LuxuryBlurb
Archive for October, 2010
Sunday, October 31st, 2010
 In CRAINS, a report shows how New York City is unlike the rest of the USA, and is truly an international city.
These days, buyers of commercial property in New York can expect their investments to provide similar rates of return as they would in London, Paris and Washington D.C.—cities RCA calls the “Fabulous Four.”
Capitalization rates, the yields investors receive from investing in commercial properties, are more in parity among these four markets than with their respective regions.
Over the past year, yields on prime properties in New York and Washington have averaged a mere 50 basis points, or 0.5%, above those of London and Paris. But they have ranged from 50 to 300 basis points—0.5% to 3.0%—below the average yield in the U.S. as a whole, where prices are significantly lower. Similarly, those in London and Paris have been on average as many as 200 basis points below the average office yield in Western Europe.
One of the main reasons is the strong interest from cross-border buyers, who represent a large share of acquisitions in each of these four cities and help keep prices aligned within these global markets. Foreign buyers account for more than half of office transactions in London and Paris, and a quarter of transactions in New York and Washington.
“A buyer can jump from New York to Paris very quickly,” said Dan Fasulo, head of global research at Real Capital Analytics. “It’s the same buyers, the same debt providers.”
This isn’t a new phenomenon, but it has regained momentum since the recent slump. Mr. Fasulo said that it has been a macroeconomic trend for close to a decade but was put on hold during the global economic downturn in late 2008 and early 2009.
And what does this mean for residential real estate? “When there is money to be made in New York City,” says Leonard Steinberg of Prudential Douglas Elliman and publisher of Luxuryletter, “the wealthy are there. That bodes well for our City.”
Saturday, October 30th, 2010
 With almost certainty we will see a major political shift after next week’s elections. The presidency will be stuck in a potential gridlock where the only window of opportunity is 2011 says Nouriel Roubini in to-day’s Financial Times. The president deserves credit for setting up a bipartisan debt commission, which is most likely to propose a sensible combination of entitlement spending cuts and increases in taxes. But sadly the chance that these recommendations will be implemented in 2011 is close to zero: Republicans will veto any tax increase, while Democrats will resist unpopular entitlement reform. Again, Washington politicians serving their own interests of power and not the well being of the country. The TEA PARTY is not the Third party this country needs after all…..the THIRD PARTY needed is the one that can unlock gridlock and side with the party that makes the most sense for the country, trimming it’s excesses and de-radicalizing its agenda….an intelligent party …….GO BLOOMBERG!
So we see LOTS OF GRIDLOCK over the next 2 years, a protracted Halloween if you like. And how will this affect New York real estate?
“New York’s high end real estate is fueled primarily by Wall Street,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and publisher of LUXURYLETTER. “Wall Street goes where the money is, and if growth is not in the USA, it will put its money where it can make the most money. There are many other parts of the world where growth and success are huge, and US investors and companies have their hands in all of this. Remember corporations and private equity are sitting on over 2 Trillion dollars of cash right now. Wall Street likes certainty, and its almost certain not much is going to change in Washington for the next 2 years. We think this will keep the markets stable: they will not soar upwards, nor dip downwards. Some areas of inventory shortage may rise more than others though: that is happening already.”
Thursday, October 28th, 2010
 Tonight, 200 Eleventh Avenue, the iconic new landmark in the West Chelsea Arts District designed by Annabelle Selldorf and built by Glauco Lolli-Ghetti of Urban Muse and Young Woo and Associates came to life with the launch of SNOB magazine, the Russian language magazine geared towards the growing Russian community in the USA.
On one of the most perfect evenings, a large, well-heeled crowd ascended to a dramatic penthouse in the building currently listed by Leonard Steinberg and Herve Senequier of Prudential Douglas Elliman for $ 17,5million. Beluga Caviar and Champagne were flowing, with thousands of candles and 2 bands playing. The dramatic double height loggia terrace boasted the most remarkable panorama of Midtown Manhattan as a backdrop. Nets owner Mikhail Prokhorov, the owner and publisher of SNOB, towered over the crowd, yet he never felt constrained by the 24ft ceilings of the large living room with views in every direction.
The magazine, operating out of a Dumbo office, will include a social-networking website and an elite club that hosts invite-only cocktail receptions, readings and film screenings around the U.S. The September issue features a cover story on Stepan Pachikov, the Russian founder of a handwriting-recognition software company. Snob will be distributed 10 times a year, running a circulation of 20,000 in New York.
Thursday, October 28th, 2010
 If you are walking near West 26th Street and 10th Avenue, look up. You will notice a new addition to the High Line—the Viewing Spur is starting to take shape. Crews have hoisted the 22-by-11-foot painted steel frame into place, giving us a hint of what will soon be one of Section 2′s most dynamic design features. The Viewing Spur is meant to recall the billboards that were once attached to the structure of the High Line. This frame, though, will enhance views of the High Line and the city, rather than blocking them as the billboards once did. The Viewing Spur will be surrounded by shrubs and trees, such as Flameleaf sumacs (Rhus copallina), sassafras (Sassafras albidum), and Greenbay magnolias (Magnolia virginiana ‘Greenbay’). At the foot of the frame, a platform with wood benches will invite High Line visitors to sit and enjoy views of the neighborhood. Meanwhile, passers-by on the street will look up and see people in the place of advertisements. We think it will be one of the best places for people watching when Section 2 opens next spring.
“Only when the extension of the High Line Park opens next Spring, will we see the true value of it’s ability to connect neighborhoods,” says Leonard Steinberg, publisher of LUXURYLETTER and managing director of Prudenital Douglas Elliman. “This park will connect the sensational gallery district of West Chelsea to the vibrant Meatpacking District and Greenwich Village. What surrounds this park will be simply amazing, and already we can witness the creation of an entirely new quality of life for Manhattan living.”
Thursday, October 28th, 2010
 And this is news? Any New Yorker has know this news headline for decades. So instead of repeating the obvious, here are some solutions for reducing the noise levels in Manhattan:
1) Fine (heavily) and remove any and all vehicles whose noise levels exceed the legal limit: we all know the culprits….those annoying Harley drivers who think that all of us are beaming with delight as they roar through town. Sorry guys, you are the only freaks who think that noise is ‘fun’. Fine them. It will raise revenues and improve quality of life. Its not only bikers: think those huge annoying garbage trucks from the dark ages, busses, etc…..replace them all with electric vehicles that are quiet.
2) Enforce the law in general: There are noise laws, but they are hardly ever enforced. Noisy AC systems, trash playing music loudly in their cars with the windows wide open (if your tunes are so great, why let them out? keep them to yourselves!).
3) Turn down the volume of your I-pod……With everyone on their I-pods trying to drown out city noise comes a price: Living in a loud club is not good for your ears: ear-phones playing loud music all day long has the same effect.
4) Turn down the music in restaurants: If we aren’t allowed to dance on the tables, why on earth would we want to be tempted throughout dinner when the chances of having a normal conversation are impossible without screaming.
5) Movie Theaters have amped up their volume by at least 10% over the past decade: its just louder than normal Hollywood!
6) Remember: If you want to capture someone’s attention….whisper! Shouting like our lovely politicians turns everyone off. Shouting in real life achieves the same.
7) SAY SOMETHING: Standing back and not voicing your outrage creates a “NEW NORMAL”….stand up for your right to peaceful co-existence.
8) Noisy neighbors have HOUSE RULES and BUILDING BY-LAWS governing noise: if they don’t, install them or move.
We hope this has you started: any suggestions?
Sunday, October 24th, 2010
The economy in the U.S. probably grew at a faster pace in the third quarter, reflecting a pickup in consumer spending that bodes well for the recovery’s staying power, economists projected a report this week will show.
Gross domestic product rose at a 2 percent annual pace, up from a 1.7 percent rate in the previous three months, according to the median estimate of 67 economists surveyed by Bloomberg News before an Oct. 29 Commerce Department report. Other data may show business investment remains a mainstay of the economic rebound, while housing is mired in a slump.
“This is definitely good news for the New York real estate market which has seen significant improvements in activity, reduced inventories and the anticipation of significant bonus dollars about to enter the markets,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and publisher of LUXURYLETTER.
The question is: If growth is good, and better than we have been told, why is good not good enough? Surely with an economic meltdown as cataclysmic as the one we just experienced, we should not expect a speedier recovery?
Sunday, October 24th, 2010
 NOT SEEN ON YOUR STREET, BUT COMING TO YOUR WALLET SOON. The foreclosure mess could hurt homeowners in Manhattan in an indirect way: The costs of buying an apartment and paying off the mortgage are likely to go up, say housing experts.
The rising costs will come both during the closing and throughout the life of the loan.
At the closing, the cost of title insurance, which protects a property buyer from claims of ownership made by other people, is likely to rise, industry officials say.
“At a closing last week I witnessed an ‘additional title insurance fee’ to cover additional insurance.,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and publisher of LUXURYLETTER.
The foreclosure mess has sent insurers scrambling. One of the largest, Old Republic Title Insurance, told its agents on Oct. 1 not to issue policies on homes that have been foreclosed by GMAC Mortgage or J.P. Morgan Chase. And on Wednesday, the nation’s largest title insurer, Fidelity National Financial, said lenders must vouch for the accuracy of their paperwork before it will insure properties.
Just like homeowners-insurance rates rise after a hurricane, the rates for title insurance are expected to rise, to compensate for the added risk.
The turmoil will likely lead to pricey premiums for new homeowners, says McLean, Va.-based housing economist Tom Lawler. Adds Cameron Finlay, chief economist at mortgage lender Lending-Tree.com: “Any time there is uncertainty in the market or risk implied, it follows that costs go up.”
Other costs could be felt during the life of the loan. Until the current mess, servicing loans was a low-margin, high-volume business. Servicers collect mortgage payments from borrowers and send them off to mortgage holders, and if the loan gets into trouble, they manage the foreclosure. Few doubt this process will get costlier now that it is under scrutiny from regulators and the courts. That higher cost likely will show up in higher interest rates for borrowers.
Both of these higher costs also would hit homeowners who refinance their loans.
How much the costs of buying a home will rise is unknown. Mortgage industry officials say it is too soon to tell. And no one believes the costs will significantly change the price of a home. So if you thought anyone was immune to the foreclosure mess, think again.
And no, Manhattan is not immune even though foreclosures are still extremely rare here. The only good news: all these rising costs equal INFLATION, not the worse option, deflation. Owning real estate during inflationary times is a good thing.
Saturday, October 23rd, 2010
 Is Downtown Manhattan the new New York SUBURB?
With 200 Eleventh Avenue, you have a garage attached to your own apartment……many full-full service buildings are becoming similar to suburban ‘gated communities’ affording even more conveniences than their suburban counterparts….think 101 Warren Street with its own Whole Foods, Bed Bath and Beyond and Barnes and Noble IN the building….in the suburbs you have to drive to those chains. Bicycle use has doubled in the past few years. Millions of trees have been planted, and parks are sprouting on every corner.
New York is becoming more suburbanized. You’ve got Home Depot, Costco, all the amenities that used to be reserved for the suburbs. The younger generation wants to live in Brooklyn, Hoboken, Chelsea, Tribeca, Soho and the Lower East Side, not in Westchester and Connecticut. Transportation from these areas to downtown is actually easier than to midtown. So when the decision makers are the next generations, it is likely that the importance of Grand Central to the decision makers will decrease relative to today. Advantage, downtown. It is fashionable to live and work Downtown….think VOGUE moving from Times Square to the Wall Street area.
“Convenience is the new luxury,” says Leonard Steinberg, publisher of LUXURYLETTER and managing director of Prudential Douglas Elliman, New York’s leading real estate brokerage. “Downtown dwellers love being able to walk to work. Walking is the one thing suburbs don’t allow. Downtown used to be all about manufacturing and finance offices: gentrification has changed that forever. A walk down a typical downtown street will include commercial lofts transformed into elegant homes, a doorman greeting guests…..tree lined streets, sidewalks with Mom’s or nannies with strollers, several Starbuck’s, only Downtown there is a strong infusion of unique boutiques and restaurants with an edgier flavor than Uptown,and certainly more interesting than the mix offered in Greenwich, Alpine or White Plains.”
Walk up Tenth Avenue from 14th Street and spot new condominiums and rental buildings by the dozen mixed in with hip, cool offices. Hudson Square surrounded by Tribeca and Soho features a substantial volume of media company office. Cross the street from Goldman Sachs and you land in Tribeca….stay on that side of the highway and you’re already in Battery Park City, and area that has grown tremendously in desirability. And all of this comes with greenery once only promised in suburban life.
Cut a commute from 1 hour a day to 30 minutes, and that adds up to more than a 5 day vacation per year…..
Friday, October 22nd, 2010
 SOMETHING THEY GET RIGHT IN PARIS.... A survey has just been released assessing the satisfaction of New Yorkers with their City…..Manhattan came out on top for some critical parts of the survey. Not only is it perceived to be the friendliest and safest borough, it is also considered to be the best place to live. On the down side, Manhattan was also overwhelmingly voted the least affordable…….
According to the DOT, 54% of all trips in NYC are less than two miles, and from 2006 to 2010 the number of bikes in the city doubled. As a result of increased bicyclists, new protected bike lanes are being added around the city.
“Every time we put down a protected bike lane, we see injuries for everyone go down 50%,” said Ms. Sadik-Khan.
“Bikers are completely out of control in the city,” says Leonard Steinberg publisher of LUXURYLETTER. “If the City is looking to make cyclists a growing mode of transportation AND raise revenues, I strongly suggest a clampdown on the lawlessness of bicyclists. Only yesterday I witnessed a cyclist run a red light and hit the white stick out of the hands of a blind person crossing the street! Why do the cops focus on car parking fines instead of biker violations that are significantly more harmful? Now its time to add secured bicycle parking everywhere and licensing too.”
Today the New York Times reports that a crackdown on cyclist lawlessness is underway, but….“It’s not always easy to do,” said Raymond W. Kelly, the police commissioner, who joined Ms. Sadik-Khan to announce the initiative. “Bicyclists move along at a very good clip. Particularly when a police officer is by himself or herself, it’s difficult to do.”
Wednesday, October 20th, 2010
 Rents in New York, Los Angeles and Washington D.C. average $2,090 and are among the highest in the nation, running as much as 218% higher than in other major metro areas, according to Movoto.com, which tracks sales and rental prices in the 40 largest U.S. cities.
“This fact is common knowledge throughout our dear land and amongst the Federal government,” says Leonard Steinberg, publisher of LUXURYLETTER and a managing director of Prudential Douglas Elliman. “The Federal government still taxes people living in these cities as if they were living in Tupelo, Ms: Yes, $ 250,000.00 income a year makes you quite wealthy in Tupelo, but not in New York!”
Now compare these rents to incomes; in most metro areas, income dropped between 2008 and 2009, according to the Commerce Department. In the New York metro area, for example, income fell 4.6% to $52,375, which translates into no more than $1,527 per month rent or about 35% of your income. You’d be hard-pressed to find that kind of deal on a studio in Manhattan or a two-bedroom in Brooklyn.
Jimmy McMillan, the nutty governor candidate for New York State may have a point. Except of course, like all politicians, what the politician says does not necessarily apply to the politician: Mr. McMillan pays $ 800/month in rent, almost a third of the average rental in New York……
In an unexpected twist, many cities are seeing rent prices rising because of the housing downturn. This includes areas that didn’t experience a construction boom, but where a large number of people have lost their homes to foreclosure and now have no option but to rent. In Austin, Texas, a new two-bedroom two-bath condo runs around $1,800, but cost $1,200 before the downturn, says Jack McCabe, CEO of McCabe Research & Consulting, which tracks the housing industry. In Austin, income fell 4.9% to $35,522, making that 35% of income threshold a meager $1,036 rent payment.
So why then does the Federal Government not make a provision in their tax code for the cost of living for certain cities where the middle class are really not rich or middle class anymore? Is Middle Class the new POOR in New York?
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