.
The new U.S. report is a rough count of births from states. It estimates there were 4,136,000 births in 2009, down from a year ago’s estimate of 4,247,000 in 2008 and more than 4.3 million in 2007.
The report does not give details on trends in different age groups. That will come next spring and will give a clearer picture who is and is not having children, Ventura said.
Last spring’s report, on births in 2008, showed an overall drop but a surprising rise in births to women over 40, who may have felt they were running out of time to have children and didn’t want to delay despite the bad economy.
Women who postpone having children because of careers also may find they have trouble conceiving, said Mark Mather of the Population Reference Bureau, a Washington-based demographic research group.
“For some of those women, they’re going to find themselves in their mid-40s where it’s going to be hard to have the number of children they want,” he said.
Heather Atherton is nearing that mark. The Sacramento, Calif., mom, who turns 36 next month, started a home-based public relations business after her daughter was born in 2003. She and her husband upgraded to a larger home in 2005 and planned on having a second child not long afterward. Then the recession hit, drying up her husband’s sales commissions and leaving them owing more on their home than it is worth. A second child seemed too risky financially.
“However, we just recently decided that it’s time to stop waiting and just go for it early next year and let the chips fall where they may,” she said. “We can’t allow the recession to dictate the size of our family. We just need to move forward with our lives.”
“This trend could result in smaller houses, apartments, and so much more,” says Leonard Steinberg, managing director of Prudential Douglas Elliman. “It could also result in larger cities becoming more and more desirable.”
Saturday, August 28th, 2010
The economy is experiencing a unique problem: unemployed people who are able to find good jobs in alternative cities are unable to take the jobs as they cannot sell their homes as many mortgages are worth more than the homes in this current market.
Why not introduce a NATIONAL HOUSE-TRADE BANK/DATA BASE, whereby someone could trade their home and mortgage for someone else’s similar home/mortgage value in the City they need to move to? Whereas both properties would still retain an inflated value in to-day’s market, over time this will correct itself, but more importantly, it will minimize the significant expense of foreclosure to the economy and speed up hiring.
“This could boost the economy by helping those un-employed to take a job, thus reducing stress on the government funding, and also reduce the number of foreclosures and sales happening below market values,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and leader of the LUXURYLOFT team. “An employed person spends more, thereby boosting the economy a third way. It’s time for politicians and banks to get creative and practical!”
Friday, August 27th, 2010
 In CRAIN’s it is reported that Balducci’s is seeking to return to Manhattan, searching for a 10,000sf flagship store as well as some smaller outposts. We say: HEAD WEST! The area in far West Chelsea around the Highline Park desperately needs a Balducci’s. “We think the perfect location would be at the corner of 23rd Street and 10th Avenue in the new building on the South West corner,” says Leonard Steinberg, head of the LUXURYLOFT team and a managing director of Prudential Douglas Elliman. “Add up the demand from London Terrace, the thousands of new condominium units that have recently opened COMBINED with the 3 million or so visitors to the Highline Park each year and you have the recipe for a perfect location. Also, an access elevator and stairway is being installed just under the Neil Denari designed HL23 a few steps West. This location would also service the thousands of people walking to the Starets Leighigh building and all the hundreds of Art Galleries each day.”
FROM CRAIN’S: After exiting the Big Apple last year, high-end grocer Balducci’s is now planning to make a comeback. The gourmet chain, known for its enticing assortment of meats, cheeses and Italian delicacies, is eyeing several locations for small, quick-service stores, as well as for a 10,000-square-foot flagship.
Balducci’s, which was founded in New York 64 years ago, currently operates six locations in New York state, Connecticut, Virginia and Maryland, along with three quick-service shops at John F. Kennedy International Airport. Starting this fall, it is planning to open as many as three small midtown locations, ranging from 1,000 square feet to 2,000 square feet in size
“We’re looking to put our foot in the market,” said Jason Pruger, the Newmark Knight Frank Retail broker who, along with colleague Ross Kaplan, is exclusively representing Balducci’s in its search. “Balducci’s is an iconic New York brand that we’re excited to bring back.”
For its larger Big Apple flagship, the chain is searching “affluent, dense residential neighborhoods” such as the Upper East Side and Upper West Side, Mr. Pruger noted.
Sizing down its first outposts is a good starting point for the chain’s re-entry here, according to industry consultants.
“Real estate being as expensive as it is in Manhattan, it’s not a bad idea to go smaller,” said Matt Casey, who runs grocery consultancy Matthew P. Casey and Associates.
Balducci’s shuttered its two last Manhattan locations in Chelsea and the Upper West Side in April of 2009. The grocer also operated a storied outpost on Sixth Avenue in Greenwich Village from 1972 to 2003. At the time of the Manhattan closures, the gourmet chain also terminated a Washington, D.C., store. It is now operated by New York investment firm Angelo Gordon & Co., which also owns New Jersey-based Kings Super Markets.
Jim Demme, the Angelo Gordon & Co. senior advisor who led the acquisition of Balducci’s, did not immediately return calls for comment. However, Burt Flickinger, a supermarket consultant, expects him, along with the operating power of Kings, to return Balducci’s to prominence.
“[Balducci's under Kings] will be a very formidable foe, particularly for A&P’s Food Emporium,” said Mr. Flickinger. He also noted that Kings “is of the best seafood retailers in the U.S. and is very strong in delis and will bring those skills to Balducci’s in New York.”
Thursday, August 26th, 2010
 According to a report on CNNMoney, the American home is shrinking. Toll the bell for the McMansion.
After years of growth, the Census Bureau recently reported that median new home size fell to 2,135 square feet in 2009 after peaking at more than 2,300 earlier in the decade. That is a significant drop….almost 7%!
“As we see two economies emerge, the averages will shift,” says Leonard Steinberg of Prudential Douglas Elliman managing director of New York’s leading residential real estate brokerage. “Most middle and lower income homeowners do not use or need a formal dining room, let alone a double height ceilinged entrance hall: With new technologies come new efficiencies. A large screen TV used to take up about 12sf ….now it hangs on the wall. Architects are becoming more focused on engineering useful space rather than creating large spaces. Of course, the very wealthy will still have their Mc Mansions, but even in this arena we are seeing a remarkable shift towards energy efficiency and it has become fashionable to boast of a home’s eco-friendly features.”
So, how could New Yorkers shrink their space, considering homes here are significantly smaller (and thereby much more efficient than suburban homes):
1) Use skinny plasma TV’s mounted on the wall.
2) Double up: a wall that has bookshelves built in to it uses the space of the wall. Better still, store the books away and use a KINDLE or I-pad to store thousands of books. If you dine formally once a year, think about making the dining room more of a great room/study that converts easily for formal dining.
3) Scale your furniture differently: Many, over-stuffed, over-sized furniture items achieve the exact same comfort levels as much smaller pieces that use up much less square footage.
4) Engineer your storage: Closets should be engineered for maximum usage. Use ‘void spaces’ those little pieces of space under stairs, above closets, etc where outstanding storage opportunities exist used creatively.
5) If you have those hideous through-the-wall AC systems, box around them to add storage as well as hide them from sight. Still better than those vile window units that are both ugly and super-inefficient.
6) Store under the bed, possibly utilizing this as a closet rather than just ‘junk space’….there are interesting applications for this.
The downside to shrinking homes? The cost per square foot will rise.
Wednesday, August 25th, 2010
In this morning’s Wall Street Journal Josh Barbanell reports that despite rising gloom about home sales across the country, sales of apartments in Manhattan appear to have strengthened this summer, with median prices up, inventory down and an increase in the number of apartment closings.
The figures suggest that the Manhattan market, buoyed by a resumption of hiring and a healthy Wall Street bonus season ahead, has so far escaped much of the distress across the country. The National Association of Realtors reported Tuesday that existing home sales nationwide plummeted by 27% in July, following the expiration of federal housing tax credits.
“Everyone has an opinion as to where the market is heading: the reality is all these opinions are guess-work,” says Leonard Steinberg of Prudential Douglas Elliman, who was contacted for this article but not quoted. “Ask anyone in the financial markets if we are heading into inflationary or deflationary times and the answer is consistently yes….and no.”
Wednesday, August 25th, 2010
 After yesterday’s expected news about sharply reduced activity in the re-sale of existing homes (the aftermath of the end to the buyers tax credit), it was announced that mortgage applications rose last week as record low rates lifted demand for home refinancing loans to its highest level in over 15 months, a development that could provide a much-needed jolt to the economy.
Home loan refinancing puts extra cash into consumers’ hands that they can save, use to pay off existing debt or funnel into the economy through extra spending.
To-day we await the figures for the sale of NEW homes. “We are finding in Manhattan an increased demand for new homes that do not require renovation, and we are also seeing owners of existing homes more reluctant to sell right now, happy to wait the market out if they do want to sell,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and leader of the LUXURYLOFT team.
Tuesday, August 24th, 2010
Sales of previously owned U.S. homes dropped in July to their lowest pace in 15 years, implying further loss of momentum in the economic recovery. Note: PREVIOUSLY owned homes.
The National Association of Realtors said sales dropped a record 27.2 percent from June to an annual rate of 3.83 million units, the lowest level since May 1995. June’s sales pace was revised down to a 5.26 million-unit pace. Analysts polled by Reuters expected existing home sales to tumble 12 percent to a 4.70 million-unit pace from the previously reported 5.37 million units in June.
Tuesday, August 24th, 2010
 Something very newsworthy is happening in the luxury Manhattan real estate market…….for the first time in many years we have experienced (while renting out an apartment in Tribeca) prospective, qualified renters withdrawing their applications after realizing that buying would cost almost the same as renting, and opting to buy. We have not heard this in YEARS.
“To-day, figures will be released for housing sales in July, and they won’t be great. New York is a different market though, so what is happening in the US is not necessarily what is happening in our area”, says Leonard Steinberg, managing director of Prudential Douglas Elliman. “Our recent rental experience leads us to believe we really have bottomed, and from here the market stabilizes and improves.” Recently released rental activity reports indicate a rise in rental property inventory: but these reports are not very specific. Some areas and property classifications are actually experiencing shortages which will boost the cost of renting. The days of cheaper rentals in prime Manhattan areas are fading fast, epecially for larger units. Combine this with the MTA’s quest for sharply raised fares and one has to wonder where deflation exists in New York. If anything, this is inflation.
In FORBES, columnist John Tamny says don’t fear the housing market……There’s a growing consensus that another economic contraction is likely if home prices in the U.S. dip. The thinking here seems to be that if prices decline, the resulting increase in foreclosures would weaken already shaky banks that would either fall into insolvency, tighten lending standards or both. With bank lending already down, renewed weakness would supposedly strangle a nascent economic recovery.
Scary stuff for sure, but also arguably overdone. Most would agree that heavy investment in the housing sector helped get us into the mess we’re in, so for housing worriers to suggest that an artificially enhanced property market is our cure is to get things backward.
More realistically, the mortgage defaults and resulting housing weakness a few years back signaled an economy on the mend thanks to markets correcting overinvestment in that space. If economic growth is the goal, the best thing we could do would be to let houses and mortgage securities find their natural, market clearing level.
To do otherwise, as in if Washington continues to use limited capital to prop up housing, would be for our federal minders to elongate what remains a painful economic downturn. A housing correction, far from limiting growth, would actually constitute economic revival for underutilized capital migrating toward more productive pursuits.
When an individual buys a home, there’s merely a transfer of wealth from one person to another. This is quite unlike the purchase of shares in a public company, or the deposit of funds in a bank where an individual is transferring capital to existing and future businesses eager to expand. To invest in housing is to essentially transfer capital into the ground, whereas when we save and invest we provide entrepreneurs with the means to expand.
This is important in light of the housing boom of not long ago. It’s once again assumed that a decline in prices from what remain high levels would be economically harmful, but it could more credibly be stated that the not-so-long-ago rally in home prices was the recession for limited capital flowing into unproductive assets of the earth over productive assets of the mind.
To make what transpired not long ago clearer, tomorrow’s Googles, Microsofts and Intels suffered a capital deficit amid the rush to housing, and builders gorged on the capital that passed them by. This was no accident; rather it was the predictable result of policy from the U.S. Treasury in favor of a weaker dollar.
History shows that during periods of currency weakness, available capital flows into tangible assets least vulnerable to the aforementioned debasement. Ludwig von Mises referred to this phenomenon as a “flight to the real,” and it’s what has always occurred when monetary authorities seek a decline the value of the unit of account.
Looking at the decade just passed, the dollar’s impressive weakness drove up the nominal value of all commodity-like assets, with housing a natural beneficiary. Not only did this “money illusion” distort home purchases, but it ultimately created a housing glut as faulty price signals tricked developers and lenders into believing that home prices could only rise. Evidence of the overbuilding that resulted from monetary mischief is everywhere at present, with unsold and uninhabited homes dotting suburban landscapes across the country.
For the federal government to then use capital borrowed or taxed from the private sector to put a floor under home pricesnow would be for it to continue to distort real market signals on the way to more investment in housing. We’d be doubling down on an economic bet that previously helped put our financial system on its back.
The logical response is that intervention in the property space is necessary to maintain the fragile health of a banking systemthat would suffer mightily from another round of mortgage defaults. Fair enough, but this thinking ignores what little good the savior of Japan’s zombie banks did for its economy during its two lost decades, plus it grossly overstates the importance of traditional banks when it comes to the accession of credit.
Sunday, August 22nd, 2010
 Imagine these awnings (or a version thereof) attached to all sunny sides of buildings in Manhattan where the awnings not only provide cover from the sun and rain, but also produce power…..what about small solar panels or wind turbines that you plug in just like a small appliance?…..that’s the promise of a Seattle, Washington-based start-up that is working to provide renewable energy options — solar panels and wind turbines — for homes and small businesses. The panels cost as little as $600 and plug directly into a power outlet.
The company, Clarian Power, aims to be the first to bring a plug-in solar power system to the market, in 2011.
Clarian’s president, Chad Maglaque, says the company’s product is different from existing micro-inverters, which convert solar panels’ power into AC current. Maglaque says his system has built-in circuit protection, doesn’t require a dedicated electrical panel and plugs directly into a standard electrical outlet.
“Within the next 5 years, we will see a radical volume (think i-pod) of new, highly creative systems in New York real estate installed to create clean energy,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and leader of the LUXURYLOFT team. “We have been touting these systems for years in LUXURYLETTER, the monthly newsletter on the goings on of luxury Manhattan real estate.”
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Lola Gardner 
I really enjoyed your website and will bookmark it!