Number of Foreign Investors Returning to the US Market

From the Wall Street Journal:

Insiders in the real estate industry claim they have observed an increase in the number of foreign buyers returning to the US market. International buyers have been slowly returning after a period of relative absence during the pandemic for more than a year, but insiders reported that in the last three months, their levels of interest had nearly reached pre-pandemic levels. That is due to a combination of loosening Covid regulations around the world, particularly in previously rigorous nations like China, as well as a number of political and economic developments, such the Russia-Ukraine war and the tumultuous Brazilian election.

Foreign purchasers are a significant shift in domestic markets that have been cooling as a result of rising interest rates and recessionary worries. The decline comes after a strong real estate boom, driven by Covid, that drove most U.S. markets higher in 2021 and early 2022.

“It was the domestic buyer that led the recovery out of Covid,” said John Gomes of Douglas Elliman, who said foreign buyers currently account for about 40% of his team’s business, which has offices in New York, Miami and Los Angeles. That is up from just over 30% before the pandemic. “It is the foreign buyer that is leading the recovery this time around. It’s very, very apparent.”

“It was a real unknown when and if, after the pandemic, the Chinese buyer would come back to New York,” he said.

By contrast, Corcoran Sunshine has “clearly seen a pullback” over the past 10 months in activity by local and domestic buyers, he said.As listing websites like Redfin don’t maintain track of a buyer’s country of origin, it is challenging to get information on the volume of transactions by foreign buyers. The assertions of a resurgence of foreign buyers are, nevertheless, supported by some facts.

Corcoran Sunshine, a new development marketing company that sells condos all around New York City, reported a 25% rise in foreign visits to its portfolio buildings in January 2023 compared to January 2022, with a significant increase in visitors from China and the Middle East. According to Ryan Schleis, senior vice president of research and analytics at Corcoran, the company’s portfolio saw more than triple the number of foreign visitors and more than twice the number of foreign buyers during the same period in 2022 compared to the pandemic’s slowest sales period, April through December 2020.

He ascribed the increase in part to China abandoning its zero-Covid regulations, enabling Chinese citizens to finally go to the United States with more freedom.  “It was a real unknown when and if, after the pandemic, the Chinese buyer would come back to New York,” he said.

In contrast, Corcoran Sunshine has “obviously experienced a downturn” in activity from local and domestic purchasers over the previous 10 months, he claimed.

Some developers in South Florida claim to have recently noticed an uptick in demand from Brazilian purchasers. The developers of Nexo Residences, a 254-unit condo development in North Miami Beach, reported that since October 2022, amid political unrest following the nation’s presidential elections, Brazilian buyers’ interest has increased by 30%. In order to lead the political opposition to President Luiz Inácio Lula da Silva and defend himself from claims that he instigated attacks by protestors on government buildings in January, the former president of Brazil, Jair Bolsonaro, has stated that he intends to return to Brazil this month.

Montauk Oceanfront Trailer to Sell for Record $3.75M

An off-market listing for an 800-square-foot oceanfront Montauk trailer is in contract to sell for a record $3.75 million, which equates to a cool $5,000 per-square-foot, The New York Post has learned. Located in Montauk Shores, the price point is several times the previous record in the area, where the last highest recorded sale was $1.85 million for a trailer that traded hands in 2022. It’s a high price to pay for sure. When compared to New York City’s luxury market, roughly the same price per square foot — $4,998 — is getting a deep-pocketed buyer a 3,951-square-foot penthouse at the Robert A.M. Stern-designed 30 Park Place in Tribeca that’s now also in contract, according to StreetEasy. However, that Hamptons trailer’s price per square foot pales in comparison to that of a nearly 17,550-square-foot penthouse that listed at Central Park Tower in late 2022 for a colossal $250 million — $14,249 per square foot — which would set the record for the priciest home ever sold in the US if it trades hands for that royal sum. Will Gold with The Atlantic Team at Douglas Elliman represented the unidentified buyer.

“The Ditch Plains area in general is very special. It is an oasis for surfers and beachgoers, and in the past several years has been subject to an extraordinary amount of growth and transformation,” Gold told The Post.

The two-bedroom, two-bathroom mobile home was specially built by John Hummel and features upscale finishes with a contemporary beach vibe. The living room and back deck both have 180-degree views of the ocean. Other features include a gas fireplace, a private deck, a grill, and an outdoor shower. The main suite has a private bathroom.

“Especially since COVID, individuals and families have realized the value of oceanfront communities and are paying up for it,” Gold added. “This beachfront row of units in ‘Montauk Shores’ is the perfect exclusive opportunity to enjoy everything Ditch Plains has to offer.”

The transaction is expected to be completed early next month. The neighborhood, on the other hand, has a basketball court, a playground, a recreation center, and swimming pools. The region is known for drawing well-known and wealthy visitors like Jimmy Buffet, who once engaged in a bidding war for a mobile home on the beach. However, for the extremely wealthy, this neighborhood of trailer parks has come to represent an unusual status symbol. Three people have invested in a trailer in the neighborhood: movie producer Karen Lauder, hedge fund manager Dan Loeb, and co-founder of Vitaminwater Darius Bikoff. Apart from the previous record sale, at least 10 mobile homes there have sold in the past year for amounts ranging from $675,000 to $1.4 million. Additionally, the cost of trailers located nearer the beach is higher.

Article from the NY Post

Ceiling Collapses in Bed-Stuy NYCHA Building

A NYCHA building’s ceiling collapses in Bed-Stuy.

Bed-Stuy residents criticized NYCHA on Saturday for failing to stop a leak that led to a portion of the building’s ceiling collapsing this week. On Wednesday night, Marlene Ritter, a resident of a NYCHA building on Willoughby Avenue, claims she was in bed when she heard a loud crash. She claims to have witnessed a portion of her apartment’s ceiling collapse. “This is sickening, the smell is horrible…I’m embarrassed,” said Ritter. The building’s tenants claim that no repairs have been made since the ceiling collapsed on Wednesday and that they have been without heat or hot water ever since.

All-Time High Set for Rents in Manhattan in January 2023

January saw an all-time high for Manhattan rents. As a result of a robust job market and a shortage of available apartments, Manhattan’s median rents increased in January, setting a new record. According to a report from Douglas Elliman and Miller Samuel, the median rental price in January increased 15% to $4,097 from the year prior. This was the highest monthly figure ever. In Manhattan, the median monthly rent increased by 13% to $5,142 in January 2022. Following record increases in late last year, analysts and real estate specialists had predicted that rents would begin to decline in January. But despite a slowing economy and well-publicized layoffs in finance and technology, Manhattan’s rental market is still in high demand. According to Jonathan Miller, CEO of Miller Samuel, a real estate appraisal and research firm, “We’re not seeing rents fall in any appreciable way.” In reality, they are merely moving sideways. According to analysts, a healthy job market is what primarily drives Manhattan’s rental market. Despite headline-grabbing layoffs at major tech firms and Wall Street banks, New York’s overall job market and wage growth are still strong. More employees might be returning to the city as more people go back to work. New leases increased 9% in January 2022 compared to January 2022 and by 8% over December, indicating that despite high rents, tenants are still willing to pay them. At the same time, despite growth, there are not a lot of apartments available. According to Miller, the vacancy rate, or percentage of apartments available for rent, was 2.5% last month, which is lower than the 3% rate that is more typical for Manhattan.

The rental strength is “a tale of two cities,” according to Joshua Young, executive vice president and managing director of sales and leasing at Brown Harris Stevens. According to him, there is a high demand for brand-new, top-notch rentals that are entering the market in desirable areas, which is resulting in a shortage of luxury apartments. While they wait for the price of apartments to drop, an increasing number of prospective apartment buyers are choosing to rent. They are waiting for rental prices to decrease, he said. They don’t want to be the ones who pay too much for a house that will be worth less in a year. Since many prospective buyers of luxury properties opt to rent, there is a particularly high demand for rentals in this category. According to Miller, there were bidding wars over nearly one in five luxury rentals in January. Analysts predict that rents won’t decrease much, if at all, in the upcoming months unless the job market and economy slow down. In terms of the rental market, “I think 2023 will be just as strong as 2022,” Young said.

Source: CNBC

City Recommends Conversion to Underused Offices to Apartments in Central Business Districts

From NYC.gov:

Office Adaptive Reuse Task Force of Mayor Adams Unveils Recommendations to Convert Underused Offices into Homes builds on the initiatives of the Adams administration to revitalize central business districts and increase the supply of housing Including 11 Specific Recommendations Office conversions could provide homes for as many as 40,000 New Yorkers over the course of the next ten years if recommendations are put in place alongside existing regulations. 

The mayor of New York City, Eric Adams, today unveiled suggestions made by a task force organized by the city to encourage the conversion of vacant office space into new housing for New Yorkers. The New York City Office Adaptive Reuse Study, created by the Office Adaptive Reuse Task Force and headed by Dan Garodnick, Director of the Department of City Planning (DCP) in New York City, offers 11 specific recommendations that would alter state statutes and local zoning regulations in an effort to apply the most flexible conversion regulations to an additional 136 million square feet of office space, or roughly the same amount of space as the entire city of Philadelphia. With these recommendations in place and the current city and state regulations, office conversions could potentially create as many as 20,000 homes in the next decade, enough to house up to 40,000 New Yorkers, even though property owners will decide whether to convert their buildings.

“With this study, we have a roadmap to deliver on a vision for a more vibrant, resilient, prosperous, and affordable city,” said Mayor Adams. “The need for housing is desperate, and the opportunity offered by underused office space is clear — we know what we need to do. These concrete reforms would clear red tape and create the incentives to create the housing we need for New Yorkers at all income levels. I want to thank the members of the task force for helping to chart the course, and I look forward to working with them and our partners in city and state government to deliver these much-needed reforms.” “Enabling more offices to convert to housing will help us bring back our commercial districts while also addressing our housing supply crisis,” said Deputy Mayor for Economic and Workforce Development Maria Torres-Springer. “The recommendations in this report will set us on the path to achieving these critical goals, and I look forward to partnering with our colleagues in Albany and the City Council to ‘Get Stuff Built.’” The study outlines a path forward to deliver on goals outlined in “‘New’ New York: Making New York Work for Everyone,” an action plan released in December by Mayor Adams and New York Governor Kathy Hochul — including reimagining the city’s commercial districts as vibrant 24/7 destinations, making Midtown Manhattan and other business districts more mixed-use and flexible, and expanding the city’s supply of housing. It also builds on Mayor Adams’ “Get Stuff Built,” “City of Yes,” and “Housing Our Neighbors” plans, which include significant steps to tackle the city’s severe housing shortage. Increasing opportunities to repurpose underused office space for housing and other uses is critical to achieving those goals. “After every crisis, New York City reinvents itself, which is why it is so important for our codes and regulations to stay flexible. The Office Adaptive Reuse Task Force recommendations will help us meet the moment and rise to each new challenge with a built environment that is as dynamic and diverse as New Yorkers themselves,” said Chief Housing Officer Jessica Katz. “

To solve our housing shortage, we need every tool possible. Our administration’s housing blueprint, Housing Our Neighbors, calls for leveraging zoning to encourage more affordable and supportive housing citywide, helping families access new neighborhoods with amenities, jobs, and schools close by, which every New Yorker deserves.” “Our ability to remain a global leader in a rapidly evolving and changing economy will depend on our ability to adapt,” said DCP Director and City Planning Commission Chair Garodnick. “Working closely with the City Council and our colleagues in Albany, we will build clear rules and set this city up for success.” Implementing the task force’s recommendations would extend the most flexible conversion regulations to an additional 136 million square feet of office space — roughly the amount of office space in the entire city of Philadelphia. Credit: New York City Mayor’s Office The Office Adaptive Reuse Task Force was convened by the Adams administration in July 2022 following Local Law 43, sponsored by New York City Councilmember Justin Brannan.The task force’s recommendations include: These recommended reforms would be implemented via changes to state law and regulatory changes through a city zoning text amendment.The task force included 12 members with a wide range of experience in architecture, development, economics, finance, law, and advocacy: “From designing the street grid to rebuilding after 9/11, New York City exists in a constant state of evolution and aspiration.

Today, our commercial office buildings offer the opportunity to meet the changing needs of the city, including the critical need for housing,” said HPD Commissioner Adolfo Carrión Jr. “The recommendations from the Office Adaptive Reuse Task Force aim to ensure the city’s built environment keeps us thriving as a city of opportunity.” “It is essential for New York City to be adaptive to the changing needs and dynamics of New Yorkers in this post-pandemic era,” said NYCEDC President and CEO Andrew Kimball. “The recommendations laid out in this report build off those put forth in the ‘Making New York Work for Everyone’ action plan to reimagine 24/7 commercial districts across New York City. These proposals are designed to aid in the transformation of single-use commercial hubs into mixed-use, live-work environments and are necessary to building a more vibrant and inclusive economy for all New Yorkers.” “Outdated regulations that no longer serve their intended purpose are a roadblock to solving some of the most intractable challenges the city is facing today,” said Acting DOB Commissioner Kazimir Vilenchik, P.E. “The necessary changes to the New York State Multiple Dwelling Law and the city’s Zoning Resolution recommended in this study will finally give property owners a pathway to convert their empty office buildings into the housing this city desperately needs. I applaud the task force on their commonsense recommendations to reduce red tape and streamline the conversion process.” “Successfully addressing our city’s dire housing crisis requires creative solutions, and the Council is proud to have passed legislation to create this task force to advance important recommendations for converting underused office space into new housing,” said New York City Council Speaker Adrienne Adams. “Our recovery from the pandemic requires employing concrete tools, flexibility, and thoughtful strategies to create homes for New Yorkers and strengthen our central commercial districts. I look forward to working with the administration and our state partners to confront the housing shortage, ensuring that New York remains an affordable place to live, work, and raise a family for all.”

Borough President Mark Levine. “The task force’s recommendations will help unlock opportunities to turn underutilized office buildings into housing we badly need. I look forward to working with the mayor and Chair Garodnick as we find innovative ways to build more housing and create healthier, more vibrant neighborhoods across the city.” “New York needs to be able to adapt to fully recover from the pandemic and the changes it brought to our society,” said New York City Council Majority Leader Keith Powers. “There is incredible potential in turning unused office space into ways to address our housing crisis and more. I am grateful for the recommendations of this task force and look forward to continuing to partner on our economic recovery.” “New York City is lagging other municipalities in converting office space to housing. That’s why it is so important to take bold steps, right now.” said New York City Councilmember Erik Bottcher. “Our housing shortage poses an existential crisis to New York’s future. I want to thank Mayor Adams and Chair Garodnick for this forward-thinking work.”

Media Contact pressoffice@cityhall.nyc.gov(212) 788-2958

Manhattan Real Estate Sales Year over Year

  • Median sales price slipped year over year for the first time since the pandemic era began but was well above pre-pandemic levels
  • The rate of annual sales growth went negative for the second straight quarter
  • Listing inventory slipped quarterly but was on par with pre-pandemic levels despite sales slowdown
  • Coop median sales price increased year over year for the seventh consecutive quarter
  • Condo sales fell sharply year over year but remained above pre-pandemic levels
  • All luxury price trend indicators expanded annually for the fifth straight quarter
  • Luxury listing inventory expanded annually for the second straight quarter but was sharply below pre-pandemic levels
  • Average price per square foot of new development sales edged higher year over year but was sharply below pre-pandemic levels
  • New development sales declined sharply from the year-ago surge but remained significantly higher than pre-pandemic levels
  • Information obtained from the Elliman – Miller Samuel Report: Q4-2022 Manhattan Sales

Manhattan Apartment Sales Down 29% in Fourth Quarter 2022

Upon examination of data compiled by Miller Samuel for Douglas Elliman indicates that the number of apartments sold in Manhattan dropped by 28.5% in the fourth quarter of 2022 compared to the fourth quarter of 2021. The average price for a Manhattan apartment is approximately $1.5M with the median sales price dropping by 5.5%. According to the Douglas Elliman and Miller Samuel data, the number of sales in fourth quarter 2021 totaled 3,559 compared to 2,546 in fourth quarter 2022. CNBC reported, “The declines in both sales and prices mark the end of the roaring comeback in Manhattan real estate after the worst days of the pandemic and raise fears of continuing weakness into the new year. Rising interest rates, a weaker economy and a falling stock market, which has an outsized impact on Manhattan real estate, are all likely to weigh on the market this year.”