NEW YORK–While most of the rest of the U.S. real estate world hangs on every word Federal Reserve Chairman Alan Greenspan speaks, the market here in Manhattan rarely pays attention. Consisting of some of the world’s most expensive properties, all-cash deals often are commonplace.
A handful of Manhattan’s top real estate players discussed the market’s unique characteristics, problems and future this morning during Real Estate Connect NYC 2005. Among them were Prudential Douglas Elliman CEO Dottie Herman, Coldwell Banker Hunt Kennedy CEO David Michonski, Real Estate Board of New York President Steve Spinola and Pamela Liebman, CEO of The Corcoran Group.
“I see people come from the Midwest, ask what they can afford and start to cry,” Herman said.
But while the Manhattan market is vastly different from most other real estate markets, it’s had its share of ups and downs. Michonski noted the hit lower Manhattan took just after 9/11, with 50 percent vacancy rates.
Looking around today, the market seems to have jumped right back. Manhattan living is about lifestyle, as well as investment portfolio building.
“I just worry that in ’05 my poor brokers aren’t going to get a break again,” Liebman said. “Now I just see people in this crazy pace; it doesn’t seem to stop.”
Supply is still very lean, according to Michonski. But Spinola pointed out that development has been increasing and will continue to increase. For the first time in decades, Manhattan has seen more than 20,000 permits for new housing two years in a row, he said.
Spinola also talked about the city’s more affordable options for housing, saying he didn’t want people to think the only way to Manhattan real estate is through all-cash, multimillion-dollar deals. “The truth is we have all kinds of housing,” he said.
The average rent in New York City is $700 per month, he said. The five boroughs provide more than just the luxury option. Additionally, the city’s largest upcoming real estate endeavor will be in West Manhattan, where 40 million square feet of new development is slated to soon begin. Of that, about 14 million square feet will be for housing and about 40 percent of that will be reserved for affordable units.
“All of that is coming into place so that this city can continue to grow,” Spinola said.
In terms of technology, many New York brokerages have embraced the Internet and display listings online. The REBNY has developed a technology platform for sharing listings, however Michonski said there really is no technology or system for aggregating data, which makes it difficult for experts to analyze the market.
While many brokerage outsiders might say the New York market is next to impossible to enter, Liebman disagreed. “It’s not exclusive here. Anyone can come into New York and join the Real Estate Board,” she said.
REBNY has implemented a 72-hour co-brokerage rule mandating that members co-broker a listing after that initial time has elapsed upon taking the listing.
A point of contention and an aspect of New York real estate that’s been changing vastly due to the Internet is so-called no-fee listings. One Web site that has spurred the change is Craigslist. Craig Newmark, founder and customer relationship manager for Craigslist joined the New York real estate panel this morning to talk about those changes.
“What my volunteers are telling me is that over time the ethical watermark is rising among apartment brokers in the city,” Newmark said. “Meanwhile we’re asking (brokers) what they need.”
Craigslist, which first launched in the San Francisco Bay Area and has spread to some 60 additional metropolitan areas since inception, serves as an online community bulletin where people can find a place to live, jobs, a date for Friday night, sell their used furniture or connect with people with common interests.
The site launched in New York City in 2000, and really started to take off during the fourth quarter of 2001. “I don’t know if that’s a coincidence or not,” Newmark said.
Over the last few years, Newmark has personally handled some of the situations that have come up among apartment brokers and renters using Craigslist. Among them are brokers who charge a fee for their service while posting apartments in the “No Fee” section of the Web site, brokers using bait-and-switch tactics to attract prospective renters to their listings, and brokers not disclosing fees until late into a rental deal.
In the midst of this, Newmark said a hobby of his has become “to visit apartment brokers to terrorize them,” he said. While Newmark admitted to getting pleasure in doing that, overall he sees broker morale improving in the city.
“We’re hearing consistently that this is getting better,” he said. “We think we’re seeing that moral sanction to do the wrong thing being removed. This is the kind of community and value we’re being driven to.”
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