Tag Archives: manhattan

Manhattan real estate will continue to hamper New Jersey housing recovery

As a by-product of Manhattan real estate market, what happens in the city usually at some point spills over to the northern New Jersey market. When Manhattan real estate does well New Jersey prospers.  Conversely when Manhattan hits the skids as it did when the market crashes in 2008, the New Jersey market tanks. This is usually how it goes in New Jersey…”usually” being the key word.

We’re still waiting for this to happen in New Jersey…and we’ve been impatiently waiting for years and there’s no light at the end of the tunnel.  And worse, there’s more bad news for us to the west of the city.  Why has the New York City real estate prospered so much while the Bergen County, New Jersey market (except for new rental projects) still languishes after so many years.

The Modern…new ultra luxury glass residential tower in Fort Lee, New jersey

Here are a few reasons:

As a recent New York Times article points out…

Real Estate in Manhattan Set Records in 2014…

It was a banner year for Manhattan real estate. In 2014, buoyed by sales of ultraluxury apartments in new developments, the real estate market rebounded to surpass its previous peak, reached in 2008, when the financial crisis hit, according to Jonathan J. Miller, the president of the appraisal firm Miller Samuel.

The average sales price reached a new high of $1,718,530 last year, surpassing the record set in 2008, when the average sales price for the year was $1,591,823, according to Mr. Miller, the author of a report for Douglas Elliman Real Estate.

Big-ticket closings also helped the average price per square foot climb to a record $1,297 for the year, above the previous high of $1,251 per square foot in 2008.

The median apartment price, which measures the middle of the market and is less affected by high-end sales, was $940,000 in 2014, just behind the record of $955,000 set in 2008, according to Miller Samuel.

The better the market is in New York City the worse it seems to be for the suburbs 

“It was an extremely strong year,” said Sofia Song, the head of research at Urban Compass, which reported record dollar volume in the fourth quarter of 2014 with approximately $5.4 billion in closed deals. “Properties were being snapped up faster and at higher closing prices than the 2008 market peak.”

This is what’s happening with the housing market in Bergen County:

  • Single family home sales decreased 6% in 2014…decrease of 368 homes on a sales volume of 5564 homes
  • Multi-family home sales decreased 3%…decrease of 88 units on a volume of 2655 units

And this is what’s happening with the Manhattan housing market:

Dottie Herman, the chief executive of Douglas Elliman, reported half of all apartments in the fourth quarter sold at or above list prices, the highest percentage in six years.

Pamela Liebman, the chief executive of the Corcoran Group. “And there’s really no sign of things slowing down.”

The number of contracts signed in the fourth quarter, 3,216, was the highest since the fourth quarter of 2006, when 3,246 were signed, according to the Corcoran Group. Co-ops accounted for 58 percent of signed contracts this quarter, the highest co-op market share since the third quarter of 2009.

And the real killer…”at least twice as many new condominium units are scheduled to hit the Manhattan market this year as in 2014, the most since 2007, leading some real estate watchers to predict a tempering of price growth and slower pace of sales. “It is anticipated that the market will likely see a price adjustment,” in the first quarter of 2015, Urban Compass stated in its report.

All of this points to problems for a New Jersey real estate recovery:

  • If prices in Manhattan stabilize or even decrease fewer city lovers will be inclined to make the exodus out of the State.  Even with the super quick inflation, city residents haven’t fled in mass numbers to the much cheaper burbs…at least not to the single family market
  • As long as people continue to invest in new ultra luxury condos in the city the New Jersey ultra-luxury market will continue its downward spiral
  • And the real kicker is that with all of the new rental buildings being built along the New Jersey waterfront with their amazing designs and amenities and sexy locations, this has become huge competition for homes that are for sale, and will surely take a major bite out of the sales numbers…and prices.

Example:  The Modern…Fort Lee, New Jersey

As just published in the New York Post…

Fort Lee is the new New Jersey

The New York Post tells the story of The Modern in Fort Lee, New Jersey…the areas newest and most spectacular ultra luxury rental building, and why people are attracted to this iconic new 40 story building.  And this is just the tip of the iceberg for what is to come of the real estate market along the Hudson River waterfront in New Jersey.

Those of us who have followed Steve Pozycki over the years will understand why no one will ever duplicate the design and quality of The Modern in New Jersey…unless of course he decides to build another building. SJP also duplicates this incredible attention to detail in their new 500,000sf Waterfront Corporate Center 3 on the Hoboken waterfront.

Fort Lee luxury tower reflects housing rebound

The Modern…website

NJBIZ Power 50: #5 Steven J. Pozycki — SJP Properties

SJP Properties inks lease with e-commerce startup Jet.com at new Hoboken building

SJP Properties, Thomson Reuters ink major expansion deal in Hoboken

Also see:

And this is only one developer and one residential rental project in New Jersey.

How can the suburban real estate market withstand the competition from so many new rental buildings. It’s a case of the new vs the old. Guess who’s going to win?

Advertisements

50.9 million reasons why luxury Manhattan real estate is still going strong

ImageThe record setting 5-minute $50.9 million sale of a Chelsea penthouse is another sign that the luxury market in Manhattan is as strong as its ever been.

According to listing agent Vickey Barron of Douglas Elliman, the deal sets a new record for the most expensive home sale downtown.

Set in the Walker Tower this office converted art deco building is the new talk of the town…only one of the 47 units still remains for sale at $47.5 million.

Check out the article at the WSJ…Downtown Manhattan Penthouse Sells for a Record $59.9 Million

After the $50.9 million sale why did they raise the price?

Is it a wonder why the New Jersey luxury market is still sucking wind? In towns like Alpine, Saddle River, Englewood and Tenafly, you can’t sell a home priced above $3 million if your life depended on it…unless there’s a huge price chop.And forget the luxury condo market in New Jersey…if there is one.

Everyone’s putting their big bucks where the market is the hottest…Manhattan and every place surrounding it…in New York.

Word has it from the experts on Wall Street that the New York market has another 50% increase in it’s long term pricing.

Can it happen?

Northern New Jersey luxury market getting clobbered by NYC luxury sales

Why is New York City having a banner year(s) selling incredibly expensive ultra luxury homes (and everything else for that matter), and Bergen County, New Jersey is having another only soso year…and a another horrible year for the ultra expensive end of the market.

Usually when NYC condo sales and prices skyrocket, and rents increase, buyers start flocking out of the city to the New York suburbs. Bergen County has always reeled in a huge portion of the exodus….but that’s not happening now.

The Iconic New York by Gehry building

Sales of ultra luxury homes in Bergen County are down 47% in 2012, and 2010-2011 wasn’t any better. But sales  of ultra luxury units (trophy properties) in Manhattan have been booming the past several years.

The New York Times reported that Kiefer Sutherland recently sold NYC his townhome for $17+ million, which is just a drop in the bucket compared to all of the trophy sales that have been happening north of $50 million.  Yet in the affluent New Jersey suburbs, the high end of the market is gasping for air.

Even luxury home sales in the Hampton have hit the breaks.

The end effect, is that the NYC housing market is further killing the suburban market…and the effects are painful for the suburbs.  A lack of buyers leaving NYC coupled with an incredible number of rentals in the planning stages, and already under construction will make things  even more painful for areas on the other side of the Hudson River.

All these new rental projects in Jersey City, Hoboken, Edgewater and Fort Lee, and in NYC will have a devastating effect on suburban home sales.

Looking ahead, if the suburbs don’t learn real fast how to compete for buyers, then they’ll start failing.  And it will happen fast:

  • Downtown’s are already failing
  • taxes are rising and home prices aren’t
  • the market above $1 million is hurting
  • Very few single family homes are being built
  • The suburban office market isn’t recovering

These aren’t good signs. And there’s nothing pointing to things getting any better in the future.

More on this later.

Check out the Kiefer Sutherland article…Big Ticket: Sold for $17.5 million

Also check out…New York By Gehry

Manhattan developer waits for the right tenant at the their premium price

An article in the WSJ.com…It’s Hardly a Ball for 11 Times Square talks about the risks associated with speculative office building…”especially during a real estate slump”.  Duh.  Having developed and built various projects, I always thought there was a risk no matter when you built, even during good times.  If I built something that I thought was the greatest project around, would others feel the same, and would they pay the price I wanted.  It’s a delimma that every developer faces when they build a project.  And the task is even more daunting when the project takes years to design, to get governmental approvals, permits and then to build it and start moving people in.

There’s also one more major factor that goes into developing projects and making deals: Ego.

And this is part of the gist of the article…how can a developer be so egotistical during a major slump in the economy to pass up a deal to lease space.  They think, isn’t something better than nothing?

Not always

11 Times Square by SJP Properties

The WSJ believes that the project, 11 Times Square by SJP Properties, should take what they can get when presented with a deal.

Tenants who looked at the new skyscraper but decided against it include the National Basketball Association, law firm Morrison & Foerster LLP and even restaurant chain Buffalo Wild Wings Inc., according to people familiar with the matter.

Prudential now faces the possibility of having to pour more cash into 11 Times Square. Its $720 million construction loan, held by a group led by PNC Financial Services Group Inc., must be repaid in May.

The crazy thing here is that most of the developers who build these massive projects are paid large management fees to build them, and the fees cover a portion of the money they put into the project.  So the overall risk isn’t insane.  And as anyone else in business would do, when the deal isn’t to “their advantage”, then the deal doesn’t get made.  And sometimes it’s not to the lenders advantage when deals don’t happen…and they get into plenty of arguments over this, it’s still usually the developers call.

Real-estate developers in Atlanta, Seattle and other U.S. cities also are struggling because of office buildings that hit the market as it was cooling. Some developers that began projects in 2006 and 2007 with no commitments from tenants have been forced to shrink rents, restructure loans or even hand the buildings over to lenders.

An SJP spokeswoman declined to comment. Prudential company officials say they feel good about the leasing prospects, and they don’t want to cut rents and sign long-term leases at low values. “To drop rents on a new, state-of-the-art building to make them comparable to buildings in Midtown that are an average of 75 years old doesn’t reflect what we believe to be the immediate value of the space,”

To the defense of SJP, they are far from stupid, and have proven themselves to be one of the most successful developers in the region.  A s the article doesn’t point out, you can’t always rely on the “brokers take” of the market, because they’re great a predicting the past, not the future.  If it were their money at risk they would be singing another tune. And then at times they don’t make any sense…

“It’s not that we’re under any pressure to lease it up within a specific time frame,”

It’s one thing to act confident when talking to the press, but it’s egotistical to make statements that anyone with a half a brain knows is laughable. Will SJP Properties and Prudential Financial call the brokers into their boardrooms to have a Trump-like conversation?

We hope SJP has better luck with their two new residential high rises in Ft. Lee NJ that they hope to start in 2012.