Tuesday, October 11, 2011

Rudin locks in $525M construction financing for St. Vincent's

The Rudin family's $800 million redevelopment of the St. Vincent's Hospital site is one step closer to a reality. According to the Wall Street Journal, Rudin Management obtained $525 million in construction financing and can begin construction once the government approval process, already underway, is complete. 

The relative ease with which the Rudin's cleared the financing obstacle given today's tight lending environment was surprising, the Journal said. Bank of America, JPMorgan Chase, Bank of New York Mellon and M&T Bank contributed to the loan. 

But that last hurdle, government approval, could be the highest. 

The City Council may respond to pressure from Village residents and demand more concessions from the developers for the right to proceed with building. The Rudin family has already reduced the height of the development from 266 feet down to 203, agreed to renovate existing structures rather than replace them, provided a 15,000-square-foot park in the plans and teamed with North Shore-LIJ to build a 24-hour medical emergency department for the community. 

"We think that we have responded in a very positive way to all the concerns that have been expressed to us before," Rudin said. But the community still wants a smaller structure and affordable housing to be included in the plan. 

Rudin bought the site for $260 million, and crafted plans for 450 luxury units among four towers and a row of five townhouses, a playground, an elementary school and the medical facility

Source: The Real Deal

Tuesday, October 4, 2011

New York Exceptionalism

American debt has been downgraded. Has Manhattan real estate? A data-driven review.

We know the eurozone is barely hanging on, job reports are terrible, and nobody’s hiring. What we don’t know—because it typically takes a few months to become evident—is what all of this means for New York real estate. Is this a moment to buy? To sell? To panic-sell? In the weeks after the Standard & Poor’s downgrade, we asked a wide range of brokers, analysts, and executives to size things up. As you’d expect, they more or less fell into two camps—the ups and the downs—but their opinions tended to funnel down to one conclusion.

From the optimists: “In my opinion, we’ve already come off the bottom,” declares Barbara Corcoran, founder of the Corcoran Group and commentator for the T­oday show. She says newcomers are still pouring in, especially from China and Brazil, and that those wealthy buyers are indifferent to the downturn. She’s backed up by Victor Calanog, chief economist at the analytics firm Reis, who’s seeing “large transactions that seem to defy gravity.” (A penthouse just sold on First Avenue—that’s First, not Fifth—for $11.025 million.)

Noah Rosenblatt, proprietor of Urbandigs.com, relies on transaction volume as a strong indicator. He reports that the 30-day moving window of contracts signed is steady, at a little over 600. After Lehman Brothers folded, that number stayed below 500 for four months; at the peak, it topped 1,000. (Rosenblatt also monitors new listings and sees no flood of desperate sellers.)

Anecdotally, too, things have been okay. “We’re right on our numbers from last year, and last year was our second best in history” in transactions and dollar value, reports Halstead president Diane Ramirez. She agrees with Rosenblatt that listings inventory is encouraging. Right now, her internal data show about 7,200 properties available—about a seven-and-a-half-month supply. In bubble times, that figure was about three months, and in the worst days of 2008 and 2009, it was more like a year’s worth—two years’, for high-end properties. New developments aren’t crowding the market, because financing has dried up, so there’s little worry of a glut.
Contracts aren’t being canceled much, either. According to StreetEasy.com (supplier of the three bar charts above), 44 went bust in Manhattan last month compared with 51 in August 2010; the number of new contracts is essentially the same, with 660 this August versus 651 in the same period last year. Foreclosures, too, are on the wane, per PropertyShark.comdata (see graph).

Finally, we checked on the banks. Jumbo lenders—those who offer the big loans needed to buy in New York—are returning to the marketplace. Several institutions that made themselves scarce two years ago have returned, says Melissa Cohn, president of the Manhattan Mortgage Company. Others are banks who’ve “never done jumbos and are doing so now.”

But buyers may have their chance too: Just because New York real estate has done well so far doesn’t mean it will hold on. Job growth has been weak, and there are a lot of rumors about Wall Street layoffs. “Long-term volatility will paralyze a lot of buyers,” predicts StreetEasy research director Sofia Song. You can see that in the popularity of rentals: StreetEasy’s traffic usually peaks in spring, says Song, but this year, for the first time, August has been the busiest month, “and that was due to the rental traffic.” Vacancies are down to one percent; rents are rising. Rental buildings are selling well, says Robert Knakal of the commercial-real-estate firm Massey Knakal, and banks are eager to finance those deals. “That might spell some diffidence for the sales market,” says Calanog.Though the Fed is keeping rates down until 2013, analyst and appraiser Jonathan Miller thinks “the benefit has played out.” If you were waiting for a low rate, you got one. Getting a mortgage is no easier, adds Calanog: “Banks are still reticent.” And though more banks are writing jumbo mortgages, the rules will change in October: Jumbos will start at $625,500 instead of the current $729,750. That means buyers who want to stay under the jumbo cap (where interest rates are lower) will have to come up with the difference—always a challenge.
The consensus: Nearly everyone had the same conclusion: This is no crash. Rosenblatt says, “There’s a certain pause in the market that wasn’t there in May … but it’s nothing like post-Lehman. It’s just not.” Calanog predicts a “soft crawl upward,” with prices inching from $1,000 to $1,050 per square foot: “Because everyone is tempering their expectations, I suspect people will be surprised at how okay things will be.”

By By S.Jhoanna Robledo - The New York Times

Tuesday, September 20, 2011

July Manhattan Market Update:

 Lets get right to the freshest data available on the pace of new supply and the pace of newly signed contracts to see how the Manhattan market performed in July compared to both the prior month and the year ago period.

First, lets look at the pace of new supply coming to market on a monthly basis:


Conclusions: This is now the 10th consecutive year-over-year monthly decline of new supply to hit the market. If it feels like there is not that much new supply out there, your right. The data shows that the current pace of fresh, new listings hitting the Active marketplace right now is way down from both last month, and the same period last year. Inventory remains tight which means there is even less high quality product out there that is priced to sell quickly. This is adding to downward pressure on inventory levels right now.

Second, lets look at the pace of new contracts signed on a monthly basis:


Conclusions: We saw a big drop in new deals signed in July, to 713. This is down from 988 last month and mostly in line with July 2010's total of 760. Seasonality is likely the main reason for this after seeing 4 consecutive months of between 950 - 1,150 new deals signed. Its not easy to sustain 950+ new deals signed, especially with less product coming to market each month; as evidence by the first chart above. We should expect a tick down in new demand as we get into July & August and we are seeing that right now. It happens to be occurring as equity markets get hit with fresh fears of a possible economic slowdown - so I can understand why some out there think this might be a sign of a new slowdown to hit the Manhattan market. It's just too soon to tell considering the strong levels we are coming from the past 4 months.

Finally, here is a 1QTR view of Manhattan Pending Sales vs Active Inventory:


Conclusions: Both pending sales and active inventory levels are down around 9% over the past 3 months. The only metric seeing a relative uptick from a few months ago is Off-Market trends; which makes sense given this time of year. Usually as we enter the slower summer months, the pace of listings being removed from the active marketplace rises; and off-market trends are showing that right now. So, active inventory is being pressured to the downside by two main elements:

1) less and less new product coming onto the active marketplace,
2) rising off-market trends as sellers take active listings off the marketplace

A declining pending sales should be an upward pressure to supply, but the above noted two elements clearly are overpowering the downtick in new demand the market is seeing right now. Active inventory is also exposed to frequency with which brokers update their listings, as the UrbanDigs platform implemented a rule that only counts a listing as 'ACTIVE' if the exclusive listing agent regularly maintains the 'actv' status internally; if the agent doesn't update in 30 days, the listing is dropped out of our count of active inventory. So, we could also be seeing a rising # of listings going stale that could also be pressuring supply to the downside. 

Saturday, August 20, 2011

In New York, a Sprinkling of Higher Prices

Great article about how different and ahead of rest of the Country the Real Estate market in New York City is. Prices going up... Multiple offers... Yap! It is real here!!

In New York, a Sprinkling of Higher Prices

In New York, a Sprinkling of Higher Prices

Hiroko Masuike/The New York Times
BEFORE the financial markets’ most recent drubbing, New York City’s real estate prices had been flat for the better part of a year. But over the spring and summer, prices in certain pockets of property sprinkled around Manhattan and Brooklyn had rebounded to or beyond pre-recession levels.

Read the article: In New York, a Sprinkling of Higher Prices

Monday, August 15, 2011

Brazil, Fourth Largest Holder Of U.S. Treasuries, Will Maintain Foreign Reserves In Dollar

Brazil has no plans to sell U.S. Treasuries or change its foreign currency reserves holdings as a result of Standard & Poor’s downgraded U.S.’s credit rating,according to Bloomberg.
As of August 4th, Brazil holds $348 billion in foreign currency reserves, 35% more than in the same period in 2010. About 60% of this total, or $211 billion, is held in U.S. treasuries. Hence, Brazil is the US’s fourth largest creditor, only behind China, Japan, and the U.K.
Since Brazil is such a large creditor, it is in Brazil’s interest to enforce the idea that even though U.S. treasuries are no longer “risk free”, they are and will still be perceived as safe havens. Therefore, Brazil will try to send the following message to the market: Standard & Poor’s downgrade of the US.’s credit rating is only an additional dramatic element but it doesn’t really have a large influence in the current global crisis.
Guido Mantega is Brazil’s finance minister. Following the US's credit rating downgrade, I am expecting polemic declarations from the author of the term "currency war." (Image by Reuters)
On the other hand, some believe that the downgrade marks the symbolic act of the beginning of a new cycle of further uncertainty without the existence of totally “risk free” assets- those that remain classified as such do not provide sufficient liquidity to attend everyone’s needs of safe havens. According to a July report, S&P gives 18 independent entities its highest ranking; examples are Hong Kong, Australia, and the Isle of Man.
Scholarships, jobs and industrial production fell in virtually all countries, a scenario that shows no signs of change in the coming months. Nonetheless, Brazil, according to The Economist, was one of the latest countries to get in the global crisis of 2008 and one of the quickest to bounce back, remains confident it has strong defenses against external crisis. Brazil was upgraded another notch on the investment grade scale this year, disparity between rich and poor is shrinking, and it holds reserves of $ 348 billion.  These factors represent strong defenses against external shocks, at least theoretically. For practical reality, however, Brazil is very exposed. In fact, last Friday Brazil’s stock index plummet, registering the worst performance among the world’s 20 largest equity markets.
Source: Forbes

Tuesday, August 9, 2011

Building permits see increase, construction resumes in city

Though still below 2008 levels, new construction permits in New York City are on the rise, an indication that developments may be back on track, the Wall Street Journal reported. 

Permits for new buildings, alterations and demolition rose by approximately 12 percent during the first half of 2011 compared with the same period last year, according to new data from the Department of Buildings. Demolitions -- normally a firm indicator of brand new projects -- jumped by 14 percent. 

"More construction permits mean more people are going to work," Buildings Commissioner Robert LiMandri said. 

Private developers are still experiencing difficulty when it comes to financing big projects, said Richard Anderson, president of the New York Building Congress, as lenders tighten their restrictions. 

The increase in construction permits is "certainly a positive sign," he said, but the improvement has been undercut by the number of stalled sites in the city[WSJ]

Monday, August 8, 2011

New development condo sales increase in Manhattan, Brooklyn

New development condominium sales are up year-over-year in both Manhattan and Brooklyn for the second quarter of 2011, according to a second-quarter new development report released today by residential real estate firm MNS. 

In Manhattan, condo sales prices were up 18 percent on an average compared to the second quarter of 2010, the report says.  

Compared with the first quarter of 2011, the average Manhattan new development price was virtually flat. Even though some condo sales are seeing strong sales, several real estate professionals told The Real Deal earlier this spring that many challenges lie ahead. 

The Flatiron District saw the most positive change in the second quarter, with the closings at 15 Union Square West  and the $13 million sale of the Cupola apartment at 141 Fifth Avenue forcing the neighborhood average up over 50 percent from the first quarter of 2011. 

On the Lower East Side, the Karl Fischer-designed seven-unit 263 Bowery condominium brought the neighborhood quarterly average price per square foot over the $1,000 benchmark. The neighborhood had a 19 percent increase from the first three months of the year on a price per square foot basis and also had the highest concentration of two-bedroom units sold as compared to other supply within the neighborhood with 78 percent. 

While Greenwich Village and Chelsea condo sales were at a high point between January and March, the slow pace of closings at the Devonshire and Loft 25 brought those neighborhood averages down about 50 percent between April and June.  

In May, several real estate professionals also identified other trouble spots. "Our analysis shows about 5,500 unsold new development units in Manhattan, including all of the "shadow" inventory that's not yet listed. 

Rae Gilson, director of sales at Classic Marketing, said at the time that the "disparity between obtaining a mortgage for a resale and a new development sale is the largest it's been in my 25 years of following the market." 

In Brooklyn, the average new development sales price was up 10 percent year-over-year and 7 percent quarter-over-quarter. 

Bushwick was up from zero new development participation in the second quarter with the addition of six closings from the Knick, and sales averaging $460 per square foot. 

Sales in Prospect Heights almost doubled, primarily due to Richard Meier's 114-unit On Prospect Park, the report says. The $3.3 million penthouse sale was the highest new development sale in the borough in the second quarter. 

Boerum-Cobble Hill saw an over 20 percent jump in sales prices over the first quarter of the year. In the Cobble Hill historic district, closings at the converted church, called Landmark at Strong Place, began, averaging over $1.5 million. In Williamsburg, closings at the Edge made up a quarter of all second-quarter of 2011 transactions in Williamsburg and boosted the neighborhood average to $710 per foot. 

Greenpoint had both a quarterly and an annual decline sales price of about 5 percent. In addition, the number of closings dropped by 50. Even without the final sale of the penthouses at 50 Bayard the neighborhood remains flat.

Source: The Real Deal by By Miranda Neubauer

Sunday, August 7, 2011

Despite improved quarterly figures, home prices still struggle to recover

Though national home prices posted 4.1 percent quarter-over-quarter gains on improved summer numbers, year-over-year declines reveal that markets are still trying to find their footing, according to July 2011 Home Data Index from Clear Capital, released today. 

The gains of 4.1 percent, the second consecutive month of positive price gains, represent an improvement over June's 0.9 percent rolling quarter uptick but they have not been enough to alter the broader housing picture, Alex Villacorta, director of research and analytics at Clear Capital, said. 

"Building off last month's minimal quarterly gains," he said, "prices continue to correct from winter's extended declines. Although this is encouraging, many markets are still near, or at record lows as [real estate-owned] saturation remains a significant proportion of all sales activity." 

Northeast markets bucked the trend of year-over-year price declines, the report shows, with the broader New York City area posting positive growth year-over-year. Orlando, Fla. and New York, N.Y. both made it onto a list of top performing U.S. markets, ranking 14th and 15th respectively, both displaying quarterly growth of 6.7 percent. 

All four U.S. regions are still experiencing yearly declines, the report shows. The Midwest was hit the hardest, experiencing a decline in price of 13.1 percent. 

The national REO saturation rate, now at 28 percent, is improving, down 5.7 percent from last quarter. 

--The Real Deal by Katherine Clarke

Friday, August 5, 2011

Onsite: Early Look at the 9/11 Memorial and Museum

With the 10 year anniversary of September 11, 2011, less than six weeks away, we took a trip downtown to see how things are coming together at the National September 11 Memorial & Museum. Entering the WTC site from Greenwich and Liberty Streets, below the rising tower of 4 WTC where glass is going in, the scope of the rebuilding is ever apparent. From beyond the fence and along downtown sidewalks the WTC site still seems somewhat remote, but once inside the construction zone the sheer amount of glass, steel and stone is awe-inspiring. Everywhere the eye roams workers are busy lifting massive beams and raising curtain wall panels into place. The changes over the past 3 years are profound, ascan be seen in our WTC Construction Watch Special from September 2008.
Masons are laying stone pavers across the 8-acre Memorial Plaza, now planted with swamp oak trees rising 30 feet into the air, their leaves and branches offering cover from the hot summer sun. Waterfalls in the South Poolbuilt at "a scale that is unmatched" and moving 24,000 gallons of water per minute, cascade over 30-foot walls of granite, flowing down to a center pool where the water disappears below. At bottom an access door is tucked into the stone and shows massive hardware reminiscent of a submarine. We made our way along the parapet of the South Pool where names of those lost will be displayed in bronze. We passed through the workers and trees towards the center of the Memorial Plaza, then slipped inside theMemorial Pavilion, now nearly glassed and clad, and made our way into the Museum.
The Pavilion, set to open in 2012 and designed by Snohetta so that it "provides a sense of intimacy in an otherwise capacious urban space," gives a whole other perspective, both historically and architecturally. Once inside the gridded framework, a wide set of stairs leads up to rooms overlooking the Memorial, the arches of the Santiago Calatrava transportation hub and tower sites nearby. Descending the stairs, two steel tridents from the original twin towers stand tall. Through the gridded glass the new 1 World Trade Center tower is seen rising skyward. A ramp takes us through the interior of the museum space, between the structure of the two pools marking the original tower foundations. The exposed slurry wall, the edge of the WTC bathtub holding back the waters of the Hudson River, can be seen from an overlook where the ribbon-like pathway leads down to the Museum's main level at bedrock. There artifacts will be stark reminders of that morning ten years ago, including FDNY vehicles that were recently lowered into place, now sitting covered and silent.
Returning to the Memorial plaza above, two concrete vent structures bordering the western perimeter have been clad in steel mesh, rendering the buildings diaphanous. The Memorial Glade at the southwest corner of the site, near whereLiberty and West Streets meet, is now encircled by trees, an open space for gatherings and the perfect spot for taking in the towers rising just beyond. 4 WTC to the east is up above the 35th floor, eventually climbing to nearly 975 feet and 72 stories. 1 WTC to the north has now reached nearly 900 feet on the way to its full height of 1776 feet. From points all over NYC, this tapering tower is filling the hole we've seen in our sky for the past decade, a new monument to our city of commerce.
A full batch of shots from our 9/11 Memorial and Museum tour can be found in ourFlickr Gallery
Source: The Real Deal by Pete Davies