Warburg Blog

In her charming and funny book “The Last Blind Date” (full disclosure, I am in there as her real estate agent), Linda Yellin allows a whole chapter for her co-op Board experience. Coming from Chicago, or anywhere else in the world, I understand how bizarre and invasive this process can seem. Since 2011 has been a bad year for turndowns (and no, most of them are NOT about the Board being unhappy with the price), I thought I would make some suggestions as to what a reasonable and fair Board process might look like.

The City Council has some Board related legislation under review, as I discussed in a blog earlier in the year. That legislation, modeled after a similar bill passed on Long Island, has aroused the opposition of the Council for New York Co-operatives and is therefore probably doomed to failure. But I do believe a reasonable bill could pass, and that Boards and managing agents could themselves take steps to make the process more expeditious and transparent.  To whit:

 - Time parameters – give the Boards 30 days to review a package and ask for more information, schedule an interview, or reject. And don’t make an exception for the summer. That’s why conference calls exist. And then give them 15 days after the meeting to provide a response. There is no reason why this part of the process cannot be expedited. People’s lives are on hold waiting for the outcome.

- Standardize all the forms so the purchase applications and financial statements are identical across the spectrum of buildings. Make sure the purchase applications are free of questions which violate Fair Housing rules. Put those forms on line. 

- Require that all Board members receive an annual half hour of Fair Housing education from a professional (this excellent suggestion which I wrote about a while back comes from Hall Willkie, President of Brown Harris Stevens. It would go a long way towards eliminating inappropriate or illegal behavior)

- Create a firewalled virtual package for every building so thousands of pages of paper don’t get wasted on every package which is submitted.

- Finally (and this is beyond the realm of legislation) let the same presumption of innocence which our legal system promises to criminal defendants apply to co-op Board applicants. Board members, if the financials aren’t clear, ask a question. Don’t be so quick to turn the thumbs down on good people with reasonable assets. The vast majority of Board rejectees are upstanding, would pay their maintenance in a timely manner, and would be pleasant, neighborly co-shareholders. Let’s give apparently qualified people the benefit of the doubt!

Forget about making Boards legally responsible for giving a reason for every rejection; it is never going to pass in Manhattan and would create a liability nightmare which would make any sane person balk at joining their Board. It just isn’t practical. But some improvements in the current system, like those I address above, are both achievable and necessary.  Let’s start there.

You can’t help but notice,if you’ve been anywhere on the East Side near Second Avenue,that there’s some MAJOR construction going on for the 2^nd Avenue subway.

What may be escaping you (if you don’t live anywhere on the East Side where you routinely are near Second Avenue) is that there are a plethora of businesses ,many of which have been on or just off the avenue for decades,that are suffering- not just because of the economic malaise in general,but the construction process.

With barriers,closed sidewalks,and signs obstructing their view from the street-it can be hard to remember there are many once vibrant businesses that are not so much anymore.

I love the Shop 2^ndAvenue campaign,and I’ve tried to at least a few times per month,patronize local business along the avenue. Whether its stopping for a light dinner at Ricardo’s Steakhouse after a broker’s open house (111^th and Second Avenue) ,getting my hair done at Eddie’s Jr Hair Salon (110 ^thand Second Avenue) , a mani/pedi at Pretty Nail No 1 ( 102^nd and Second Avenue) , brunch at Don Pedro’s (96^th and Second Avenue) ,groceries at  Key Food (93^rd and Second Avenue)  or the new  Fairway (86^th Street off Second Avenue), breakfast meetings at Viand Coffee Shop (86^th and Second Avenue), new keys for my listings at Umbrella Locksmith (68^th and Second Avenue) –well you get the picture ! It is incredibly important to support your neighborhood businesses.

The Second Avenue Subway,once completed,will be terrific. It will ease many transportation deficiencies east of Third. Using myself as an example,it can take me approximately 10-15 minutes to walk to or from the train station,if I’m not speed walking (and yes,I know that we New Yorkers tend to be speedy- I prefer to look at it as goal oriented focus). The new Select Bus Service on First and Second Avenues,which replaced the limited M15, can be terrific. Additionally the bus does leave me closer to my apartment than taking the subway,but it sure would be great to have a subway on Second Avenue !

…but take a look beyond the construction. Haven’t you noticed,when you look for someplace to live-whether purchasing or renting,very often the closer you are to transportation,the more expensive it becomes ? In New York City,this is very often the case.In Manhattan,on the East Side,you have ‘east of Third’ and ‘west of Third’,and that’s WITHOUT taking into account the inherent cachet of being on or off some of the avenues.

Is there a hidden opportunity ? Maybe…if you can look past the construction,and the increased traffic as a result,and see out perhaps less than ten years from now,when all of this is gone,and you are three minutes from the second avenue subway-wouldn’t that be terrific ? If you’re thinking of buying,wouldn’t it not be worth considering buying in this area,and being able to see some what will likely be inevitable appreciation in the value of your property over time-this may be the opportunity for value purchases.

While you’re contemplating that…start by patronizing some of the local merchants let’s  Shop 2^nd Avenue !

via yournycrealestateresource.com

The Friendly, Courteous Connoisseur Just Around the Corner

Sure, Downtown Cellars (formerly The Greene Grape Downtown) has about 240 different bottles of wine from all over Europe, South America, Australia, South Africa and other far-flung and close-to-home wine-growing regions. They stock a wide variety for any occasion or mood, but it’s the staff that really sets this boutique wine shop apart. We agree wholeheartedly with this comment from Chris W. on Yelp: “The service is unparalleled – knowledgeable, friendly, and always ready with a great new suggestion.” Now that’s customer satisfaction.

We spoke recently with current owner and wine connoisseur, Seth Datz, to find out more about one of favorite neighborhood spots. According to Datz, Downtown Cellars specializes in hard to find wines, wines from small vineyards and organic and sustainable wines that retail for $20 and under. “I like the wines that are still owned by the growers, some of my favorites are red Burgundies and German Rieslings,” he said.

And if you’re thirsty for a better understanding of wines, Downtown Cellars runs a fantastic free tasting every Friday from 5-7 p.m. Be sure to join their email list to get updates and find out about each week’s theme. “Our emails go out to about 6,000 customers. A lot of people meet after work and, depending on the tasting and the night, our store can be so crowded you can’t move,” Datz said. “We sometimes have an ‘Old World versus New World’ theme where our customers can compare Chardonnay from France to Chardonnay from California.” Sounds fun!

So what’s their most popular wine? You may be surprised. According to Datz, “Italian reds are very common, but the wine sold most is a Savigny Blanc from Chile. It’s inexpensive and great!” Other bestsellers include a California Pinot Noir and Prosecco, the dry Italian sparkling wine.

With fine spirits, constant promotions and frequent tastings, Datz makes finding your own favorite wine easy and comfortable. Even better, a rewards program allows customers five percent back on each purchase. And when you have $20 worth of rebates, you’ll receive a $20 voucher at the store. Cheers!

Downtown Cellars

55 Liberty Street

New York, NY 10005

As I anticipated, I got a lot of feedback to last week’s blog, “The Blame Game.” Some was very positive, some not so positive. But everyone seemed to acknowledge that the Occupy Wall Street protests are giving voice to a national sense of concern about the status quo. And everyone seemed to share the same sense of apprehension and uncertainty about the future.

Real estate purchases, in every era except the anomalous period between 2003 and 2008, have always been about the future. Real estate is big, complex, and illiquid. It is not, or at least should not be, a short term investment. It serves many functions: it can be a home, an income producing investment, a concrete (literally) hedge against volatility, or a safe place to park money extracted from something else. I was amused but not surprised to note that on tonight’s episode of the new Showtime series “Homeland”, the money ultimately destined to fund a terrorist action is converted from jewels into real estate. A house near the airport. What could be a safer place for money than that?

So why is it, with so much confusion and concern about what is going on in the U.S. and our future, that the New York residential market has held up so well? I see it as a sign of hope. Buying signals belief. A renter is always transient, but a buyer is putting down roots, expressing confidence in the viability of the environment. To see people from all over the world putting their money into New York real estate is to believe in the health and vitality of our city, and to have faith that the problems we face are difficult but not insurmountable.  No other industry more profoundly reflects the underlying zeitgeist. A real estate purchase means “I am sticking around, and I am confident that over time this town is a good place for investment.” In addition, for those who are buying their real estate as a home, it means “I believe in New York as a place to call home.”

New Yorkers, even investment bankers who are always anticipating the next crash, vote their confidence through their real estate purchases, precisely because those purchases are both illiquid and long term. So our fundamentally healthy, fundamentally stable market carries the result of that vote: there’s a lot to overcome, there’s a lot to fix. But we believe.

No,that is most certainly NOT a typo. Despite my never-ending adoration of my beloved hometown and home borough,I have been known to depart,for short periods,and visits. But how might you ask,did I end up heading to Westport…

…Well it all started with Twitter,which lead to an RE Bar Camp,which lead to deepening of a connection and building a friendship,that ultimately resulted in a message in my Facebook inbox a few weeks ago.

Would you come to Westport and share your perspective on mobility and technology for real estate agents with my agents.

My answer,sure,why not -let’s put it on the calendar !

A relatively quick (and painless) ride-the heels I wore notwithstanding.And realizing (again) that there are many people who live in NYC and are reverse commuting using Metro-North. I am a huge fan of the commuter rail roads,as when I do need to pop out for a meeting,it is far more productive as I am able to work,whether its using my Blackberry,iPad or MacBook Air. I don’t ‘lose’ any time.

In fact,on the way to Westport,created a keynote for the talk,booked two showings,and worked on comps for a listing presentation..and the train ride was ONLY an hour !

I was met by  Melissa Riley (@melissariley) at the station,and my return trip , Marilyn Katz (@westportmoves) was kind enough to refresh my memories of Westport,showing me some highlights and we stopped for a quick lunch.

The office meeting was terrific,not so much about talking AT a somewhat captive audience,but talking with colleagues,and learning about some of their challenges,with technology,with their market,and how we are all trying to keep up and not fall behind.

You may ask ,why would I take a chunk out of my day to travel to do this ? The same reason I give time by volunteering at REBNY (where I’m on the Education Committee and enjoy the Residential Sales Council),the same reason I have attended and helped to put together bar camps .Besides enjoying sharing knowledge and expertise with others,it is fantastic to broaden one’s sphere. And now,next time I have clients who are considering leaving Manhattan (or coming back),I will have some information to share with them,including the length of the commute- I will have recommendations that weren’t generated by pulling a name out of a hat.

NYC is a mecca of sorts,and I love being able to combine my native’s perspective on living here with helping people to find the perfect home. But I also realize that there are reasons that bring people to and from this great city I call home,and I find that its important to be able to help facilitate a transition into NYC as well as out of.

That said,best get back to working on those comps for that listing discussion later this week. And if you are thinking of moving in,out ,down or up- let’s chat first,and chart out your plan !

Many thanks to the great agents I met ,and I look forward to seeing you all again very soon !

via yournycrealestateresource.com

In spite of what Gordon Gekko believed, greed turned out not to be so good. So now there is a lot of talk about the country’s economic and social ills. Here are a couple of my opinions: whatever you may think about it, the notion of closing tax loopholes or imposing additional taxes on those with incomes of over $1,000,000 per year is NOT class warfare. The statistics are in: income disparity in this country is rising and the government’s need to fund a safety net for those unable to do so for themselves, which is a fundamental requirement of civilized societies, grows ever more expensive. The job market is bad and likely to remain so for a while; it may even be that the intersection of more efficient technology and rising population will leave joblessness at higher-than-historical levels for some time to come. These are complex, intractable problems which will take years, sacrifice, and political courage to solve.

That said, I confess to lacking much sympathy for the Occupy Wall Street marchers who appeared for their TV moment in front of the apartments of Jamie Dimon, Lloyd Blankfein, and the like.  We have sold property to many of the reviled 1% and I cannot help but wonder about how history was revised so rapidly. Only five years ago, everyone was aspiring to be a real estate millionaire. Six or seven years before that, every cab driver in New York was a day trader and everyone was going to make a tech stock fortune; we would all be rich and happy in the “new economy” where the stock market never went down.

It didn’t quite turn out that way. Along the road, there was certainly a lot of profiteering by a lot of people in the mortgage and banking industries, and plenty of real estate agents as well. But did no responsibility accrue to those members of the “other 99%” who actually refinanced their home five times to take out more and more equity? Or those who bought numerous investment properties they could not afford with 100% mortgages? I just cannot buy the story that everyone who borrowed was deceived by a heartless one percenter. The truth is, immigrants from all over the world want to come here because our society is so mobile. The streets really are paved with gold for the lucky and industrious; anyone CAN (although few WILL) make a fortune. That is what all the people across the country hoped for as they invested in real estate they could not afford. But when it all doesn’t work out, you cannot just point the finger at Wall Streeters without  looking at all the Main Streeters who also wanted to play the game.

As everyone who knows me knows, the failure to assume personal responsibility is my pet peeve. I stand firmly by the belief that we need to address the inequities which have created our current “trickle up” economy. But I do not stand with Occupy Wall Street. It’s always too easy to just blame the other guy.

It was today – a grey and basically drab morning. 

Feeling a wee bit puckish coming out of the local subway, I went into our local bagel bakery for a toasted seven grain with butter.  Butter, in the era in which I grew up, was The Great Beast: it was fattening, costly, and my Father used entirely too much of it when he cooked scrambled eggs (a simple trick, it took my brothers and I years to figure out why his scrambled eggs tasted better than our Mum’s) but as I’ve gotten older I’ve re-discovered its virtues, and while I use butter infrequently in my cuisine, when I do I use lots of it and thoroughly enjoy every bit.  As a consequence, I now prefer a buttered bagel to its unctuous cream-cheese-schmeared relation.

Since I was hungry (I’d been at my son’s school for a lengthy meeting and hadn’t had any breakfast) I opened up the fragrant envelope which had been handed me by my favorite counter-girl, and took a first bite as I crossed Lexington Avenue.  Passing in front of Lenox Hill Hospital, tilting forward so as to avoid dripping on my suit, I took another. The initial toasty crunch, the toothsome pull, and the encompassing butter finish of the warm gobbet was perfection.  Pure and simple.  I tried hard to savor every bite, and I felt lucky: there was still half left, and it was still warm, by the time I got to my desk.

My point is there’s no other city in the World in which you can have that exact experience. 

Don’t get me wrong.  I love a baguette in Paris, a Cornish pasty, or a Singapore noodle as much as anyone.  I even love the Montreal bagel, flat and meager as it may at first appear to a native such as I.  But the New York Bagel, properly made and hot from the oven, simply has no peer.  I just think we should relish pleasures such as this, hold on to them tight, and as New Yorkers, cherish the fact that we live here.

Paul Tiberio is Senior Vice President of Duane Reade, which opened one of its newest 24-hour locations on Wall Street just last month. An impressive 22,000 square feet, it also happens to be the single largest of all their New York City stores, said Tiberio, a testament to the Financial District’s explosive growth in recent years and a real vote of confidence in the neighborhood.

The building itself is positively rich with history and grandeur. According to Tiberio, “The fireplace in the back where the nail salon is used to be David Rockefeller’s office 20 plus years ago, and we were also able to keep all of the marble flooring and restored and polished the marble pillars. Also, the marble stone archways and brass escalators are all still intact.”

This is no run-of-the-mill pharmacy. No, Duane Reade is redefining what you can expect from your neighborhood store by offering hairstyling services, including hair and scalp analytics, manicures and massages, and even men’s haircuts. Two chefs are on-hand to make fresh sushi every day and a delicious smoothie bar offers up healthy drinks.

Speaking of health, the pharmacy has a doctor on staff for consultation during the week, which is great for tourists and out-of-towners in need of walk-in or immediate care.

Tiberio said that residents really appreciate the all-under-one-roof approach. “The pharmacy allows customers to get their prescriptions refilled quickly, which is great. And the daily crowd is taking advantage of the fresh food options for breakfast and lunch,” he added.

There’s even a stock ticker for the business professional to glance at and a $3.00 shoe shine, which donates all proceeds to New York-based philanthropic organizations through the Duane Reade Charitable Foundation. Wow, look good and feel good for a few bucks. That may just be the best bargain in the store!

Duane Reade

40 Wall Street

New York, NY 10005

In the residential real estate business there is a saying which goes back as least as long as I do: buyers are liars. I never liked that saying much. But there is an underlying grain of truth. Every broker who has been around the block has had at least a couple of experiences with a buyer who works with them for months, then buys something completely different from what they had been looking at, often with another broker whom they discovered online or just met at a party. So what I would say is that buyers are evolving. Priorities change during the search. Looking at property can bring the REAL wish list into sharper focus. Are space and layout ACTUALLY more important than address and location? Does prewar trump light and air? We, as agents, don’t know the answers to these questions at the beginning of the process, and often you, as the buyer, don’t fully know the answers either.

So both sides need to be vigilant. On our side, we need to pay attention to the many reactive cues our buyers give us when looking at property and in the all important chatting which takes place as we travel between appointments. If we don’t try to dominate the conversation, our buyers will tell us what they want in many small ways. A casual question asked several times about whether or not this property is in a “good building” lets us know that this is a concern. A buyer who walks immediately to the windows in every apartment clearly cares a lot about what is outside them. A note taker who opens every closet door and needs to walk through three times will negotiate very differently from a quick looker who knows within moments if he/she is interested and never stays anywhere more than four or five minutes. And for one the devil is in the details, while the other will probably choose based on big picture criteria.

And here’s what we ask of you, the buyer. First, listen to us. I know the Internet, StreeatEasy, Zillow, and Trulia give access to a lot of listing information (although a lot of it is wrong or out of date.) But access to information is not the same thing as deeply understanding the nuances of the marketplace. Second, confide in us. We have a fiduciary responsibility to you as your broker to keep the information you give us confidential. But we cannot operate without understanding your real goals, your real timetable, etc. And we cannot help you devise a strategy without having some sense of what you are willing to pay for the property you want to buy.

When it works (and if it isn’t working, you should change brokers), the broker/buyer relationship is both efficient and effective. We enjoy the satisfaction of seeing you settled in the right place at the right price. You feel secure that you have been heard, that your evolving priorities have been attended to, and that you have benefited from our expertise in both finding the property which gives you what you REALLY wanted (as opposed perhaps to what you originally THOUGHT you wanted) and paying the right price for it.

New York’s top agents share a number of traits, including extensive knowledge of the marketplace, negotiating expertise, and a primary focus on serving YOU. That’s what you should expect from us. What we hope for from you, and we know we have to earn it, are loyalty and trust. These gateways open into the successful relationship described in the paragraphs above. Then we won’t have to think that buyers aren’t liars, and more important you won’t be thinking that of us.

Following is my Manhattan Market Watch column for November publication. The world news is sobering indeed, but in New York, we have much for which to be grateful.

October 2, 2011.  I’ve taken to begin these columns with a dateline because the global economic picture is unclear and can change on a dime.  There’s no magic bullet or one government tool that will repair our struggling world economy.  Are we headed for another recession as some economists forecast?  Pimco’s Mohamed El-Erian sees a financial crisis looming again as European sovereign debt spreads well beyond Greece and observes that all intervention despite being “massive” has not been enough to function as a “circuit breaker” to contain the quandary. 

If we head towards another meltdown, what will happen to residential real estate in New York?  If you ask industry insiders, we’ll land on our feet, and come out on the right side of even. 

Three years after a global financial meltdown, New York is still one of the most attractive markets for investors.  As the beneficiary of capital flight, our city has played host to foreign purchasers from around the globe, especially China, Russia, Brazil and Australia.  2010 turned out to be a banner year for the condo market with Russians buying trophy double digit million dollar apartments and Chinese investing in multiple smaller million dollar units. 

Ten years after 9/11, the World Trade Center has been rebuilt and downtown Manhattan is vibrant again.  Tourists are visiting in record numbers demonstrating that our city is not only resilient, but healthy and strong.  Real neighborhoods have grown in Brooklyn and Long Island City, and our streets are cleaner and safer than ever. 

This is Jay-Z’s New York “where dreams are made of”—a city that generates excitement and energy, whose diverse citizens sit on the boards of cultural and philanthropic organizations.  It’s where venture capital is found, and entrepreneurial spirit is nurtured.  It’s where the talented and the young want to be.  In the last 10 years, census reports show the population of 20-29 year olds has increased 8%.  Talent is drawn here and wants to stay here.  By 2030, our city’s population is projected to increase an additional million. 

Even as housing reports everywhere but New York are nightmarish, we in the big apple have much to be grateful for.  While the rest of the nation was feeling pain as early as 2007, New York real estate wasn’t significantly affected until after Lehman fell.  From October 2008 until about mid 2009, we experienced the fallout first hand, learning that we were not immune.  Although we had been insulated and protected by the predominating co-op model whose financing limitations precluded that our housing would ever be underwater in sharp contrast to the rest of the nation, when we got hit in New York, we managed to work through the housing malaise and subsequent recession better than most other cities, outperforming DC, San Francisco, Boston and LA. 

Unlike the stock market, which is super sensitive to both good and bad news, residential real estate is a brick and mortar investment with utility whose prices don’t swing dramatically.  Wall Street’s volatile stock market gyrations have created some super losses, and probably even more wealth which will impact our market in 2012 and 2013.  More $10M+ properties will be selling, boosting confidence throughout the marketplace.   

While everywhere else there’s a surplus of inventory, in New York there are segments with a real shortage of product.  There was no rush among sellers to list after Labor Day, so early fall housing stock fell short of expectations.  While condo properties may be plentiful, co-op inventory for large apartments is thin particularly on the West side.  In all areas of the city and all cost ranges, supply decreases as prices increase.    

On the development side, mostly smaller scale projects are underway, with more conversions from rental to condo than ground-up new construction, because the former is far less costly per square foot.  The condo construction loan is the least favorable today among lenders, with lack of credit as the reason for 600 currently stalled projects.

On the other hand, residential mortgages are returning to normalcy.  Jumbo lenders are back, and interest rates will probably remain at their same low levels through the next election.  However, it’s still taking reams of documentation to qualify and about 45 days to get a commitment.  Effective this month, confirming limits are lowered to $625,500.

The Fed’s newest flavor stimulus of the month “Operation Twist,” aimed at lowering long term interest rates, is designed to ease a restrictive lending environment.  Reaction to this latest attempt to revive the U.S. economy has been mixed.  Will it boost consumer spending?  Will it stimulate loans so companies can build new factories and hire more workers?  

Although employment numbers continue to disappoint and hover at 9%, and  layoffs at financial institutions persist, jobs are being added—albeit slowly—in private sector start-ups and in industries such as health care and especially higher education—serving to balance Wall Street’s former dominance.  Expansion plans are notable at CUNY, NYU, Fordham and Columbia.  In 2013, a much anticipated extension of Palo Alto’s Stanford University campus will bring new opportunities and fresh status to Roosevelt Island with a hi-tech graduate center for applied sciences.  In a report on 9/26/11, Stanford’s President John Hennessy explained that he chose New York because of the megacity’s ability to attract students and faculty from around the world and because of the initiative of its visionary Mayor Bloomberg.

In New York, the residential real estate glass is half full.  Come sing with Jay-Z—“Welcome to the melting pot…  / No place in the world that can compare… / These streets will make you feel brand new / Big lights will inspire you, / Let’s hear it for New York, New York, New York.”