Archive for May, 2012
New York is especially well positioned in the NEW TECH ECONOMY: The recent expansion of New York’s Internet industry has forced some entrepreneurs — who recently automatically flocked to California’s Silicon Valley - to focus on New York. New York is now enough of an attractive alternative that a few West Coast-born start-ups are even packing up and moving east….. this is all good for New York real estate, both commercial and residential. People often ask why The Caledonia, a condominium building located in West Chelsea, achieves such high pricing…..does the fact that it is a 3 minute walk from Google’s offices at 111 8th Avenue have something to do with it?
Now that the technology industry has shifted more towards creating consumer products and applications, rather than building the basic framework of computing and the Internet, New York is the most logical location for many new start-ups as they benefit from proximity to the media, advertising and fashion industries, New York’s strengths. And as the city’s industry grows, entrepreneurs say, it is offsetting some of the traditional disadvantages of being outside Silicon Valley. It is also encouraging news as this tech industry growth will further lessen New York’s reliance on the financial sector as the primary source of job and wealth creation.
New York may not be overtaking the Bay Area as the hub of the country’s technology industry just yet, but the trend East is certain now. California’s tax policies that are currently being re-evaluated to offset the State’s mushrooming deficits may also encourage more entrepreneurs to head East: yes, New York’s tax policies may not be much better, but they are certainly better than California’s.
You can build great companies elsewhere, but there are few places in the world like New York where you have the powerful infrastructure to build true global franchises — technology-based franchises. Add into the mix the significant investments being made into colleges training those with the skills needed for the Tech industry.
DIA is about to launch an important new arts building in West Chelsea on West 22nd Street: Dia just bought the former Alcamo Marble building at 541 West 22nd Street in Chelsea for $11.5 million. That building sits between its former space at No. 545, and its existing six-story building at No. 535. With this additional site Dia can build a substantial 22,000-square-foot Manhattan home. In 2004 Dia closed its two Chelsea galleries (its main operations were across the street at 548 West 22nd Street), saying it had outgrown the buildings. Dia rented one of them to the Pace Gallery with a lease that ends in June.
Dia has chosen Roger Duffy, a partner at Skidmore, Owings & Merrill, to be the architect: The new Dia will include 15,670 square feet of gallery space and 3,625 square feet of rooftop for outdoor exhibitions like Dan Graham’s “Rooftop Urban Park Project,” a 1991 architectural pavilion fashioned from two-way mirrored glass that was originally installed on the roof of No. 548.
Plans call for creating a single building with a masonry-and-glass facade along the north side of West 22nd Street. It will consist of the one-story structure at what is now No. 545; a three-story building that will be erected on the site of the marble works at No. 541, and the ground floor of No. 535. (The other 5 floors of that building will be used for administrative offices or leased to commercial galleries.)
Another significant cultural addition to the West Chelsea Art scene, and an important indicator that the art scene is here to stay.
This is what Manhattan is built on…..the picture above shows chunks of granite that were blasted out of the basement of a townhouse being renovated and shows just how intensely solid the foundation of a good chunk of Manhattan is.
It is also a message about how digging a basement in New York is not an easy (or cheap) endeavour. Most New York townhouses that are renovated these days create more usable space out of their basements by digging deeper to create better ceiling heights. In London, the super-high-end houses are digging SUPER deep installing significant ‘below-grade’ living space that is very usable. Do-able, but not cheap, quick or easy……
CNBC host asks a reporter for comment on Durable Goods data: He had none…the anchor says: ”Make something up: it’s CABLE TV!” How real!
We have entered the NEW TECH ECONOMY, an economy that is reliant on, and thrives on technology to improve speed and productivity, lower costs and increase profitability. This Tech Economy makes our world a much smaller place by inter-connecting countries and economies instantly, 24 hours a day. It usurps in many ways the significance of the brick-and-mortar economy of bygone decades. Right now the key focus for investing in Silicon Alley is not Social Media: its all about energy. The world is looking to tech for solutions.
Hewlett Packard announced job cuts of 27,000 to-day: are they looking to Apple for a business model based on Apple’s ability to ship profits and jobs outside of the US to boost profitability?
All this is facilitated by technology. Commerce and industry are driven by it. Even in real estate land the reliance on tech for marketing and advertising is huge, not to mention day-to-day operations. These are the ‘GOOD NEW DAYS’ as opposed to the ‘BAD OLD DAYS’ when we had to run back to our offices to read a faxed memo, type letters and mail them, etc, etc. In the GOOD NEW DAYS of the Tech Economy we can read a newspaper anywhere in the world, anytime of the day…..from the palm of our hand. or receieve an e-mail message, or an important call. This connectivity has accelerated our lives dramatically, and in many ways made our world much easier.
On the flip side, personal interaction is waning, our addiction to a screen keeps growing, and the complexities associated with technology keep growing too: more concerning is that tech reduces the need for humans. The humans that can embrace and thrive on this “New Tech Economy” will reap the benefits, while many will falter. I believe this could further boost the growth of the rich, and further enrich them. Surely the investors of Hewlett Packard will be the biggest beneficiaries of these massive lay-offs? To-day alone the stock rose over 2%.
As crazy as it seems, the STAR TREK fanatsy worlds created for our entertainment decades ago are physically materializing before our very eyes, creating a new world where evolution too is accelerating. This should serve as a warning to all that the ways of the past will change and we had all better adapt fast, or risk becoming extinct.
Often buyers wince at the sight of a construction site abutting a building they are considering buying in…..they fear the noise it will produce. They are correct: there will be noise. But don’t for one moment think anyone living in Manhattan is immune to noise. It’s everywhere. Here are some instances of noise that you should consider:
1) Neighboring construction sites are noisy for sure: But if they are privately run, chances are the developers will want to complete the project in a timely manner, so these projects can at least be timed. The majority of the exterior noise happens in the first half of the project usually.
2) Neighboring apartment/house noise: many people renovate their apartments. These renovations often take up to a year, and in the instance of townhouses they can often take 2 years or more. The noise from a renovation above, below or besides your home can be the noisiest of all. The older the building, the better chance someone will be renovating soon.
3) LOCAL LAW 11 NOISE: This law commands all building to inspect their facades periodically….the inspections usually result in noisy facade work.
4) Infrastructure noise: whether its the building of a subway line, the re-paving of a street, replacing rotted pipes, or general improvements, infrastructure noise is a certainty everywhere throughout the city with aging systems and new technologies springing up daily.
5) Traffic, emergency vehicles, trash collectors: Why is it that a motorbike is allowed to make extreme noise? One person’s thrill is thousands of people’s torment, yet the law allows it? And then there are some that want to fight electric vehicles’ silent operation because they need some noise to warn of their approach…..really? Personally the thought of silent vehicles sounds dreamy to me….
These are but some of the examples of how noise is EVERYWHERE in Manhattan. No-one can escape it. So install good windows, wear ear-plugs, support laws that regulate noise and the times noise is allowable, and acknowledge that if you wanted absolute silence you would have chosen another town to live in. And don’t for one moment think that by buying an apartment NOT next to a construction site that your world will be silent bliss. The photo above was taken on the corner of Hudson and North Moore in Tribeca, an established prime location. …..not so quiet and peaceful after all: major infrastructure work, facade work to a building, and who knows how many fabulous apartments behind those windows are in the midst of a renovation…..
All the hoopla surrounding the IPO of Facebook and to-day’s swoon of almost 10% in its valuation leads me to believe one should be very careful about over-hyped product….including real estate. I do believe Facebook to be one of the most over-hyped companies on earth: is it really worth so much more than UPS?
The best advice I have ever been given in stocks is firstly to fully understand the company and secondly to do lots of homework, buying into valuations based on fact, rather than hype….Warren Buffet-style. The same is true when in a multiple bidding situation for real estate: should you pay X dollars over the asking price? Or should you pay what your (thorough + realistic) research tells you its worth? A solid and honest broker will be able to provide a good chunk of this factual material. Most times a property that everybody wants is under-valued…..but sometimes hype can cloud judgement. What exactly does the property deliver? What exactly does Facebook deliver?
There are lessons to be learned all around us, every day….
As news broke this week that the Thomas Juul Hansen designed penthouse at One 57 (157 West 5th Street) sold for around $ 90 million, a new record for New York City real estate pricing, I am in California observing other markets. And all I can hear is how the real estate markets around the country, especially on the high end, have come roaring back to life in prime locations. In Boston, Montecito, Miami, Bel Air, London, Monaco, new pricing records are being achieved. A friend of mine recently completed a renovation of a house in Boston: within days they had multiple bids, over the asking price.
I did find it amusing how Gary Barnett announced blatantly in the New York Times this morning that the buyer of the penthouse at One 57 was NOT Russian, as if having Russian buyers in a building would somehow de-value the building? Is it possible that the Russian selling his MAJOR apartment at Time Warner is indeed this buyer? Or is it democratically-elected-president-for-life Vladimir Putin who was simply too busy buying real estate to attend the G8 conference? Is it Borat, or just the dictator he plays in his latest movie?
I have heard similar sentiments from brokers and owners from St. Jean Cap Ferrat to Santa Barbara. Some buyers actually ask the question: Are there many Russians in the building/neighborhood? I thought that was illegal….. Russian buyers have certainly been a potent force in the Manhattan market in the past few years: In New York, might sentiments of this nature spark the re-surgence of the tough, secretive co-op board that could prevent the sale of an apartment to a Russian without providing any reasoning for a turn-down?
I am involved with contractual negotiations on a daily basis, even though in New York real estate contracts are handled by lawyers. In most real estate contracts, certain obligations have to be met by both sides, and failing to do so has consequences. Maybe its time for this type of Contract with America, as opposed to the BS political pandering and promises that seemingly have no consequences except for the (slight) possibility of being voted out of office……think Charlie Rangel.
The Right says we should cut taxes and decrease spending: why not draft a contract that does these things…..but this time do so with specific consequences? What if the Right are actually correct on this front and lowering taxes and cutting spending is indeed the solution to our huge deficits, unemployment and slow growth? Why not agree to a 2 year contract/window of opportunity whereby corporate taxes and income taxes are lowered and spending is cut……then, if after 2 years, the economic growth, unemployment figures and deficit do not improve by mutually acceptable, pre-negotiated numbers, those who received the tax breaks have to pay back all their tax savings….with interest. Just like most contracts?
Similar contracts could also be drafted whereby any corporation that hires outside of the USA instead of inside the USA loses all its tax breaks automatically?
Maybe gay marriages should indeed be banned if the American family starts to disintegrate because of gay marriage……although surely that disintegration started many decades ago without the assistance of gay marriage?
Why is it that all of us have to live by contractual obligations but politicians do not? Its time for us to rectify a broken system, and maybe if everyone had to put their money where their mouths are, we could start to resolve the bigger issues?