Matrix Blog

Luxury, Super, Ultra, Mega

Cluttering Luxury Housing Markets with Listings Made for TV – Manhattan Edition

June 28, 2014 | 4:55 pm | wsjlogo |

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[Source: WSJ]

A little over a week ago the WSJ’s Candace Taylor broke the story about 3 contiguous listings to be marketed together at the top of a 15-year old ground lease condo in Battery Park City for $118,500,000.  At 15,434 square feet, that works out to $7,678 per square foot.  CNBC’s Robert Frank provides more details in a video tour that was broadcast shortly after the story broke.

Normally I don’t bother to do the math on this sort of thing but after the Cityspire listing a while back, I thought I’d tweak my thinking a bit as the luxury market gets more than its fair share of confusing “milestones.”

Doing the Math
Here’s my listing price logic using content in the near viral news coverage of the record Battery Park City listing – I break down the 3 units:

$56,500,000 ($7,406/sqft) listing - 7,628 sqft 5-bed listed last year for 5 days and removed.

$11,700,000 ($3,330/sqft) purchase - 3,513 3-bed in April 2014.

$19,000,000 ($4,425/sqft) listing – 4,293 sqft 4-bed $23M January listing dropped to $19M, then removed.

$87,200,000 is the aggregate total for the 3 units that total 15,434 square feet ($5,640/sqft). The current list price of $118,500,000 represents a $31,300,000 premium for the combination of all 3 units before we might assume the millions in renovations to combine if you believe that the $87,200,000 total is what aggregate of the individual properties are worth.

Given the $3,330 ppsf recent sales price of the 3-bed and the unable to be sold for $4,293 ppsf after 6 months on market 4-bed and the not-market tested 5 day listing period 5-bed at $7,406, I can’t figure out how the listing agent gets to $7,678 ppsf as an asking price for all 3 together before the cost of renovation to combine? Perhaps the seller set the price.

The listing broker tells us that the pricing “is justified by the square footage“, as well as the views and building’s amenities.”

Got it.

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Manhattan New Development: Small Share, But Rising Sharply

June 20, 2014 | 11:58 am | delogo | Charts |

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[Click to expand]

I took a look at the change in new development inventory versus re-sale inventory both by year-over-year change (quite dramatic) and number of units.  Both categories bottomed out at the end of 2013.

These trends are based on Manhattan co-ops and condos which represent more than 98% of the “non-rental” market.  Much of the new inventory coming online is located within the “luxury” market which is the top 10% based on price.

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Tall and Thin Skyscraper Renderings: the New Bricks and Mortar

June 10, 2014 | 10:05 am |

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[click to expand]

The New York Post ran an article on Sunday “Chinese buyers snapping up NYC skyscrapers” that was chock full of Manhattan skyscraper renderings – I found myself clicking through all of them. While I already am familiar with each of these residential and commercial towers, I never get tired of looking at them.

While I’m no architectural critic and some of these designs are controversial, even cited as dangerous, I must admit I really like the genre. I was fatigued from enduring the boring, utilitarian and ultimately generic designs throughout the 1980s and 1990s.  We got a sampling of this new genre in the last new development boom a decade ago, but with the shift towards the higher end of the market, there seems to be more money available for creating iconic designs.

As far as the China hyperbole cited in the piece, it is an assumption based almost exclusively on anecdote as well as 2013 research by National Association of Realtors (cited as “US National Real Estate Association” but had no luck finding it with Google so I assumed they meant NAR). And how do we rely on an NAR survey of it’s members when so few Manhattan real estate agents are members of that trade group?

I’ve inserted all the renderings below: I’m not going to  bother labeling them since that’s not the point – you can get that detail in NY Post piece.  These are placed here for your oogling pleasure.

HudsonYards from West Chelsea (c) Related Cos..jpg

ARTS ARCHITECTURE

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99 Church Street, Silverstein Properties, New York

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World Trade Center

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[London Calling] ‘Mike Mulligan and his Steam Shovel’ New Development Edition

June 9, 2014 | 10:41 am |

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I read Mike Mulligan and his Steam Shovel nearly every night to my 4 sons when they were younger (probably an unnecessary qualifier). It was also my favorite children’s book as a kid.

As it turns out, this story preempted current London construction methodology (h/t boingboing.net).

So, many of the squares of the capital’s super-prime real estate, from Belgravia and Chelsea to Mayfair and Notting Hill, have been reconfigured house by house. Given that London’s strict planning rules restrict building upwards, digging downwards has been the solution for owners who want to expand their property’s square-footage.

mikemulligandig

This trend reflects the appraisal concept of highest and best use for the equipment despite the inherent wastefulness. Does it make sense to leave the equipment in the basement? With all the concern in the US about below grade empty oil tanks and the environment, I wonder how this practice is allowed, cost effectiveness aside.

Given the exceptional profits of London property development, why bother with the expense and hassle of retrieving a used digger – worth only £5,000 or £6,000 – from the back of a house that would soon be sold for several million? The time and money expended on rescuing a digger were better spent moving on to the next big deal.

You really need to read the book.

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The Woolworth Penthouse Explained

May 29, 2014 | 5:35 pm |

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[Source: NY Post, click to expand]

I’ve had this page bookmarked all week and found myself referring to it periodically for the above sort-of infographic. Lois Weiss lays it all out in her article, clearly titled: This is what a penthouse on top of the Woolworth Building could look like

At one point in time, the Woolworth Building was the tallest building in the world, so this apartment would have been the highest condo in the world (ok, ok, condos weren’t around back then).

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Yahoo! Finance: Talking about “Why” we are seeing more $100m+ home sales

May 23, 2014 | 1:02 pm | Videos |

I had a great conversation with Lauren Lyster on Yahoo! Finance, Daily Ticker on the super high end housing market. Incidentally, if she switched from TV Host/Reporter to real estate, she’d have the best name in the real estate brokerage business.

Here’s a recent list of high priced sales.

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Contrary To Popular Belief, The World Has Manhattan All Wrong

May 18, 2014 | 11:00 am |

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[Source: Time-Life]

Today, when I speak to friends and relatives in other parts of country, I find a consistency in the image Manhattan currently conveys and it’s completely skewed. Here’s a little background.

1985 to 1995 [Wild West] I moved to Manhattan in 1985 and it was perceived by outsiders as a very dangerous place. “Manhattan-bashing” was in vogue. My relatives in the Midwest saw Manhattan as a place where tourists were getting mugged and stabbed in broad daylight (It didn’t help that my father was mugged twice in Midtown outside of our office in broad daylight on a weekday). They feared for our lives.

1996 to 2000 [Dot Com Boom] Manhattan now had “Silicon Alley” as well as NASDAQ – which was soaring. Midwesterners were caught up in the stock market frenzy as evidence by conversations of trades of Microsoft and Caterpillar stock over potato salad and cheeseburgers and bottles of Faygo.

2001 to 2008 [9/11 to Development Boom to Lehman] The 9/11 tragedy struck New Yorkers hard but the subsequent rise of NYC from the ashes into an eventual new development housing boom was simply amazing. The Manhattan housing boom peaked in 2008, two years after the US housing market had peaked. This period ended with the collapse of Lehman Brothers and access to credit worldwide immediately evaporated.

2009 to 2010 [Collapse and Rebound] There was a surprisingly rapid improvement in the regional economy in the year following Lehman’s collapse and housing rebounded faster than expected.

2011 to 2014 [Playground of Wealthy Foreigners] Manhattan and Brooklyn become a favorite safe haven for international investors to park their money in real estate.

But now we stuck with a Manhattan housing market exaggerated stereotype (represents 90% of media coverage) in 2014:

  • Most sales are all-cash transactions.
  • Most purchasers are made by foreign buyers.
  • Most sales are millions of dollars (i.e. $5M and up).

When in fact, the 2014 Manhattan housing market reality is:

  • 45% of sales are all-cash transactions.
  • Foreign buyers are a small part of the market – i.e. 60% of all sales are co-ops and foreigners don’t purchase them.
  • More than half of all sales are below $1M (i.e. $5M+ is way up in the top 5%).

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[Three Cents Worth #265 NY] Gap Between Starter, Luxury Markets Grows

May 14, 2014 | 1:48 pm | curbed | Charts |

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Check out my 3CW column on @CurbedNY:

I thought I’d bring out another way to measure the market since we’re over-obsessed with “luxury.” The starter market needs more analysis since affordability is now a key topic of conversation across the U.S. right now. For the more than 20 years of releasing market reports, and in all the other markets we analyze, I have always defined “luxury” as the top 10 percent of sales in a given period. For the “starter” market, I inverted the analysis and defined it as the lowest 10 percent of all sales in a given period. I’ve parsed out the past three years of Manhattan apartment sales by quarter and measured the year-over-year change in average sales price for the luxury and starter markets. I selected “average” over “median” to suss out more volatility…

[My post title was originally "For Starters, Luxury Manhattan Is Further Away" but wasn't used - the crack Curbed staff didn't think it was catchy enough.]

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My latest Three Cents Worth column on Curbed: Gap Between Starter, Luxury Markets Grows [Curbed]

Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami
Three Cents Worth Archive Curbed Hamptons

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[Global Top 20] Highest Priced Closed Residential Sales List

May 14, 2014 | 11:15 am | bloomberglogo | Radio |

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[click to expand]

After all the hoopla over the recent $147M sale in The Hamptons, I compiled a list of the highest priced sales around the world I could think of. It’s not comprehensive since all the sales are in the US or UK, and there are a few out there that haven’t closed yet.

Here’s a very brief Marketplace Radio piece on this phenomenon.

Please share if you know of others!

A few takeaways:

  • The media coverage to actual sales ratio is staggering.
  • There can’t be more than a few dozen, a few hundred or perhaps a few thousand that would be considered buyers in this space at any one time.
  • These sales are a pop culture-like distraction from the growing issue of access to affordable housing in the US.

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The $100M+ US Home Sale Trifecta – Without NYC – 2014 Edition

May 6, 2014 | 5:23 pm | Milestones |

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With the $147M sale in East Hampton, NY, it has been a busy couple of weeks for the .0000000000000000001% of the home buying public in the US. With the 3rd US home sale to close above $100M in 2014, it has left many thinking – why isn’t NYC in the fray?

After all, NYC arguably legitimized the US “trophy sale” frenzy a few years ago when Sandy Weill sold his penthouse at 15 Central Park West to a Russian oligarch for double what he paid for it. I’ve argued that this $88M sale was the launchpad for the new trophy market in NYC even though the transaction appears to be a divorce strategy. After that sale closed, the subsequent trifecta of trophy sales back then seems relatively affordable now.

As journalists tell me…three data points make a trend.

2014 US Sales over $100M
$147,000,000 Further Lane, East Hampton, NY
$120,000,000 Copper Beech Farm, Greenwich, CT
$102,000,000 The Fleur de Lys, Los Angles, CA

So is the era of US $100M+ sales a trend?

Yes, although it is probably more accurate to call it a “phenomenon” than a trend.

In NYC? Eventually.

To a few real estate brokers I engaged with on this topic, the idea that NYC would see the $100m threshold broken in 2014 seemed inevitable, only because of this 2014 US trifecta. It is the belief that we are experiencing a momentum swing over the $100m threshold because 3 sales by May, compared to a sale a year means a shift.

Meh. I view this phenomenon as “product-specific” and not “location-specific.” There is a randomness to the locations where these sales occur. However I do believe the probability is high that NYC will see such a sale in the not too distant future.

Then again, does it really matter? Do these $100M+ sales have anything to do with the remainder of the US housing market? No they don’t. But it’s fun to talk about.

The Manhattan $1M Average Sales Price Threshold broken in 2007
I remember when the Manhattan $1M average sales price threshold was broken in 2007, foreign media went gaga, struggling to find a deeper meaning to housing. There wasn’t. I always viewed it as simply a number on the spectrum.

Affordable Irony
Definitive proof that I have “hipster” tendencies – my never ending search for irony.

Yesterday’s announcement of the 3rd US $100m+ sale was one of record breaking irony: the announcement of NYC mayor’s 10-year plan to create 200k affordable housing units. The need for affordable housing – low and middle income – has always challenged NYC. The mayor’s affordable housing plan “moon shot” as the New York Times has described it came out on the same day as the $147M East Hampton sale story broke. Irony.

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