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 rebuilding and reinventing itself every day. Rent regulations are shaking things up, but perhaps not in an ideal way for those who were hoping for rents to go down or stay low.
Retail is changing, but new industries and models are popping up and rents remain high. Billions of dollars are still being plowed into the local market and investment properties.
While there are still potential corrections and adjustments to be made in the property market, most of the talk of a downturn appears to have subsided. Transactions seeming to show new 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…
Landlords are scrambling to deal with and get ahead of rent control regulations.
Many see little common sense in the way regulations are going, and that may not change. Some are trying to sue against new regulations. Others are getting more creative.
In response to the new rules Blackstone has stunningly pulled back from plans to continue to renovate the 100 building, 11,000 rental unit complex it bought on the Lower East Side for $5.3B. The giant firm is reportedly looking at other options for the properties in its portfolio, such as converting to condos instead of maintaining rentals.
Other landlords are re-evaluating their options due to rules which prevent taking more than one month of security deposit. Such as stopping renting to international students. Others are looking at insurance products to cover the gaps in risk.
Then you have new models which are moving to charge for a ‘membership’ to live in shared homes instead of traditional leasing. Models like Haven will cram 20 people into a house, four to a room and charge around $1,000 a month. Others offer pod share arrangements.
After several years of incredible growth, other companies who have been modernizing the industry are choosing to cash out. Airbnb is looking for an IPO exit.
WeWork is planning a $3.5B IPO in September 2019. A very, very modest sum given recent efforts to secure a $6B line of credit, and previous valuation of $47B.
On the bright side, Amazon is very much interested in taking over the real estate industry. It’s a new partnership with Realogy and its subsidiary companies like Sotheby’s creates a new giant on the landscape and plenty of perks for those using the site.
While the market seemed to be struggling to find its footing for a moment, and there is still some adjusting needed to modernize and adapt for today’s consumers we appear to be in a new norm with low-interest rates and very high interest in investing in real estate.
Success seems to be all about marketing and pricing it right and tailoring with the right end consumer in mind. This is evidenced by new sales records being set.
Content marketing is a big part of this, with on landlord crediting a single blog post for quadrupling its leased space on Park Avenue.
Meanwhile, in other big news, the largest demolition in New York City history is about to get underway on Park Avenue in Midtown East.
For Brooklyn Real Estate News
As tax authorities continue to raise taxes, deplete breaks and elevate assessments, some are finding relief in flexing their right to appeal. The latest data shows Brooklynites saved $57M in annual property taxes in 2017 by challenging their assessments. This is something everyone can do, and often helps create a lot of extra value and cash flow. Developers are also continuing to gain millions in tax breaks to renovate and construct. Especially when their projects create new housing or save jobs.
After pulling out of Queens, Amazon seems to have its sights on now coming to Brooklyn. Jeff Bezos is reportedly still evaluating several sites for a new 1 million square foot lease to house a new logistics facility in the borough.
While some old school retailers are battling with resizing and relocating, the booming weed business seems to be snapping up some of the voids. Williamsburg is to be the latest beneficiary of a new marijuana dispensary in a space asking for $200 a square foot in rents. It is the 4 NY location for Remedy.
Hot London based co-living company The Collective is also expanding in NYC with a new hotel and apartment building in Williamsburg. ODA has been announced as the architect. The Collective is also currently working on a project in Bed Stuy.
In other boroughs
A group of residents in one Chelsea condominium building has become proactive about protecting their views of the Empire State Building by purchasing $11M in air rights. It will be interesting to see how this trend plays out.
Famous actor Robert De Niro is planning to build his own 600,000 square foot production studio in Astoria at a cost of around $425M. The new studio will sit on a Steinway piano manufacturing site that is being purchased for $73M.
In the first half of 2019, just over $14B of Manhattan investment properties traded hands. Adding to the sales in the second half of the year is an almost $200M lower Manhattan office building sale, by the Rudin family who need to cover estate taxes owed. A powerful reminder to get a strong head starts on estate planning.
In other notable sales, Maya Angelou’s former Harlem brownstone has finally sold after a year and a half for $2.3M. She purchased the investment property in 2001 for just $275,000. Her own home also recently sold for $4M.
This month’s New York real estate news roundup is overall very positive again. There appears to be no shortage of capital or demand for well priced and well-marketed properties. Developers are still vying for titles to building the best and tallest buildings. Records are still being set. There is bound to be some substantial turmoil over new rent regulations. Those voting for them may ultimately, unfortunately, find the rulings extremely counterproductive. Smart owners and landlords are rushing to find ways to adapt and take leasing into the future with new models.
Well, that’s it for this month’s roundup. 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 returns 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.