Oct 12, 2017
The world’s population is getting richer, and the evidence shows that many of the world’s rich want to spend their new wealth on luxury real estate. The international luxury residential market will see more demand than supply over the next three years, according to a report published by the Real Deal, with 25 percent of high-net-worth individuals expected to buy high-end real estate compared to the 17 percent who want to sell. The report also noted the numbers of wealthy people across the world is increasing significantly.
There were 1.6 million households around the world with more than $10 million in net worth during 2016. That figure is an 11 percent increase from 2015 and a whopping 91 percent increase since 2010. Most of the world’s wealthy consumers live in North America, with the number of $10 million-plus households increasing 146 percent in the last eleven years. Europe is the second largest “wealth region” in the world and is home to nearly 20 percent of the world’s wealthy households.
The Asia Pacific region has seen an explosion of wealth, with the high-net-worth individuals in that part of the world increasing more than 20 percent between 2015 and 2016. China is producing 100,000 new millionaires each year, according to a report earlier this year. Despite the report’s rosy outlook for the international luxury market, New York City continues to experience an excess of high-end product. Manhattan real estate sales of over $10 million in the first half of the year increased 12 percent from the same period the year. However, that jump is driven largely by both closings from contracts signed in 2014 and luxury sellers’ growing willingness to negotiate on price. In Los Angeles this year, there were 65 sales in the $10 million to $20 million range, up from 50 during the same period of last year.And in Miami, there have been 46 properties sold in the over-$10 million market so far this year.
In London news, the London housing market hasn’t looked this bad since 2009, with its housing prices posting the first annual decline in almost a decade, according to the Nationwide Building Society. The cause of the slow is generally blamed on Brexit. Despite this, analysts claim there is cause for optimism - consumer confidence appears to be on the upswing, while Lloyd’s Bank saw business confidence rise from its lowest point. TRD reported this summer that the sky high prices London is known for may be a thing of the past — and if London real estate prestige falls internationally, New York City would stand to gain.
WeWork and Airbnb have formed an alliance in a bid to take over the corporate travel market.
Customers who book a room on Airbnb will also be able to reserve a desk at the nearest WeWork co-working space under a pilot program in six cities, Bloomberg reported.
As of Thursday, the service will be available in Chicago, New York, Los Angeles, D.C., London and Sydney. Earlier this year Airbnb introduced a feature allowing users to search for homes with a desk and high-speed internet. WeWork, meanwhile, has offered overnight stays at its WeLive co-living location in Lower Manhattan. The company recently raised $4.4 billion from Japanese conglomerate SoftBank to bring Wework’s valuation to $20 billion.
In far west side news, the online retail giant Amazon just signed a 15 year lease for 360,000-square-foot at Brookfield Property Partners’ 5 Manhattan West. It will serve as New York’s main location for Amazon Advertising, and jobs at the site will include software engineers, data analysts and economists.
Amazon will take all of the sixth and seventh floors of the 16-story building on 10th Avenue between 31st and 33rd streets, as well as parts of the eighth and 10th floors. It will bring the building’s occupancy rate to 99 percent, with other notable tenants including JPMorgan Chase and Whole Foods, which is anchoring the building’s ground floor with 60,000 square feet of space.
Amazon’s expansion into 5 Manhattan West will create 2,000 new jobs with average annual earnings of $100,000, according to Gov. Andrew Cuomo’s office. The company was offered up to $20 million in tax credits to expand in the state, and it will invest $55 million to outfit its new space with energy-efficient standards.
5 Manhattan West is part of an eight-acre, six-building mixed use development that Brookfield is constructing on Manhattan’s west side from Ninth Avenue to 10th Avenue and 31st Street to 33rd Street. It will feature roughly 6 million square feet of office space, residential space and a boutique hotel. Amazon has set up multiple projects in New York State over the past five years, including investing $9 million into a fashion photography and videography studio in Brooklyn and setting up a 350,000-square-foot administrative office at 7 West 34th Street. The company is also planning to open its first distribution center in New York on Staten Island’s West Shore, which is expected to create over 2,200 jobs.
The Seattle-based company most recently shook up the business world by announcing that it would seek to open a second headquarters, which should represent a $5 billion investment. Although New York is expected to be in the running for this as well, Related Companies chairman Stephen Ross recently said in an interview with Bloomberg Television that he “can’t see them really coming to New York, realistically” because of the city’s high cost of doing business.
In Brooklyn news, workers with the U.S. Environmental Protection Agency are set to start scooping toxic sludge from the bottom of the Gowanus Canal the first week of December and will begin prepping for the excavation next week. Starting this week, barges will cruise into the heavily polluted canal's Fourth Street Basin, where dredging will clear the way for EPA equipment to access the sludgy sediment, known as "black mayonnaise," marking a key step forward in the canal's $506 million cleanup.
Before work on the Superfund site begins, the EPA will "stabilize the shore" with bulkheads along the basin's neglected banks, with that work likely to occur during the last week of October. Come December, workers will begin scraping muck from the basin's floor for a pilot study that will work out the projects logistics and inform the EPA's final plan for the entire 1.8-mile waterway.
The pilot dredging is expected to last until the spring of 2018 and will culminate with a report to help shape the EPA's overall plan, including where excavators will eventually dredge the canal.
It is possible that the agency will unearth some hidden gems, or at least buried junk, during the work. Last year, debris removal from the the Fourth Street Basin yielded two boat wrecks, eight support pilings, a tree and 25 other items that measured greater than 5 feet across. Toxic sediment removed from the canal will be ferried down the waterway and mixed with cement to ensure it does not leach contaminants, Tsiamis added. EPA officials anticipate finalizing plans for cleaning up the northern portion of the canal by February 2019. The cleanup for that portion of the canal will be completed around 2022 at the earliest, this according to DNA Info.
In Downtown Brooklyn news, JEMB Realty is planning to bring a 37-story building to the heart of Downtown Brooklyn at 420 Albee Square. The tower would span about 385,000 square feet and contain office and commercial space, including a 300-seat school on the first six floors. FXFOWLE Architects is designing the project, and JEMB received a $56.5 million loan for the project in July. JEMB originally planned for the tower to be significantly higher but scaled down the proposed height from 65 stories to 35 stories in March 2015
In Upper West Side news, an apartment building at 200 Amsterdam that would be the tallest tower on the Upper West Side recently received the greenlight from the Department of Buildings.
The 51-story, 112-unit building is being developed by SJP Properties and Mitsui Fudosan America, and has faced vehement opposition from the local community, Crain’s reported. Critics of the project claimed in was in breach of the building code. The DOB had shut down the site, but last week, the DOB said the companies had addressed all concerns. The developers will need to refile for permits. SJP and Mitsui Fudosan paid $275 million for the parcel at 200 Amsterdam Avenue in 2015, and filed permits with the DOB last year. [Crain’s] — Miriam Hall
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