Posts Tagged ‘luxury’
Wednesday, September 5th, 2012
Posted by Leonard Steinberg on September 5th, 2012
This month Vanity Fair termed Greenwich Village the “GILDED GHETTO”: is this the appropriate description of the neighborhood everyone, including foreigners, Uptowners and Downtowner’s, agree is the ultimate New York living environment? The area’s unique combination of (guaranteed) low lying buildings that provide the best light in the city, charming tree lined cobbled streets with their eclectic mix of apartments, chic townhouses and mega-mansions, a superb mix of retail and restaurants, and it’s proximity to the Hudson River Park and Meatpacking District make it the kind of utopian ‘bubble’ that seems to be a trend around the globe.
Other cities all have their ‘gilded ghetto’s’ I guess, from Rome to London to Beijing, Cape Town, Sidney, Moscow and Rio. With the divide between wealthy and the rest of the world growing I see a growing trend: this is where the Village is possibly a bit unique in that it probably will always have some element of ‘West Side Story’-looking real estate mixed in….A Burberry store next to a store that’s very far from that price-point. The human scale of the Village is what makes it so very desirable: where else could a mega-mansion blend in so discreetly and not be a gilded limestone wedding cake? This is all very characteristic of the new, younger discreet wealth.
This is the new luxury. The un-luxury of the new-new global wealth that appears more drawn to the brassier, flashy versions of luxury that are beginning to look all alike.
Thursday, December 22nd, 2011
Posted by Leonard Steinberg on December 22nd, 2011
The word RICH has to be one of the most used words of 2011….it also happens to be a four letter word. Just like the word LUXURY, it also has to be the most mis-used word, although in this lie many similarities.
What is rich? What is luxury? Both are very much words that have great meaning when evaluated relatively. To most earning $ 250,000.00 per year, someone earning $ 2 million per year is rich, while they consider themselves well off at best. Many million dollar earning bankers view themselves as poor next to movie stars and basketball players. To most buying an Hermes Kelly bag is luxury, while for someone else a Coach bag has the same value. Luxury can be a material object, service, etc., conducive to sumptuous living, usually a delicacy, elegance, or refinement of living rather than a necessity. Luxury is free or habitual indulgence in or enjoyment of comforts and pleasures in addition to those necessary for a reasonable standard of well-being. It can also be a means of ministering to such indulgence or enjoyment. Luxury can be a pleasure out of the ordinary allowed to oneself. It can also be a foolish or worthless form of self-indulgence: the luxury of self-pity. Its all very, very relative though.
Rich is defined as having wealth or great possessions….. abundantly supplied with resources, means, or funds: the big question is who defines what abundant is. Right now the world seems entirely focused on income as the definition of wealth. A co-op Board frowns on high income alone and does not consider that to be rich without substantial assets too. Old Money is often assets-rich and income-poor……so is someone with OLD MONEY rich if they cannot afford to replace the tattered curtains in their living room? Then again, someone rich in Montana, may be quite middle class in Manhattan, a best.
I find that the bigger struggle is actually within the so-called ONE PERCENT: I constantly hear the outrage of people who thought buying a one MILLION dollar apartment in New York would deliver the home of their dreams….the dissilussionment at the reality is Austin Power-style in its shock. TO buy a $ 3million apartment in New York these days, you probably need an income of at least $ 1million per year: thats not the 1% at all….. A $10 million apartment buyer would need to earn lots more than that……more like the 0,001%. I hear many who earn around $ 500k a year furious at those earning $ 5 million per year who pay less taxes than they do benefitting by all kinds of legal breaks that they simply do not have access to.
So while the class war that exists between the 99% and the 1% is potent, even more extreme is the class warfare within the 1%. Its all relative at the end of the day. All of it. I feel certain that the poor in Africa would consider the poor in the USA well off. Maybe RICH and LUXURY are the most mis-used words of 2011?
Wednesday, September 28th, 2011
Posted by Leonard Steinberg on September 28th, 2011
As New York luxury residential real estate construction awakes from its slumber, we should prepare ourselves for another building boom in the city. Assuming construction financing flows and no major financial or political crisis hits, this could be very good for construction employment in the city. Already, architects, engineers, lawyers, designers, etc are hard at work in the planning stages. After this comes the big push when ground is broken. These are our questions:
1) Will this sudden awakening force construction labor prices up, thereby triggering inflation?
2) Will this awakening create a commodities and material price rise and shortages as it happens almost all at once?
3) Will so much construction of high end new product result in an over-supply? (I am counting around 1,000 super-luxe units already)….and will this additional supply dampen pricing on existing inventory that may have benefitted by low inventories?
4) Will the costs of doing a simple home renovation soar?
5) Will traffic and congestion and noise, not to mention builder dust, make life in the city tougher?
6) Or will this major injection of industrial activity boost the New York economy to new heights, maybe separating it from the rest of the country’s woes?
We shall see….
Saturday, November 6th, 2010
In this morning’s Financial Times, Aswath Damodaran, the NYU business school professorwho moonlights as the guy who teaches Goldman Sachs trainees about how to value companies, said he defined luxury as an industry that has figured out how to leave people feeling good about being suckered. He also said you can’t value luxury; it’s in the eye of beholder, but you can try to value a brand name, because a brand name is what gives you the power to charge a higher price for exactly the same product someone else has.
So do the brand names SUPERIOR INK, ONE JACKSON SQUARE, 100 ELEVENTH AVENUE, 200 ELEVENTH AVENUE, etc deliver the exact same product as other lesser brand buildings and charge much more?
New York residential real estate development has certainly abused the word ‘luxury’ over the past decade, and we think the majority of ‘luxury’ buildings consisted primarily of a plush sounding brand name, renderings of what was promised that skewered reality, often featuring couture-clad super-models, a very fancy lobby, a somewhat impressive facade, and then very ordinary apartments that do not qualify as anything special.
There have been exceptions: Some buildings have gone much further than the Louis Vuitton-style thinking of charging a fortune for a plastic bag made in China supported by excessive branding to justify an exorbitant price: A building like 100 Eleventh Avenue designed by Jean Nouvel, virtually re-invents space: while many new apartments do a very nice interior finish out, I would challenge anyone to create this finish in an existing space that does not have the remarkable windows, the ceiling heights and that unmistakable Jean Nouvel esthetic, whether you like it or not. These element could be re-created in cheaper space only to a point, and then they would fall short because of the structural aspects that are simply impossible to duplicate without ground-up construction.
Is Superior Ink really superior? The common areas and services certainly are: we were a bit disappointed with the actual apartments although the views and light are outstanding in many. 15 Central Park West delivers on many levels, but we felt the finish out and layouts of some of the apartments was rather dull: as expected, many buyers renovated. The Richard Meier Towers delivered a stellar modernist product, the like of which had never been seen anywhere in Manhattan before. Structurally there were some compromises, dictated mostly by the land. Pallazzo Chupi delivered a unique product, but it too had some elements that were questionable for a luxury product. The Bloomberg building delivered stellar, highrise apartments with an impressive building and continues to command premium pricing, as does the Time Warner Center, although we find many of those apartments a bit difficult because of the odd shape and proportioning of many of the rooms.
Would 200 Eleventh Avenue be the same if it did not have 24ft ceilings in the living room combined with protected park, river and skyline views, COMBINED with those superb windows AND mechanicals that were discrete and meaningfully concealed? Where in New York can you install a garage attached to your apartment? Impossible.
The inability to easily re-create a product is what we think true luxury is, and in real estate it has to encompass many elements:
1) A unique location with protected, meaningful views and exposures.
2) Significant architecture: architecture that cannot just be replicated by an interior finish out alone.
3) A composition within the building that protects its status. Inexpensive studios in a building mixed with super-luxury large units can deflate a building’s status.
4) Engineered mechanicals: discrete building systems that do not impact the quality of space (no hideous grills or intake panels!), quality windows, elevators large enough to fit the type of furniture and art associated with a luxury home.
5) Building amenities that are useful and meaningful to owners, delivered in a taste level that go well beyond utilitarian.
6) Building services, including a 24 hour doorman and quality super, are critical.
7) Strong proportioning: rooms designed to be lived in, with good ceiling height/volume, width and breadth. Rooms should be designed to accommodate furniture placement easily.
8) Technology: while most of this can be installed to meet the individual tastes of owners, the building should have technology built in to maximize efficiency of the systems as well as security for owners. Security is luxury.
So yes, we would conclude that there is such a thing as real luxury in Manhattan real estate, but it is in very short supply. And future projects will have to step up to deliver not just a partial list to ‘get by’, but the complete package, as the audience being catered to is now comparing what we deliver to other amazing products in other large cities around the world and New York has to work a lot harder to deliver much better.
Friday, April 2nd, 2010
In this month’s LUXURYLETTER, (www.luxuryletter.com) it was reported that Manhattan’s real estate pricing and activity picked up notably over the same period last year. Because LUXURYLETTER addresses the luxury market over $ 1 million, the figures are somewhat different to what is being widely reported….
The other reports that came out from the major real estate companies reported that Manhattan apartment sales doubled in the first quarter as bargain-hunting buyers scooped up co-ops and condos in a market where resale prices have fallen an average 29 percent since their peak. This figure is skewered as it does not address new construction pricing. And as we all know averages are often meaningless.
The number of sales soared to 2,384 from 1,195 a year earlier, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today. The median price for a co-op or condo slid 11 percent to $868,000.
Values fell across apartments of all sizes as New York City recorded 10.2 percent unemployment in February. Fallout from the recession and credit crisis that cost more than 184,000 finance jobs in the Americas is still hurting New York. The city lost 5.4 percent of its finance industry jobs in the 12 months ending in February, the state Labor Department said March 25.
Lots of this information is pertinent to the housing market, but not as much for the luxury market.
Wednesday, March 24th, 2010
The majority of wealthy investors rely on their own expertise over the advice of wealth managers, according to a new survey, which will come as a fresh blow to an industry still reeling from massive outflows of client money. Real estate group Knight Frank and US-based Citi Private Bank asked high-net-worth respondents to their 2010 Wealth Report to rank their preferred source of advice before considering an investment. Respondents ranked their own expertise as the most important source of information and also put that of their peers ahead of advice provided by their private bank or independent wealth adviser. Newspapers and the Internet were the least popular sources of information, according to the survey. The findings of the report come at a time when wealthy investors, unhappy with the performance of their managers during the crisis in 2008, look to re-allocate assets, and advisers step up their efforts to retain clients. Swiss bank UBS, which boasted one of the biggest wealth management businesses, lost more than $100bn (€74bn) in client funds between 2007 and 2009. Respondents to the survey were bearish about growth prospects of their personal wealth in 2010. Although only a small proportion of 4% believed it would decrease, 72% believed it would increase slightly. Only 5% thought it would increase significantly. Tangible assets are considered the most popular investments, with property in particular accounting for one third of the portfolios of respondents. The wealthy believe now is a good time to buy – 13% of respondents said they planned to purchase a new primary residence, while 37% said they would look to acquire a new secondary residence. Michael McPartland, managing director and head of residential real estate at Citi Private Bank, said: “Buying becomes opportunistic in a downturn, particularly as people turn to assets such as property when other assets experience dislocation.” Manhattan luxury real estate benefits by independent thinking wealthy buyers for sure.
Friday, March 12th, 2010
Led by a big gain in electronics, U.S. retail sales increased 0.3% to a seasonally-adjusted $355.5 billion in February, despite three major snow storms in the East, the Commerce Department estimated Friday.
Sales have risen in four of the past five months, and were up 3.9% compared with a year earlier. Most categories of retailers recorded month-over-month increases in February, driving sales to their biggest percentage gain since November, the government said. Auto and truck sales were one exception, falling 2% compared with January. Sales at health- and personal-care stores dropped the most in six years. Excluding autos and trucks, retail sales increased 0.8% to $297.7 billion in February, the largest gain since November.
The storms had “no noticeable effect on retail sales,” wrote Brian Fabbri, an economist for BNP Paribas. Sales at non-store retailers, such as catalogs and online stores, were unchanged. “While we are not expecting the consumer to come roaring back in the near-term, improvements have been quicker than expected considering the still-distressed state of the labor market,” wrote Adam York, an economist for Wells Fargo Securities.
February sales were better than expected. Economists surveyed by MarketWatch were expecting February sales to be unchanged, and for sales excluding autos to rise 0.1%.
Retail reflects the real estate market in some way: February was brutally cold and stormy, yet sales were brisk. We ponder what sales will produce when the weather warms up….and it is…..and we are seeing LOTS of activity in the luxury real estate market. March’s figures will be interesting indeed!
Wednesday, March 10th, 2010
The millionaires’ club in the United States grew by 16 percent in 2009, following a 27 percent decline in 2008. Families with a net worth of at least $1 million, excluding primary residences, rose to 7.8 million in 2009, an increase from 6.7 million a year earlier, according to a survey of high-net-worth U.S. households conducted by Spectrem Group. The Standard & Poor’s 500 Index increased 24 percent in 2009 and has risen 68 percent over the past 12 months.
Affluent households, which the survey defined as those with net assets of $500,000 or more, increased 12 percent to 12.7 million, the Chicago-based consulting firm said in a statement Tuesday. The number of households with a net worth of more than $5 million rose 17 percent to 980,000.
The average age of a so-called affluent investor is 58, compared with 62 for a millionaire and 67 for an investor with more than $5 million. Survey respondents in all three categories said they were most concerned about the impact of a prolonged economic decline on their financial well-being, according to Spectrem. The highest number of affluent and millionaire investors said they were likely to invest in cash, which includes certificates of deposit, over the next 12 months, followed by stocks and then bonds, said Spectrem.
The biggest number of ultra-high-net-worth investors said they were likely to invest in equities, followed by cash and international investments. The fewest wealthy investors said they were likely to invest in alternative investments such as hedge funds and investment real estate, Spectrem said.
The increase in the number of millionaires is still being held back by residential and investment real estate, which hasn’t bounced back, Walper said. The S&P/Case-Shiller index of home prices in 20 major cities was down 29 percent in December from its July 2006 peak.
This may further explain the renewed strength of the Manhattan luxury real estate market.
Thursday, March 4th, 2010
This morning’s Wall Street Journal reports that one year removed from the trough of the recession, American corporations continue to hoard more cash than ever. There are now tentative signs that they are finally comfortable using the money to do some shopping.
The 382 nonfinancial firms in the Standard & Poor’s 500 that have reported results for the fourth quarter of 2009 are now holding $932 billion in cash and short-term investments, according to a Wall Street Journal analysis of data from Capital IQ. That sum is up 8% from the third quarter and up 31% from a year ago. And why? Cash is very cheap these days. With all this cash around, it is not surprising that the high end real estate market in Manhattan is so very active right now……with lots of all cash or mostly-cash buyers. The savings rates have also climbed dramatically.
An argument could be made that these corporations have hoarded all this cash at the expense of jobs, the one issue all politicians are blaming unanimously for the tepid economic recovery. But all this cash held in both corporations and privately will be let loose into the economy….its happening already as part of the economic cycle. This will affect inventory levels accross the board. And when inventories need to be beefed up. jobs are created. Slow, painful, and mostly it affects the lowest wage earners. I guess the politicians don’t want to say all of this out loud: its the system.