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THE
STATE OF THE NEW YORK CITY RESIDENTIAL REAL ESTATE MARKET AN INSIDER’S VIEW OF THE LATEST TRENDS IN LUXURY RESIDENTIAL REAL ESTATE
This year spring came early to the Manhattan real estate market. The tulips that grace the malls of Park Avenue may not have appeared until May but clear harbingers of a springtime real estate revival were already in the air as early as January of 2007. After a strong last quarter of residential sales in 2006 January roared in with a dramatic 20 percent increase in sales as compared to the same month a year ago. According to the New York residential appraisal firm of Miller Samuel prices were also up over 14 percent for this same period as inventory began to shrink. This initial burst of activity has gained momentum resulting in jammed open houses and a flurry of bidding wars for special well priced properties. New York City has simply defied the national trend in real estate. In marked contrast to communities such as Miami, Las Vegas, and Washington, where home values have weakened and inventory is mounting, New York City has once again proven it is an island unto itself. Indeed, the first quarter residential sales figures for 2007 show a dynamite combination of surging sales volume, higher prices, declining inventory, and a shorter time on the market for properties. What has produced this remarkable turnaround?
After a year and a half slowdown the New York residential market has dramatically rebounded. Fueled by record 2006 Wall Street bonuses of $33 billion New Yorkers have leapt back into the marketplace propelled by pent up demand to take the plunge and buy. Previously worried by media reports that the local real estate market would either collapse or decline, many potential buyers opted for a wait and see attitude. However, mortgage rates have stabilized, the local economy remains strong with a continuing city budget surplus, and buyers are now back and determined to buy. Today, faced with declining inventories, especially for large family apartments and palatial trophy residences, buyers often find themselves vying for the same small pool of properties. With a mounting momentum of demand, and a diminishing supply of good offerings, the spring New York City residential market is active, robust, and strong. Led by last fall's record breaking and well publicized sales of several high profile properties such as the Stanford White designed mansion at 25 East 78th Street for $45 million, and the Harkness Mansion at 4 East 75th Street for $53 million, overall confidence in the New York housing market has returned. The first quarter 2007 residential market statistics clearly demonstrate this. Several varying reports cite a rise in prices between 5.4 percent and 6 percent and as high as 12 percent. According
to Miller Samuel the average sales price of a Manhattan apartment was
$1,290,391 for the first quarter of 2007, up from $1,224,840 in the
last quarter of 2006. According to this same report, large 4 bedroom
properties showed the largest In addition, Miller Samuel states that the next highest gain was the 3 bedroom category, up 9 percent to $3,592,638. Interestingly, this same statistical report showed a 7.5 percent increase in the studio category to $455,571, while one bedroom apartments declined modestly by 1.9 percent to $687,078. Overall time on the market declined by one week to an average of 131 days on the market. That said, many new listings are being snapped up in less than a week or even a day in today's vibrant spring market. Also, dramatic price surges were notable in Brooklyn where various reports cited price increases as high as 22 percent over last year, especially, as reflected in newly constructed or converted buildings.
Throughout New York City, demand is back, and there is a frenzy of activity for special property. That said, some properties move faster than others in this market. Today's buyers are focused and educated. Bidding wars and overbids are the clear result of astute buyers who are determined to win a prime listing at any cost. The spring market with packed open houses is roaring along but, even so, it has not equaled the pandemonium of several years ago.
Just as the sales market is strong so is the rental market. In 2006, many New Yorkers who were afraid to purchase in an uncertain market retreated to the rental arena. Vacancy rates plunged to a record low of 0.43 percent. Rents for market rate apartments skyrocketed by as much as 20 percent. Today, with the possibility of obtaining a million dollar mortgage for approximately $6,000 a month, many renters are choosing to buy. With the sales market once again heading north these renters do not want to be priced out of the sales arena as it escalates upwards. Still, buying is not for everyone. Down payment and closing costs must be considered as well as a commitment to remain in the city for a certain period of time. Average rents for a one bedroom apartment have risen to just under $2,500 a month with two bedrooms at about $3,500 and three bedrooms just under $5,000. But good luck finding an apartment at these price points. With city wide employment on the rise, and many former rental buildings being converted to condominiums rental availability is tight. For the first time in a long time both the rental and sales market are equally strong.
Lifestyle, Lifestyle, Lifestyle Are there any trends in today's real estate world? What's new and where? Amazingly, one cardinal classic rule of real estate is losing validity. Location is simply not the all important factor that it heretofore has been. Rookie brokers were always taught that buyers would never compromise on their location of choice. Not today. As neighborhoods throughout the city reinvent themselves, and as the zip codes of fashion change, New Yorkers are simply moving all over town. The city is cleaner and safer. Downtown is becoming more and more residential while the perimeters of Harlem are stretching farther north. Brooklyn and Long Island City are hot destinations across the river. Today, lifestyle counts. Views and amenities count. New condominiums throughout the city offer perks ranging from traditional sports facilities, children's playrooms and business centers to up-to-the-minute virtual concierges, spa havens, and, in the latest twist, a garage space on the same floor as your apartment. Today, buyers often choose where they want to live based on how they want to live. Another noticeable trend is the growing number of people who are deciding to combine two or more apartments in order to create a custom space. This phenomenon is especially prevalent in new condominium construction or conversion. Developers specifically design layouts that can readily offer the easy possibility of combining adjacent units; floor plans are often pre-drawn to illustrate these combinations. It is not just the wish for bigger space that motivates today's buyers to combine units but the desire to create an apartment that fits their individual needs. Again, just as buyers have a more open attitude to neighborhood, today's buyers choose to express themselves by creating a custom space for their personal lifestyle.
One of the hottest new areas in which to live is Brooklyn. Celebrities are rapidly joining the long established ranks of authors who make the quiet tree lined streets of Brooklyn their home. For Wall Streeters, Brooklyn has always provided quick subway or water taxi access to the Manhattan Financial District. With a rich cultural life centered around the Brooklyn Academy of Music, the Brooklyn Museum of Art, the Brooklyn Library and the beautiful Brooklyn Botanical Gardens, Brooklyn offers a more relaxed lifestyle than Manhattan without sacrificing the rich intellectual diversity of its neighbor. Today, Brooklyn is experiencing an explosion of real estate development. Since 2005, there have been 5,800 development units in Brooklyn that have either been sold or are in the planning stage even without counting the future mammoth Atlantic Yards project by Forest City Ratner. Brooklyn is transforming itself with conversions and ground up developments as diverse as the transformation of the former Williamsburg Savings Bank with its iconic clock in Fort Greene now named One Hanson Place to the minimalist Richard Meier new glass and aluminum tower near the Brooklyn Museum entitled On Prospect Park. 110 Livingston, an architectural masterpiece designed by McKim, Mead and White which was formerly the headquarters of the New York City Board of Education is now redesigned as a condominium with the same address. From DUMBO to Williamsburg to Red Hook, the various neighborhoods within the borough are rapidly becoming sought out residential destinations by many buyers from all areas of New York City. One of the most arresting new projects in Brooklyn is the transformation of the former 14 story 1928 Jehovah's Witnesses' warehouse located at the foot of Brooklyn Heights at 360 Furman Street into a 449 unit condominium named One Brooklyn Bridge Park.
This H shaped fortress is poised directly on the waterfront, and offers drop dead views of the skyline of Manhattan, the Statue of Liberty, Governor's Island and the Brooklyn Bridge. Not only will One Brooklyn Bridge Park boast the most dramatic views of Gotham imaginable but it will also directly overlook the future verdant Brooklyn Bridge Park with 85 acres of promenades, sports fields, playgrounds, bicycle paths and docks. This new park will be designed by noted landscape designer Michael Van Valkenburgh under the auspices of the Brooklyn Bridge Development Corporation. The conversion of One Brooklyn Bridge Park by RAL Companies & Affiliates under the direction of developer Robert A. Levine, is the largest residential conversion in Brooklyn's history. The building will offer a wealth of different apartment configurations from 588 square foot studios with soaring 12 foot plus ceilings to a super glamorous 4,638 square foot triplex penthouse with private elevator. Prices will range from $525,000 to $7,250,000. Among the myriad units there will be lofts, townhouses, and terraced penthouses. Although the unparalleled views of Manhattan and the Statue of Liberty will come with the highest price tags, there will be lovely views of Brooklyn at more affordable prices from mid to high floor east facing units. Those units that front on the Brooklyn Queens Expressway will be protected by sound resistant windows and provide quick packed drama for adventurous buyers. In addition, One Brooklyn Bridge Park will also offer cabana and parking spaces for sale to the future owners. Perks will include a fitness center and an indoor golf simulator. The elegant contemporary design of this conversion will feature Dada Italian custom cabinetry, Sub-Zero refrigerators, Bosch appliances and Duravit soaking tubs. Occupancy is slated for the end of the year, and, as expected, sales are brisk at this exceptional new development.
Another new offering that is truly extraordinary is the hotel condominium pied-a-terre component of the conversion of the former Plaza Hotel. While most of the condominium residences at the Plaza are under contract and anticipated to close soon (please note that there are several residences, including a park view Penthouse, still available for a lucky few purchasers), the hotel condominium pied-a-terre suites offer a real opportunity to buy into the fabled Plaza at an exceptional price. Once again, it's all about lifestyle. After all, what could be more glamorous than a life at the Plaza? With a hotel pied-a-terre suite, future owners will just bring their toothbrush, and, on as little as five days' notice, check into their fully owned and deeded unit at the new Plaza Hotel. All the services of a five star hotel, including a butler assigned to every floor, will await their pampered stay. These buyers will undoubtedly feel as if they belong to a special club in the city's most famous building. Owners can simply call ahead to order their refrigerators stocked and ask for personal touches such as orchids or the newest DVDs to be ready for their arrival. Whereas the Plaza Residences were originally offered from $2.6 million to more than $40 million, the pied-a-terre suites range from $1.6 million to $5.8 million (except for one 2,100 square foot, two bedroom penthouse suite with a view of the park at $9.35 million). The five styles of the hotel condominium pied-a-terre suites are named for fabled Plaza Hotel spaces: • The Rose • The Palm • The Edwardian • The Plaza and • The Terrace Suites They range in size from 500 to 1,300 square feet, plus the larger duplex penthouse, and begin on the 11th floor of the new Hotel Plaza which will front on West 58th Street. Living rooms will have a custom hardwood floor evoking the Plaza's original design, and baths will feature mosaic marble tiles that recall patterns in the original elegant lobby mosaics. There will be a private owner's closet where personal items can be stored, as well as a butler's kitchen. When not being used by their owners, some of the expenses of these suites can be defrayed by allowing the hotel management to rent these units to nightly guests. Although hotel condominium ownership is relatively new to New York City the opportunity to purchase a pied-a-terre at the Plaza to use as one likes, and, at the same time, offset expenses when one is not in residence should prove irresistible to many buyers. For a pied-a-terre in New York City it would be hard to find a more memorable address than The Plaza.
Traveling across town, a neighborhood that is about to be dramatically changed by innovative or even startling new architecture is West Chelsea. The recent rezoning of West Chelsea has permitted the development community to express itself in a creative spirit. Hot on the footsteps of Richard Meier's glass towers at 165 Charles Street and 173 & 176 Perry Street in the West Village noted architects are engaged in designing glass buildings on Eleventh Avenue that will vividly alter the skyline of West Chelsea. The execution of Frank Gehry's design for the headquarters of IAC/InterActive Corp. for Barry Diller overlooking the West Side Highway at 19th Street is about to be completed.Reminiscent of the Guggenheim Museum in Bilbao, Spain, this glass sheathed tower has the appearance of a billowing cloud like structure floating over the Hudson River. Next door, French architect Jean Nouvel has designed an extravagantly exuberant 23 story condominium at 100 Eleventh Avenue at West 19th Street that is under construction. This fanciful design features a curved glass façade created from 1,650 individual window panes of 500 different sizes all opening in different directions. Does that sound dizzying? In fact, it is all about framing the views of the Hudson River, and reflecting facets of light. Prices for the 72 super luxury apartments will range from $2,000 to almost $5,000 a foot. Apartments will consist of one, two, and three bedroom units plus a $22 million, 4,700 square foot four bedroom penthouse with over 12 foot ceilings. In addition, 100 Eleventh Avenue will be an environmentally friendly green building. The
overall goal is to create a building that sparkles as facets of light
bounce off each other. This spring, New York City residential real estate
is also sparkling brightly. Activity is up. New offerings provide a
wealth of variety throughout diverse neighborhoods, and confidence has
returned to our local arena. Central Park is in full bloom, and so is
the market.
Uptown: Downtown: Tribeca:
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