Bubble Wrap

New York could see a double dip in residential market

The November issue of The Real Deal includes an article with an array of analysts predicting where housing in New York is going over the next year with many forecasting a second round to the downturn.

The biggest problem New York is facing is unemployment. According to the state Comptroller’s office, the city shed 115,700 jobs as of June and is expected to hit 328,000 jobs losses – 47,000 of them in the securities industry – by the third quarter of 2010, boosting an unemployment rate that has already hit 10.3 percent.

Jonathan Miller, the president of appraisal firm Miller Samuel, said there has never been an economic recovery in New York at the same time that the finance sector was suffering.

Sharp Drop in Building Residences in the City

The Times writes about the huge drop in new construction with both the residential and commercial sectors as reported by the New York Building Congress. The report contends that the downturn may have bottomed out, while some industry experts are more pessimistic. There are currently only 2 commercial buildings under construction and housing has dropped from 30,000 units per year to about 6,300 this year.

The residential market is more bleak. More than 460 residential projects have been delayed, nearly a third of them in Brooklyn, according to the latest figures from the city’s Buildings Department. Many analysts say it will take several years for the market to absorb all the luxury apartments that have been built recently.

Three Cents Worth: Moving Sideways?

Jonathan Miller charts inventory and inflation-adjusted median sales price for Curbed, noticing better stats than previous quarters.

The combination of these metrics suggest that things are not deteriorating as quickly as they had been since the 9/15/08 Lehman tipping point, but it still doesn’t show that we have found some sort of bottom for the Manhattan housing market. With high unemployment, shadow inventory and tight credit, I would think we have a while to go before things stabilize. Still, it’s better news than we have received as of late and I’ll take it.

O Stuy Town!

The Observer looks at the Stuy Town sale to Tishman Speyer as a possible stroke of good fortune for tenants of the mega-complex as their bid to buy the property was rejected three years ago.

In a new twist, it’s now at least conceivable that the tenants—along with other former bidders—might just have another crack at Stuy Town, this time at presumably a much less inflated price. Tishman Speyer is on pace, before the end of the year, to exhaust the reserve fund that has been helping it to make debt payments, as Realpoint reported the fund had just $33 million left as of September, down from $400 million in 2007. Since June, the report said that between $7 million and $19 million has been taken out of the reserve fund each month.

Madoff's Estate Sales

While The Observer reports on the recent selection of two Sotehby’s brokers to handle the sale of Madoff’s Upper East Side Penthouse, and The Real Deal reports on two Corcoran brokers chosen to market his Palm Beach home, The Post gets word on a flurry of activity on his Montauk beach house, which has been on the market for just over a week.

Bernie Madoff’s Montauk beach house has at least four offers. And there are so many more interested buyers in the Ponzi putz’s $8.75 million listing that Corcoran Group broker Joan Hegner, who shares the listing with her husband, Raymond, is already having the busiest September of her life.

City Dealing to Make Luxe Condos Cheaper

The Post reports on the city’s push to expand their affordable housing portfolio by putting vacant apartments on the market at steep discounts. Negotiations are underway with a few banks who may be eager to unload their foreclosed property, but the banks would have to take significant losses.

A $500,000 luxury condo might be marked down to $300,000, suggested Rafael Cestero, the city housing commissioner.

In return for the markdown, developers or bankers would get up to a $50,000 city subsidy for each apartment.

He added that if the prices are right, the city would be prepared to buy unfinished buildings, as well as those where at least 50 percent of the units are empty.

The 15 biggest winners and losers since the crunch

With the approaching 1 year anniversary of Lehman’s collapse,The Real Deal takes a look at the best and worst deals since the onset of the credit crunch.

“Worst deals” included record-breaking purchases like the GM Building, although Mort Zuckerman, chairman of Boston Properties, told The Real Deal he still considers it “the best purchase we’ve ever made” when viewed as a long-term investment. Also singled out as a not-so-savvy investment were individual apartment sales like one at Julian Schnabel’s Palazzo Chupi, where a Wall Street buyer paid $15.5 million only to see the value plummet by 55 percent, doubling the declines seen in the overall market.

Ding Dong the Doorman's Dead!

The NY Post looks at the recent rise in virtual doormen systems many developers are installing in their buildings. While these systems may bring cost savings and convenience to smaller buildings, some residents would prefer a human who can help in emergency situations.

Jeff Bennett, the developer behind several new Harlem condo buildings, including Windows123 and Soho North, said he chose Virtual Doorman because it was a selling point for buyers.

“In this building, Soho North, a real doorman would be cost prohibitive, because there’s only 11 units,” he said. “It’s a great value for the money.”

Sharp Price Drops in Manhattan Apartments

The Times reports on the recent release of the Q2 Manhattan market reports, which show big declines in price and volume from a year ago, while activity has picked up in the last 6 weeks.

The number of closings fell more than 50 percent, and prices in some categories were reported down as much as 25 percent, compared with the same quarter in 2008. Sale prices were also down from those reported in the first quarter of 2009.

City Council OKs Fordham’s Lincoln Center expansion

Crain’s reports on the approval of Fordham’s plans to add six new buildings to its campus at Lincoln Center over the next 25 years. The expansion includes new academic buildings and dormitories, which will support the schools growing enrollment.

The vote was practically guaranteed since earlier this month Gale Brewer, D-Manhattan, who represents the Upper West side neighborhood, extracted some concessions from the school to win her support. She negotiated to reduce the heights of the buildings that Fordham will erect. She also got the school to agree to build a public atrium on Columbus Avenue and an escalator to lift people to elevated public open space. The full council typically votes to support the member who represented the district with proposed project.

Congrats to the Friends of the High Line!

Yesterday we had the pleasure of witnessing the opening of the High Line and can’t stop thinking about how pleased and impressed we are that you pulled it off. Even the speeches were great! Congrats to the Friends of the High Line!

WE DID IT! HIGH LINE OPENS!

Earlier today we stood with Mayor Bloomberg, Speaker Quinn, Borough President Stringer, Congressman Nadler, and other leaders and supporters and cut the ribbon on the High Line, officially opening the first section to the public. This historic day is the culmination of ten years of advocacy, planning and construction, and we’re so grateful to everyone who has helped make this opening possible.

Mint Condition, Low Miles

The New York Times observes the many reasons buyers are choosing nearly new buildings over brand new buildings. One of the main reasons is that many banks are not lending in buildings with less than 70% of the units sold, which includes numerous new developments.

Another is that they don’t have to worry if the sponsor is going to finish the job or start renting out unsold apartments. The buildings are also likely to have an observable community of neighbors; apartments with valuable custom upgrades like surround-sound wiring or $25,000 automated window shades; sellers who have more flexibility to negotiate than most developers; and a relative dearth of new-building kinks, including the torment of ongoing construction.

Ruling could put Ratner's Atlantic Yards project back on track

The Daily News reports on the ruling that the use of eminent domain to build a new arena for the Nets does not violate the state Constitution. Although the ruling might be appealed, further delaying the project, officials believe this is the last hurdle for the project and ground breaking could be as early as this summer.

“We’re very, very happy,” Ratner told the Daily News Friday, hours after the court victory. “This is really the last hurdle that we have and now we can do what our company does best and build an arena and houses.”

Domino Effect

The NY Times reports on Linden78, the latest building where buyers are walking away from contracts and getting their deposits returned because the developer did not meet a closing deadline.

“This is how the system is supposed to work,” said Steve Goldschmidt, a broker at Warburg Realty. “Funds were escrowed, a deadline wasn’t met and people got their money back.”

The developers were required to close on at least one unit by April 1. One buyer did close on a $3 million purchase on March 31, but the closing was not counted by the state attorney general’s office, since the building did not yet have a temporary certificate of occupancy. Those buyers too may chose to withdraw.

Developers press on with big plans

While other developers may be scrapping their projects, Crains reports on Two Trees Management and their ambitious plans in Hell’s Kitchen and DUMBO. With plenty of cash, and expectations to push through zoning changes, David and Jed Walentas could continue their run of successful developments.

It’s also not the first time the Walentases defied common wisdom. To date, they have sunk more than $100 million into the Clinton Park project, which they predict will be a cash cow for them for years to come. In fact, they are off to a surprisingly good start. Last year, Mercedes-Benz agreed to take 330,000 square feet of space in the roughly 1.2 million-square-foot building. Lining up the loans to construct the building may be harder, though.

The Madoff effect: Brokers get creative to unload property after the scam

In this month’s issue of The Real Deal, sellers and brokers get creative with the techniques they are using to sell property. Among the strategies explored are: sealed bid auctions, short-term rentals, and ditching exclusive contracts.

In the new market, developers in particular found that the first round of incentives they offered to buyers — things like free closing costs, gift certificates, and ‘price protection’ programs — did little to assuage uncertainty. Brokers say that gimmicks don’t work and that good, well-priced properties are now the only gold standard.

Curbed Roundtable: April State O' the Market Report

Curbed has a roundup of the latest market reports that were released this morning. The one thing the reports all have in common is that sales are down drastically, about 50%.

The market appears to be in a holding pattern, with buyers waiting on huge discounts, sellers reluctant to massacre prices, and no deals getting done as a result. Something’s gotta give.

Atlantic Yards project in Brooklyn is dead, says its architect Frank Gehry

Based on an interview with Frank Gehry in The Architects Newspaper, The Daily News pulls together several comments that may suggest the relationship between Gehry and the Atlantic Yards is over.

Mayor Bloomberg this week suggested the project may still get built – but on a smaller scale and without Gehry.

“It would be sad if Atlantic Yards gets built without the Gehry design, which would’ve been phenomenal for this city,” Bloomberg said. “I gather at this point it looks like that the only ways Ratner’s going to get that done is to do it at a lower cost and not to do everything at the same time.”

Chop Shop

The Post examines some properties with huge price cuts, and by talking to their brokers, this seems to be the best way to generate interest as reality sets into place.

Yes, the economic crisis is a lot scarier than any freak with a hockey mask. And the knives have come out. Apartment prices are being cut down all over. No longer are brokers bragging about a super-high price-per-square-foot – the current boast is that a listing is much cheaper than it was a year ago.

Wait. Did we say a year ago? Try a month ago. Or even a week ago.

Manhattan on clearance: Comparing price cuts by neighborhood

The Real Deal with several industry experts break down current pricing levels in the Manhattan real estate market and discuss what level prices need to come to in order to see activity pick up.

The comparison found that in every neighborhood, current listing prices and recent actual sales differed widely, indicating a deep disconnect between sellers and buyers in the current downward market. Median listing prices would need to drop from 8 percent in Soho and Tribeca to a whopping 42 percent in the West Village and Greenwich Village just to equal the actual median sales price in those neighborhoods during the last quarter of 2008.