Wednesday Link-O-Rama

I must apologize for the light postings lately and the lack of original content but today's Manhattan real estate marketplace is requiring more effort and energy per deal than anytime in the past decade.  Don't misunderstand me here...I'm not bellyaching...just providing some insight as to why posting quantity and quality have suffered. 

So today again I provide you with links to some interesting topics around the real estate (and pot...yes marijuana) blogosphere:

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Friday Link-O-Rama

A potpourri of stories from around the country to right here in our own backyard:

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Friday Link-O-Rama

I continue to be incredibly busy and apologize for the weak number of posts this week.  It has been unavoidable as ech day has been busier than the previous.  So as many of my readers know, when I'm swamped, I often like to offer some links to stories that I find intriguing or just plain fun.  So here goes:

Be back Monday with a continued update on our current market conditions including a report on weekend activity and a short term projection of where everything seems to be heading in the world of Manhattan residential real estate.

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Apple Store Coming to Upper West Side

Is Apple getting into the lingerie business?  Nope but they are rumored to be taking over VS's UWS site.  I can almost fall out of my office window onto what will soon be the city's newest Apple Store.

photo from Property Shark (via Racked)

What is currently a Victoria's Secret on 67th and Broadway is likely to become Steve Jobs' newest retail outlet.  It's no secret to how savvy Jobs is.  With retail prices in Times Square at astronomical levels (rumored to be as high as $675/sf...whaaaaaat!!!!!?), the $300/sf avg in Lincoln Center seems like mere peanuts to pay for Upper West Siders business.

Check out APPLE OF UPPER W. SIDE'S EYE (NY Post)

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2075 Broadway at 72nd Street

One of the most frquently asked questions I field is "What's happening on that lot at the corner of 72nd Street and Broadway?"

Thanks to Curbed, here's a very accurate and complete answer direct from RKF's website.

Check out the rendering also via Curbed and RKF.  Looks quite nice and befitting of the space.

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TrueGotham TV Explores Square Feet: Episode Five

Last week in our 4th episode of TGTV's 5 part series on Square Feet we delved further into understanding why consumers can't seem to get an accurate approximation of square footage for the properties that they are seeing.

In our final episode of this 5 part series our panel discusses possible regulation of methodology and approximation of square footage with suggestions on just who should police those responsible for overstating and how they could go about doing so.  Check it out:

As I stated last week, I could do weekly episodes on this topic forever (or at least until the problem went away) but I'm eager to move on to other interesting content.  The surprising conclusion that I have drawn from this eye-opening series is that the methods of measuring are already relatively standard (with the exception of new development condos) and the discrepancies in stated square footage almost always come from me and my colleagues. 

The first step to correcting these gross inaccuracies is to hold accountable those who overstate square footage by a certain amount (do we say +-5%?).  I believe that all real estate agents should be mandated to have their properties measured by an "approved" entity (licensed architect, floorplan illustrator, appraiser).  Furthermore, they should be required to share that precise measurement with the consumer.  In time, I believe you would see fewer discrepancies and more honesty surrounding stated square footage. 

Exaggerating square footage isn't salesmanship, it's lying.

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Broker Incentives and More Square Foot Woes

Broker/Buyer Incentives Surfacing?

I'm sitting in my office right now listening to the live broadcast of our weekly business meeting.  I couldn't resist blogging about something I just heard.  Avonova, one of the latest condo conversions on the Upper West Side located at 81st and Broadway is launching a new program offering broker and buyer incentives for upcoming sales.  Buyers will receive a $10,000 gift certificate towards the purchase of California Closets and their agents will receive a full 4% commission and an additional $2500 American Express gift card at closing.  The reason I share is that incentives are rarely seen in a hot market where demand outweighs supply.  Perhaps this is a sign that the Fall market isn't providing the demand that sellers and developers had hoped for.  This time last year many Wall Streeters began shopping for apartments that they would buy with their January/February bonus money.  Not so much this year...so far.  Perhaps this incentive is just an isolated incident or perhaps it's a sign of things to come?  Only time will tell.

UPDATE:  Just received email from The Atelier offering a trip to St. Thomas ("airfare included"...that's a good thing) to the agent who sells the most units between now and December 31st.

More Square Footage B.S.

As most of my readers know, I'm on a mission to try to solve the problem of square footage inaccuracies.  Check out TrueGotham television (TGTV) for our 5 part series discussing methodology, accountability, and policing.  Episode 5 airs this Thursday. 

The impetus for the TGTV series was both buyer and broker frustration.  Many of my readers are as "mad as hell and they just aren't gonna take it anymore!"  (Network)

A reader of TrueGotham who also was a recent bidder on a property of mine just sent me this floor plan of an Eastside property that is being marketed as 800sf! 

By my calculations (and I'm being VERY generous) I get approximately 560sf.  They are overstating the number my more than 40%!!! 

Anybody out there see how this space is 800sf? 

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Buildings Department to the Rescue: What Took So Long?

Adam Lisberg of The Daily News wrote today that the Buildings Dept. vows crackdown on unscrupulous builders.  Sounds like an excellent idea to me as it seems like everyone and their brother thinks they are an investor/developer these days.  I can't tell you how many phone calls I have received from friends and family asking me to find them a "deal" somewhere so that they can either convert, build, or renovate and flip the project.  99% of these people have absolutely ZERO experience with projects of this type.  They all have one thing in common though and that is that they believe you don't need experience to make money in this real estate market.  Unfortunately, that has been true up until now but who wants to buy from an investor/developer who has no proven track record?  Check out what the Buildings Dept. is finding now that they are actually delving into the inner workings of some of these projects.

Buildings Commissioner Patricia Lancaster said a special excavation task force has issued stop-work orders on 167 sites - more than 20% of the ones it inspected - and a team now visits sites to ensure the orders are followed.

She said the department also is cracking down on architects and engineers who build illegal eyesores by abusing their right to certify their own plans.

When the Buildings Department audited 155 of those plans, it found problems with 80% of them.

As someone who has watched projects from beginning to end with fascination at their seemingly shoddy construction, this really doesn't surprise me.  I also don't pretend that I'm any sort of expert on construction but I can see the difference between a project completed by Extell or Related versus Joe Schmoe who builds 10 units in the form of an upside down "L" over an existing tenement building. 

The desire to capitalize on the booming Manhattan real estate market has unfortunately brought out the worst in some people as they have cut corners and bent rules and regulations to suit their wallets.  No big surprise here.  What is rather disconcerting to me is that the Buildings Dept. is only now taking an active role in policing these projects. What happens to all of those who bought property in these projects already built by "unscrupulous builders?" What is the Buildings Dept going to do to those builders and for those who were taken advantage of by purchasing in those buildings?

Now that the housing boom is over in much of the country and slowing significantly in our back yard (my opinion of course...I must still say that inventory remains ridiculously low and many of my buyers remain frustrated that they can't find a home...the difference is that these buyers are patient), it seems that various agencies are ready to go after the "sleazy" who profited during this time.  Check out Jonathan Miller's post today at Matrix regarding the Federal government's plan to create oversight of the mortgage broker industry.  Nice timing!  What were these agencies doing when all of this fraud and unscrupulous behavior was taking place?  I just don't get it!

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New York City Council Protects The Ariel's Views

Ray Rivera of The New York Times reports that the City Council has voted unanimously to limit high rises on the Upper West Side. 

The City Council unanimously passed a rezoning plan yesterday that limits the spread of high-rise buildings along 51 blocks on the Upper West Side, an area that officials say has undergone a significant increase in development.

The plan is intended to preserve the physical character of the community. It generally limits buildings to 14 stories along Broadway; 10 to 11 stories along the other avenues; and 6 to 7 stories on the side streets. Additionally, it imposes design restrictions so that new developments more closely match the neighborhoods around them.

The rezoning area is bounded to the west by Riverside Drive and the east by Central Park, and to the south by 97th Street and the north by 110th Street.

A perfect example of government controlling housing inventory.

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Memorial Day Link-O-Rama

I hope everyone is looking forward to this long Memorial Day weekend as much as I am.  I'm heading out to Bridgehampton with the family to spend the weekend with my in-laws (that's a good thing...I actually really like them). 

  • And as much as I DETEST spin classes, I have agreed to join my brother-in law for a class at Zone Hampton on Saturday.  Hey Neal, why aren't we stayin' in the hood and checking out Soul Cycle  which I just found out about via Gotham Gal's Joanne Wilson?

Now back to real estate:

That's all I've got for today.  Taking off on Monday so have a wonderful weekend and see you all on Tuesday.

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True Gotham Redux

I'm off to the Dominican republic today for a much needed vacation with the family.  I'll be back blogging on Monday, April 2nd but today and all of next week, I will rerun some of True Gotham's most popular/controversial posts.  Enjoy.

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March New Residential Development Report

The Real Deal's March New Residential Development Report is out complete with the newest developments to hit the market, financing updates, sales updates and those currently under construction.  Check it out.

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Friday Link-O-Rama

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February New Residential Development Report

The Real Deal's February New Residential Development Report is out complete with the newest developments to hit the market, financing updates, sales updates and those currently under construction.  Check it out.

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Manhattan Condo Development Report

Michael Stoller of The New York Sun reported yesterday on the incredible number of condominium developments that are in or close to the pipeline.

A managing partner at Massey Knakal Realty, Shimon Shkury, says his firm is listing 38 development sites in the five boroughs. Thirteen sites are available in Manhattan, 12 in Brooklyn, seven in Queens, three in the Bronx, and three on Staten Island. Prices range from as low as $48 a buildable foot, on Marcy Avenue and Stockton Street in Brooklyn, to $360 a buildable foot, in Manhattan. 

Stoller's slant is towards Wall Streeters who are feeling cash rich after big bonuses and may want to try their hand at residential real estate development in the city. 

Stoller's advice: If diving into residential development in NYC, it is wise to consider consulting or partnering with a seasoned real estate professional with development experience.  Oh yeah...you also need a lot of cash because lenders are less likely to write checks for novice developers or class B development sites.

"There aren't any real ‘killer' sites being offered at the moment," the president of SJP Residential, Allen Goldman, said. "In fact, the offerings of large sites suitable for residential development are few in number. I suspect that great sites, which have location, height, and views, would still be asking north of $400 a square foot. ‘B sites' are showing signs of lower numbers with more urgency to sell, some being offered in the range of $200 a buildable square foot."

Here are some excerpts from Stoller's article summarizing some of the city's many new developments:

CHELSEA HIGH LINE DISTRICT

1. 537–545 W. 27th St., opportunity to build 123,000 square feet of commercial or residential space or a community facility building without zoning changes or variances.  By purchasing air rights and using an inclusionary housing bonus, one could increase the size of the development to more than 185,000 square feet.  Real estate experts expect the site to trade for more than $300 a buildable foot.

2.  511–517 W. 21st St. with frontage on both 21st and 22nd streets. A developer can build a 100,000-square-feet building for use as a gallery or a hotel, and industry sources expect the site to sell for more than $500 a buildable foot.

UPPER EAST SIDE, SUTTON PLACE, & TURTLE BAY

3.  305 E. 85th St., with frontage on Second Avenue. The winning bidder has an opportunity to construct a 21-story, 117,663-square foot tower with 4,125 square feet of retail. "The property will probably fetch north of $400 per buildable square foot, partly due to the fact that the project will be breaking ground in the spring, and design and development drawings are 100% complete," Mr. Miller said.

4.  1480 Second Ave. on the northeast corner of East 77th Street will be sold to a developer who plans to construct another condominium as big as 60,000 square feet. The site is expected to trade for about $375 a buildable foot.

UPPER WEST SIDE

5. 210 W. 91st St. between Broadway and Amsterdam Avenue.  A developer can build a 110,682-square foot residential condominium on floors five to 22 that will house 45 residential condominiums at the site of the Young Israel Westside Synagogue.  The synagogue is seeking $16 million for the development site. The price includes completed architectural plans and legal and operating agreements.

6.  20-story residential condominium is planned for 230 W. 78th St. between Amsterdam Avenue and Broadway. The building, a development of Urban Residential Properties, will have 34 apartments.

7.  Construction has begun on a 16-story residential condominium at 120 W. 72nd St. between Columbus Avenue and Broadway. The tower, a development of Anbau Enterprises, which recently completed the conversion of the Intercontinental Hotel at 110 Central Park South, will have 22 apartments.

8.  At the southwest corner of 72nd Street, at 2075 Broadway, a 19-story condominium is rising. The site, directly across the street from Broadway and the 72nd Street subway stop, will have a total of 49,478 square feet of retail on four levels. 

UPPER EAST SIDE

9.  Later this year, the Related Cos .will begin development of a new tower at 200 E. 86th St. on Third Avenue. The 20-story building will have 190 units and 14,000 square feet of retail space.

10.  One block north, Extell Development has already begun construction of its mixed-use residential condominium on the corner of Lexington Avenue and East 86th Street.

11.  Directly across the street is a branch of Emigrant Savings Bank, at 1270 Lexington Ave. The site is owned by Ramaz School, which is planning to select a developer to build a new school and a residential condominium tower on the upper floors.

12.  World Wide Holdings has begun construction at 1425 Second Ave., on the northwest corner of 74th Street. The 30-story tower will also have about 70 residential units and a 44,000-square-foot Equinox Fitness Center.

13.  World Wide has also made an agreement with the city for a 75-year lease of a 1.5-acre site on East 57th Street and Second Avenue, where it will raze the existing schools, P.S. 59 and the High School of Arts and Design, build two new schools, and develop a 59-story apartment tower and a four story band of retail stores.

14.  250 E. 53rd St., the Veneto, a development of the Related Cos. The 32-story tower will have 137 condominium units.

15.  303–307 E. 51st St., directly off the corner of 51st Street and Second Avenue, where Kennelly Development Co. plans to erect a 40-story residential condominium tower with 117 apartments.

16.  946–952 Second Ave. between 50th and 51st streets, another condominium tower is planned.

17.  Directly across the street, at 249–253 E. 50th St., where the restaurants Lutece, Leopard, and Kate Kearney's once stood, another residential building is rising.

18.  Demolition is under way at 49th Street and Second Avenue, where a developer has obtained financing from Lehman Brothers to build a residential condominium.

Not a shabby list of 18 projects and this isn't everything.  Check out the Real Deal's January Development Report.  We are talking about big players like Worlwide Holdings, Eastern Consolidated, Macklowe, Related, and Extell.  It is hard to believe that these companies aren't proceeding with eyes wide open and feel confident that market conditions will remain strong to support all of this new inventory.  I remain cautiously optimistic only because my past skepticism has continuously been proven wrong.  I still can't imagine that this influx of condominium units will be absorbed without some sort of significant price correction.  It seems like simple supply and demand and although I believe there remains a pent up demand, I question that it will be enough to prevent a price correction...even in Manhattan. 


 

 

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New Residential Construction Projects

Check out this month's list of new residential construction (via the Real Deal).  if you follow the links at the bottom of their page, you can also see previous month's projects.  An excellent resource!

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Do Condominium Owners Want to Share With Renters?

Christine Haughney reports that so many of those Manhattan condominium developments are morphing into condo/rental and condo/hotel developments to suit a changing market.

Gary Barnett, the chairman of the Extell Development Company, said that for some of his projects, he was still figuring out how many units he might turn into hotel rooms or rental apartments.

One building that he is planning to construct on Riverside Boulevard between West 62nd and 63rd Streets may have some rental apartments. He is planning to turn the lower half of his project at 135 West 45th Street into a hotel, and part of his project at 151 East 85th Street into rentals.

Jules Demchick, the chairman of the J. D. Carlisle Development Company, who is building 290 apartments at 23rd Street and Third Avenue, said he would decide within the next month what the breakdown would be between rentals and condominiums.

Converting projects to rental apartments is starting to make more sense because this sector has strengthened. The vacancy rate for rental apartments in Manhattan is a very low 0.8 percent, according to Citi Habitats, a Manhattan real estate brokerage. The borough hasn’t had such a small percentage of rental vacancies since before Sept. 11, according to Gordon Golub, Citi Habitats’ senior managing director of Citi Habitats.

This is not surprising to me as we saw signs of this last year when Related began construction of a hybrid rental/condo project in an attempt to hedge the market.

101 Warren Street also is a recent project that combines the two but at least this project separates the rentals in a different building. Tenants also don't have use of the condominium amenities. Which brings me to the question I have as a real estate professional and a condominium owner... how will this hybrid structure affect the perception of the buildings by prospective purchasers?

I own and live with my family in a condominium that has very few renters. The building is not a hybrid, but a full fledged condo with some investor units that have been rented out. That said, it is an industry-wide belief that owners tend to take greater care of the building and its common areas when their own financial stake is rooted in the project. Renters typically are a bit more lax in caring about the building as a whole. So in a building that is structured to house a significant number of tenants among the home owners, what will the ramifications be both aesthetically and financially for the owners? Will these hybrid condo projects be perceived as less valuable because of the rental segment of the population? I suspect that many of my buyers will choose projects that are 100% condo versus the hybrid project.

Regardless of the high rents that tenants will pay in these buildings, their lack of investment in the building may indeed lower the perception of value for prospective purchasers. Something that absolutely must be considered when shopping for a condo these days.

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Slow Sales at 455 Central Park West are No Shocker

Much has been written about 455 Central Park West, which is a developer's bold attempt to make a top-shelf condo building out of a cancer hospital next to the projects on 105th street.

(A big article in New York, for instance. One nice tidbit: that article says the towers of the building were made round so that germs couldn't hide in the corners.)

Today there's news that sales of the premium condominiums have been slow.

I don't think this surprises anyone.

It's a shame for the developer that Columbia University--which bought a lot of units in the building--didn't spring for the whole thing. There is no question that the project is beautifully designed and features stunning views and amenities. But even with that, the asking prices have been insane,  considering the building sits directly in front of the Lincoln housing projects and is quite a distance from transportation and a lot of the amenities of the Upper West Side.

Even on the building's official website, the guide to the neighborhood curiously includes no attractions at all--other than a middle school--within two blocks of the development, but sees fit to highlight such attractions at the Jewish Theological Seminary on 122nd or Zabar's way down on 80th street. In Manhattan, five blocks is a long way to walk for a coffee shop. But on this map, Zanny's at 108th and Columbus is the closest one that gets any attention--all of which inadvertently confirms the notion that this development is on something of an island.

Perhaps the site is jinxed. It was once a sanitarium, and many have failed trying to build there--many were stalled in planning for various reasons. The current developer is a pioneer, but like those who settled in the wild west, he is likely to experience plenty of obstacles before convincing many others to "settle" there--at least at those prices.

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Mr. Trump vs. Prince Bandar

Donald Trump's mansion in Palm Beach, Florida, on sale for $125 million, was expected to set the mark for the most expensive home in the US, but Saudi Arabia's Prince Bandar has upped the ante.

Christie's Great Estates and Josh Saslove are now listing the most expensive house in the United States ($135 Million).

Saudi Prince Bandar's Hala Ranch includes 15-bedrooms, 16-bathrooms, a racquetball court, and an indoor pool. According to The Rocky Mountain News, the 70,071 square foot house is assessed at $55,953,500.

Which one would you buy? The Trump manse? or Bandar's Rocky Mountain ranch?

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Herman Badillo's Plan

Much has been made of former Congressman and Bronx Borough President Herman Badillo's plans to build several bold mixed-use developments across the city. Gothamist and the New York Post are among those who have discussed his latest plans for Williamsburgh Square.

Angela Montefinise writes
in the Post:

The proposed 675,000- square-foot Williamsburgh Square would feature four towers of 38, 36, 20 and 12 stories. There would be 360 underground parking spaces, a charter school, a "semi-public" park, a day-care center, two floors of retail, and both market-rate and affordable housing.
Many are upset at these plans, but I think their ire is mislpaced. Here is a man with incredible vision who was instrumental in revitalizing the Bronx in the 70's and whose credentials and prior commitments to the city speak for themselves. All neighborhoods seem to fight change with community boards spending a lot of money fighting new development projects sighting "greedy" developers' lack of interest in their community.

As far as I can tell, Badillo wants to provide real services to the community in the form of schools, supermarkets, day care, community centers and most importantly AFFORDABLE HOUSING, yet he is being met with the same resistance.

What exactly are people looking for? I remain puzzled.

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