News

A Scarcity of New One-Bedrooms

The New York TimesJanuary 10, 2014
For decades, one-bedroom apartments have been a fixture of New York. But finding one going forward, at least in new developments, may become as hard as hailing a cab in a downpour.
Developers convinced that buyers want extra legroom — and often seeking to recoup their own sky-high investments in land — are phasing one-bedrooms out of new buildings in favor of much more spacious units.

“I don’t know that one-bedrooms will ever become extinct,” said Charles R. Bendit, a chief executive at Taconic Investment Partners, “but I think the nature of the city is changing. Young kids aren’t leaving as quickly as they once did, and people who are making an investment are investing in a family home.”

Mr. Bendit is putting his analysis to the test as he develops Sterling Mason, a once-stalled condo at 71 Laight Street in TriBeCa. When conceived during the last real estate boom, by a different developer, the project was to have offered five one-bedrooms out of 36 units, in a complex made up of a new building and a renovated one, side by side.

But after buying the building for $65 million in 2012, Taconic decided that bigger would be better, and it reconfigured the interiors to allow for larger apartments, a process that involved removing two elevator banks and stairways. Today there are no one-bedrooms at Sterling Mason, which has 32 units, 14 of them three-bedrooms.

And the bet may have been a smart one. Since last summer, when sales began, eight of the units have sold, at an average of $2,700 a square foot, according to Streeteasy.com. And “no one is coming in to say, ‘Gee whiz, I wish you had one-bedrooms,’ ” Mr. Bendit added.

Whether to be family-friendlier, or for reasons affecting the bottom line, developers generally appear to be decreasing the supply of new one-bedrooms.

At the start of this month, there were 104 for sale in new condos in Manhattan, out of 654 units in total, or a 16 percent share, according to research from the Corcoran Sunshine Marketing Group.

Over the same time last year, there were 194 one-bedrooms for sale out of 718 units, or a 27 percent share, the data show. Similarly, at the beginning of 2010, there were 463 one-bedrooms on the market, out of 1,798 units, or a 26 percent share.

Even when resale units are taken into account, the one-bedroom market seems a shade of its former self — though of course the shortage bodes well for anyone with a one-bedroom to sell.

Last week, there were 1,227 one-bedrooms for sale in Manhattan, according to Streeteasy.com.
The units, mostly south of 110th Street, were listed at a median price of $745,000, or about $1,130 a square foot, the data show. At their peak in December 2008, by contrast, the number of one-bedrooms in Manhattan reached 3,257, according to Streeteasy.

As the recession roiled the market, one-bedrooms encountered strong headwinds; many of the first-time buyers drawn to these starter apartments were unable to get loans, which caused units to linger and dip in price. Since then, in the last couple of years, as the housing and lending markets have improved, one-bedrooms have practically flown off the shelves. Sales, in fact, made up about 41 percent of all deals in the fourth quarter of 2013, according to the Miller Samuel appraisal firm; the quarterly showing was the strongest since 1997, when they represented about 43 percent off all deals.

Given that one-bedrooms constitute such a large portion of the market, one might think developers would want to build more of them. But many developers have had to shell out more for land purchases — in Manhattan, prime lots can cost around $850 a square foot — so there is often pressure to build the larger, more expensive units, said Jonathan J. Miller, the president of Miller Samuel.

“It’s not that there is no demand for one-bedrooms,” he said. “It’s that there is no demand for one-bedrooms at $4,000 a foot, which would make some of these sites feasible.”

The market share of one-bedroom sales is expected to drop further in 2014 as new multi-bedroom products begin to work their way through the system.

The list of condominiums with few one-bedrooms is long and splashy. Walker Tower, the conversion of a former telephone building in Chelsea, on West 18th Street, had just three one-bedrooms out of 53 units. Closings there began in November.

There are only eight one-bedrooms, out of 145 units, at 56 Leonard in TriBeCa, according to a spokeswoman for the Alexico Group, a developer in the project. At One57, the skyscraping condominium from the Extell Development Company on West 57th Street, just eight of 94 units are one-bedrooms, according to a company spokeswoman. Brokers say that one-bedrooms are often used for nannies. But at Walker Tower, which ended up with a total of 47 units in the building, some of the scarce one-bedrooms were combined, according to Michael Stern, the managing partner of the JDS Development Group, which developed the building, along with Property Markets Group.

Even smaller projects are supersizing: the Schumacher, a condo conversion at 36 Bleecker Street in Greenwich Village, has no one-bedrooms among its 20 units, according to its website, though it does have several four-bedrooms.

Still, even though one-bedrooms seem to be fading in importance in the sales market, they are plentiful as rentals, brokers point out. Nor are all Manhattan developers eschewing one-bedrooms, which make sense for some projects’ economics. When they are offered alongside larger units, they can prove more popular, as at 530 Park Avenue, a 109-unit condo conversion on the Upper East Side, at 61st Street. Since last spring, 60 units have sold, 22 of them one-bedrooms, according to Aby J. Rosen, a principal of RFR Holding, its developer. Only three one-bedrooms are left, he added.

In less affluent areas, where land prices are lower, one-bedrooms may be a better fit.

At Edgecombe Parc Condominium, a project underway at 456 West 167th Street in Washington Heights, more than half the units, or 27 out of 49, are one-bedrooms. Seventeen have sold since marketing began in November, according to Ilan Bracha, a broker with Keller Williams New York City, which is handling sales. Prices at the building, which is being developed by Gleam Realty, have averaged $700 a square foot, Mr. Bracha said.

Large units in areas like TriBeCa attract families in part because of the top-rated public schools. But in neighborhoods like 530 Park’s, where the schools are not as much of an attraction, family-size units can be a harder sell, said Mr. Rosen, adding that many one-bedroom buyers have said they will use them as pieds-à-terre.

“Everybody is chasing the $50 million buyer,” he said, “but I would rather focus on the $7 million to $10 million buyer.”

Sometimes the sites themselves determine the sizes of units. “You don’t want to bastardize the shape of a building; if it dictates larger apartments, it’s better not to create tiny units,” said Doron Zwickel, a Core Group broker in charge of sales at 93 Worth Street, a 91-unit project in a former textile factory in TriBeCa. “But this was not a very deep building, with lots of windows, so it was very efficient to do.”

At 93 Worth, there are 16 one-bedrooms, or 18 percent of the total, as well as 22 studios; eight units remain for sale after a little over a year of marketing, Mr. Zwickel said. Average sale prices have been $1,850 a square foot.

At a new condo that Mr. Zwickel is marketing at 241 Fifth Avenue, the one-bedroom count is even higher: 35 percent of the listings, or 16 out of 46 units. Only one of the units remains.

“I believe that most of the product in the works is still geared toward the high end and the mega-rich,” he said. “I think it would be wise to create more variety.”

CORE Duo Singing Their Way to Success

Brokers WeeklyJanuary 09, 2014
At a past showing on East 83rd Street, Tom Postilio decided to go with his gut. The tour of the apartment was almost over and he felt the interested couple needed a final nudge. So Postilio stopped in his track and started singing Frank Sinatra’s “All the Way” – the couple’s wedding song.

What would be weird coming from any other broker worked for Postilio, who had spent years singing Sinatra on stage. “That sealed the deal,” he said.

With college and graduate degrees in real estate mushrooming across the country, more and more people are entering the field as fully trained professionals. But Tom Postilio and his partner Mickey Conlon at CORE are living proof that an unconventional background can still be a big advantage.

HAVE YOU HEARD: One World Property Advisors takes over leasing at 66 Franklin Street, CORE agent featured on “Selling New York”

Brokers WeeklyJanuary 09, 2014
New York’s “pre-sale” apartment stylists James Hart and Barbara Brock of Sold with Style, were featured on HGTV’s Selling New York Jan. 7 episode along with Core agent Lisa Graham.

The pair staged 4,500 s/f 30th floor duplex penthouse at 211 Madison Avenue listed for sale for $5.595 million.

Graham sought out Sold with Style’s expertise when she was faced with selling the five bedroom, six bathroom apartment that had not been upgraded since it was built in the 1980’s.

A health and wellness enthusiast, Graham enlisted help from Big Apple Feng Shui expert Ann Gallops who called in Hart and Brock.

They brought in some amazing pieces of furniture and accessories from their 5,000 s/f.

The apartment is now in contract.

Money Talker

Fox BusinessJanuary 03, 2014
Jarrod Guy Randolph, James Freeman and Remi Spencer on a new study showing that many workers don't trust their bosses and want to quit.

Broker vs. Broker: How Low Can You Go on Commissions?

The Real DealJanuary 03, 2014
The Manhattan residential inventory crisis is forcing brokers into a tight corner when it comes to negotiating commissions and terms of exclusive agreements with sellers, brokers told The Real Deal.

With brokers competing for work thanks to the overwhelming shortage of exclusive product, savvy sellers are pitting agents against each other in an attempt to secure advantageous arrangements. Some of the things these sellers are after? Paying lower commissions, of course, and shorter exclusive arrangements (often three, instead of six, months.)

“They’ll say ‘X, Y and Z broker offered to go as low as this,’” said Ryan Fitzpatrick, director of sales at residential brokerage CORE. “‘Can you match that?’”

Brokers who are hungry for listings, particularly those without long track records or with smaller firms, are agreeing to those terms in order to break into the deal stream, sources said. But that, in turn, is putting pressure on the residential brokerage community at large.

“The brokers that are desperate are using that angle to get work,” said Mara Flash Blum, a broker at Sotheby’s International Realty who recently pitched against a broker willing to take a lower commission. “I said ‘I’m sorry, I can’t do that,’ ” she said.

The inventory crunch shows little sign of letting up. In the fourth quarter of 2013, inventory dropped to 4,164 co-op and condominium units, a 12.3 percent dip from the fourth quarter of 2012, according to brokerage Douglas Elliman. That’s the lowest inventory level since Elliman began tracking the data in 2000. The drop was even more pronounced for new development units, whose availability fell 19.6 percent year-over-year.

The situation was much better on the luxury end of the market — the top 10 percent of all units — where the listing count was 1,190, a 24.9 percent increase over the same period in 2012.

At the same time, turnover of product in the market is still happening at a fast pace. The absorption rate in the fourth quarter was 3.8 months, nearly two months faster than the 5.5-month pace in the prior-year quarter.

“There are a lot of agents competing for a small number of listings,” said Fitzpatrick. “It makes for a very intense playing field. Most sellers are savvy. They realize they have options. They realize that they can call the shots in some respects.”

The standard commission for a deal is 6 percent — 3 percent for the seller’s broker and 3 percent for the buyer’s — while for luxury properties, it can inch down depending on the price of the unit.
One broker told TRD that he’d been competing for an exclusive against a broker who offered a commission of less than 2 percent on a $2 million property, but he declined to provide specifics.

For brokers at large corporate firms like the Corcoran Group and Douglas Elliman, undercutting on commissions is strongly discouraged, if not tacitly banned.

Indeed, at a recent panel event, Elliman CEO Dottie Herman spoke out against the practice.
“If the only thing you think about is who’s the cheapest, and you couldn’t care less about the service, then I’m not really even going to have a conversation with you, because there’s nothing to talk about,” she said. “Good luck to you.”

Meanwhile, smaller companies, like Miron Properties, have more wiggle room for discussion.

“We have certainly been able to pick up listings where the corporate firms haven’t, because we were able to be creative with fee structures,” said Jeff Schleider, managing director at Miron. “If there’s some special circumstance, like the client is going to be selling and buying with us, we’ll of course work with them on commissions. Before I started Miron, I worked at Corcoran, and agents would lose deals all the time because [they wouldn’t drop their commissions]. Six percent doesn’t always work.”

But many warn that giving up too much on commissions is a slippery slope and, from a broker’s prospective, sets a dangerous precedent for future deals.

“There is a clear value in the work of a professional broker,” said Michael Graves, a broker at Elliman. “A skilled agent will deliver results far beyond the percentages of any discount. Most sellers understand that taking a discount agent is akin to jumping over dollars to reach for pennies.”

CORE’s Fitzpatrick agreed. “We’re not a discount brokerage. We’re not going to enter a race to the bottom,” he said.

“If you go into three plastic surgeons, you’re not going to barter on price. It’s about the results,” he quipped. “You want the broker that’s going to get you the highest price for your apartment. Many sellers respond to that once they understand where we’re coming from. Not everyone, but many do.”

Sellers are also increasingly asking to reduce the length of exclusive agreements to less than six months, because they think that’s plenty of time to sell a well-priced unit in today’s quick market. But experienced brokers said that despite market conditions, three months is rarely enough time to complete a deal.

“The perception is that things are flying off the shelf. But unless it’s new construction, it’s not flying off the shelf,” said Flash Blum.

If a broker is going to invest the time and, in some cases, their own money in preparing the apartment for sale and securing advertising and media exposure for their exclusive, they can’t run the risk of losing the exclusive after just three months, Flash Blum said.

“I don’t like to take a three-month exclusive,” she said. “You lose the first two weeks just getting the apartment ready for sale.”

We Hear...

New York PostJanuary 03, 2014
That American Airlines Arena and Sam Nazarian’s SBE will launch a new, 32-person VIP Hyde suite for Miami Heat games and other events this month . . . That model Julie Henderson hosted the opening of the Professional Bull Riders Monster Energy Buck Off at MSG on Friday . . . That after his Feinstein’s at the Regency shuttered, piano man Michael Feinstein performed his annual New Year’s Eve show in San Francisco at Feinstein’s at the Nikko, where he was joined onstage by Tom Postilio and Mickey Conlon.

Predicting 2014: Pros weigh in on everything from de Blasio to prices, but agree that market can’t keep up with last year’s pace

The Real DealJanuary 01, 2014
Sure, nobody knows what’s actually going to happen in the New York City residential real estate market in the New Year. But it’s still fun to guess.

In this month’s Q&A, The Real Deal asked residential brokerage heads, market analysts and developers to give us their best educated guesses on everything from residential pricing to how the beginning of Mayor Bill de Blasio’s term in City Hall will impact the market.

Most seemed to be in agreement on at least one thing: the 2014 market will not be able to sustain the pace of the 2013 market. But, they said, that’s more a function of the record-setting pace of nearly every metric in 2013 than it is of the coming year.

“It’s unrealistic to expect deal volume to compete with what we just experienced, so I would lower my expectations on the future pace of contract activity and ultimately price action for 2014,” said Noah Rosenblatt, the founder of brokerage and research platform UrbanDigs.

While Rosenblatt and others said a shortage of inventory will continue into the New Year and will lift prices, some said buyers have hit their limit on price increases. That’s partly because much of the inventory that is coming on the market is being “posited toward the ultra-luxury buyer,” said Core CEO Shaun Osher, who noted that the “affordable luxury” sector —between $1.5 million and $3 million — is still seeing a void of quality product. He said anything listed in that price range this year will do well.

In addition, several sources said they didn’t expect de Blasio’s first year in office to impact market conditions immediately, partly because it will be hard for him to get anything passed in Albany because of the state elections this year. But they said, depending on what the new mayor does this year, his presence could impact the pipeline of residential product more long-term.

For more on which areas of the city are expected to do best and worst, what developers are looking out for, and what to anticipate in

terms of a residential bubble, we turn to our panel of experts.

Shaun Osher: founder and CEO, CORE

NYC’s residential market has strengthened beyond what many could have anticipated a year ago. What are you expecting to see in the New Year? Where do you expect the market to be a year from now?

A year from now I think we will be in a more stabilized place and I don’t think there will be the rate of appreciation in property value that we have seen over the last 12 months. We have actually seen a bit of a slowdown in appreciation on values and a little bit of a slowdown on some absorption.

The residential inventory shortage is obviously one of the big factors driving market conditions right now in NYC. What are you expecting on the inventory front in the coming year?

There is not much of a pipeline of new product coming on the market in terms of numbers. We are still historically low with respect to inventory. There are less than 5,000 available units on the market right now. We are at 50 percent of where we should be. There are a number of new projects coming on the market, but in total unit numbers, it’s going to have an insignificant impact on inventory. I think there is going to be a housing shortage and I think the shortage is going to be exacerbated by the fact that a lot of the inventory that we are going to see coming on the market is going to be posited toward the ultra-luxury buyer.

Residential sellers had the upper hand in 2013. Do you expect that to continue in 2014 or do you expect that dynamic to change?

I expect the dynamic to change slightly because buyers feel that value has reached a threshold. Buyers are going to start saying no to irrationally exuberant values. So I think we are going to see a more stabilized market where the momentum will go more to the buyer and there will be more equilibrium.

Sales volume hit the second-highest level in Manhattan in 24 years in 2013’s third quarter. What are you expecting when it comes to deal volume in the coming year?

It’s going to have to slow down at some point, but I don’t see that happening over the next 12 months because of the shortage. Absorption on market-rate properties will be very quick. Good product in a strong market will always sell very quickly.

The luxury market obviously did extremely well in 2013, but some have expressed concerns that developers are now paying too much for land and banking on getting per-square-foot prices that are unrealistic. What do you expect from the luxury sector in the coming year?

I agree with that statement and I think that the luxury sector of the market is going to feel some pressure, especially where developers need to meet certain prices because of the land cost and construction cost. Any developer that is expecting prices in a neighborhood that won’t command them will be caught with their pants down.

Which sectors of the market do you expect to perform well in NYC this year?

The market that has the largest void is the affordable housing in the luxury segment — anything priced between $1.5 million and $3 million. There is a void of good quality product in that category. Anything at that price point should do better than any other segment of the market.

Which geographic areas do you expect to struggle most in NYC in the coming year?

Anywhere that is too pioneering, where they are demanding prices that are too high for the neighborhood. It will be interesting to see what Hudson Yards does, but I am very bullish on West Chelsea and Tribeca and the fringe areas around those neighborhoods. The neighborhoods that could be disappointing would be Hell’s Kitchen and pockets of the Far East side.

What are your thoughts on a residential bubble? Do you have concerns about that in the coming year?

I think certain segments are in a bubble. There is always a concern about an unforeseen event that is going to initiate a correction or adjustment.

What new, big residential projects (other than One57 and 432 Park) do you expect to generate the most buzz in the NYC residential market in the coming year?

Larry Silverstein’s Four Seasons [hotel and condo] project in the Financial District will be one to pay attention to because it’s uncharted territory where prices have not been tested.

What impact, if any, do you think the new mayoral administration will have on the residential market in the coming year?

In the next 12 months, almost none. But it will have an impact into the pipeline of product for the next five years.

The $40 million buyer: They’re often not bold-faced names, but understated billionaires in obscure fields

The Real DealJanuary 01, 2014
Forget fame and glamour: The buyers of Manhattan’s most costly real estate are often not the boldfaced names that appear in the gossip pages.

Those spending $40 million or more on a home are seldom bankers, starlets, tech billionaires or Russian oligarchs and their children, brokers say. Instead, these big spenders often tend to have roots in the working classes, making their fortunes from manufacturing, inventions and sales.

“Everyone expects buyers at this price point to be extremely glamorous, but really they are the minority,” said Leonard Steinberg, who leads the luxury brokerage team at Douglas Elliman. “Ninety percent of buyers in the $40 million-plus range are just extremely clever people that have invested wisely, or invented something extraordinary.”

Steinberg is currently marketing a 7,250-square-foot condo penthouse at the Elad Group’s 250 West Street, for $39.5 million. And despite the apartment’s hefty price tag so far, the potential buyers coming to view the property have been largely under-the-radar players with unrecognizable names.

And while Steinberg stressed the growing influence of highly cosmopolitan foreign billionaires on the New York market —from places like China, Russia and Western Europe, as well as new wealth emerging in countries like Nigeria, South Africa and Mexico — he said Americans are still the primary buyers of this type of home.

For example, one potential buyer who recently viewed the property was a towel manufacturer. But the buyer’s fortune was not built on a recognizable name brand of bath or beach towel, nor through sales at big retail chains. Instead, she produced towels distributed exclusively at wholesale centers — hardly haute couture.

“You have to think, who invented the technology in your keyboard? Who manufactured the screws and hinges in the products all around you? Who innovated the latest medical device?” Steinberg asked.

“Buyers in this market usually aren’t people who got rich raping the system. They tend to be either ingenious or rather lucky.”

While Wall Streeters, technology millionaires, heirs and TV, movie and sports stars obviously have millions to spend, brokers say those buyers usually top out below the $40 million price point. There are, of course, exceptions — like Leslie Alexander, the billionaire owner of Houston Rockets, who snapped up a $42 million unit at 18 Gramercy Park South last year (see “A drop at the top”).

But more often than not, the $40 million-plus buyers work in obscure fields. Indeed, while senior executives at the big global banks often earn total compensation packages that come in around $20 million, in many cases much of that headline number isn’t in cash. Typically, half or even two-thirds of their total will come from restricted stock awards or options that vest over time, making their fortunes less liquid.

There are, of course, exceptions — hedger funder Bill Ackman and a group of investors are reportedly in contract for a $90 million unit at Extell Development’s One57 — but there are also more than a few New York City trophy homes listed above $40 million. In fact, approximately 30 homes in the city are currently on the market for $40 million or more, according to real estate listings website StreetEasy.

Sotheby’s International Realty’s Elizabeth Sample, who along with partner Brenda Powers has four properties listed at $50 million or above, added that there are currently at least another five off-market “whisper” listings in the same price range.

But don’t expect Hollywood glitterati or high-visibility TV and music personalities to chase those properties. Stars typically buy at lower price points.

Case in point: Judy Sheindlin, better known as “Judge Judy,” is the highest-paid TV personality in any genre, grossing $47 million a year, according to TV Guide magazine. Yet, as The Real Deal previously reported, the no-nonsense justice spent $8.5 million on her four-bedroom co-op at 14 Sutton Place South in 2013.

Other notables such as Yoko Ono, Lance Bass and Norah Jones all sold Manhattan apartments in 2013 with asking prices ranging from $2.14 million to $8.9 million. And this fall, actress Rosie O’Donnell spent $6.4 million on a Saddle River, N.J., estate.

Another misconception is that the titans of Silicon Valley are spending their hundreds of millions on urban domiciles. But think again: Steinberg says that while older tech billionaires do on occasion buy at this level, many prefer to live more organically, in smaller and more sustainable luxury homes.

As for heirs and heiresses, brokers agreed that there is often a sense of humility that keeps richly bequeathed children from spending too much all at once. Yes, there are twentysomethings like Ekaterina Rybolovleva who settled on an $88 million apartment in the exclusive 15 Central Park West.
(Her father, fertilizer magnate Dmitry Rybolovlev, reportedly bought it for her.) But many of those who inherit their fortunes tend to be more modest — and guilt-ridden about spending too much money.

“[Overall,] the common thread with buyers at this level is that they are often extremely humble,” said
Vickey Barron, associate broker at Douglas Elliman and director of sales at JDS Development and Property Markets Group’s Walker Tower in Chelsea, which is currently listing a full-floor penthouse for $47 million. “These buyers are not wound up. They tend to be gentle souls that just happen to be very successful entrepreneurs, which is refreshing and lovely to see.”

Barron said a more accurate portrait of the apartment hunter with more than $40 million to spend is a salt-of-the-earth businessperson. Sample added that in many cases, the broker is better dressed than the client, sometimes leading to embarrassing mix-ups with owners.

“If you just saw them in a coffee shop, you wouldn’t know they were rich.” Barron said. “These people care about quality, not glitz. They want to fly under the radar; they can even be a little artsy.”

Barron recounted one recent case at Walker Tower involving a T-shirt-and-jeans-wearing apartment hunter interested in one of the building’s lavish penthouse units. When she learned the origins of her client’s fortune, Barron said she was embarrassed to have never heard of the company or the product it sold.

“Their business is crazy successful, but I had no idea what in the world it was,” Barron said. “Later, I learned that it was an expensive product that you wear from a brand that does absolutely no marketing, yet sells over a million dollars worth of product each month.”

The common denominator uniting this demographic of high-end buyer is that they are self-made, according to Emily Beare, a broker at CORE.

“These buyers aren’t Harvard Business School graduates with millionaire parents. They are very savvy and very street smart,” said Beare, who listed 15 Central Park West’s first combination unit for $70 million and represented the same seller, steel magnate Leroy Schecter, in his purchase of the Rothschild Mansion on the Upper East Side for $25 million in 2012. “They like to stay low-key and they don’t want to flaunt their wealth.”

Beare even remembered one client who made a fortune manufacturing machines like the ones used to cook hot dogs in baseball parks and street carts.

Predicting 2014: Pros weigh in on everything from de Blasio to prices, but agree that market can’t keep up with last year’s pace

The Real DealJanuary 01, 2014
Sure, nobody knows what’s actually going to happen in the New York City residential real estate market in the New Year. But it’s still fun to guess.

In this month’s Q&A, The Real Deal asked residential brokerage heads, market analysts and developers to give us their best educated guesses on everything from residential pricing to how the beginning of Mayor Bill de Blasio’s term in City Hall will impact the market.

Most seemed to be in agreement on at least one thing: the 2014 market will not be able to sustain the pace of the 2013 market. But, they said, that’s more a function of the record-setting pace of nearly every metric in 2013 than it is of the coming year.

“It’s unrealistic to expect deal volume to compete with what we just experienced, so I would lower my expectations on the future pace of contract activity and ultimately price action for 2014,” said Noah Rosenblatt, the founder of brokerage and research platform UrbanDigs.

While Rosenblatt and others said a shortage of inventory will continue into the New Year and will lift prices, some said buyers have hit their limit on price increases. That’s partly because much of the inventory that is coming on the market is being “posited toward the ultra-luxury buyer,” said Core CEO Shaun Osher, who noted that the “affordable luxury” sector —between $1.5 million and $3 million — is still seeing a void of quality product. He said anything listed in that price range this year will do well.

In addition, several sources said they didn’t expect de Blasio’s first year in office to impact market conditions immediately, partly because it will be hard for him to get anything passed in Albany because of the state elections this year. But they said, depending on what the new mayor does this year, his presence could impact the pipeline of residential product more long-term.

For more on which areas of the city are expected to do best and worst, what developers are looking out for, and what to anticipate in terms of a residential bubble, we turn to our panel of experts.

A Drop at the Top: 2013’s priciest closed residential deals pale in comparison to 2012’s biggest sales

The Real DealJanuary 01, 2014
With the New Year underway, it’s time for a post-mortem on last year’s residential market. And in an unusual twist, industry insiders who normally rely on statistics to understand the ins-and-outs of the market are saying that it’s best to avoid the numbers when gauging how the uppermost echelon did in 2013.

That’s because while the luxury market got all the buzz last year, some of the numbers tell a different story.

Indeed, 2013’s top five Manhattan residential deals totaled $162.13 million, a 47 percent drop from 2012’s $306.5 million. In addition, the highs weren’t so high: the most expensive closed sale was the $42 million purchase of a sponsor unit at 18 Gramercy Park, compared with the $88 million sale of financier Sanford Weill’s apartment at 15 Central Park West in 2012.

Considering this data, it may seem as though the residential market took a dip last year.
However, most of the year’s priciest sales — including a transaction reportedly in excess of $90 million — won’t actually close until well into 2014, brokers told The Real Deal.

Those deals are expected to break records.

The reason that they’re slow to hit the tape? Those priciest deals are predominantly in new-development condominiums in which closings have not yet begun. So, with the exception of the $42 million deal, most of 2013’s top deals were resales, which are traditionally less pricey than brand-new product, or condominiums that hit the market in 2012.

It is also symptomatic of the lack of available high-end properties, brokers said.

“I would have to assume that the [drop in the numbers] is a function of available inventory and does not necessarily represent a shift in buyer motivation or an exhaustion of the buyer pool,” said Tim Crowley, a broker with Flank Brokerage, the brokerage arm of the development and architecture firm by the same name, who sold the third priciest deal of the year. “There have been contracts signed this year in mega Midtown projects like One57 [at 157 West 57th Street] and 432 Park Avenue that prove this point.”

Those Midtown contracts, which are set to close this year and into 2015, will provide the true and final accounting of how well the market performed in both 2012 and 2013, Crowley noted. (Some of the pending sales at One57 went into contract in 2012.)

Still, not everyone is confident that the demand for units priced above $5,000 per square foot, the norm at towers like One57 and 432 Park Avenue, will continue at the level needed to absorb the supply. Indeed, developers, encouraged by the appetite for those units in the last two years, have brought more of those high-priced residences to market in the last year than in recent memory. Despite the overall inventory shortage, there were nearly twice as many units that came to market asking above $5,000 a foot in 2013 than in 2012, according to data from CityRealty.

“Developers are using One57 and 432 Park as benchmarks for 2014, but it’s difficult to know how deep that market is,” said Emily Beare, a luxury broker at CORE. “One building in a neighborhood does not necessarily make a market.”

Beare, whose $70 million listing at 15 Central Park West was taken off the market in the fall, noted that the $88 million sale last year at 15 Central Park West, the record-setting condo project developed by Arthur and William Lie Zeckendorf, had created an irrational frenzy in the market.

“Once sellers realized that the sale did not truly reflect the market, prices [for comparable listings] came down as much as 25 percent. The sale was an example of the right buyer at the right time,” she said.

But while 2013’s top five closed deals maybe not have matched the deals that went into contract the prior year, they were not shabby, either.

Read on for a closer look at which units made the cut.

Time for Change

Luxury Listings NYCJanuary 01, 2014
Last year was a historic one for New York City real estate, with price records shattered and the luxury market on fire.

Hedge funder Bill Ackman and a group of investors reportedly paid more than $90 million for a unit at Extell Development’s luxury condo tower One57. If the sale closes at that price, it will set a record for the most expensive Manhattan condominium.

With a new mayor and a slew of luxury condos coming to the market, what can we expect this year? Read on for a look at some key issues.

Interest rate jitters

Speculation that the Federal Reserve could begin to wind down its signature easy-money program has renewed buyers’ sense of urgency to take advantage of historically low rates before the cost of borrowing shoots up.

The interest rate for a 30-year fixed-rate loan is currently hovering around 4.6 percent, but experts predict rates could reach as high as 6 percent this year.

Over the past few months, there’s been an uptick in buying—which was already going strong, despite the relative lack of inventory—as interest rates have inched up, said Jordan Roth, a senior branch manager at GFI Mortgage Bankers, a residential mortgage provider in Manhattan.

“If rates had stayed where they were in the first part of 2013, buyers might have stayed on the sidelines,” he said. “Now, we’re seeing people get into the game.”

The de Blasio agenda

Many people are watching to see which of Mayor de Blasio’s real estate-related issues he raised on the campaign trail gets tackled first.

More affordable housing is likely on the way: On the mayor’s agenda is mandatory inclusionary zoning, which would change the rules on affordable housing for developers.

At the moment, many residential projects are planned as 80/20 buildings—a program through which developers receive tax-exempt financing in exchange for making 20 percent of their units affordable—though de Blasio may change that ratio for new residential developments.

The condo concern

Luxury super-towers One57 and 432 Park Avenue hogged headlines last year. Now we’ll see if the batch of high-end projects conceived in the wake of those two high-profile condos can survive.
“Developers are looking at those projects as benchmarks, but they’re on a different playing field,” said Shaun Osher, CEO of real estate brokerage CORE, who predicts that new units coming to market with exaggerated price tags will linger. “Buyers are not going to be foolish.”

Among the most anticipated projects set to go up in Midtown is JDS’ so-called “skinny” tower at 107 West 57th Street, which is slated to rise to 1,350 feet, and the 1,423-foot glassy skyscraper Extell is building at 225 West 57th Street.

The renewal of Seward Park

Big changes are coming to the Lower East Side, which will see a 1.65-million-square-foot, mixed-use project in and around Seward Park, slightly north of East Broadway.

The six-acre site is the largest swath of undeveloped city-owned land in Manhattan below 96th Street.

The project will include 1,000 units of housing (half of which must be permanently affordable) as well as a 15,000-square-foot open space, a school, a community center, 250,000 square feet of office property and a mix of retail spaces.

“Smart people are buying in the area before this is built,” said Stephen Kliegerman, president of Halstead Property Development Marketing. “This is potentially the most exciting mass new development to happen in the city. You’re going to see values in that area jump by 50 percent over the next five years.”

Other large-scale projects to watch: South Street Seaport, the World Trade Center site and Hudson Yards, which is rising on the far West Side.

Aiming High

Luxury Listings NYCJanuary 01, 2014
Basketballer Paul Pierce scored a full-floor loft at Franklin tower, at 90 Franklin Street. The 5,000-square-foot rental—with four bedrooms and a wood-burning fireplace—was asking $35,000 per month. The building is also home to Mariah Carey, who owns the penthouse.

NYC's Premier Properties: 131 West 24th Street, #5/6

Luxury Listings NYCJanuary 01, 2014
131 West 24th Street, #5/6 in Chelsea - $5,000,000

Co-op: 12 rooms, 5 beds, 3 baths | Amenities: Pets Allowed, Storage Available, Hot Tub
Maintenance: $1,300 | Listing ID: S1052972

Magnificent 4,200 square foot duplex loft now available. The home's flexible layout is currently configured with five bedrooms. Listed at CORE by the Patrick Lilly Team, 212-612-9681, patricklillyteam@corenyc.com.

Put it to Use in New York

Leverage LookbookJanuary 01, 2014
"New York is a true melting pot of culinary, cultural, financial, social and creative people, where the cream can rise to the top! The dining scene here is particularly special, and because of the abundance and convenience of incredible restaurants in New York, most people eat out. However, lately, I've started to see a trend in more people actually using their kitchens for functional purposes rather than just looking at them like a piece of furniture." --Shaun Osher, CORE

Razzle Dazzle: Colin Cowie's Manhattan Marvel

Leverage LookbookJanuary 01, 2014
"It reeks of chic," says event planner to the stars Colin Cowie, of the duplex penthouse he has put on the market for $5.75 million. The 15-story modern edifice of limestone and gray brick -- named The Emory and located in Manhattan's historic Flatiron district -- is by Morris Adjmi Architects. Cowie closed on the top two units in 2009 and proceeded to customize the resulting nearly 3,000-square-foot space into a glamorous couture haven where he could host his legendary parties. The apartment, available with furnishings for an additional sum, is awash in materials and surfaces that emanate shimmer and shine.

Money Talker

Fox BusinessDecember 27, 2013
The Wall Street Journal’s Veronica Dagher, Jarrod Guy Randolph and communications expert Rachel D’Alto on the impact of work on one’s health.

2013 Was Great for NYC Condos — But Can it Last?

The Real DealDecember 27, 2013
While this year has been hailed as having a near-perfect confluence of factors driving New York City residential real estate, some industry leaders are predicting it could pass.
Rising demand for sparse Manhattan condominiums combined with a no-holds-barred attitude towards luxury development has shattered records, with the average contract price exploding 60 percent in the third quarter of 2013 to a record $3.43 million, according to the Corcoran Sunshine Marketing Group.

Meanwhile, the number of new units coming online in Manhattan is still below the average, according to Corcoran Sunshine. In 2013, 49 residential buildings with a total of 2,269 units opened in Manhattan, south of Harlem, compared to 30 buildings with 1,309 units in the previous year, Corcoran Sunshine said.

And a rise in building permit applications, to 3,339 filed in the first 10 months of this year, up from 2,328 in all of 2012, has the market looking up since the days of 2010.
Not surprisingly, new condos are getting scooped up. For example, at least 90 percent of the 125-unit NoMad condos at 10 Madison Square West are under contract, and the 66-unit Leonard at 101 Leonard Street in Tribeca was 80 percent sold two months after opening, the New York Times reported.

However not everyone thinks the flurry of new development is a good thing. Shaun Osher, CEO of real estate brokerage CORE, voiced concerns to the Times that the pool of buyers may not be deep enough to snap up high-end condos that lack value.

“Buyers are not going to be irrational in their purchases,” Osher told the Times. “I think there will be a pushback to price-per-square-foot numbers that don’t meet the quality or location of the product.”

In 2013, the High End Ruled

The New York TimesDecember 27, 2013
Rising demand and a record shortage of apartment listings set the stage for a seller’s market in 2013. But new development stole the spotlight.

After a four-year dry spell, a crop of new luxury condominiums aimed at the superrich opened in Manhattan and were snapped up faster and at prices surpassing those attained before the recession.

The total number of new development contracts jumped 20 percent, to 1,847, through the third quarter of 2013, compared with the same period last year, as wealthy buyers rushed to sign contracts for apartments still in the construction phase, according to the Corcoran Sunshine Marketing Group.

For the same period the average contract price surged nearly 60 percent, to a record $3.43 million from $2.16 million, surpassing the previous new-development high of $2.21 million in the third quarter of 2008. And the pace of sales was rapid-fire, underscoring the strength of demand for Manhattan condos built for the upper echelons.

“Newly introduced development absorbed far faster than anyone could have predicted,” said Kelly Kennedy Mack, the president of Corcoran Sunshine Marketing Group. “Extremely compelling properties, limited supply and a hungry pool of both domestic and international buyers drove rapid sales.”

Just 49 residential buildings opened in Manhattan in 2013, not counting Harlem and Upper Manhattan, with a total of 2,269 units, according to Corcoran Sunshine. That’s more than the 1,309 units across 30 buildings that came to market last year. But it’s still below historical averages of about 3,000 units normally required to meet demand, Corcoran Sunshine found. During the boom of 2007, 8,052 new units were listed.

Developers focused on ultra-high-end condos with every conceivable amenity to justify the expense of building amid surging land costs. In early December there were 256 listings for less than $2 million in new condo developments, down from more than 2,000 at the end of 2008. By contrast, there were 458 for more than $2 million, down from 1,129 about five years ago.

In many cases, prices met or exceeded expectations, particularly in the downtown market, where about 260 deals over $7 million took place, compared with 80 in 2012, with the majority in new developments.

Among the most talked-about buildings was 56 Leonard, a 145-unit TriBeCa tower by Alexico Group and Hines that was shelved during the recession, only to open to enormous interest earlier this year. More than 90 percent of its units were sold within nine months, at an average price of $3,200 a square foot.

In June, a penthouse at 56 Leonard went into contract for $47 million, a new high for a condo sale downtown. But it was soon outdone by a $50-million-plus penthouse atop Walker Tower, a newly converted luxury condominium in Chelsea.

Stories abounded of condos flying off the shelves. A luxury condominium developed by the Witkoff Group in the West Village, 150 Charles Street, had found buyers for all 91 luxury apartments just six weeks after sales opened in February. The average price was $3,400 a square foot, according to Susan M. de França, the president of Douglas Elliman Development Marketing, which handled the sales.

“We had a list of hundreds of individuals that were waiting for the property to be launched,” Ms. de França said. “We never even featured an advertisement.”

In NoMad, another Witkoff project, 10 Madison Square West, a 125-unit condominium conversion, had similar success, with nearly 90 percent of its one- to five-bedroom residences in contract within five months of opening sales in July. That included the penthouse, which was never officially listed but went into contract for about $36.5 million in under 90 days.

In TriBeCa, the Leonard, a 66-unit condo conversion at 101 Leonard Street by Bizzi & Partners Development, was more than 80 percent sold within two months of its July opening. Just three units are left, including a three-bedroom for about $3 million and a four-bedroom penthouse with a private rooftop terrace for $7.5 million.

The Jefferson, a project by CBSK Ironstate, was the only condo to open in the East Village this year. Its 82 units were priced from $795,000 to $3.595 million; the final contract was signed earlier this month.

The frenetic sales activity wasn’t limited to downtown. Sales began earlier this year at 432 Park Avenue, a Midtown luxury condominium developed by CIM Group and Macklowe Properties. When completed in 2015, it will be the tallest residential building in the Western Hemisphere. Half of its 104 units are in contract, for roughly $1 billion in potential sales, including a $95 million penthouse that will set a price record if it closes.

On the Upper West Side, the sales campaign at 101 West 87 Street, a 62-unit condominium by Bazbaz Development that opened in January, lasted just seven and half months, with the $7.6 million penthouse among the first units to go.

One Riverside Park, an Extell Development project overlooking the Hudson at 50 Riverside Boulevard, opened sales last month. Already half of the 219 units are in contract.

Although new development started its comeback in 2012, with sales velocity and prices rising in a market starved for fresh inventory, the pace only accelerated in 2013. “It wasn’t until this year when we saw new development was achieving success on such a widespread scale,” said Ms. Mack of Corcoran Sunshine. “New development was not only really back, but performing at a level not seen before.”

How long the frenzy can continue is anyone’s guess. Too many high-end units coming to market at the same time could lead to a softening. “Buyers are not going to be irrational in their purchases,” said Shaun Osher, the chief executive of the brokerage firm CORE in Manhattan. “I think there will be a pushback to price-per-square-foot numbers that don’t meet the quality or location of the product.”

Building permits for new developments are on the rise. Permits were filed for 3,399 units in Manhattan through the first 10 months of the year, as opposed to 2,328 for all of last year, according to the latest census figures.

The outlook has certainly improved since 2010, when Manhattan permits were filed for just 704 units, amid a lack of financing that squelched further growth. Yet even if all the permits filed for Manhattan this year were to translate into new units, said Gregory J. Heym, the chief economist at Brown Harris Stevens and Halstead Property, “you would still have what would be considered a neutral market.”
“This pipeline,” he said, “it can’t come fast enough.”

The Big Ticket

The pricing of resale apartments and townhouses clung to the stratosphere in 2013, and the luxury market was active, but most buyers did not let trophy properties entice them into sticker-shock territory.

The handful of residences priced for resale above $100 million, along with those priced above $50 million, lingered unsold as of mid-December, according to city records.

The most expensive sale to close this year was for $43 million: a former shoe warehouse at 144 Duane Street in TriBeCa. Built as a department store in 1862 and now destined to become a posh 21st-century family compound, it clocked in at $45 million less than the record-shattering $88 million paid last year for Sanford I. Weill’s penthouse at 15 Central Park West. It was also $7 million behind the 2012 runner-up, an 11th-floor co-op with 70 feet of Central Park frontage at 944 Fifth Avenue that sold at year’s end for its full $50 million asking price.

But the sale of 144 Duane Street, a historic limestone building that hit the market in 2011 for $45 million — and climbed to $49.5 million in 2012 — did establish, albeit temporarily, a downtown record. Tricked out with 23,100 square feet of residential space, including a triplex penthouse and a basement basketball court, it nudged just ahead of the pristine $42 million duplex penthouse at 18 Gramercy Park South for which Leslie Alexander, the billionaire owner of the Houston Rockets basketball team, paid the full asking price.
The lavishly appointed 6,300-square-foot PH17 on the 17th and 18th floors has four terraces and a heated infinity pool among its amenities.

There was no lack of variety at the top: the year’s third-most-expensive resale, at $34.35 million, was the Ellen Shipman Biddle house at 21 Beekman Place, an appealing century-old Turtle Bay townhouse named for the renowned landscape architect who lived there from 1919 to 1946.

The elegant brick house, restored in 2008 and priced at $48.5 million in 2012, set a record for a 20-foot-wide townhouse ($4,754 per square foot) when it was bought last summer by the State of Qatar, presumably as a diplomatic residence.

The restoration-ready Walter N. Rothschild Mansion at 41 East 70th Street finished in fourth place at $32 million, and a chic combination that created an 8,500-square-foot triplex penthouse at the Abingdon, at 320 West 12th Street, rounded out an eclectic Top 5 of closed sales at $29.78 million.

“I look at 2013 as a bit of an anomaly,” said Jonathan J. Miller, the president of the appraisal firm Miller Samuel. “All of the year’s records set by property type — co-op, condo and townhouse — were actually lower than last year’s records, yet the luxury market has not weakened. There is a randomness to pricing at the very top, and aside from trophy sales, price trends for the overall market were fairly mundane over the year, despite record low inventory.”

Two of the most prolific new developments were luxury reinterpretations of downtown antiques: 18 Gramercy Park closed 10 of its 16 spacious prewar-themed residences for an aggregate return of just over $187 million ($4,208 per square foot) for the sponsors, Zeckendorf Development and Global Holdings. In Chelsea, the sponsors of Walker Tower at 212 West 18th Street, JDS Development Group and the Property Markets Group, announced 22 closed sales, with three more scheduled before the end of the year, for a total of $226,904,290 (this does not include its most expensive units, a pair of penthouses for $55 million and $47.5 million).

Although 2013 was not a year of blockbuster closings, big money was in motion — a flurry of contractual commitments for extraordinarily expensive condos in as-yet unfinished luxury developments. Downtown at 56 Leonard Street, Penthouse 60, at the jagged pinnacle of the building, is in contract for $47 million; PH1 at Walker Tower is in contract just under its rather bold $55 million asking price and poised to break the downtown record upon closure.

In Midtown, where Central Park views authorize premium price points, 432 Park Avenue announced the signing of a $95 million contract for the top-floor penthouse, and at Extell Development’s juggernaut tower, One57, more than 10 condos priced above $45 million are under contract, two for more than $90 million. One57 is more than 70 percent sold, with total projected sales exceeding $2 billion.
At that rate, One57 appears to be positioning itself as next year’s “It” development. And if the avalanche of trophy contracts signed all over town in 2013 translate into closed sales, 2014 may well earn the sobriquet of the year of the splurge.

ROBIN FINN

Landmarks

The seemingly endless debate about whether a landmark designation hurts real estate values continued bubbling in 2013, even as the New York City Landmarks Preservation Commission designated two new districts and one extension in the fiscal year ending in June, and began preparing to celebrate the 50th anniversary of the city’s landmarks law starting in 2015.

In the fiscal year that ended in June, the commission approved the East Village/Lower East Side Historic District; the West End-Collegiate Historic District Extension, roughly along West End Avenue between 70th and 79th Streets; and the Bedford-Stuyvesant/Expanded Stuyvesant Heights Historic District in Brooklyn. In the current fiscal year, the commission is to vote on the Harrison Street Historic District on Staten Island and the Central Ridgewood Historic District in Queens. The South Village Historic District, a 13-block area north of West Houston Street, was approved unanimously on Dec. 17.

Public hearings have been held on the Riverside-West End Historic District Extension II; the Crown Heights North III Historic District in Brooklyn and the Bedford Historic District, also in Brooklyn; and the Douglaston Historic District Extension in Queens.

The Real Estate Board of New York, known by its acronym Rebny, continued to be vocal in citing the downsides of historic designation.
In a June report, Rebny stated that more than one in four properties in Manhattan are protected as landmarks, and argued that designation as a historic district “effectively prohibits the full development potential of underdeveloped sites.” The report also stated that “there are numerous cases where properties with no historic value like vacant lots, parking lots and gas stations are included in the designation of a historic district.”

“There are many occasions when we’ve been supportive of landmark designation,” said Michael Slattery, Rebny’s senior vice president for research. “For example, the extension of the Park Slope District and the area in Chelsea where the Underground Railroad was. Where the process breaks down is when the quality of buildings is not up to standards — for example, when a district includes too many no-style buildings.”

In response, Elisabeth de Bourbon, the commission’s director of communications, said: “What critics don’t take into account are issues like neighborhood stability and neighborhood pride. Those sorts of benefits cannot be measured.”

Mitchell Moss, a professor of urban policy and planning at New York University, says both viewpoints have certain merits.
“On the one hand,” Professor Moss said, “some protected areas, like the proposed South Village extension, are of questionable historical identity. On the other hand, in many protected areas, landmarking has not been an impediment to development. Designation hasn’t stopped development in NoHo or West Chelsea. In many areas, landmarking has encouraged intelligent development. Dumbo is one of the great successes of landmarking.”

Ingrid Gould Ellen, the director of the urban planning program at the Robert F. Wagner Graduate School of Public Service at New York University and a director of the Furman Center for Real Estate and Urban Policy at New York University, points out that the Rebny reports study only Manhattan. “Both camps are focused on Manhattan,” said Professor Ellen, noting that designation might have a very different impact in Manhattan than on the rest of the city. In addition, she said, “the challenge for any study of historic district designation is that it’s always difficult to know what would have happened in the absence of a designation.”

The goal, in her view, should be a broader conversation about land use. “We need to balance the goal of increasing new construction and that of preserving the city’s cultural heritage,” she said.

CONSTANCE ROSENBLUM

CORE - Another Record at One Museum Mile

Real Estate WeeklyDecember 26, 2013
One Museum Mile, the new residential condominium at 1280 Fifth Avenue on Central Park in Manhattan, has reached 90 percent closed and in contract.

The development has closed 33 sales in the past six months totaling more than $65 million, announced CORE, the exclusive sales and marketing firm for the building.

Recent sales include a three-bedroom that closed for $3.745 million or $2,133 psf, the highest price per square foot ever achieved for an apartment in the neighborhood.

The sale broke the previous record held by another three-bedroom apartment at One Museum Mile, which sold for $2,030 psf.

“This milestone is as much a testament to this exquisite Robert A.M. Stern building as it is to the transformation of perception. At the top of Central Park, this is one of the most beautiful neighborhoods in the city,” said Tom Postilio, CORE’s director of sales for One Museum Mile.

“We have again toppled our previous record pricing. This neighborhood is not emerging — it is blossoming.”

Among the remaining units are a one-bedroom, 1,200 s/f unit with private terrace offered at $1.395 million. Two-bedrooms with Central Park views start at $1.725 million, and three-bedroom homes start at $1.895 million.

Home Staging Effect? Not Much.

The Wall Street JournalDecember 26, 2013
How much does a tacky purple wall color affect a home's sale price? Not much, according to new research on home staging.
While good staging does influence a home buyer's overall impression of a house, staging alone doesn't result in buyers willing to pay more for the house, says Michael Seiler, professor of real estate and finance at the College of William and Mary, who researched how home buyers responded to six house tours that varied in paint color and furniture quality.

His findings show that buyers are willing to pay roughly $204,000 in each of the house examples, regardless of the quality of furnishings or paint color. However, the research subjects believed that other buyers would adjust their pricing based on how the house is staged.
"We were able to parse out what you consciously believe and subconsciously believe," Mr. Seiler says. "Beforehand, everyone thinks poor staging is going to be a problem. But when we actually did the experiment, we found it doesn't matter."

Mr. Seiler and co-authors Mark Lane of Old Dominion University and Vicky Seiler of Johns Hopkins University led 820 home-buyers through one of six virtual house tours in March 2012. Using professional-grade rendering software created by an architecture firm in Virginia Beach, Va., each house featured either a "neutral" beige wall color or an "unattractive" purple paint color, and "good" furniture, "ugly" furniture or no furniture. The neutral and attractive options were chosen to appeal to the greatest number of people, Mr. Seiler says.

The home buyers then reported what they would be willing to pay, as well as their overall impression of the house.

Still, Mr. Seiler warns: "All we could test is how much the home would sell for. What we don't know is whether a well-staged home will sell faster. It may sell quicker."

The study, "The Impact of Staging Conditions on Residential Real Estate Demand," has been accepted by the Journal of Housing Research for publication sometime next year, he said.

It may be hard to persuade real-estate professionals of the findings.

Doug Eichman, a real-estate agent with Core in New York City, spent more than $30,000 to stage a Midtown East penthouse co-op listed for $6.995 million. His stager, Cheryl Eisen, president of New York City-based Interior Marketing Group Inc., says staging works when buyers feel emotionally connected to the house.

"The bare-bones reason for staging initially is to show buyers how they can function in a space," Ms. Eisen says. "When you go over the top, you make them have an emotional reaction to the space. If they fall in love with the space, they will be willing to pay for it."

Darci Willis, a real-estate agent with Century 21 Scheetz in Carmel, Ind., says that when potential buyers are on the fence, a well-staged home may be a deciding factor.

"Even though people logically know that they can change the paint color, it can be distracting and off

El Barrio’s Journey from Boho to Bourgeois

New York PostDecember 24, 2013
As noted real estate hand Bill Shakespeare once asked, “What’s in a name?”

If you’re trying to sell high-end condos in East Harlem, quite a lot, apparently. In early 2012, luxury development 1280 Fifth Avenue was dead in the water — despite a Robert A.M. Stern design and a location right on Central Park. The building also boasts some impressive cultural bona fides thanks to the New Africa Center, now in development on the tower’s first four floors. Nonetheless, two years after launching, 1280 Fifth had closed on only three of its 113 units.

Seeking to right the ship, developer Brickman decided on a “reset” — bringing in real estate marketing outfit CORE to launch a new sales effort. Taking stock of the building’s travails, the firm decided that what was needed was “an identity” says Tom Postilio, CORE’s director of sales. “People weren’t really aware of it. It wasn’t really on the map the way it needed to be,” he says. And so a name change was in order — from 1280 Fifth Avenue to One Museum Mile. It was a move, Postilio says, “that looking back at now, we really feel was a game changer.”

Since then, the development has gone gangbusters, setting a neighborhood record with prices topping $2,000 per square foot. Earlier this month, it reached 90 percent sold, having in the last six months notched 33 closings totaling more than $65 million.

Maybe it was just a matter of time for East Harlem — a traditionally Latino ‘hood roughly running from East 96th Street to East 125th Street; and from Fifth Avenue to the East River. A hotbed of development during the last housing boom, East Harlem “was hit very severely by the [2008] crisis,” says Corcoran broker Fabienne Lecole. In 2008 the nabe’s price per square foot was at $714, but then declined to $626 in 2009, and went to $545 per square foot in 2011, according to CityRealty.

But, driven by new luxury buildings like One Museum Mile and 1212 Fifth Avenue, a 55-unit condo from Durst Fetner Residential that has also drawn prices in excess of $1,000 per square foot, “slowly and gradually we are seeing a nice recovery,” says Lecole. Artisan shops like Beurre & Sel opened at La Marqueta, the market at 115th and Park Avenue. ABV, a wine bar, is a neighborhood hit at Lexington Avenue and 97th Street.

Julie Tucker, global business director at advertising firm JWT, closed on two units at One Museum Mile at the beginning of the year after a search that took her all across the city. “I looked at The Dylan in Hell’s Kitchen, brownstones up on 125th Street, a lot of rental places, and then I saw [One Museum Mile] and it was just gorgeous,” she says. Given their three young children, she and her husband were particularly attracted to the development’s amenities like a pool and playroom, and, most important, its proximity to Central Park. They’ve since combined their two apartments into one 2,300 square foot abode.

It’s not just a matter of the high end of the market, though — a number of more modest projects are contributing to the neighborhood’s real estate revival, as well. Developer HAP Investments, for instance, currently has four buildings planned for the area: HAP 1, an 8-unit rental at 419 East 117th St; HAP 2, a 30-unit rental at 2338 2nd Ave.; HAP 5, a 20-unit condo building at 329 Pleasant Ave.; and HAP 6, a 20-unit condo at 1653-1655 Madison Ave.

Prices on the rental side range from $1,750 for studios to $6,000 for a two-bedroom penthouse, and condos start at $450,000 for studios and going up to $1 million for two-bedrooms. The numbers suggest that HAP’s developments — and East Harlem more generally — offer more reasonably-priced options for buyers who might find themselves edged out of other Manhattan neighborhoods, says HAP CEO Eran Polack.

“It’s a nice alternative to the Upper West Side, the Upper East Side, places that are much more expensive these days,” he says.
And while East Harlem prices are still relatively affordable now, they aren’t exactly holding steady. This year’s going rate of $716 per square foot represents a 21 percent jump from $592 per square foot (with sales at One Museum Mile and 1212 Fifth Avenue subtracted) for the neighborhood from 2012. By way of comparison, price per square foot for all of Manhattan rose 8 percent, from $1,251 to $1,347.

These moderate prices, however, don’t mean a lack of pizzazz, Polack says, noting that he and other developers are bringing world-class architecture to the area. His HAP 5 building, for instance, comes designed by renowned architect and designer Karim Rashid.

Blumenfeld Development, meanwhile, hired Copenhagen-founded architecture firm the Bjarke Ingels Group to design a 200-plus-unit residential tower it’s putting up on East 125th Street. And last week, a trio of buildings along Park Avenue between 124th and 125th Streets were sold to New York-based investment firm Waterbridge Capital for almost $37 million. The buyer plans to convert the spaces into a mixed-use retail and condominium complex — which will stand directly across from a similar development slated to rise at 1800 Park Avenue.

All of the new projects are clearly having an effect. “There’s gentrification is going on. There are new restaurants, new supermarkets. I see young professionals coming into the area,” says Jorge Durand, who arrived in East Harlem from Hamilton Heights in the summer of 2011.

Last May, Durand moved to a one-bedroom in the La Celia co-op building at 64 East 111th St., lured there, like Tucker, in no small part by its proximity to Central Park. A runner, Durand actually discovered the building on a jaunt through the park. “It was like an accident,” says Durand, a scientific strategist in medical advertising. “I was running one day and on my way back to my [old] apartment, I saw this building under construction.” Beyond the greenery, Durand also cites a growing Lexington Avenue gallery scene and restaurants like Third Avenue’s Amor Cubano as key to the area’s appeal.

Tucker, too, has come to appreciate East Harlem’s culinary offerings. Recently, she discovered bakery La Tropizienne, a local institution at First Avenue and 110th Street. “It’s just the most amazing little French cafe,” she says.

On the downside, she notes, East Harlem still lacks some of the more pedestrian amenities other spots take for granted. For instance, she says, “I would love to have a pharmacy closer by.” Bottom line, though, Tucker says, “I love it. I have a Fifth Avenue address, and my house overlooks Central Park.”

When she puts it that way, it does sound pretty nice.

Foreign Buyers Are Starting To Choose Brownstones Over Luxury Condos

Houston ChronicleDecember 20, 2013
As more and more super-pricey luxury condo buildings rise above New York City, international buyers are bucking the trend and purchasing historic townhouses instead.

According The Wall Street Journal's Candace Taylor, more and more foreigners are looking into buying brownstones as secondary residences, opting out of the condos that have long been popular for this particular group.

Townhouses, many of which were built in the late 19th and early 20th century, can be difficult to maintain, and they don't have the services that make living in a doorman building is so convenient.

However, there are some unexpected benefits to living in a brownstone. As demand for luxury condos grows, housing boards for those buildings have begun investigating potential buyers' financial background more than ever before. The privacy of a townhouse would be much more attractive to Europeans or other foreigners who are not accustomed to disclosing their finances.

"More and more, the tendency is to go toward a full townhouse purchase because they can be anonymous, and they can get all the space for a fraction of the price," Adie Kriegstein, an agent at CORE who recently represented a French family in the purchase of a townhouse on West 77th Street, said to the Wall Street Journal.

The numbers show that townhouses in Manhattan do tend to be slightly cheaper than luxury condos. For the third quarter of 2013, the average price per square foot for a townhouse was $1,144, compared to $1,379 for condos.

And the most expensive condos are much pricier than the most expensive townhouses — condos at 15 Central Park West average at $5,487 per square foot, compared to $2,440 per square foot at the Harkness Mansion on the Upper East side.

Plus, there are plenty of ways to create a full-service experience in a brownstone, from hiring a property manager to installing a virtual doorman.

All of the buzz surrounding townhouses is starting to spread to historic walk-up apartments as well.

Data from real estate consultants Miller Samuel showed that the number of walk-ups sold increased by 64% over the last year, a huge jump compared to the 22% increase for apartments in full-service doorman buildings.

"There is a new generation of renters out there who don’t need a doorman, and want something unique and different," Jordan Sachs, president of residential brokerage firm Bold New York, told The New York Times. "Walk-ups can offer a wonderful combination of old prewar New York mixed with new design, and that can be hard to find in a cookie-cutter doorman building."
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