current market trends - Stribling
CURRENT MARKET TRENDS NEW YORK CITY RESIDENTIAL REAL ESTATE JANUARY 2017
1110 PARK AVENUE
January 2017 Presented by
Elizabeth Ann Stribling-Kivlan President
Elizabeth F. Stribling
2016 was a turbulent year with dramatic political and economic shifts across the globe. For New York City real estate, last year was (thankfully) less erratic, though the market did see ups and downs. As we look back on the past 12 months, several trends and developments stand out. Here are our top ten takeaways from 2016’s residential real estate market.
Chairman
1) More buyers are willing to look anywhere for a great apartment. As neighborhoods across the city continue to flourish, buyers are less focused on living in a certain zip code. The new development boom has given buyers more housing options in neighborhoods both established and up-and-coming. Buyers are even embracing “new” corners of long established locales. On the Lower East Side, sales activity is happening farther east and as far south as Cherry Street. And on the Upper East Side, buyers are migrating farther east thanks to the recent Second Avenue subway opening (more on this later).
46-30 CENTRAL BOULEVARD, LIC
2) The Financial District gets rebranded. The southern tip of Manhattan has seen tremendous growth over the past few years, due to an influx of young people followed by a handful of prominent residential developments like 111 Murray, 50 West Street and 30 Park Place which also includes a Four Seasons Hotel. Some might be surprised to learn that the downtown neighborhood’s demographics are not that different from Williamsburg or the East Village: the area’s median age is 32. The business sector has also evolved with tech and media companies setting up shop alongside financial firms. All this change has prompted a rebrand: shedding its reputation as a business-only district, the area south of Chambers Street is now being called Lower Manhattan. 75 WALL STREET
3) There’s a growing gap between co-op board and buyer expectations. Brokers witnessed an increase in board rejections this past year, signaling that co-op board expectations are out of sync with buyer qualifications. With so many of today’s most affluent buyers choosing condos, high-end co-op sales have taken a hit. As the Wall Street Journal reported, overall co-op sales for 2016 were down 12% from the previous year. Although the number of exceptionally qualified purchasers for co-ops has decreased, many co-op boards still maintain rigorous application standards and may even reject buyers who do not meet certain, possibly unrealistic, expectations.
JANUARY 2017 | 3
4) Buyer Preference for Open Layouts and Modern Décor Continues. One factor that helps explain the continued popularity of new condo developments is buyer preference for open floor plans and contemporary details. Buyers want up-to-the-minute style and new condo developments can easily incorporate the latest tech features, finishes and amenities. With minimalism the preferred aesthetic, details typically found in prewar co-ops like cornice moldings and parquet floors are no longer the draw they once were for buyers. We’ve also noticed that, while open floor plans have been a condo staple for a few years now, new developments are beginning to incorporate “flexible” space that can be opened up or closed off easily. 129 LAFAYETTE STREET
5) Staging is important. Brokers report that apartment staging often helps a property sell faster and for a higher price. Yet, whether the interior is a traditional pre-war co-op or a modern condo, a stager will always choose contemporary furniture and minimalistic decor. One reason staging has become increasingly important is that, as luxury developments capture more and more of the market share, buyers have grown accustomed to pristine interiors where every detail is carefully calculated. Staging often gives a property the final touch needed to attract a winning offer.
210 WEST 78TH STREET
6) The under $3 million market is strong. We saw several sky-high residential closings last year, like the penthouse at 432 Park Avenue that sold for $87.7 million, but it’s the under $3 million market that’s been the most active, particularly in the resale sector. Buyers tend to move quickly as inventory in this price range is tight – and some properties have even incited bidding wars. A well-priced townhouse co-op in the East 60s recently saw multiple bids and closed at asking price.
187 HICKS STREET
7) Interest rate hikes are affecting certain market segments. The Federal Reserve raised interest rates back in December 2015 and again just last month. The 2015 rate hike likely motivated buyers in the $2-million-and-under price range, where the highest percentage of financing occurs, to purchase a home before the rate rose even further. But even with the recent hikes, interest rates have been, and remain, historically low. People who would normally rent may have been lured to the buyer market for this reason, a factor that may help explain the slowdown in luxury rentals.
8) But the luxury rental market is soft. The use of incentives at luxury rental properties rose significantly last year. As of November 2016, approximately 25% of new Manhattan leases came with concessions like a free month’s rent compared to 13.5% in November 2015. Thanks to a number of new developments hitting the market last year, there’s no shortage of luxury rental inventory (some might say there’s an oversupply). With so many options available, renters are in a strong position to negotiate monthly rates and perks.
9) Motor courts are the latest must-have luxury amenity. Also called porte-cocheres, private courtyard entries are popping up at several ultra-luxury properties including midtown’s 252 East 57 where the minimal but dramatic court area also includes an automated parking system. Set apart from city sidewalks, these private, often gated, spaces offer unparalleled convenience and security. VIPs can discreetly enter a building free from paparazzi or a family with young children can load and unload a car without the safety concerns of doing so on a busy street corner. Judging from the popularity of porte-cocheres among elite buyers, we expect to see many more buildings include them in the near future. 252 EAST 57TH STREET
10) The long-awaited Second Avenue subway opens. Although the official opening took place on January 1, 2017, we’ve included this on our list because it’s a historic development for the city and a potential boon for the Upper East Side market. While much remains to be seen, property values in the Yorkville area are expected to increase and a flurry of new developments are in various stages of construction. Many Second Avenue business owners eagerly anticipate increased foot traffic. We’re excited to see how the far East Side continues to evolve in 2017.
219 EAST 72ND STREET
The Right Broker Makes All the Difference. Over the past 37 years, Stribling brokers have successfully represented the world’s most discerning clients, offering an exceptional level of service, integrity and sophistication coupled with an in-depth understanding of the ever-changing real estate market. Stribling professionals embrace a wide range of tastes and styles, ensuring that each client is matched with the broker who can best assist them in buying or selling their home.
UPTOWN 212 570 2440
STRIBLING.COM
CHELSEA 212 243 4000
TRIBECA 212 941 8420
.com/StriblingAssociates
BROOKLYN 718 208 1900
@StriblingNYC
EQUAL HOUSING OPPORTUNITY • ALL INFORMATION HEREIN IS SUBJECT TO CHANGE AND NO REPRESENTATION IS MADE AS TO ITS ACCURACY
@striblingnyc
A SAVILLS INTERNATIONAL ASSOCIATE
1110 PARK AVENUE
January 2017 Presented by
Elizabeth Ann Stribling-Kivlan President
Elizabeth F. Stribling
2016 was a turbulent year with dramatic political and economic shifts across the globe. For New York City real estate, last year was (thankfully) less erratic, though the market did see ups and downs. As we look back on the past 12 months, several trends and developments stand out. Here are our top ten takeaways from 2016’s residential real estate market.
Chairman
1) More buyers are willing to look anywhere for a great apartment. As neighborhoods across the city continue to flourish, buyers are less focused on living in a certain zip code. The new development boom has given buyers more housing options in neighborhoods both established and up-and-coming. Buyers are even embracing “new” corners of long established locales. On the Lower East Side, sales activity is happening farther east and as far south as Cherry Street. And on the Upper East Side, buyers are migrating farther east thanks to the recent Second Avenue subway opening (more on this later).
46-30 CENTRAL BOULEVARD, LIC
2) The Financial District gets rebranded. The southern tip of Manhattan has seen tremendous growth over the past few years, due to an influx of young people followed by a handful of prominent residential developments like 111 Murray, 50 West Street and 30 Park Place which also includes a Four Seasons Hotel. Some might be surprised to learn that the downtown neighborhood’s demographics are not that different from Williamsburg or the East Village: the area’s median age is 32. The business sector has also evolved with tech and media companies setting up shop alongside financial firms. All this change has prompted a rebrand: shedding its reputation as a business-only district, the area south of Chambers Street is now being called Lower Manhattan. 75 WALL STREET
3) There’s a growing gap between co-op board and buyer expectations. Brokers witnessed an increase in board rejections this past year, signaling that co-op board expectations are out of sync with buyer qualifications. With so many of today’s most affluent buyers choosing condos, high-end co-op sales have taken a hit. As the Wall Street Journal reported, overall co-op sales for 2016 were down 12% from the previous year. Although the number of exceptionally qualified purchasers for co-ops has decreased, many co-op boards still maintain rigorous application standards and may even reject buyers who do not meet certain, possibly unrealistic, expectations.
JANUARY 2017 | 3
4) Buyer Preference for Open Layouts and Modern Décor Continues. One factor that helps explain the continued popularity of new condo developments is buyer preference for open floor plans and contemporary details. Buyers want up-to-the-minute style and new condo developments can easily incorporate the latest tech features, finishes and amenities. With minimalism the preferred aesthetic, details typically found in prewar co-ops like cornice moldings and parquet floors are no longer the draw they once were for buyers. We’ve also noticed that, while open floor plans have been a condo staple for a few years now, new developments are beginning to incorporate “flexible” space that can be opened up or closed off easily. 129 LAFAYETTE STREET
5) Staging is important. Brokers report that apartment staging often helps a property sell faster and for a higher price. Yet, whether the interior is a traditional pre-war co-op or a modern condo, a stager will always choose contemporary furniture and minimalistic decor. One reason staging has become increasingly important is that, as luxury developments capture more and more of the market share, buyers have grown accustomed to pristine interiors where every detail is carefully calculated. Staging often gives a property the final touch needed to attract a winning offer.
210 WEST 78TH STREET
6) The under $3 million market is strong. We saw several sky-high residential closings last year, like the penthouse at 432 Park Avenue that sold for $87.7 million, but it’s the under $3 million market that’s been the most active, particularly in the resale sector. Buyers tend to move quickly as inventory in this price range is tight – and some properties have even incited bidding wars. A well-priced townhouse co-op in the East 60s recently saw multiple bids and closed at asking price.
187 HICKS STREET
7) Interest rate hikes are affecting certain market segments. The Federal Reserve raised interest rates back in December 2015 and again just last month. The 2015 rate hike likely motivated buyers in the $2-million-and-under price range, where the highest percentage of financing occurs, to purchase a home before the rate rose even further. But even with the recent hikes, interest rates have been, and remain, historically low. People who would normally rent may have been lured to the buyer market for this reason, a factor that may help explain the slowdown in luxury rentals.
8) But the luxury rental market is soft. The use of incentives at luxury rental properties rose significantly last year. As of November 2016, approximately 25% of new Manhattan leases came with concessions like a free month’s rent compared to 13.5% in November 2015. Thanks to a number of new developments hitting the market last year, there’s no shortage of luxury rental inventory (some might say there’s an oversupply). With so many options available, renters are in a strong position to negotiate monthly rates and perks.
9) Motor courts are the latest must-have luxury amenity. Also called porte-cocheres, private courtyard entries are popping up at several ultra-luxury properties including midtown’s 252 East 57 where the minimal but dramatic court area also includes an automated parking system. Set apart from city sidewalks, these private, often gated, spaces offer unparalleled convenience and security. VIPs can discreetly enter a building free from paparazzi or a family with young children can load and unload a car without the safety concerns of doing so on a busy street corner. Judging from the popularity of porte-cocheres among elite buyers, we expect to see many more buildings include them in the near future. 252 EAST 57TH STREET
10) The long-awaited Second Avenue subway opens. Although the official opening took place on January 1, 2017, we’ve included this on our list because it’s a historic development for the city and a potential boon for the Upper East Side market. While much remains to be seen, property values in the Yorkville area are expected to increase and a flurry of new developments are in various stages of construction. Many Second Avenue business owners eagerly anticipate increased foot traffic. We’re excited to see how the far East Side continues to evolve in 2017.
219 EAST 72ND STREET
The Right Broker Makes All the Difference. Over the past 37 years, Stribling brokers have successfully represented the world’s most discerning clients, offering an exceptional level of service, integrity and sophistication coupled with an in-depth understanding of the ever-changing real estate market. Stribling professionals embrace a wide range of tastes and styles, ensuring that each client is matched with the broker who can best assist them in buying or selling their home.
UPTOWN 212 570 2440
STRIBLING.COM
CHELSEA 212 243 4000
TRIBECA 212 941 8420
.com/StriblingAssociates
BROOKLYN 718 208 1900
@StriblingNYC
EQUAL HOUSING OPPORTUNITY • ALL INFORMATION HEREIN IS SUBJECT TO CHANGE AND NO REPRESENTATION IS MADE AS TO ITS ACCURACY
@striblingnyc
A SAVILLS INTERNATIONAL ASSOCIATE
