Nov 21, 2014

Pier 55 - Floating Park in Hudson River

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Futuristic Floating Hudson River Park
Artist's Rendering CreditPier55, Inc./Heatherwick Studio
Media mogul Barry Diller and fashion designer Diane von Furstenberg plan to create a $170M floating park in the Hudson river near Chelsea and the Meatpacking District.

View from Manhattan 
CreditPier55, Inc./Heatherwick Studio



As reported by the New York Times, an additional $39.5M of funding for Pier 55, which has the support of Gov. Andrew Cuomo and Mayor Bill de Blasio, would come from the city, state and Hudson River Park Trust, subject to approval of the Trust's board.

 CreditPier55, Inc./Heatherwick Studio 
The Diller-Furstenberg Family Foundation will supply $130M. It will feature lawns, gardens and three performance spaces, including a 700-seat amphitheater.

The 2.7-acre project, dubbed Pier 55, would replace the decaying Pier 54 on West 13th Street and be connected to Hudson River Park in Manhattan via platforms.
Pier 54
Credit Mitchell Hall 
Approvals also must come from the Army Corps of Engineers and state Department of Environmental Conservation before construction can begin in 2016.




 
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Nov 20, 2014

Your Home is a Commodity - Control the Sale Process

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What Do Manhattan Sellers Have Control Over?
  • Location? No
  • Room Count? No
  • Square Footage? No
  • Floor? No
  • View? No
  • Building Amenities? No

What sellers actually have control over
  • Price: Nothing matters more than the initial list price. Buyers and buyers’ brokers are very tuned into to marketplace valuation and the power dynamic shifts to the sellers when an attractive pricing means an apartment is seen as something to be pursued actively. If your goal as a seller is to get the most amount of net proceeds at closing in the shortest most efficient way, an attractive price is the only way to achieve that. Even in very soft markets, a well priced opportunity will attract a great deal of interest and offers and an overpriced one will not.
  • Sales Site Preparation: The way a home looks, feels, smells and presents is very important. Buyers make very fast decision when they walk into a home or first see the pictures online. I’ve watched the evolution occur where more and more buyers have spent a great deal of time scrutinizing pictures and then arrive to either have their impressions confirmed or disappointed. Sellers need to invest in creating an appealing home that buyers want to live in.
Some Obvious Suggestions That Can make a Difference
  • Clean and Clean! The home should be sparkling clean, not just for the first Open House but for every single showing. No dust. No clutter not a single thing that will result in a negative reaction. Sellers do well to remove into storage as much as possible.
  • Depersonalize. Buyers want to imagine living in their home not yours. Sellers should remove all or most photographs, kids drawings or overly personal and items.
  • Paint. A fresh coat of paint can be one of the best investments you can make to increase the value of your apartment. Keep colors neutral and light.
  • Stage. This means hiring a professional to come to your home and rearrange, bring in new furniture and generally make the home as appealing as possible. Simply swapping in new towels, sheets  etc can have a huge impact. An empty apartment can be virtually staged at a lower cost that can help buyers visualize the space furnished. 
  • Marketing. The Price you get is a function of the Marketing you choose. 
  • Negotiating Attitude: This is a key component of a successful deal and one that is hard to convey. Years of negotiating deals has given me a sense of the tone, attitude and timeline expectation. A good broker will walk the line between keeping the pressure on to get clients to act but not scaring them away with overly aggressive tactics
More tips on increasing your home's value through home sales preparation in Manhattan Home Enhancement Guide.


 
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Nov 17, 2014

Manhattan Monthly Market Report | October 2014

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Manhattan Monthly Market Report | October 2014

  • Price growth was most prominent this October in one bedroom co-ops, up 18% versus last October, due to increasing demand for more affordable product. 
  • Market-wide inventory has increased since last month as well as last year, although nearly all of this growth is due to condo listings as co-op inventory remains flat. 
  • Contracts signed are up 3% year-over-year overall, but again split by market: condo sales are down 8% while co-op sales are up 13%. The increase in co-op sales has kept pace with inventory, keeping co-op listings near historic lows while the decrease in condo sales has supplemented the growth in available listings.



 
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Nov 9, 2014

What is a Land Lease Building?

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A building that has a land lease ("ground lease") does not own the land the building was built on. Building residents pay rent for the ground on which it stands instead of owning it outright as most co-ops and condos do.

There are approximately 100 ground lease co-ops in the city. Condos are not allowed on land leases by state law, except in Battery Park City, Roosevelt Island, and Brooklyn Bridge Park, which are specifically allowed in the condo law. The land in these locations is owned by quasi state/city agencies such as The Battery Park City Authority or the Roosevelt Island Operating Corporation.
Battery Park City


Battery Park City is unique because it is on a portion of land created by land reclamation from the Hudson River. Battery Park is owned and managed by the The Battery Park City Authority.  Parcels of land are leased to developers who build in accordance with the Authority's guidelines and mandates. BPC is the largest "green" neighborhood in the world.


Instead of paying real estate taxes, condo owners in Battery Park City pay "PILOT" payment in lieu of taxes. The common charges and "PILOT" varies from building to building depending when the building was built and the time frame of the land lease. 

Most buildings in NYC with land leases are coops or condops. A condop is a residential building or portion that includes cooperative and condominium ownership structure. The condominium has a residential cooperative unit separate from the commercial units. Coops unlike condos usually have underlying mortgages.



One Carnegie Hill
Shareholders in coop's with land leases are not only paying the underlying mortgage on the building, they're also paying rent for the land. Typically adding 20 percent or more to the maintenance. 

Apartments in land lease buildings sell at discounts compared to non land-lease comparable coops because of the higher maintenance usually associated with land-lease buildings. How much an apartment costs to live in monthly determines it's affordability not it's sale price.


While shareholders of all coops have less control over their homes than owners of real property such as condos and townhouses coop shareholders in land leased buildings have less control over their building's destiny. The owner of the land the building is on has more control.



Where there is risk, there may also be opportunity. It is important to have a real estate attorney with land lease experience conduct due diligence when considering purchasing a unit in a land leased building. There are many variables and degrees of risk, pros and cons. The land lease may be for 100+ years. There may be an option for the coop to buy the land outright. There may be clauses with automatic renewals with specified amounts of rent increase. There may be tax benefits. 

The ground below Trump Plaza, a coop at 167 E. 61st St., is currently up for sale. The co-op board has offered to buy the property. The residents would be hit with assessments that would be more than $1 million for some shareholders. Two Fifth Avenue a coop in Greenwich Village, opted out of it's ground lease in 2005 by buying  the land directly from the sponsor developer, Rudin Management when the board’s 20 year ground lease was about to expire. 


The Cathedral of St John the Divine in Morningside Heights is building apartments on its Upper West Side property. The church signed an agreement with Brodsky Organization, to lease the parcel. Brodsky will pay rent for the land.



Chelsea Enclave
Another example, The Chelsea Enclave originally entered into a 99-year lease with the General Theological Seminary causing the units to be condops instead condominiums but the Seminary in Chelsea agreed to sell three of its buildings and some land to developer, The Brodsky Organization for $47.5 Million.  

Carnegie House at 100 W. 57th St., 995 Fifth Avenue, The Marais at 520 West 23rd Street, The Azure at 333 E 91st St,  Excelsior at 303 East 57th,, The Sovereign at 420 East 59th Street, One Carnegie Hill at 215 East 95th Street, 101 West 23rd Street and 88 Morninside Avenue are some coop and condop buildings in Manhattan with land leases. 





 
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Nov 5, 2014

Manhattan Residential Rental Market Report | 3Q-2014

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Some aspects of the Manhattan rental market favored landlords, while others were more advantageous to tenants this past quarter.

Average rents increased for all apartment sizes, from studio to three-bedroom units, and the percentage of leases offering a move-in incentive declined – signs that negotiability favored landlords.

However, the vacancy rate in Manhattan increased from the second quarter, which means prospective tenants had more options to choose from and that landlords may come under greater pressure to price their units conservatively.

Average rents for one-bedroom apartments increased the most of any apartment size, up 3.5% versus the prior quarter. Rents for studios rose 1.7% on average, and two- and three-bedroom units both increased in price by an average of approximately 1%.

While Manhattan rents increased for smaller-sized apartments year-over-year, they declined for larger-sized homes. When compared to the third quarter of 2013, rents for both studio and one-bedroom apartments increased 1.9% on average. The average rent for two-bedroom homes remained flat while rents for three-bedroom units fell an average of 2.3% compared to this time last year.

1.35% of apartments were vacant during the third quarter of 2014, up from 1.25% during the second quarter. On a year-over-year basis, however, conditions for apartment seekers were essentially the same as a year ago when 1.37% of Manhattan apartments were vacant.

During the third quarter of 2014, 6% of transactions we brokered included an owner-paid incentive, down slightly from 7% during the second quarter. Typically these concessions take the form of one month of free rent or payment of the broker’s fee. During the third quarter, we generally saw incentives used in newly constructed properties where the concession was part of the overall marketing plan, or in more expensive apartments where the owner wanted to drive traffic to the unit without lowering the asking rent.

The rental market is highly seasonal and historically the fourth quarter has been a good time for prospective tenants, especially those in search of value. Typically, rental pricing eases as the weather cools and the borough’s vacancy rate ticks up, especially as we enter the winter holiday season.


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Nov 3, 2014

Trinity To Build Luxury Residential Apartment Towers

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Skyscrapers and Trinity Church 1905
Courtesy of Library of Congress, Detroit Publishing Company Collection. 
Trinity Church is the city's largest landholder among religious institutions. Trinity owns 8% of the 215 acres Trinity was granted by the King and Queen of England over 300 years ago having granted land to churches, schools and other institutions. Trinity Church is one of the largest commercial landlords in New York City. 

Trinity owns almost 6 million square feet of Manhattan office space. It turned productive farmland to industrial and office space.

According to Crains NY Business, "in the next few weeks, the Episcopal church—whose property arm, Trinity Real Estate, oversees the 5.5 million square feet of office buildings it owns on the western fringe of SoHo in an area called Hudson Square—will try something new. It will venture into the high-stakes game of residential development."

Trinity will build as many as four luxury residential towers there, as well as one partially residential property near Wall Street. 

Trinity's first step will come before the year-end, when it selects a partner to help rebuild its 25-story headquarters on Trinity Place. The building is across the street from Trinity's landmark church and linked to its famous cemetery—the final resting place of Alexander Hamilton, among others—via a pedestrian bridge. Work converting the office building to a sleek, 44-story Pelli Clarke Pelli-designed tower, topped by luxury residences, will begin next year.
Rendering courtesy of:  Pelli Clarke Pelli of the mixed-use tower Trinity Church plans to erect on Trinity Place in the Financial District.
Trinity is the ’hood’s largest property owner. Hudson Square was once known as the Printing District. Last year the City Council approved a massive rezoning allowing the church—Hudson Square's largest landlord, with more than a dozen office buildings—to build residences for the first time.

Bounded by the Hudson River, Soho, Tribeca and the West Village, Hudson Square has eclectic characteristics borrowed from its surrounding neighborhoods. While Hudson Square shares Soho's trendy vibe and low-rise architectural aesthetic, it also maintains a touch of Tribeca's elegance.

Related articles:
Cathedral of Saint John the Devine Building Apartments



 
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Oct 28, 2014

NY Real Estate Broker Confidence Index | 3Q- 201 4

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The Real Estate Board of New York’s Real Estate Broker Confidence Index for the third quarter of 2014 showed that broker’s confidence decreased slightly compared to last quarter from 8.88 to 8.80.

Both residential and commercial brokers’ confidence marginally decreased, with commercial brokers’ confidence slightly higher than residential brokers. This has been the case since the first quarter of 2013.

Although confidence levels have not dropped below 8.80 in 2014, confidence in the market has slipped since the beginning of 2014, decreasing in both confidence in the current market and confidence in how well the market will do in the near future.

The Residential Broker Confidence Index decreased from 8.30 to 8.23 this quarter, and is the same as it was one year ago in the third quarter of 2013. Residential brokers have identified the lack of inventory as a major issue in each survey for the past year, and this quarter was no different.

Brokers mentioned seeing an abundance of new ultra high end developments going up around Manhattan, but that the real need is for middle-income housing throughout the City.

 The popularity of new neighborhoods in the outer boroughs was a positive factor in the market for our residential brokers.

The Commercial Broker Confidence Index was 9.38 this quarter, down from 9.45 in the last quarter. Commercial confidence levels have been high since the survey began, never dropping below 9.0 since the first quarter of 2013.

Commercial broker comments and concerns about the market were more varied than the residential brokers. For Commercial brokers a growing tech sector is a positive sign for the office market, creating strong demand and diminishing supply. Commercial brokers are confident as a result of the increased leasing activity in Midtown South.

Download full report


 
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Oct 26, 2014

The Importance of a Pre-Approval in a Seller’s Market

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Urban Myth "A pre-approval will lower my credit score" 

I'm often contacted by buyers that want me to show them apartments. Often these buyers do not know how much apartment they can afford. They require financing but have not been in contact with a lender.

I recently spoke with a buyer that was interested in one of my listings. When I asked if she was pre-approved for a co-op loan she told me that she didn't want to get pre-approved because it would lower her credit score. 


An "urban myth" and not a valid reason to not get pre approved before looking for an apartment in Manhattan. A credit score may have a temporary glitch after several inquiries although an inquiry is not an application for credit. This first time buyer told me "she begs to differ" and that she didn't want to get a pre-approval every time she viewed a property

The Importance of a Pre-Approval in a Seller’s Market

The lenders I work with and recommend will pre-qualify and pre-approve a buyer for several months at a specified maximum amount. 


The pre qualification informs sellers and their brokers based upon the information received, the lender is indicating that the applicants’ financial, credit, and income information appear to support their eligibility for the loan amount listed on pre-approval letter. It is not a loan commitment. A loan commitment may be issued following the applicant’s consent to move forward with the loan, the payment of any fees, a satisfactory appraisal and underwriting approval.

Buying a home and getting a mortgage is one of the biggest and most important lifetime financial decisions and a primary reason why a consumer should be concerned about their credit score. In my professional opinion and experience if an inquiry on your credit report from a mortgage lender has an adverse effect that lowers your credit score enough to affect the interest rate offered or your loan eligibility you have bigger issues than a couple of inquiries from lenders. Paying bills on time and paying down debt matters a lot more.

Lenders are competitive. They also know how to read a credit report. They understand a buyer may be shopping for a mortgage when shopping for a home. In fact, if they see their competitor's inquiry on your report it may be leverage to your advantage. If one lender wants the business they may try to offer a better deal than their competitor.


Understanding The Related Costs of Apartment Buying


You'll need to think about more than a mortgage payment to determine if you can afford an apartment in Manhattan. To assure you are purchasing a home within the confines of your budget, you must consider down payment requirements, closing costs, taxes, carrying charges, and yearly maintenance requirements as well.

How much can you afford?


First consult with a mortgage broker or banker to determine how much of a mortgage you qualify for. Calculate the estimated mortgage payment plus monthly maintenance (coop), common charges and real estate taxes (condo).

Several formulas exist to help determine how much a lender will allow a consumer to borrow. One of the more accurate formulas is a front- and back-end ratio. It states that the buyer can afford as much as 28 percent of his or her gross-monthly income toward the monthly mortgage payment, assuming that the consumer's other debt payments (credit cards, car loans, student loans, etc...) are less than or equal to 8 percent of his or her gross-monthly income.

Most NYC coops have more stringent financial requirements than most lenders. Most coops use a 25%-30% debt to income ratio formula. Many coops will only allow a maximum of 75% financing although some will allow 80%. Coops may also require liquid assets available after the closing to cover 2 years worth of maintenance or 1 year of mortgage and maintenance. Every building varies and uses their own formula.

While condos and some coops will allow 90% financing a seller may not want that risk and lenders will require PMI (private mortgage insurance) increasing the debt to income ratio. A minimum 15% or 20% down payment may be required. 

Manhattan mortgage bankers and brokers






 
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Oct 22, 2014

Manhattan Monthly Market Report | September 2014

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Manhattan Monthly Market Report | September 2014

The Manhattan market came back strong in September. Year-over-year prices rose in all measures, in some cases by very significant percentages.

For the first time since January, September saw year-over-year gains in contracts signed in both the condo and the co-op markets. 

Average discount from asking price is up slightly for both condos and co-ops, but smaller than the discounts given a year ago. Days on market showed month-over-month increases, but this is likely a result of less buying activity through the month of August.



 
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Oct 13, 2014

"Affordable Housing" in NYC - For Whom?

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There are rich doors and poor doors - Are moderate and middle income New Yorkers being left out?
When mayor Bloomberg first introduced the New Housing Marketplace plan in 2002, more than 40 percent of New Yorkers spent more than 35 percent of their incomes on housing, a position that the U.S. Department of Housing and Urban Development considers cost-burdened.

The original goal was to create or preserve 65,000 units of affordable housing by subsidizing or incentivizing new construction and rehabilitating existing affordable housing. In 2005, Bloomberg optimistically reset the goal, stating the city would create or preserve 165,000 affordable units by the end of 2014 with a $7.5 billion investment from the city.

One notable aspect of mayor Bloomberg's plan was its focus on creating more housing for moderate and middle income families, something few past programs have addressed. This category includes, but is not limited to, people living on $58,000 a year as individuals, or up to $145,000 a year for a family of four.

During the Bloomberg administration: "We want to retain a large and varied workforce in the city,” said Ruth Anne Visnauskas, a deputy commissioner for the Department of Housing Preservation and Development (HPD). “Having affordable housing for the firefighters, the teachers, the nurses — people who might not be at the lowest income levels but are still priced out of the market — is important."

A 2009 study by the Center for an Urban Future looked at the strain that housing costs were putting on middle class New Yorkers and argued that it was imperative for New York City to maintain a strong middle class.
432 units of middle-income housing on West 45th Street in Hell's Kitchen
"Middle class people are the ones who start small businesses, which employ many New Yorkers". 

The Bloomberg administration originally projected that 32 percent of the 165,000 units would be set aside for middle class New Yorkers. According to the IBO’s report, of the 124,400 that have been started so far, only 15 percent have been set aside for these groups. That amounts to about 18,600 units of affordable housing to date.
Mayor De Blasio’s Housing Plan—Housing New York: A Five Borough, Ten Year Plan

Mayor Bill De Blasio's plan: Housing New York:  A Five Borough, Ten Year Plan, is an ambitious plan to build and preserve 200,000 housing units, including 50,000 new affordable housing units.

For Whom? 

De Blasio's plan reduces the percent of units set aside for middle class New Yorkers by 10%

The plan is guided by eight principles, such as revamping the city’s planning and land use policies, establishing economic diversity as the cornerstone of housing development and strategically protect past investments in housing affordability.

These guiding principles will redefine many of the city’s housing programs and policies and can be seen in the more than the fifty initiatives in the plan

Here are a few highlights from the plan:
  • Propose the creation of a Task Force to explore legislative and administrative changes to simplify and rationalize the city’s tax programs while increasing their effectiveness in creating affordable housing.
  • Change zoning and land use regulations to promote housing creation through conversion of obsolete non-residential buildings and identification of opportunities for using Transferable Development Rights.
  • Create new incentives for properties that are not served by existing programs but are in danger of converting to condos or exiting rent regulations.
  • Define affordable housing as follows: Extremely Low Income (0-30% of AMI); Very Low Income (31-50% of AMI); Low Income (51-80% of AMI); Moderate Income (81-120% of AMI); Middle Income (121-165% of AMI).
  • Overall production goals of the plan: 60 percent preservation; 40 percent new construction.
  • Share of housing units preserved or created by income group:  Extremely Low income (8 percent); Very Low Income (12 percent); Low Income (58 percent); Moderate Income (11 percent); Middle Income (11 percent). 
A 2009 study by the Center for an Urban Future looked at the strain that housing costs were putting on middle class New Yorkers and argued that it was imperative for New York City to maintain a strong middle class

Mitchell-Lama buildings that were originally created for Middle Class New Yorkers are at the end of their regulatory agreements. They have been a big source of affordable housing in many neighborhoods.
While preserving the Mitchell -Lama stock helps with overall affordability goals, it doesn't create new options for moderate or middle class families and many Mitchell-Lama buildings have chosen to go market rate at the end of their term. 

The HPD has since revised its goals and plans to devote 22 percent of the housing to moderate and middle income New Yorkers. The IBO predicts that there will need to be a serious shift for the HPD to meet even these numbers.

Even meeting this reduced target will require a fairly significant change in the income mix of units started and in the next few years with a large uptick in the number of moderate units according to the report.

One programs that currently offers home ownership for middle and moderate income New Yorkers are HDFC coops  primarily re-sales that will allow maximum incomes of 120%- 165% of (AMI) Area Median Income.

Area Median Incomes:

According to the NY Times USA Map June 26, 2014 

The median income in Manhattan (New York, NY) is $68,370. 
In Brooklyn (Kings County) the median income is $45,215. 
In Queens the median income is  $56,789. 
In Staten Island (Richmond County) the median income is $73,496. 
In the Bronx the median income is $34,300. 
In Westchester County the median income is $81,093.
In Nassau County the median income is $97,049.
In  Suffolk County the median income is $87,778.



 
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This blog site is designed and published as a consumer service by local real estate broker to help Manhattan, New York City buyers, sellers and renters make informed real estate decisions. This site and its feeds are owned and operated by Mitchell J Hall, a NY State licensed real estate associate broker associated with The Corcoran Group and member of the Real Estate Board of New York.

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