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TV, Videos
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The Real Deal has posted the full video of the panel discussion I participated on last week with developers Steve Witkoff, Miki Naftali and Michael Stern. The Real Deal’s publisher Amir Korangy deftly kept the conversation going and candid, despite the technical challenges, sweltering heat and a heckler (i.e. just another day in NYC).
Tags: Steve Witkoff, Condos, New Development Showcase, Miki Naftali, Michael Stern, Panel Discussion
[click to expand]
Thoughts
You can see a slight slow down in the pace of the market at or above $5M while the remainder of the market continued to accelerate as evidenced by faster (lower) absorption rates. It makes sense since there is no new development entering the market to ease the supply shortage of the “lower 90%” of the market.
Side by side Manhattan regional comparison:
[click images to expand]
I started this analysis in August 2009 so I am able to show side-by side year-over-year comparisons. The blue line showing the 10-year quarterly average travels up and down because of the change in scale caused by some of the significant volatility seen at the upper end of the market. The pink line represents the overall average rate of the most recently completed month for that market area.
Definition
Absorption defined for the purposes of this chart is: Number of months to sell all listing inventory at the annual pace of sales activity. (The definition of absorption in our market report series reflects the quarterly pace – nearly the same)
Manhattan Market Absorption Charts [Miller Samuel]
Tags: Absorption
Here’s a great conversation with the guest Paul Goldberger, Pulitzer Price winning architecture critic, former New York Times architecture critic and current Vanity Fair editor of his seminal piece on the Manhattan “Billionaires’ Row” phenomenon that is occurring around the world. His Vanity Fair piece provides a terrific visual summary and he provides a nice shout out to the “Bank Safety Deposit Box” analogy I like to use.
Tags: Podcast, WNYC, Vanity Fair, Paul Goldberger, Billionaires Row, Leonard Lopate Show
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Daniel Geiger of Crains New York Business interviews well know developer Steve Witkoff on his plans for the Park Lane Hotel, formerly owned by Leona and Harry Helmsley. Steve talks about shadow effect and how he plans to let Vornado discover how deep the top of the market is via their nearby development site on Central Park South.
There has been a lot of discussion about “Billionaires Row” which these developments would be part of.
Tags: Central Park, Billionaires Row, Steve Witkoff, Helmsley Park Lane Hotel, Hotel, Vornado, 220 Central Park South
[Source: Vanity Fair, click to expand]
Paul Goldberger, the Pulitzer Prize-winning architectural critic at the New Yorker and voice of design reason, penned a comprehensive overview of the “tall towers” building phenomenon in the latest issue of Vanity Fair. It’s an engrossing piece with stunning visuals as it correctly describes the global trend that is creating it.
I believe Michael Gross, the author of the new book on 15 Central Park West, Manhattan’s truly first super luxury condominium that was wildly successful and oblivious to the global economic crisis, coined the phrase “Billionaire’s Belt” which best describes this new Manhattan submarket and new housing classification. I was pushing “57th Street Corridor” as a label but there were no takers so I’ve modified Michael’s phrase to “Billionaires’ Row” as if all these buildings are fighting to be the best.
I like Goldberger’s description of the new design trend:
…the latest way of housing the rich, is an entirely new kind of tower, pencil-thin and super-tall—so tall, in fact, that one of the new buildings now rising in Manhattan, the 96-story concrete tower at the corner of 56th Street and Park Avenue, 432 Park Avenue, will be 150 feet higher than the Empire State Building when it is finished…
And that these residences provide…
a place not for its full-time residents but for the top 1 percent of the 1 percent to touch down in when the mood strikes.
One thing missing from this piece, and perhaps rightfully so is the discussion of why these projects are being built beyond the notion that the global wealthy are demanding them. In Manhattan, new construction developers have to target the super luxury market because land prices are at record highs – we just came out of a record setting building boom last decade – and few prime sites are available. With a high cost of land, inflated labor and materials costs, the math does’t work otherwise for more mainstream projects.
Our city’s obsession with chronicling lifestyles of the Wall Street rich and dysfunctional in the previous boom with prices of $3,500 to $4,000 per square foot seem downright quaint now. Now upwards of $10,000 per square foot has emerged as the price point for all participants in this market niche to aspire to.
New York City residents don’t seem quite sure what to think about these projects and their likely full time emptiness. One thing is for sure, the world’s elite are now a lot more visible and it’s a lot easier to point fingers…doesn’t One57 kind of look like it’s flipping the city off while it looks at the park?
Source: New York Observer.
But this global pattern of the wealthy searching for hard assets to invest in doesn’t appear to be ending anytime soon.
And we’ll continue to appraise it.
Tags: One57, 432 Park Avenue, Vanity Fair, Paul Goldberger, Extell, Gary Barnett, Christian de Portzamparc, Billionaires Row, Starchitect
After separating new development data from existing sales from our 1Q14 Manhattan sales report, the high end new development product that is beginning to close now and pushing overall prices to record levels.
[click to expand]
Tags: Existing Home Sales, New Development Sales
[click to expand]
The Center for an Urban Future, a NYC-based think tank, just published a sobering summary of New York City’s aging infrastructure. You can download the report. Here is the report author’s editorial in Time Magazine.
The NYC real estate economy is dependent on the quality of services offered by the city. One of the unsung reason for NYC’s active NYC housing market began in the early 1990s when the “broken windows theory” was widely adopted as a policy strategy. It worked. I lived through it and saw the city transition.
Now we have bigger windows to fix.
Tags: Center for an Urban Future, Infrastructure, broken windows theory
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This is a good interview with Alistair Elliott, senior partner and chairman at Knight Frank by Josh Noble of FT about the buying binge of Asian investors in many major global cities like London, Vancouver, Sydney and New York City…”mature financial cities.”
Institutional investors come first, then developers and then private investors. The phenomenon is at it’s very early stages.
Tags: London, FT, Financial Times, Alistair Elliott, Sydney, Chinese investors, Vancouver, Hong Kong, Singapore
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Joe Anuta at Crain’s New York Business lays out the permit situation for building construction, which reached 18,000 units in 2013.
Citywide, 2013’s figure is still shy of the 20,000 units the congress estimates developers need to build annually simply to keep up with the growth of the number of households, to replace outdated buildings and to provide housing options for New Yorkers across the income spectrum.
With all the construction going on right now, it isn’t enough to:
Tags: Building Permits
Yesterday I did a quick interview for CNBC at 30 Rock (right next to the new Tonight Show/Jimmy Fallon set which was all abuzz). We were talking about housing starts before they were released. While predicting this stuff is a fool’s errand, I think the bigger question was whether the recent weakening of housing metrics was a new trend or a pause caused by the harsh weather creating havoc across the US.
The NAHB homebuilder sentiment index (1 family) posted its largest one month drop in history – severe weather, cost of labor, materials and land with given as reasons but those really aren’t new issues other than the severe weather.
While weather played a role and probably amounts to more of a short term blip, I think the larger concern is the outlook over the next 6 months with reduced affordability (higher rates but still historically low) and the bottoming of existing home inventory in 2013 providing additional listing competition in some markets.
December housing starts
• 999k annualized and seasonally adjusted rate in December, declining 9.8% but exceeding forecasts. More weakness in multi-family starts than 1-family
• +18.3% 2013 over 2012
Why I thought January Housing Starts would fall (luckily I was right with the announcement of a record 16% drop) • Same factors in place as last month: Weather, Labor and Material Costs and Land Costs. • Record m-o-m drop in NAFB confidence – looking out over the coming months – suggests a larger impact by weather. • Mortgage rates slipped from last month but still nearly a point higher than a year ago, expectation of flat or edging higher in 2014. • Implementation of Dodd-Frank Qualified Mortgage (QM) may also drag viewing traffic. • Permits already fell over last 2 months which suggests lower starts (contracts versus closed sales analogy).
Actual January housing starts release after my interview
• 880K annualized rate in January, dropping 16% from December 2013.
• January 2014 y-o-y dropped 2%.
• Permits fell for 3rd consecutive month, down 5.4% from prior month (seasonally adjusted).
STILL – the question REALLY is whether the recent construction slowdown is the beginning of a trend or a temporary set back that will clear over the next few months as the weather improves and the economy shows some improvement. Right now it feels more like the market is losing momentum and the weather is only making it worse.
Tags: CNBC, Commerce Dept, NAHB, Census, Housing Starts, NAFB, Home Builder Confidence Index
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Radio
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The Wall Street Journal released an intriguing article about the use of glass curtain walls on new buildings: Study: Glass Condos Could Pose Health Threat Through Overheating: Hot Summer Could Raise Temperatures Into Triple Digits.
The piece was inspired by content provided by the Urban Green Council, who are trying to push for more rigorous building standards in the aftermath of Superstorm Sandy. They’ve had a PR bonanza for this one since the story was even picked up by Gawker.
But the findings were disputed by some developers and architects, who said that glass buildings in recent years have made big advances in overall energy efficiency. That includes improved glass with special coatings to reflect heat and more insulated surfaces in building walls, to comply with increasingly rigorous city and state energy codes.
The idea of glass curtain walls became a bigger issue in the recent boom and the current boom than in years past: the technology has improved, and with shift in the mix towards luxury development, the need for expansive views and light to raise values made it more popular. The irony of this is, and this is certainly not a definitive statement, that glass curtain walls can be less expensive for luxury development than using more traditional mortar/window installs if it is not load bearing.
And Toronto seems to hate them (when not writing about Mayor Rob Ford) in this CBC piece: Throw-away buildings: The slow-motion failure of Toronto’s glass condos.
UPDATE
Ilya Marritz at WNYC just posted on this topic with the understated title: People Who Live in Glass Houses are Really Hot. Here’s the radio version:
Tags: Hurricane, Superstorm Sandy, Josh Barbanel, Wall Street Journal, Urban Green Council, Ilya Marritz, WNYC, Canadian Housing Market, Radio
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Public
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Here is an interview I recently did for Bloomberg Television’s In The Loop on the first phase of the long awaited and sorely needed Second Avenue subway line. I had also looked at this data about two years ago.
For the show I crunched closed sales data for the 4th Quarter of 2013 versus the same period in 2009 and provided a similar time frame for the rental market. I defined the impacted subway zone as the Upper East Side neighborhood between Third Avenue and First Avenue extending from 96th Street to 59th Street. Areas out side the zone were simply those to the east and west of it but within the neighborhood. I realize that simply taking the average price of all transactions in each of the zones are subject to skew. However given the large size of the zones, I think it is a reasonable way to extract some sort of impact.
Based on the results, the subway zone fell behind the areas outside the zone during the 4 year time span.
West of Zone
Sales Prices +14.7%
Rental Prices +7.7%
East of Zone
Sales Prices +12.2%
Rental Prices +9.1%
Tags: Bloomberg TV, Second Avenue Subway
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Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts. He holds the Counselors of Real Estate (CRE) and Certified Relocation Professional (CRP) designations. He is an Appraiser “A” Member of the Real Estate Board of New York and a member of Relocation Appraisers and Consultants, Inc.
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