Though this month, my mind has been more on trends and less on deal-by-deal activity.
Located near the World Trade Center, it sits at the crossroads of the Financial District and Tribeca.
While I don’t really consider it to be Tribeca, exactly, walking the actual building was a terrific experience.
This promotional video of the project got me thinking.
In New York, neighborhoods constantly are being created, tweaked, and yes, invented.
Think about Dumbo in Brooklyn, or tertiary locations such as West Chelsea becoming epicenters within a decade.
West End Avenue between 57th and 63rd Streets will shift the entire Upper West Side.
Lincoln Center West will be the real center of things there.
Hudson Yards is on the cusp of becoming a neighborhood as well.
No man’s land becomes coveted, overlooked areas become interesting.
Longtime landlord doing an amazing market-rate rental on West 57th
So – is there such a thing as a bad neighborhood?
Here are a few things/trends I’m noticing about our market right now:
- First, the gap between condo and coop pricing is widening again.
We saw this gap shrink after the recession in 2008-2009, but right now cooperatives feel like a relative bargain.
What do I mean?
There has been pushback on coop pricing lately, and I would suspect that for the next few months, we’ll see opportunities for coops.
But for condos, the pushback hasn’t been happening.
New price levels continue to be broken for good inventory, and new development remains quite popular for anything below the super high end.
I expect absorption rates to go up (that is, sales pace slowing) over the new few months, until pricing on coops recalibrates.
This report gives good info on what’s been happening up through the end of October.
- Someone asked me last week, “Is there any neighborhood where I can buy a condo for under $2000/square foot and get something good?”
I told them that it’s getting harder, but there are lots of areas that feel like they still hold value.
North of 96th Street on the West Side (but condo pricing has gone up surprisingly quickly of late), Murray Hill, the East 50’s, the Financial District.
- Commercial buildings are going to be taller, more modern, and firms will occupy less space, while co-working spaces
will continue to grow and incubate emerging businesses.
Rezoning of Midtown East will accelerate this development of new commercial towers there.
What happens as as result there and elsewhere?
Residential will continue to take over older commercial buildings as a highest and best use.
And, new residential enclaves are definitely emerging, Midtown East from 48-63rd being the most obvious to me.
There will be expansion of residential north of 135th Street to Washington Heights on the West Side, and we’ll see medical commercial growing into West Harlem, and co-working there, as well.
125th Street will see a dramatic shift over the next 5-10 years as a reaction to Columbia’s expansion, and the gentrification all around Harlem.
- Longtime Manhattan landowners will be the only builders of rentals we’ll see for a long time.
This will be all the new construction.
We will
continue to see these rental buildings pop up not only in lesser locations, but in prime neighborhoods, too (see this for what’s happening at 80th and Broadway, for instance).
Underutilized low rise commercial along Broadway or along avenues in the 40’s will see great rental buildings popping up.
Until we see any price leveling, renters will be in abundant supply and there will never be enough Manhattan rental supply.
And condos will be built EVERYWHERE else.
Supertall in Downtown Brooklyn!
- Brooklyn, on the other hand, will see a major rental oversupply hitting the market in the coming 1-2 years.
I would expect a few of these to become condos, but not soon enough.
We’re seeing thousands of rental units happening in Downtown Brooklyn, but the really incredible stuff will the be supertall condominiums going up there.
Just you wait.
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Have a great month and Happy Thanksgiving!
– Scott