December 19th 2013
New York Post
Whatever else can be said about 2013, it marks the end of an era in real estate.
After 12 years presiding over a seemingly boundless real estate market — even with a catastrophic crash wedged in the middle — Mayor Michael R. Bloomberg, one of the biggest boosters of development in the city’s history, is on his way out.
“Everybody in the real estate business should pay a promote to Bloomberg,” says developer Steve Witkoff of the Witkoff Group.
And despite all their protests to the contrary, the new guy — Bill de Blasio — makes a lot of real estate folks nervous.
“Many people in the real estate community heard about a pre-kindergarten tax and they were like, ‘Oh my god — this is a soak the rich guy,’ ” says Witkoff. “It’s ridiculous.”
Indeed, as reality sets in, many have made their peace with the end of Bloomberg and start of de Blasio.
“Why would anyone want to turn such a successful ship around?” asks Pam Liebman, president and CEO of the Corcoran Group.
And there’s no question that this transfer of power comes at a particularly gold-plated moment in city real estate: 2013 was a banner year. It’s a fitting send-off for Mayor Mike.
High Demand/Low Inventory
“We had the lowest inventory on record, yet we did our highest volume of sales,” says Liebman. “I can’t really explain that, by the way.”
“The surge [in activity] was caused by a spike in interest rates” this spring, says Jonathan Miller, of the appraisal firm Miller Samuel. “We had many people who were sitting on the fence who jumped in, worried that they would miss out — it was the busiest summer on record.”
At an open house at 1235 Park Ave. in Carnegie Hill in the late spring, Corcoran broker Wendy Richardson saw 150 attendees for a 935-square-foot two-bedroom whose listing price was $1.1 million. The next day she had 25 offers. It sold for $1.3 million — all cash.
After flying into New York on three separate occasions from Mexico City and seeing 30 to 40 different properties (and losing out on what he thought was a done deal), one determined buyer — entrepreneur Joseph Murad — went on a marathon tour of properties with his broker, David Bibian, of Keller Williams NYC. “We spent three days intensively looking,” says Murad. “When we were finished, we just decided to make six or seven offers. All the offers were close to asking price — and out of the seven, we got one answer.” Murad wound up buying a 500-square-foot one-bedroom for $625,000 at Worldwide Plaza which his daughter is currently living in.
But unlike previous exuberant markets, a property wouldn’t sell if it was unreasonably overpriced.
“One of the ways that today’s market is substantially different than 2007 is that buyers today are both enthusiastic and cautious,” says Frederick Peters, president of Warburg Realty. “Buyers may fling themselves into a competitive bidding situation for a property they perceive as well-valued or undervalued, but they’ll stay away from something they perceive as too expensive.”
Jacky Teplitzky of Douglas Elliman, for example, had a two-bedroom on the Upper East Side priced at $1.395 million that was ignored.
“We put it back on at $1.295 million and suddenly there was a bidding war. We ended up with $1.375 million.”
The New “New” Construction
New construction grasped at insane prices — and many got them. If a building was in a hot neighborhood like, say, TriBeCa, and it was designed by a big-time architect like Herzog & de Meuron — as was the case at 56 Leonard — it could command asking prices well above $3,000 per square foot. (So far, 56 Leonard has done almost $1 billion in sales.) The same happened at 150 Charles in the West Village, where all 91 units sold out in 12 weeks — for more than $3,000 per square foot.
Traditionally plush neighborhoods such as Greenwich Village unveiled developments like Greenwich Lane, where prices range from $2 million to $20 million, and Delos, at 66 E. 11th St., where prices on its five units range from $15 million to $60 million. One Vandam, in SoHo, is selling a 5,286-square-foot four-bedroom penthouse for $28 million. The Puck Building, also in SoHo, is turning its top floors into six monster-sized apartments ranging from 4,900 to 7,000 square feet and priced from $21 million to approximately $60 million.
Even less-established neighborhoods saw new projects getting big numbers: In NoMad, 10 Madison Square West achieved more than $2,900 per square foot. And in West Chelsea, developer Michael Shvo shelled out $23.5 million — or $850 per square foot — for a gas station at 239 10th Ave. to build a future condo.
“West Cheslea took on a new life,” says Frances Katzen of Douglas Elliman.
Many of the people buying these new condos, as well as pricey townhouses, are foreigners who view Manhattan as a cheaper alternative to other big cities. In Hong Kong the average premium property is $4,810 per square foot, in London it’s $4,470 — versus $2,750 in New York, according to Knight Frank Residential Research.
Paula Del Nunzio of Brown Harris Stevens set a record this year for selling a 20-foot-wide townhouse at 21 Beekman Place for $34.35 million to (surprise, surprise) a foreign buyer. “He threw in an extra $650,000 for the furniture,” Del Nunzio says.
The Far East and Wild West
It turns out that in 2013, the old “location, location, location” mantra of real estate became a highly elastic term.
“Traditional location — the way we thought of it — is evolving,” says Wendy Maitland, senior managing director of Town.
Town’s development The Charles, for example, is on First Avenue and 72nd Street — far from the Upper East Side’s traditional Gold Coast. But that hasn’t stopped the project from commanding top-tier prices ($2,500 a foot, according to Streeteasy). And at 50 UN Plaza (off First Avenue), another project under construction, a penthouse triplex is asking $100 million.
On the other side of the island at One Riverside Park — Extell’s development just off the West Side Highway, at Riverside Boulevard and 64th Street, which launched last month — “There was a stampede there because we had one-bedrooms under $1.5 million,” says Liebman. “You’d have thought we were giving them away.”
Next Stop: Brooklyn
The real estate fervor isn’t confined to Manhattan — the Brooklyn market is surging, too.
“Brooklyn is not the stepchild,” says Kathy Braddock, co-founder of Rutenberg Realty. “It’s the property of choice for many.”
“We saw the gap between Brooklyn and Manhattan narrow,” says Miller. “The Brooklyn real estate market is a destination — not a cheaper alternative to Manhattan.
That was a big phenomenon in both the sale and rental markets.”
Maybe it’s fitting that a Brooklynite will take the reins in January.
“It’s a new start,” says Braddock. “Now that de Blasio is moving back into Gracie Mansion, it’s a symbol — this is a hometown guy. It’s exciting for New York.”