LuxuryBlurb
Posts Tagged ‘Manhattan luxury real estate.’
Tuesday, April 16th, 2013
Posted by Leonard Steinberg on April 16th, 2013
Is Manhattan luxury real estate experiencing hyper-inflation? It appears so. Whereas 4 months ago every developer (and their bankers) was talking about $ 2,000/sf for the entry level to the downtown luxury new development market, now it appears, just a few months later, that this figure has jumped significantly…..by as much as 25%? Is this a brief moment or a continued trend? With the depth of the buyer pool, I think this new normal could be here to stay….
Tuesday, February 12th, 2013
 Posted by Leonard Steinberg on February 11th, 2013
Hermes posted its 4th quarter results for 2012: the maker of uber-luxury, hyper-priced fashion goods and accessories showed sales increased 22%. Rolls-Royce has achieved its best sales in its 108-year history, with the world’s mega-rich buying up 3,575 Phantom and Ghost models during 2012. More evidence that the very wealthy are spending more and that there are more of them. The super-luxury Manhattan real estate buying frenzy that is taking place right now with rising prices further fuels my argument that the luxury market is experiencing inflation at a much higher rate than ‘regular inflation’……as the world’s economies grow producing more wealthy consumers, this trend is very likely to expand: What is luxury after all if EVERYONE can afford it?
Saturday, June 9th, 2012
 Posted by Leonard Steinberg on June 9th, 2012
In this morning’s Financial Times an article addresses how the Danish believe that good design improves lives. I see this trend more and more in New York real estate: the growth of consumer’s esthetic awareness has literally exploded in the past 10 years and their understanding of the benefits of good design keeps improving and accelerating.
While some may argue that the appreciation for good design is something only for the very wealthy, they are wrong: a revolution is taking place in the democratization of design, and great, well designed products can be found at almost any price point.
I do think we have a long way to go in Manhattan residential real estate, but it amazes me how enthused and captivated people are when they witness or visit well designed properties. And there are a few in New york for sure. I have seen this so many times at 200 Eleventh Avenue, the Annabelle Selldorf designed building known by many as the Sky Garage building. While it is true most of the buyers were excited by the ability to park alongside your apartment in a garage accessed by a car elevator, I have found the bulk of buyers were really captivated by the exceptionally designed spaces, with their soaring ceilings, large windows, well proportioned rooms and no hideous mechanical intake grills that litter so many so-called high end properties.
I have seen first hand how a beautifully designed apartment sells for more (and quicker) than an identical, but poorly designed apartment…..even if the poorly designed unit was on a higher floor with better light and views! It’s almost unbelievable, but yes, people’s senses are highly impacted by the feel and mood (and design) of a living space. At 130 West 12th Street, gorgeous design, furnishings and art masked low ceilings that would otherwise have de-valued the entire building. I have seen ‘ugly basements’ transformed to great living spaces (without windows), view-less apartmnents that felt good because the cleverly designed window treatments made the lack of a view not an issue. And while some may not have the budget for a world class interior designer or architect, HGTV and a host of other magazines show how you can practically embrace good design on a shoestring budget.
In Denmark, this year marks the 10th anniversary of Index: Design to Improve Life, a non-profit organisation that promotes the idea that interior design as a decisive factor in creating a better world. Now internationally recognised it offers the world’s largest monetary prize for design at about $650,000.00. There are 400 furniture companies in Denmark producing about $ 2 billion worth of goods: 80% are exported, making homewares the country’s fifth most important export industry. Much of this furniture is still influenced by those original designers such as Arne Jacobsen, Hans Wegner, Verner Panton and Poul Henningsen, items seen regularly in Manhattan apartments.
In New York, Danish born super-star acrhitect, Thomas Juul Hansen, has become most famous recently for his exceptional, thoughtful interior design of Extell’s One57, New York’s tallest resdiential tower. His work is best known in the Jean Georges restaurants as well as One York, HL23 and One Madison Park, which is planned to re-launch this Fall. His sleek, modernist design is especially loved by those who have lived with it, a style of design that doesn’t compete with your life, yet compliments it and allows individuality too.
At 54 Bond Street and several other propeties since, I have learned the genius of Steven Harris, whose spaces enthuse, calm and inspire all those that visit it. And those who live in a Steven Harris designed property will espouse on the value good design has had on their lives.
I have lived in a Selldorf designed apartment for the past 2 years, and I have to say the sophistication in each of the decisions made, the balance, the proportion, have all truly impacted my quality of life. Esthetics please everyone it seems, and its a potent message to developers not to underestimate its power in the value of a new building. As a large stream of new buildings comes to market over the course of the next 18 months, I strongly believe the esthetic bar in New York real estate will have been raised quite notably…..and about time too!
Saturday, November 19th, 2011
 Posted by Leonard Steinberg on November 19th, 2011
The other night I was invited to the launch of EXTELL’s newest addition to the New York skyline, One 57, the Christian de Portzamparc-designed 90 story, 1,000ft tall Tower located at 157 West 57th Street between 7th and 8th Avenues. Towering above the Time Warner Center, Trump’s One Central Park West, and certainly looking down on the neighborhood icon 15 Central Park West, the 135 residential units will rise above a 210-room Park Hyatt Hotel, offering un-obstructed panoramic views of Central Park and the entire tri-state region.
The occasion was a grand one indeed: Manhattan Brokerage Royalty came out in full force, immaculately attired in Prada, Louboutin’s, sequins and all. A string quartet greeted guests as they embarked from the elevators and led them through palatial double doors into the sales office/showroom. No expense has been spared in creating certainly one of the most dramatic showrooms ever, resplendent with floor to ceiling screens showcasing a movie of the building and environment, two mock-up kitchens and a master bathroom. Severely chic black, white and deep wood tones featured. The interior design is the responsibility of uber-chic Thomas Juul Hansen, one of New York’s premiere designer architects responsible for projects such as One Madison Park, One York, Jean Georges and Perry street to name a few. The quality of the Smallbone kitchens is immediately apparent, vastly superior to most of the designer name kitchens one sees regularly. I thought the floorplans were particularly strong, the perfect take on a classic apartment with a very modern, purist sensibility. The well proportioned, squared off rooms are reminiscent of One Beacon Court, another building many considered to be in a less-than-stellar location that has been hugely successful.
I thought the bathroom was rather beautiful and especially grandly scaled for highrise living. Architecturally, the look of the building is one of Severe Gotham Chic with definite Art Deco-inspired undertones, and should definitely appeal to many foreign buyers seeking a glossy New York experience.
Several brokers muttered that there are not enough Russian buyers to buy all these units: I suspect that sales will start to take off mostly once buyers have the ability to witness the views on site, and it may be challenging at the $ 5,000+/sf pricing not being directly on Central Park: 57th Street is not exactly Fifth Avenue. I also believe the true value of these apartments may only be realized once the building is completed and buyers have the ability to walk through the spaces, getting a feeling not only for the bathrooms and kitchens, but also the light, views, volume of space and the other finishes so critical to this price point. Hopefully the finish quality takes its cues from One Hyde Park, where this profile of buyer was willing to spend the extra dollars knowing the apartments did not have to be gutted. This building is for those that love super-highrise living, want spectacular views, grand spaces, full services, tight security, a central location, sleek, modernist design (the opposite of the Plaza or 15 Central Park West) and do not want to renovate.
It was heartening to see luxury Manhattan New Development spring back to life: this will be one of several new modernist buildings for the uber-rich coming to the market over the next year or so, including Macklowe’s 1,300ft + tall Drake building on Park Avenue at 57th Street and One Madison Park. Other, more humanly scaled buildings are coming too, so the mix and variety will be outstanding, bringing an end to the very limited inventory of top-notch apartments currently available. I believe the quality bar will be raised dramatically by this level of competition, and it will be an exciting time in New York real estate for sure.
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!
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.
Friday, August 13th, 2010
The FHA has come out to guarantee mortgage loans on a few new buildings in Manhattan: While the idea is brilliant, and long overdue, the plan is a perfect example of how governments can take a great idea and muck it up really badly. As we exit (very slowly and grindingly and uncerytainly) from the worst recession since the Great Depression, the FHA wants to offer guarantees on loans involving up to 96.5% financing! Did we learn ABSOLUTELY NOTHING from the mistakes of the past few years?
“This stupidity makes me want to take to the streets and yell at the top of my lungs!” says Leonard Steinberg, leader of the LUXURYLOFT team specialized in luxury Downtown Manhattan/New York real estate. “One of New York’s saving graces in this recession was that New York hardly accepted financing with less than 10% down: co-ops required a minimum of 20% down, unlike the rest of the country. Yes, help 50% or less sold buildings obtain financing, but don’t provide it to unqualified buyers and don’t minimize the commitment to the point where walking away is a no-brainer.”
Whitney Gollinger, marketing chief for a Manhattan condo building with an outdoor movie theater and panoramic city views, is highlighting a different amenity to spur sales: the financial backing of the federal government.
The Federal Housing Administration agreed in March to insure mortgages for apartments at the 98-unit Gramercy Park development, known as Tempo. That enables buyers to make a down payment of as little as 3.5 percent in a building where apartments range from $820,000 to $3 million.
“It’s a government seal of approval,” said Gollinger, a director at the Developments Group of New York-based brokerage Prudential Douglas Elliman Real Estate. “We need as many sales tools as we can have these days, and it’s one more tool.”
The FHA, created in 1934 to make homeownership attainable for low- to moderate-income Americans, is providing a lifeline to new Manhattan luxury condominiums after sales stalled. Buildings featuring pet spas, concierges and rooftop lounges are applying for agency backing to unlock bank financing for purchasers. The FHA guarantees that if a homebuyer defaults on his mortgage, the agency will pay it.
At least nine Manhattan condo developments south of 96th Street have sought approval for FHA backing since the agency loosened its financing rules in December, according to a database of applications kept by the U.S. Department of Housing and Urban Development. The change allows the FHA to insure loans in new projects where only 30 percent of units are in contract, down from at least 50 percent. About 1,900 apartments in New York’s most expensive neighborhoods would be covered by the applications.
Filling a Void
The agency also offers insurance to half of all mortgages in a single building after previously setting a limit at 30 percent, according to the new standards, which expire in December. The entire property must be approved for a buyer to get backing. Most of those that applied in Manhattan are buildings converted to condos or built since 2007.
The FHA is filling a void left after mortgage-finance agency Fannie Mae tightened its condo lending standards last year. The Washington-based company won’t back loans made in new buildings where fewer than 51 percent of the units are in contract, sometimes setting a requirement as high as 70 percent.
That in turn makes mortgage lenders hesitant to make loans at developments under those thresholds, said Orest Tomaselli, chief executive officer of White Plains, New York-based National Condo Advisors LLC, which advises condominiums on how to adhere to Fannie Mae and FHA standards.
‘Not an Accident’
“It’s not an accident that the FHA is offering this — not private lenders,” said Christopher Mayer, senior vice dean at Columbia Business School’s Paul Milstein Center for Real Estate in New York. “An unfilled condominium complex is not the kind of thing that a bank looking to rebuild its balance sheet on real estate is looking to do.”
In New York City, the priciest urban U.S. housing market, the FHA insures loans of as much as $729,750, and permits buyers to borrow up to 96.5 percent of the price.
No buildings in Manhattan applied for FHA recognition between 1998 and 2008 — though in those years the program didn’t require an entire property be approved and condo buyers could seek FHA-insured loans on their own, Tomaselli said.
New development in Manhattan represented 23 percent of the sales market in the second quarter, compared with 35 percent two years earlier, according to New York appraiser Miller Samuel Inc. About 8,700 new apartments in the borough were empty as of June, partly because of a lack of available financing for buyers, said Jonathan Miller, president of the firm.
‘Ironic’ Move
“Something has to happen for this product to be marketable,” Miller said. “I just find the whole thing ironic that FHA is providing financing for luxury housing.”
The FHA loosened the condo rules because of “market conditions,” according to Lemar Wooley, an agency spokesman.
“We are certainly cognizant of falling sales prices, limited availability of liquidity, etc., so we wanted to be flexible,” Wooley wrote in an e-mail. “The risk was considered before issuance of the temporary guidance.”
The new rules are a “game changer,” said Ryan Serhant, vice president at Nest Seekers International, a brokerage with offices in New York and Florida. He’s marketing 99 John Deco Lofts, a 442-unit conversion project in downtown Manhattan that features a “zen” flower garden and Brooklyn Bridge views.
The development, where sales began more than two years ago, had 10 units go into contract with FHA backing since approval in March. The FHA suspended its support for the building Aug. 3, according to the agency website. The property is working to have it reinstated, Serhant said.
Eager for Approval
Angela Ferrara, who markets the Sheffield condos on West 57th Street, checks every day whether the 597-unit property, which applied to the FHA in May, has won approval. Ferrara, vice president of sales for New York-based the Marketing Directors Inc., says she is eager to start touting the FHA backing to potential buyers. That’s a reversal from the past, when government loan programs weren’t necessary — or advertised.
“People would get the wrong idea, and think it was a different type of government-subsidized product,” Ferrara said. “It was almost regarded as a negative, particularly in the luxury properties.”
Now, she said, “It’s actually became a widely accepted marketing tool.”
The Sheffield promotes amenities such as concierge service, a pet spa and massage rooms, according to the project’s website. A neighborhood guide on the site lists chef Thomas Keller’s four-star restaurant Per Se as a nearby attraction, along with Lincoln Center, Carnegie Hall and Tiffany & Co.’s flagship Fifth Avenue store.
‘Great Solution’
The Sheffield’s owner, New York-based Fortress Investment Group LLC, took over the condo conversion project in foreclosure last August after the original developer, Kent Swig, defaulted on a loan. With 56 percent of the converted units sold or in contract, the building has about 230 units left to sell, Ferrara estimates.
FHA is “definitely is a great solution right now,” said Tomaselli of National Condo Advisors, which prepared the FHA applications for Tempo and Sheffield.
“The savvy developers did it first,” Tomaselli said. “But everybody else is catching up.”
In the borough of Brooklyn, FHA support accounted for half of the 29 units sold at the 111 Monroe condos in Clinton Hill and a quarter of apartments in Williamsburg’s NV building, which is sold out after two years on the market, said David Behin, executive vice president at the Developers Group, a New York brokerage for new buildings.
Limits to Success
The FHA’s effectiveness will be limited in Manhattan because apartment prices are higher than in Brooklyn and the insured loan is capped at $729,750, Behin said. The median price of a Manhattan apartment in a new development was $1.4 million in the second quarter, according to Miller Samuel and Prudential Douglas Elliman.
“With apartments over $1 million, FHA isn’t going to help you,” Behin said. “You’d have to put down 30 percent to get the loan of $729,000. And if you have 30 percent to put down, a bank will loan to you without FHA.”
Borrowers backed by FHA are essentially buying mortgage insurance, said Debra Shultz, managing director at Manhattan Mortgage Company Inc. in New York. Buyers pay an upfront premium of 2.25 percent of their loan value, and a monthly fee equal to about 0.5 percent of the loan amount for at least five years, she said.
Nationwide, the FHA insured 21 percent of all mortgages made in the second quarter, or $71.4 billion worth of loans, according to Geremy Bass, publisher of the Inside FHA Lending newsletter. That’s close to the $79.5 billion total value of all FHA-backed loans in 2007.
Rising Defaults
Nine percent of all FHA-insured loans were 90 days or more past due or in the process of foreclosure in the first quarter, compared with 7.4 percent a year earlier, data from the Washington-based Mortgage Bankers Association show.
The agency doesn’t require a minimum credit score for the mortgage insurance, though many lenders who fund the loans insist on a rating of at least 580, said Shultz.
The FHA is considering a minimum required score of 500, according to a notice the agency filed in the Federal Register on July 15. A person with a 500 rating is in the lowest one percentile of credit scores nationally and was likely delinquent on several accounts in the last year, said John Ulzheimer, president of consumer education for Credit.com, a consumer and credit education company based in San Francisco.
Taking on Risk
“The government is taking on more risk,” said Guy Cecala, publisher of Inside Mortgage Finance. “That’s the bottom line. They really can’t say no, because that’s their purpose. It’s to support the housing market when there’s no other funding.”
Until they heard about FHA, Asha Willis and her boyfriend, Cesar Rivera, didn’t think they would buy a place for at least five years — enough time to save a 20 percent down payment, she said. The couple reasoned that they earned enough to make monthly mortgage payments, and began an apartment search in February, limiting their hunt to buildings with agency backing.
Willis, an attending physician at Maimonides Medical Center in Brooklyn; and Rivera, a sales associate at Chelsea Piers in Manhattan, toured several glass and steel high rises and decided on a one-bedroom at Toll Brothers Inc.’s Two Northside Piers in Williamsburg, Brooklyn. It didn’t have FHA approval at the time, but developers promised it was on its way, Willis said.
Contract Contingency
“Our contract had a contingency that if they weren’t FHA approved we could get out of the contract,” said Willis, currently a renter at Manhattan’s Stuyvesant Town.
Prices at the building range from the “high $300,000s” to more than $2 million, according to Adam Gottlieb, project manager for Northside Piers. The property, which began sales in October 2008, received FHA approval in June.
Shultz, whose Manhattan Mortgage has sourced FHA loans for buyers in Brooklyn, the borough of Queens and on New York’s Long Island, said the last month brought a sudden surge of calls from would-be buyers seeking FHA insurance for Manhattan purchases.
“It’s definitely breaking through to the Manhattan market,” she said.
At Tempo, which is still under construction, developers are hoping that FHA approval will appeal to buyers of lower-priced units and inch the number of contracts signed to the 51 percent that conventional mortgage lenders require, Gollinger said. About 15 percent of the 98 units are under contract.
The developers plan to tout FHA support in e-mails and other promotions in a sales push next month as the building nears completion, Gollinger said.
“I never even dealt with this,” she said. “All of a sudden it became an absolute must.”
Monday, August 9th, 2010
 Unemployment is very high, yet many employers are finding it extremely difficult to fill certain jobs. It is estimated that unemployment amongst the very skilled is actually rather low: We know unemployment amongst the highly educated is definitely low. In this morning’s Wall Street Journal, an article tries to establish what is causing this. Employers and economists point to several explanations. A huge problem goes back to real estate: Millions of homeowners are unable to move for a job because the real-estate collapse leaves them owing more on their homes than they are worth. The USA has been a very transient society in recent decades, and re-location for a new job was considered standard practice. With real estate very illiquid, the flexibility to re-locate for a great job with fallen home values diminishes.
“This is another reason why we believe so strongly in owning a condominium, not a co-op,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and publisher of the LUXURYLETTER, a monthly report on luxury Manhattan real estate. “Most co-op’s severely limit your ability to sub-lease: condominiums will allow much more flexibility. Having the ability to rent out a property till the markets recover allows for much greater flexibility and can potentially result in avoid taking large an un-necessary losses.”
Re-location was a huge part of the real estate brokerage business: to-day, this business has dwindled dramatically.
The job market itself also has changed. During the crisis, companies slashed millions of middle-skill, middle-wage jobs. That has created a glut of people who can’t qualify for highly skilled jobs but have a hard time adjusting to low-pay, unskilled work like the food servers that Pilot Flying J seeks for its truck stops.
The difficulty finding workers limits the economy’s ability to grow. It is particularly troubling at a time when 4.3% of the labor force has been out of work for more than six months—a level much higher than after any other recession since 1948.
Our suggestion: Focus on the real estate!
Friday, July 30th, 2010
 With Research in Motion’s announcement today that they are developing a similar device to Apple’s I-Pad, we should feel certain that home automation and real estate brokerage will more than likely be entirely controlled by these devices going forward. And why not? Unlike cell phones, the larger screen is much easier to read, and much easier to operate being touch sensitive.
“I see many luxury households having possibly 2 or 3 (or more)of these devices within the next 12 months.” says Leonard Steinberg, leader of the Luxuryloft team and managing director of Prudential Douglas Elliman. “We have always touted the need for easy-to-use, consumer friendly controls in the home in our monthly LUXURYLETTER. These ‘pads’ will certainly address this need. They will also become the devise of the next decade for New York City luxury real estate brokers, just the way the Blackberry has been for the past 10 years…..already I see the I-Pad in use everywhere.”
Thursday, July 29th, 2010
 The MANHATTAN BIDDING WAR has returned: Carlos Slim, reportedly the wealthiest man in the world, just won a bidding war on the Duke Semans Mansion at 1009 Fifth Avenue in New York City. His winning bid of $44 million outbid a Russian bidder whose bid was around $37 million. This is the largest multiple bid sale of 2010, and an indicator that the high end of the Manhattan luxury real estate market is alive and kicking. “This is an extraordinary sale,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and head of the Luxuryloft team. “Then again, this is a really prized residence so it is not surprising that more than one person wanted to buy it…..especially two buyers who may have had great difficulty buying in the tough co-op’s on Fifth Avenue.” LUXURYLETTER has repeatedly reported on the demand by the super-wealthy for the best of the best, noting that there is actually a shortage of ridiculously expensive real estate in Manhattan.
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Lola Gardner 
Mike Albanese 
It seems totally insane that the FHA will insure loans with only 3.5% down. What if the market falls…..additional foreclosures, short sales? Condos requiring 90% financing and co-ops 70% brought stability to the Manhattan market.
This is a really bad idea.