Thursday is typically “Selling New York” day on the CORE Blog, but you may have noticed that we’ve been quiet about the show in recent weeks. That’s because reruns have been airing on HGTV (including tonight’s re-airing of Parul Brahmbhatt’s “Steampunk apartment” launch) while new episodes are being filmed — new episodes that will be featuring CORE agents, of course. During this brief “SNY” pause, the topic of the real estate industry embracing reality television remains a hot topic. The current issue of The Real Deal magazine examines the connection, and wonders whether small screen exposure leads to big property sales. The jury is still out on that verdict, but shows like “Selling New York” do help drive interest and shape opinions. The Real Deal’s Katherine Clarke details one interesting example involving CORE’s Tom Postilio:
At the Urban Glass House condo in Soho, for example, sales had virtually stalled because of a much-publicized odor problem from a sanitation facility next door. An agent with two listings in the building, Core’s Tom Postilio, decided to spread the word about newly unveiled city plans for a new building to house the odorous garbage trucks.
“I spearheaded an effort, through ‘Selling New York,’ to show how fabulous the building is, factoring in the city’s plans,” said Postilio, who arranged an on-camera meeting with other brokers to strategize about how to reinvent the building’s image.
Manhattan can never be described as average, but these apartments can. According to the latest market reports, the average sale price of a Manhattan apartment is $1.45 million. What does average look like? Pretty great, if you ask us. Here’s a look at three CORE listings priced around that magic number.
There’s not much else that can be called average about this expansive (over 1,200 square feet) space that straddles Chelsea and the Flatiron District. The Cammeyer, a pre-war jewel that was once the world’s biggest shoe store, is one of the best loft buildings downtown. The finishes and location are second to none, the layouts are impressive — here there’s a 35′ x 12′ Great Room — and the building’s white-glove service goes above and beyond any concept of “average.”
Today several quarterly reports detailing the ups and downs of the Manhattan real estate market at the end of 2011 were released, and the headline, according to the Wall Street Journal, was a sharp decline in sales. Though apartments in Manhattan still sold for an average price of $1.445 million and a median price of $855,000 (about even with past reports), the number of deals fell 12.4% from the fourth quarter of 2010, and 35% from last summer. Part of that drop has to do with seasonality — the fourth quarter is typically the slowest real estate sales period — but the blame can also be pinned on a simple lack of supply. New condominium sales showed the deepest declines, and as the Journal writes, “Real-estate brokers noted that the supply of apartments on the market had been shrinking, especially for new condominiums, which showed the fewest listings on the market in several years.”
Is this lack of supply creating demand? It’s one of the major story lines to follow in 2012, according to Shaun Osher. CORE’s founder and CEO offered these predictions for the 2012 Manhattan real estate market, with the impact of new inventory being chief among them:
SoHo was once “transitional.” So was TriBeCa. And the same goes for West Chelsea (remember the days before the High Line?), Madison Square Park and even the West Village. The point is that Manhattan neighborhoods are always evolving, and well-informed real estate buyers can end up making very wise investments if they put down roots in a neighborhood on the verge of something big. Which is exactly what excited us about getting involved at 1280 Fifth Avenue, and the Financial Times seems to agree. The paper took a trip to upper Fifth Avenue over the weekend and was amazed by the value available at a Robert A.M. Stern-designed building right on Central Park that happens to be a few blocks past the traditional border of the Upper East Side’s ritzy Carnegie Hill neighborhood. The FT wrote:
A few factors drive price: consumer confidence, supply, demand.
According to a Bloomberg News article this week, there’s a lack of inventory of luxury housing, and prices are robust. Well, no kidding! This was predicted by yours truly (OK, and a few others) a few years ago when the development world took a dive in the wake of the credit crunch and no one was building anything new. Most of the “luxury” inventory consists of only a few types of product, and ironically, there is very little of it in Manhattan – one of the most expensive cities on the globe. If you own one of these — new development, prime location large homes on Central Park, Park and Fifth Avenues, penthouses, townhouses, and large downtown lofts — then you have a trophy.
Owners of these types of properties are generally financially sound enough to only sell when they want to. They can weather a bad market and sell when the market is more favorable. Developers who time this market right have a huge advantage to sit on their inventory, and wait for their number. And wait, they have.
If you’re lucky enough to be able to afford a trophy you should buy it because it wasn’t too long ago that talk of $2,000 per square foot on 57th Street was the stuff of a fiction novel. Now a developer is claiming $10,000 per foot for a building with a view.
To be continued…
Shaun Osher is the founder and CEO of CORE.
Add another feather to Google’s cap. The Internet search giant is already tops when it comes to online innovation and checking up on an old fling, but now Google is also good for triggering real estate development booms. Today the Wall Street Journal writes about the domino effect of Google purchasing the office building at 111 Eighth Avenue in Chelsea for a staggering $1.9 billion, which has fast-tracked a number of new residential developments looking to capitalize on Google and other technology companies flooding the neighborhood with housing-hungry employees. One of those buildings is 305W16 (above), which is being sold and marketed by CORE. The building, just a few steps from Google’s front door, launched sales with a bang over the summer, and is now 65% in-contract and sold. There’s plenty of other action in the neighborhood, as CORE CEO Shaun Osher explains to the Journal:
New developments are always hot topic of conversation, and the past few days have been no different. Both the Wall Street Journal and New York Times ran stories about new residential developments in New York City, and the uniting theme is that smaller, boutique buildings — not the big guys — have a leg up right now. That’s mostly out of necessity. Like I told the New York Times, the hurdles that developers are facing include finding a development-ready site affordable enough to purchase, then financing a project’s acquisition and construction. Lenders are out there, but they are being significantly more picky about the margins they expect, and the developer who’s building the project.
But then again, this is New York City, and there will always be opportunities for projects to come along and change one of the world’s most famous skylines — and challenge pricing records. Even though there are more boutique projects being built, there are some larger projects in the pipeline.
One positive thing the P.L.C.B.B. (Pre-Lehman Collapse Building Boom) gave us was a superior stock of well-conceived shiny new condos. Is it any wonder why these new condos are now selling for a premium, even now? A lengthy New York Times article this past Sunday explored this phenomenon, and I’d like to elaborate on my comments in the story – that product in new developments fares best even when the markets are in decline.
If you think about it, the way in which we live our lives today has changed about as dramatically as the way we communicate. (Remember the beeper and pay phone?) Buildings today are designed differently – because we live differently. To most, the layout of the un-renovated classic six on Park Avenue is not as desirable as the new loft apartment on lower Fifth Avenue. Does anyone (with a budget) in Manhattan still use a formal dining room? Certainly not as much as a playroom, home office, guest room or open kitchen.
And now that these newer buildings have amenities to match our lifestyles, their appeal is that much greater. The interesting observation to me of real estate relative to history is how it reflects our current culture. And it is changing more now than ever before. Our pipeline of new developments we will be bringing to the market in the next wave of housing reflects this. Not only as a representation of our lifestyle, but an evolution of our culture.
Shaun Osher is the founder and CEO of CORE.
WE ARE OUT OF THE WOODS!
An important part of my job is identifying and forecasting trends. I am expected to know market trends of pricing, unit desirability, design appeal, buyers’ needs, and manage agents’ expectations. Our clients rely on our insight and foresight. Everybody knows what the historical data is. Nobody needs a report that shows old closed data. Our value is the interpretation of current data and how that may affect the future. Developers want to know where the market is going. Buyers want to know if the market has bottomed out. Sellers want to know if they should take the offer on the table. Agents want to know if there will be deals to be made.
To achieve this effectively, I need to stay very connected to all of the touch points that determine the market. How well I do this…effectively…defines my value. There are no secrets, just riddles. Here are a few of the pieces of the puzzle I absorb to make a determination:
I measure open house traffic.
I speak to agents everywhere to see what buyers are saying.
I speak to buyers.
I speak to sellers.
I speak with developers.
I communicate with bankers.
I track offer activity – How many and at what levels.
I speak to owners of companies.
I stay abreast of new developments on the horizon.
I read – Everything from blogs to books.
In short – I act like a sponge.
In February 2008, I stated that the market would possibly decline (in some segments) by as much as 40% off the high. I was criticized by some of my peers that I was being irresponsible to the sellers who had property on the market for sale. (We sold and closed on a $6 Million property that was previously asking $11 Million a month after). I contend that the speed and willingness of the markets acceptance of this correction stimulated the recovery we are now seeing.
Right now, I would boldly say that we are out of the woods in New York City. For this cycle. Open house traffic is robust, rates are low, contract signings are on the rise, and there seems to be a shortage of inventory of quality homes. Consumer confidence is also higher than it has been for over two years. Does this mean we can expect prices to appreciate at the alarming rate they did over the previous decade?
I’m giving myself the luxury of going on a RANT today. One that I have avoided for years, but one I can’t hold in anymore.
WARNING! If you write, create or print a market report of some sort, you might find this offensive and I’m sorry, but here goes…
Everyone’s a critic.
But there seem to be more “market experts” with a voice than ever before. And they are broken down into these 3 main categories:
ATMRE’s “Appraisers Turned Market Report Experts”: These are people who have made careers out of creating reports that are dated, not relative to current market conditions and really carry no validity in providing insight into current market conditions. They have also probably never sold an apartment.
BTME’s “Brokers Turned Market Experts”: These are brokers who create reports in various formats. They are mostly for marketing purposes, so they can say they have a “report” and are experts. (CORE’s Real Time Report will get some criticism for this, and if you email me, I will valiantly defend it). Oh, and if you have a better report, I’d love to start using it, so my team who compiles this data every month can start doing something else for our clients, thank you very much.
NRWHNIAOM’s “National Researchers Who Have No Idea About Our Market”: These are people who have probably never visited New York, let alone know what a Co-Op is. They still think that The Bowery is a slum and West Chelsea is a wasteland.
I was going to include specific examples of these people and reports, but I decided against it (for obvious reasons).
The latest absurdity is called the “broker confidence index”. I couldn’t make this up if I tried.
Buyer Beware! There is NO market report for New York City that exists right now that will give you answers to all your questions. In fact, you will probably be more confused after reading these reports than if you had never laid eyes upon them.
If you want to know what the market is doing, ask your broker to take you on a property tour. They know what’s going on. They are on the front lines, and this is really the only way to get educated. There are no short cuts!