Brooklyn's Growing Global "Brand" is Boosting the Borough's Real Estate Values
1) Brooklyn is no longer a second-class borough to Manhattan and is now a destination in its own right with international appeal.
2) The desirability of the borough, combined with the power of its image and brand, have had a huge impact on home prices over the past few years.
3) As of the 2Q2016, the average price per square foot has increased 23.1% over the same period last year and 9.1% over the previous quarter (source: Douglas Elliman).
4) Demand has stretched far beyond the most prime neighborhoods as buyers have discovered Bed-Stuy, Crown Heights, Prospect Lefferts Gardens, Windsor Terrace and more.
5) On the retail front, Bedford Avenue is now the fifth priciest retail strip in the U.S. (source-Brownstoner.com).
6) Current and upcoming retail tenants include Apple, Whole Foods, Trader Joe's, Adidas, Amazon, Century 21, Urban Outfitters, JCrew, Madwell, American Apparel, Target, LuLulemon, and Warby Parker; boutique fitness chains-Soul Cycle, Fly Wheel Sports, Orange Theory Fitness and Equinox.
7) Williamsburg alone represents the surge of Brooklyn's growth; over the past five years, the average price/sf has appreciated by almost 50%. Retail rents have increased by 30% in the past two years.
8) New development is bringing in a Manhattan quality aesthetic with upscale condo projects such as the Boerum, 51 Jay Street, 465 Pacific, the Hendrik, 280 St. Marks Ave., the Baltic and Pacific Park with sale prices at $1,300-$1,500/sf.
9) What makes Brooklyn so desirable? What's driving the market? 1) the city/suburb balance; 2) community; 3) aesthetic and 4) millennials.
Downtown Brooklyn's Second Act
1) MaryAnne Gilmartin (President/CEO, Forest City Ratner), Seth Pinsky (EVP/Fund Manager-Metro Emerging Markets at RXR Realty), Timothy King (Founder/Managing Partner, CPEX Real Estate), Roger Fortune (Vice President, Stahl Organization), John Horowitz (Vice President/Regional Manager, Marcus & Millichap) and Albert Laboz (Principal, United American Land) each provide their perspective on the evolution and future of Downtown Brooklyn.
Everyone Wants to Live, Visit, Shop and Stay in Brooklyn
1) Mike Stoler (Managing Director, Madison Realty Capital) moderates a panel, including Brian Leary (Co-Founder & Managing Partner, CPEX), Chris Conlon (EVP, Acadia Realty Trust), Michael Stern (Principal & Managing Member, JDS Development Group), and Phil Watkins (Principal, Megalith Capital) to discuss the buzz around the Brooklyn real estate market; investment potential for residential, office and retail as well as emerging markets for future development.
Yorkville Bets on the Second Avenue Subway
1) The Yorkville neighborhood on Manhattan's Upper East Side is experiencing a major renaissance following the near completion of the Second Avenue subway (the Q Line extension).
2) New condo developments and conversions including Carnegie Park, 389 East 89th Street, Citizen 360, The Easton, The Kent, 180 East 88th Street, and 20 East End Avenue are transforming the neighborhood adding a new inventory of luxury residential product to the area.
3) Sales prices at The Kent are starting at approximately $2500/sf ; sales prices at 389 East 89th Street are averaging about $1600/sf. Rentals at the Easton are averaging about $90/sf per annum.
4) In 2015, Yorkville's median sales price was $1,004,283 vs. $928,000 (an 8.2% increase) in the prior year (prior decade-$883,000); average price per square foot-$1,350 vs. $1,083 (a 24.7% increase) in the prior year (prior decade-$954); source: Douglas Elliman (Neighborhood boundaries: North-East 96th Street; South-East 86th Street; East-York Avenue; and West-Lexington Avenue).
5) The neighborhood is now viewed as a value play as Downtown has become very pricey.
While Supplies Last: Market for Manhattan's "Cheapest" Homes is Brisk
1) There were just 2,674 Manhattan properties listed for sale in April at prices lower than $1.05 million, a 25.9% decline from the prior year.
2) The reduced supply of units has pushed up prices in this segment by 3.9% since last year. Prices for luxury units over the same period remained flat, according to Street Easy's repeat sales price index.
3) Per Alan Lightfeldt (Street Easy Data Scientist), "The market remains flooded with luxury properties and short on moderately lower-priced homes that many New Yorkers are looking for".
4) The market for lower-priced units is growing briskly in Brooklyn as well. Inventory for units in the borough selling below $1.05 million dropped 33.6% year-over-year in April, with the median price climbing 7.3%.
By the End of 2017, Manhattan will have 5 Years of Excess Inventory: Analysis (More than 14,000 units to come online between 2015-2017)
1) Approximately 14,500 units are expected to hit the market between 2015-2017, according to a new analysis by Miller Samuel, Inc.
2) The analysis looks at all new units that have launched or are set to launch in Manhattan over a three-year period, across all price points. It assumes the same rate of sales that the new development market saw during the second half of 2015, which equates to just under 1,850 closed sales per year.
3) Per Jonathan Miller, CEO of Miller Samuels, "The takeaway is that we have anywhere from four to six years of excess supply, assuming the rate of sales holds steady".
4) In 2015, roughly 5,500 new condos came online, with another 6,000 and 3,000 projected to hit the market in 2016 and 2017, respectively.
5) Per Donna Olshan (Olshan Realty), "Units will sell faster or slower depending on the neighborhood, price point and variety of other factors".
6) While demand for ultra-luxury product has slowed, inventory of new development product remains low in the $1 million-$3 million price range.
Manhattan Homebuyers Get More Choices As Resale Supply Jumps
1) There were 5,362 previously owned condominiums and co-ops on the market at the end of June, a 25% increase from a year earlier, according to the Appraisal firm, Miller Samuel, Inc. and brokerage Douglas Elliman Real Estate.
2) Resale transactions totaled 2,231 in the 2Q2016, down 9.4% from the prior year. The median price of those deals was $945,000, unchanged from 2Q2015.
3) Of all of the previously owned apartments on the market at the end of June, 83% would be considered "non-luxury", defined as anything priced below $4.3 million (per Miller Samuel, Inc.).
4) 41% of all sales were at or above the seller's asking price, compared with 51% in the prior year.
5) Aspirational pricing is no longer vogue; sellers are becoming more realistic in terms of pricing their apartments to sell compared to 2014-2015.
Manhattan Apartment Sales Sputter (Second-quarter figures show cooling extends beyond the luxury market; brokers cite high prices)
1) Sales in the 2Q2016 were down more than 10% compared to the 2Q2015, the slowest pace since the recession year of 2009.
2) There were 2,281 sales filed with the city in the 2Q2016, the second lowest figure in the past decade, but well above 1,482 sales in the 2Q2009, when the market hit bottom as a result of the financial crisis.
3) The median price of a Manhattan apartment edged up slightly to $1.12 million compared with the first quarter and up 13.7% from the 2Q2015. The average price set a new high of $2.082 million in the second quarter.
4) Properties valued at more than $4 million that went into contract in the second quarter stayed on the market for an average of 277 days, 19% longer than 232 days a year ago. The average price cut from the original asking price to the last asking price was 7% in the second quarter, up from 4% a year ago (source: The Olshan Report).
World's Super Wealthy Population Declines 3%, Real Estate Still Key Holding
1) Based on the views of the world's leading private bankers and wealth advisors, Knight Frank's new report sheds light on the outlook for the world's ultra-high-net-worth-individuals (UHNWI's)-those with $30 million in assets or more. When asked about the split of their clients' investments, respondents revealed that residential real estate accounted for 25% of the average UHNWI's investable wealth, while commercial comprised 11%.
2) Wealth creation is expected to slow, which combined with an uncertain economic outlook around the world, will require new investment and wealth management strategies. However, judging by the sentiment of the survey's respondents, property will remain an important part of UHNWI's investment portfolios.
3) Prime residential property prices in Vancouver rose by 25% in 2015. Of the 100 markets analyzed, Vancouver's growth outpaced other markets by some margin. A lack of supply, coupled with foreign demand and a weaker Canadian dollar, explains Vancouver's outstanding performance (source: Knight Frank's Wealth Report 2016 and Knight Frank's Prime International Residential Index-PIRI).
Asia's Wealth Slides as Currencies Take Toll (Knight Frank says despite a hit to their wealth, Asia's rich still favor real estate in New York and London)
1) Per Knight Frank's Wealth Report, the ranks of every category of the rich in every region of the globe slipped at 2% or more in 2015 from a year earlier. In Asia, Malaysia's ultra-wealthy population fell 15%, Singapore's fell 8% and India's dropped 5%.
2) While more volatility can be expected over the long term, Knight Frank expects the ranks of the rich will continue to grow albeit a bit slow. There are 61% more ultra-rich individuals on the planet today than there were 10 years ago; 187,000 vs. 116,800, but the growth rate will slow to 41% by 2025. Ultra-rich have at least U.S. $30 million in investable assets other than their home.
3) Knight Frank tracks the wealthy because so many invest their riches in property. In fact, globally, 24% of the average ultra-rich's investable assets are in residential real estate, while in Asia, it represents 26% of ultra-wealthy assets.
4) For the super-wealthy, the cities that matter most, according to Knight Frank, are London and New York.