THE real estate market in Manhattan has become so unnerving to buyers that some are forfeiting six-figure deposits rather than close on deals they have made.
At 304 Spring Street, a sleek condominium building in SoHo with stunning Hudson River views, the buyer for the duplex penthouse recently decided he would not go through with the deal and walked away from a $780,000 deposit.
At 1120 Park Avenue, a classic prewar co-op filled with multimillion-dollar apartments, it appears that a buyer forfeited a deposit of as much as $1.1 million.
Saturday, February 28, 2009
Condo developer aims to conquer pink-slip fever
Toll Brothers is pulling out all the stops to lure buyers to its New York City condominiums.
On top of recent price cuts of as much as 37% at its new Williamsburg luxury condo One Northside Piers, the big Horsham, Pa.-based developer is now offering to first-time home buyers the safety net of hard-times mortgage insurance. If a buyer loses his or her job, the developer is offering to make mortgage payments for up to a year at all three of its New York City luxury condos—Northside, 5SL in Long Island City, Queens, and 303 East 33rd in Kips Bay, Manhattan.
“In the past, these programs were not a necessity,” said Scott Avram, a senior project manager at Toll Brothers. “These are uncertain times. We are always trying to think of creative ways to help buyers make a purchase.”
On top of recent price cuts of as much as 37% at its new Williamsburg luxury condo One Northside Piers, the big Horsham, Pa.-based developer is now offering to first-time home buyers the safety net of hard-times mortgage insurance. If a buyer loses his or her job, the developer is offering to make mortgage payments for up to a year at all three of its New York City luxury condos—Northside, 5SL in Long Island City, Queens, and 303 East 33rd in Kips Bay, Manhattan.
“In the past, these programs were not a necessity,” said Scott Avram, a senior project manager at Toll Brothers. “These are uncertain times. We are always trying to think of creative ways to help buyers make a purchase.”
Friday, February 27, 2009
Banks Vacate Towers Pushing Empty NYC Space to Record
Feb. 26 (Bloomberg) -- New York’s biggest banks and securities firms may relinquish 8 million square feet of office space this year, deepening the worst commercial property slump in more than a decade as they abandon a record amount of property.
JPMorgan Chase & Co., Citigroup Inc., bankrupt Lehman Brothers Holdings Inc. and industry rivals have vacated 4.6 million feet, a figure that may climb by another 4 million as businesses leave or sublet space they no longer need, according CB Richard Ellis Group Inc., the largest commercial property broker.
Banks, brokers and insurers have fired more than 177,000 employees in the Americas as the recession and credit crisis battered balance sheets. Financial services firms occupy about a quarter of Manhattan’s 362 million square feet of office space and account for almost 40 percent now available for sublease, CB Richard Ellis data show.
JPMorgan Chase & Co., Citigroup Inc., bankrupt Lehman Brothers Holdings Inc. and industry rivals have vacated 4.6 million feet, a figure that may climb by another 4 million as businesses leave or sublet space they no longer need, according CB Richard Ellis Group Inc., the largest commercial property broker.
Banks, brokers and insurers have fired more than 177,000 employees in the Americas as the recession and credit crisis battered balance sheets. Financial services firms occupy about a quarter of Manhattan’s 362 million square feet of office space and account for almost 40 percent now available for sublease, CB Richard Ellis data show.
Thursday, February 26, 2009
Half-priced condos ... in New York City?!
Sales in New York City have slowed down so much that many developers of luxury properties are planning to slash their prices - by as much as half - reports The New York Times.
Many of these developers plan to auction their properties, a tactic common outside of the city, but rarely resorted to in the Big Apple. These types of auctions have the potential to reset new condos to pre-bubble prices across the city.
"We have quite a large investment in a new condo building in a good location downtown,” one lender said. But sales have been “very, very slow,” he added. The units are currently priced at $1,000 per square foot. He expects to start the bidding at $600 per square foot.
Business Insider reports that Manhattan condo inventory is piling up four times as fast as it can be sold. A real estate insider told the publication that sellers are now putting about 1,500 units per month on the market.
Many of these developers plan to auction their properties, a tactic common outside of the city, but rarely resorted to in the Big Apple. These types of auctions have the potential to reset new condos to pre-bubble prices across the city.
"We have quite a large investment in a new condo building in a good location downtown,” one lender said. But sales have been “very, very slow,” he added. The units are currently priced at $1,000 per square foot. He expects to start the bidding at $600 per square foot.
Business Insider reports that Manhattan condo inventory is piling up four times as fast as it can be sold. A real estate insider told the publication that sellers are now putting about 1,500 units per month on the market.
Wednesday, February 25, 2009
NYC foreclosures spares some areas
Foreclosures in New York City rose 64% from December and 5% from a year ago, according to a report from PropertyShark.com scheduled to be released Monday. Foreclosures in Staten Island and Queens once again showed the sharpest increases, ballooning by 56% and 76%, respectively.
“I don’t think we have seen the worst yet,” said Bill Staniford, PropertyShark’s CEO. “People are still losing their jobs and credit is still not available. These issues will be problematic for the market.”
Among the five boroughs, Queens and Staten Island also continued to suffer the highest rate of foreclosures per household in January. In Queens, one in every 4,559 homes is scheduled for foreclosure, while in Staten Island one in every 2,845 homes are.
“I don’t think we have seen the worst yet,” said Bill Staniford, PropertyShark’s CEO. “People are still losing their jobs and credit is still not available. These issues will be problematic for the market.”
Among the five boroughs, Queens and Staten Island also continued to suffer the highest rate of foreclosures per household in January. In Queens, one in every 4,559 homes is scheduled for foreclosure, while in Staten Island one in every 2,845 homes are.
Tuesday, February 24, 2009
Manhattan real estate could fall another 30%?
Until very recently, Manhattan real estate had been a beacon of strength in an otherwise weak housing market.
But now sales volume has tanked and prices are starting to fall along with the rest of the country. The median sales price on high-end coops and condos has fallen 20% since it peaked in mid-2008 and it could get worse. Inventories are on the rise and sellers are slashing prices but still failing to find buyers.
Real estate sales star Dolly Lenz tells Barron's that a Manhattan apartment now "has to be 25% off the last sale for it to be a bargain. People have no sense of urgency. A sense of urgency is what the real-estate market needs as a stimulus."
But now sales volume has tanked and prices are starting to fall along with the rest of the country. The median sales price on high-end coops and condos has fallen 20% since it peaked in mid-2008 and it could get worse. Inventories are on the rise and sellers are slashing prices but still failing to find buyers.
Real estate sales star Dolly Lenz tells Barron's that a Manhattan apartment now "has to be 25% off the last sale for it to be a bargain. People have no sense of urgency. A sense of urgency is what the real-estate market needs as a stimulus."
Sunday, February 22, 2009
Commercial Auctions Expected to Rise
Sales generated through auctions — including residential, commercial and agricultural properties — totaled $58.6 billion in 2008, up 38 percent from $42.3 billion in 2003, according to a recently released tally by the National Auctioneers Association, a trade group based in Overland Park, Kan.
Most of the recent activity and attention has focused on the residential sector, with an increasing number of homeowners being forced into foreclosure. But commercial auctions are expected to pick up this year as property owners and developers seek to raise cash to pay off loans or are forced into foreclosure themselves.
“We’ve seen two years of residential downturn,” said David E. Gilmore, a managing partner at the Sperry Van Ness Accelerated Marketing Company, an auction and brokerage firm with offices in several states. Noting that commercial real estate generally lags behind residential by 18 to 24 months in a downturn, Mr. Gilmore added, “We’re there.”
Most of the recent activity and attention has focused on the residential sector, with an increasing number of homeowners being forced into foreclosure. But commercial auctions are expected to pick up this year as property owners and developers seek to raise cash to pay off loans or are forced into foreclosure themselves.
“We’ve seen two years of residential downturn,” said David E. Gilmore, a managing partner at the Sperry Van Ness Accelerated Marketing Company, an auction and brokerage firm with offices in several states. Noting that commercial real estate generally lags behind residential by 18 to 24 months in a downturn, Mr. Gilmore added, “We’re there.”
Friday, February 20, 2009
It's a Renters' Market in the Hamptons
This is normally the time of year when people start making plans for the summer and lock in their rentals in the Hamptons. Not this year. Last month, The Real Deal suggested the number of rental transactions was down by as much as 80 to 90 percent compared to last year at this time; today the Post offers up examples of prospective renters offering owners as little as half the official asking price.
Things may very well get worse as nervous renters wait to see if prices fall further, and owners become increasingly desperate to take the first real offer that comes their way. In other words, don't be surprised if six recent college grads end up turning ex-Lehman COO Joe Gregory's $32 million Bridgehampton home into a booze-soaked share house.
Things may very well get worse as nervous renters wait to see if prices fall further, and owners become increasingly desperate to take the first real offer that comes their way. In other words, don't be surprised if six recent college grads end up turning ex-Lehman COO Joe Gregory's $32 million Bridgehampton home into a booze-soaked share house.
Thursday, February 19, 2009
After Two Years of Trying, Owners Give Up on Selling Starrett City
The owners, a group of investors led by Disque Deane, cited the faltering economy and a lack of financing as the reasons. But the sale may have foundered over price, said Donald Cogsville, who until Monday led a consortium of nonprofit organizations and developers that had been negotiating to buy Starrett City for the past two months.
Neither side would discuss details of the proposed sale, although some real estate executives familiar with the talks said that the group had offered about $700 million. Mr. Cogsville said his consortium was unwilling to raise its offer to meet the seller’s demands.
“We weren’t prepared to offer a higher price that jeopardized either long-term affordability, or a commercial return,” Mr. Cogsville said.
Neither side would discuss details of the proposed sale, although some real estate executives familiar with the talks said that the group had offered about $700 million. Mr. Cogsville said his consortium was unwilling to raise its offer to meet the seller’s demands.
“We weren’t prepared to offer a higher price that jeopardized either long-term affordability, or a commercial return,” Mr. Cogsville said.
Tuesday, February 17, 2009
Manhattan's luxury apartment market is feeling the squeeze, with some prices down 20%.
Attention bargain shoppers: The late Brooke Astor's duplex at 778 Park Ave., with 14 rooms, six terraces and a brass-trimmed library with red lacquer walls, would have cost more than $40 million just three years ago. But today, less than a year after the listing debuted, the trophy property has a new broker and a new price tag: $29 million--a 37% discount.
All across Manhattan, but mostly concentrated in the Upper East Side, owners of luxury residencies are cutting prices by 20% to 25% on average, according to Stribling Executive Vice President Kirk Henckels, the broker of Astor's estate.
All across Manhattan, but mostly concentrated in the Upper East Side, owners of luxury residencies are cutting prices by 20% to 25% on average, according to Stribling Executive Vice President Kirk Henckels, the broker of Astor's estate.
Sunday, February 15, 2009
Luxury Real Estate in Manhattan Drops Off
When it comes to Manhattan’s luxury $5-million-and-above real estate market, last year turned out great. Record-breaking, in fact.
But that’s due only to strength in the year’s first half. After that, things changed.
“That’s an understatement,” said Kirk Henckels, Stribling’s executive vice president and director of private brokerage, saying there was still an “absurd amount of money in the market and luxury spending was unabated” in 2008’s first six months.
Then Wall Street melted down and news broke about Bernard Madoff’s alleged Ponzi scheme. That helped drag down co-op sales 37.9% in the second half, compared to a year earlier, while condominium re-sales fell about a quarter, Stribling reported. Townhouses were a bit luckier, slipping 8.2%.
But that’s due only to strength in the year’s first half. After that, things changed.
“That’s an understatement,” said Kirk Henckels, Stribling’s executive vice president and director of private brokerage, saying there was still an “absurd amount of money in the market and luxury spending was unabated” in 2008’s first six months.
Then Wall Street melted down and news broke about Bernard Madoff’s alleged Ponzi scheme. That helped drag down co-op sales 37.9% in the second half, compared to a year earlier, while condominium re-sales fell about a quarter, Stribling reported. Townhouses were a bit luckier, slipping 8.2%.
Monday, February 9, 2009
Predicting 60% Decline for Manhattan Property
A very effective guide for long term home values is actually median home price to income. Houses actually don’t gain in value over the long haul. Urban density and usage shifts can dramatically change the value of real-estate, but outside of that real estate is just a flat asset. Here is an academic paper showing the value of prime real estate in Amsterdam over a 400 year period, it's a break even proposition.
A home is only worth what people can afford to pay for it. If you can squeeze more people onto a given area of land and create more homes then you can maximize the value of the land such as in Manhattan over the last few decades.
Over time the utility function of real estate is scarcity relative to the available income of those seeking the homes. I mention this relative to an article posted in June 2007 which anticipated a 20% nationwide property decline using this metric.
A home is only worth what people can afford to pay for it. If you can squeeze more people onto a given area of land and create more homes then you can maximize the value of the land such as in Manhattan over the last few decades.
Over time the utility function of real estate is scarcity relative to the available income of those seeking the homes. I mention this relative to an article posted in June 2007 which anticipated a 20% nationwide property decline using this metric.
Tuesday, February 3, 2009
New York area homes lost $130B in value from 2007 to 2008
Sky-high real estate statistics usually don't faze us. A $10 million price tag on a SoHo loft doesn't even raise eyebrows. A dilapidated brownstone in Harlem fetching millions doesn't make us flinch.
But even normally unflappable New Yorkers may be shocked at the latest sky-high real estate number: $130 billion.
Homeowners in the NY metro area lost $130,291,409,688 in home value in 2008, according to Zilliow.com. In the U.S. as a whole, home values dropped about $2 trillion, the study found.
More than half of this $130-billion loss - about $75 billion - came in the fourth quarter, as the Wall Street crisis and other economic woes hit the real estate market - hard, the study found.
But even normally unflappable New Yorkers may be shocked at the latest sky-high real estate number: $130 billion.
Homeowners in the NY metro area lost $130,291,409,688 in home value in 2008, according to Zilliow.com. In the U.S. as a whole, home values dropped about $2 trillion, the study found.
More than half of this $130-billion loss - about $75 billion - came in the fourth quarter, as the Wall Street crisis and other economic woes hit the real estate market - hard, the study found.
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