LuxuryBlurb
Archive for August, 2011
Sunday, August 21st, 2011
 Posted on August 21st, 2011
The new EQUITY/Sam Zell rental building at 500 West 23rd Street may be bringing a worthy counter-balance to its rather mundane architecture to the West Chelsea neighborhood: rumor on the street is the ’ultimate gourmet market’ Citarella may be the new street level retail tenant. With 5 locations currently in Manhattan and the Hampton’s, Citarella would certainly be a very welcome addition to the neighborhood, prefectly positioned amongst hundreds of brand new high end condominiums whose owners would certainly be thrilled with an alternative to the insultingly dirty, over-priced Gristede’s located on Tenth Avenue and 24th Street. This location would benefit equally by the thousands of visitors drawn to the Highline Park: a prime entrance is located in front of 500 West 23rd Street…..add to this the throngs of locals and tourists headed towards Chelsea Piers and the Hudson River Park.
Leonard Steinberg says: “Lets hope this rumor is indeed true: it would be great for this neighborhood!”
Sunday, August 14th, 2011
 Posted by Leonard Steinberg on August 12th, 2011
As the political climate shifts to a more conservative stance, and the almost certainty that Rick Perry will be the next USA president, the super-wealthy will continue to seek out homes within communities that protect and separate them from the increasingly volatile outside world.
These gilded, gated communities are more obviously visible in Florida, California, Texas and Hawaii, usually featuring elegantly ornate gates with security protecting the inhabitants from the masses. In Manhattan, this country club mentality was taken to the extremes in picky co-ops such as Riverhouse, 740 Park Avenue and One Beekman where wealth alone does not secure entry. Now with buildings such as 15 Central Park West, The Time Warner Center and other high end condominiums, the old fashioned exclusionary co-op policies seem somewhat out of vogue, even though many of these buildings would probably love to institute stricter ‘admissions boards’ to keep out the riff-raff….lets face it, with the world celebrating and rewarding the likes of Snookie, wouldn’t it be nice to choose your neighbors?
The divide between the extremely wealthy and the poor will probably continue to grow. Those few individuals capable of amassing wealth through either extreme brilliance, hard work, luck or corruption, will want an environment that caters to their needs seamlessly. One Hyde Park in London is the perfect example of a building delivering that cocooned lifestyle becoming increasingly more desirable around the globe in major world centers……inclusive of bullet proof windows to keep the angry London rioters at bay?
I believe the trend to emerge out of this will be some gated community’ buildings that do not appear that way, where those living in them would be somewhat embarrassed to admit the need for the lifestyle. Because many people entering into this new wealth will have no clue about style or taste (think Snookie!) these buildings will have to deliver on every level, proposing a quality of life this buyer aspires to but would have no idea how to create: If Ralph Lifshitz could create the RALPH LAUREN uber-wasp lifestyle from A to Z, anything is possible! Security will be a growing concern, along with the staffing, swimming pool and high end gym. With the wealthy world fleeing towards quality in everything (Think the success of Hermes), the quality of these buildings from the design to the finishes to the construction to the mechanical systems will have to be of the very highest order, or they will fail.
Hundreds of apartments in this genre will be coming to the Manhattan market over the course of the next few months and years as the global economy grows (even though what is happening now is a bit scary, over the next 5 years we can be certain there will be growth). Developers who deliver an A-grade product will be handsomely rewarded. And those that deliver A-grade quality in a less obviously glitzy setting will attract the younger wealthy who don’t want to appear too ostentatious. In fact, the concept of a gated community is horrific to this buyer.
Maybe the Countess on Bravo’s The REAL Housewives of New York is wrong when she sings “Money can’t buy you class”? Leonard Steinberg sings: ”We will design, create and sell class”……for a price, of course!
Monday, August 8th, 2011
Posted by Leonard Steinberg on August 8, 2011
To-days dramatic market plunge following the S + P downgrade raises the question: is this a correction or a crash? Market corrections are not unusual events. From the market lows of July 2010 to the highs of April 2011, the S&P 500 was up over 26% without experiencing a correction. To put that 26% run-up in perspective, the best 20-year time period for the stock market was 1948-1968, and the market only returned an average of 8.4% annually during that period. This illustrates that we were overdue for a correction. During recovery periods, stocks are prone to sudden declines in value. Unexpected drops in the market can be painful, but they are part of the healing process. And I would be certain many shorted the market to compensate for last week’s losses. Gold is at an all time high, trading over $ 1,700/ounce to-day…..and talk of inflation is growing. These may be good times for real estate, provided interest rates don’t spike.
Fear is still dominating investor sentiment. Fear and uncertainty are not good for the luxury real estate market. What are people afraid of? While there are several factors that could be cited, debt problems domestically and abroad would be the most obvious answer. Our nations medium to long term debt needs to be addressed urgently. And revenues need to be raised, even if its just for a few years till everyone is working again, producing more tax dollars and not draining the Federal money bandage.
Yes, European countries have spent themselves into a corner: correcting this mistake will be good for long term growth, not bad. While some financial institutions may face losses in the process, the minimal level of European exposure U.S. banks have, makes them well equipped to face this challenge. The odds of significant damage to the U.S. economic system resulting from European debt failures are very low.
Although S&P downgraded the nation’s bond rating from AAA to AA+, Moody’s reaffirmed the United State’s AAA rating. The U.S. now has a split rating from the two largest ratings agencies. The third-largest ratings agency, FitchRatings, also agreed with Moody’s AAA rating. In confirming the AAA rating, Moody’s recognized that the budget compromise is a first step toward achieving long-term fiscal improvement. The legislation passed on August 2nd calls for $917 billion in specific spending cuts over the next decade and established a congressional committee charged with making recommendations for achieving a further $1.5 trillion in deficit reduction over the same time period.
Strategic investing is a long term project undertaken with risk and uncertainty. Equity markets do not move in a straight line, and neither do economic recoveries. Neither do real estate values. Right now we are hearing lots of NOISE, but we will only be able to assess the true facts in a few weeks, possibly months. Long term objectives should not be drowned out by short term panic or radical moves.
So lets think solutions: These will be the trends I would hope to see in the future:
1) Cut long term spending, without raising poverty levels. Raised poverty levels will cost lots more. Raise retirement ages and benefits ages. One or two years can even make a big difference. Attack waste and corruption with a vengeance. Do not ever enter into an un-funded war….EVER again. If you want to go to war, have the money to pay for it.
2) Raise revenues by eliminating loopholes for those that really don’t need them. When GE does not pay taxes, we all have to pay for it. Introduce a tax system that doesn’t just reward a select few….lets play fair. Should billionaires pay less taxes than millionaires? And if so, explain it to all of us and SHOW us how it helps the planet.
3) A re-newed awakening of our need to make and produce things. ‘Buy America’ seems smart right now.
4) A flight to quality: In real estate and in everything. Maybe its time to focus on less volume, more quality rather than too much of a bad thing. When you buy 5 cheap Chinese made toys when you could buy one well made American made toy that obviously costs more because we ended slave labor many years ago, think about the cost to all.
5) Medical costs are much, much too high for what they deliver. The profits of the medical system are the primary killer of our economic recovery. Who is profiting from this? Not the American taxpayer for sure. And without Obamacare, who will pay for the un-insured? We will.
6) Hire local: this is a double edged sword. Jobs left America not only because they were much, much cheaper elsewhere, but also because Unions were becoming extremist in their demands. Paying workers a wage that is impossible to live on is also unwise. A fair, balanced approach is needed. Ross Perot predicted our unemployment rate to-day many years ago….we chose not to listen.
7) Wall Street needs to revise its thinking. This Quarterly-think mentality has to end. It drives companies to make decisions that may be of benefit to its balance sheet and the stock price in the short term, but it is bad for the economy in general. When thousands are fired, who pays for their unemployment benefits?
Saturday, August 6th, 2011
Posted by Leonard Steinberg on August 6, 2011
The S & P downgraded the USA to AA+ credit rating from its previous top-notch rating of AAA, an embarrassment to the entire country for sure, but certainly nothing too un-expected considering the disgraceful political maneuverings in Washington….. the U.S. debt wasn’t downgraded because it didn’t have the ability to pay its debt obligations today; the U.S. does. The U.S. debt was downgraded because it nearly didn’t have the go-ahead from U.S. leaders to agree to pay the debt obligations today. So again, our beloved politicians are at fault. How will this affect real estate?
The first concern would be rising interest rates, which is a possibility. Chances are the most important result of this will be the erosion of confidence, the key ingredient to a healthy real estate market. And with an election 16 months away, chances are our beloved politicians will focus on being elected or re-elected rather than the critical issues our country faces to-day. The level of stupidity and self-serving arrogance is astounding. If the US was a company, the entire Congress would be fired……so maybe its time for us the shareholders of the USA to stand up to this crazy power hunger. Commercial real estate will probably suffer more, as companies will hold back on expansion and spending. It seems the only solution large corporations can think of to solve our troubles is to cut back expenses…..usually at the expense of the big picture.
The key to this economic recovery is all about driving demand: without it, there can be no growth and certainly no buisness confidence. If the government cuts benefits dramatically, eroding the little cash the tens of millions of Americans rely on to survive, will that drive spending? Hardly. It could only work if the government simultaneously drives growth and investment. Now that we are certain we are in trouble, we should ALL contribute to our recovery. Yes, that means intellligent spending cuts, tax incentives for hiring, increased revenues…..sorry guys, but cutting your income from $ 10million to $ 9million per year to boost tax revenues won’t hurt! And yes, some of the tax breaks provided to companies that really don’t need them to be super-profitable should be removed. It’s time for some Bloomberg-style intelligent accounting AND business common sense. Has your accountant or lawyer ever made you money? No, they are good at preserving wealth, not growing it…..our economy needs growth. And we should start making + buying more quality stuff in the USA.
Will the New York luxury residential real estate market suffer? Doubtful. There are always people making lots of money in any market, and the de-valued dollar, limited inventory and still-low interest rates will keep the market relatively healthy. But the best will be the first to sell, and an even greater demand on quality is inevitable. The role of the broker will be even more challenging, and the buyers, sellers and bankers will be tougher. Good luck to us all….now lets find some good leadership for Washington: no freak-show extremists please: It’s time to try practical intelligence.
Wednesday, August 3rd, 2011
Posted by Leonard Steinberg on August 3rd, 2011
$4,200 is now the average amount carried by Americans on their credit cards…..that is down from over $ 11,000.00. That’s down rather dramatically. To me it means that should consumer confidence return, spending could rise nicely….and lets face it, this economy needs and relies on spending more than anything. Once that happens it would fuel employment, and the fewer people uemployed and working, producing tax dollars, not being paid by the Fed…and spending….the better life will be here. You have to dream….
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It would definitely be a welcome addition. The neighborhood has an abundance of income and very few places to spend that income on high quality produce and products.
Has this rumor been confirmed since? Would be an amazing addition to the neighborhood. Gristedes is terrible.