Sep 30, 2019
Welcome to the newest New York Real Estate Update from Brooklyn Made.
This month’s roundup shows a New York City real estate market that just keeps marching on. It’s redeveloping and upgrading every day. New condo prices, the completion of new megaprojects in Brooklyn and office leasing all seem to be great highlights.
While there are still many units that will need to be absorbed into the market, transactions seem to show continued confidence in this strong market as the status quo for the foreseeable future.
Keep listening to get the scoop on all of this, the most notable news this month and what it means for landlords and investors.
In the commercial real estate headlines…
WeWork’s IPO is probably the biggest news this month. The office giant has pushed ahead with getting listed on the NASDAQ despite quite vocal detractors, including millionaire commercial real estate investor Sam Zell and WeWork’s own lead investor Softbank.
WeWork’s valuation has plummeted by more than 50%, from $47B to around $20B. The company is reportedly zoned in ongoing public to raise another $10B. While many are concerned that not only is the company on shaky ground, but presents a major threat to office markets in NYC and London.
It is one of the largest office landlords in the world. Yet, has a dangerous business model, which left it losing almost $1B in the first half of 2019, on $1.5B in revenues. Many worry that it is unsustainable and could drag down both the real estate market and the stock market with it.
Billionaire investor and deal maker Carl Ichan is the latest notable New Yorker to make the move to South Florida, along with his company. Part of a much larger migration of businesses and wealthy individuals who have been fleeing NY’s extreme taxes, including property taxes. Ichan has offered his employees $50,000 each to help with their move, if they set up residency in Florida as well.
The industry thought it dodge the pied-a-terre tax with the last budget. With the effects of new rent controls still stinging, a renewed effort to tax real estate in NY even further is lemon juice on fresh wounds. Many are not happy about it. Many are frustrated that lawmakers just don’t see how damaging taxation and rent controls already are. We’ll have to see how this battle plays out.
Despite being another big IPO that has been losing a lot of money, Uber has continued to spend big on New York real estate. Following its lease at Hudson Yards in the first quarter, the ride sharing company reportedly just signed a much larger lease at 3 World Trade.
The latest figures show New York companies are spending over $1B a year on office space. A figure expected to rise by another $100M a year by 2020. Rents are up 40% since 2014, and demand may continue to keep them strong.
While we recently covered the fact that a slow down in building permits and deliveries should bring balance to the market in the next few years, data suggests 25% of condo units recently coming to market remain unsold. 40% of units on Billionaire’s Row are unsold. While developers are unlikely to drop prices much, there could be plenty of incentives coming for buyers and renters.
For Brooklyn Real Estate News
Another rental tower has begun leasing at The Domino Sugar Factory megaproject. The 45 story building at One South First. With current promotional deals, studio leasing prices start at around $3,500 per month.
Over at the River Park development in Cobble Hill, sales have just launched as well. There are just 48 apartments in this 20 story building. Although there are plenty of amenities to rave about, prices aren’t cheap. A 530 square foot studio starts at $1M.
One of DUMBO’s last condo to loft conversions just hit the market too. One bedrooms at 168 Plymouth start at $1.4M.
Williamsburg’s Moore’s Street Market is getting a nice makeover with $2.7M in donations to upgrade the indoor space that has been operating since 1941.
Be sure to check out our special report on successful Brooklyn Startups and all they are achieving.
In other boroughs
One Manhattan landlord was just busted for turning 2 condos into 18 micro apartments. Each as small as 70 square feet and with ceiling heights as low as 4 and a half feet high. The owner faces close to $150,000 in fines, plus $1,000 a day until the units are restored.
Life is hard for many living in NYC. Conditions aren’t always good. One condo buyer recently felt so hard done by they filed a class action lawsuit. All because the $3.6M condo didn’t have a $2,200 wine cooler.
Finally, a little more sanity is coming to New York’s affordable housing. NYC’s affordable housing lottery is finally doing away with credit checks in order to participate. However, applicants will still have to provide proof of positive rental history.
New York City landlords may soon have to register their first and second floor storefronts. The move is aimed at tracking vacant units, and then coming up with a solution to get them filled.
The Union Square Tech Training Center recently celebrated breaking ground and is expected to open in 2020, and to create over 1,000 short term and permanent jobs.
While there continues to be some concern over the amount of unsold condo inventory, prices still seem strong. Residential rents and commercial leasing seems strong. Big tech companies keep inking large leases. How this plays out over the next few years may largely depend on the success of WeWork and its post-IPO performance.
There is concern and frustration over new rent regulations, and even more over increasing taxes which seem to be having a negative impact. Yet, luxury units are still commanding high rents, even when calculating promotional deals.
Make sure you’ve checked out our new special episode on Brooklyn Startups too.
Well, that’s it for this month’s round up. Look out for our other upcoming reports, and check out the latest data on the Manhattan and Brooklyn residential and multi-family market, and which features and neighborhoods are yielding the best rents at NewYorkMarketReports.com.
Make sure you like and share this report, and leave your comments on this news, or any trends you think we overlooked or you want to hear more about in the comments section.