January 2016

ONE FOR THE BOOKS: Ten Things That Went Down In CRE In 2015

There is never a dull moment in NYC’s real estate market.  Here are some key highlights of noteworthy happenings in 2015:

  1. NYC commercial real estate sale volume is up. Total sales volume is on track to surpass the last peak in 2007 of $62B, all fueled by low interest rates, foreign investment, capital preservation needs and 1031 exchanges.

  2. The Fed raises interest rates by 25 basis points.  No one in the New York commercial real estate world seems to care.

  3. DHCR’s smallest rent increase of 0% (i.e. rent freeze) spurred a new appreciation for preferential rents.

  4. The billionaire’s club keeps rolling.  With skyrocketing land prices, ultra-lux condo development is the only way to go. For 2015, One57 continued to be in the lead for the priciest condo sale of $91.5M (2014’s largest sale was $100.5M at One57). But there’s a finite universe of buyers out there, so will it continue to hold up?

  5. Stuy-Town was sold.  Again.  Blackstone and Ivanhoe Cambridge acquired Manhattan’s largest apartment complex, Stuyvesant Town-Peter Cooper Village, home to 30,000 residents for $54.3B. A win for Mayor Di Blasio, as 5,000 units will be reserved for “affordable housing”. 

  6. Micro starts to go macro.  The city’s first micro-unit development, Carmel Place, with (55) 355 SF studios is underway with 40% of the units set aside for affordable housing.

  7. Creative office is the rage.  With NYC’s tech boom and office explosion, WeWork’s  footprint is expanding, with over 22 locations and a design aesthetic that everyone wants to emulate: collaborative workspaces that possess a sense of community.  Companies are setting up shop in Brooklyn, the coolest borough especially in Dumbo Heights and Sunset Park’s Industry City.

  8. More emerging neighborhoods are on the map.  Forget trying to be the #1 most popular neighborhood. There are SO MANY to choose from: Ridgewood, Astoria, Williamsburg, Greenpoint, Crown Heights, Bed-Stuy, the Financial District, Midtown West, Harlem, the South Bronx and the list goes on. 

  1. Boutique hospitality.  Every visitor wants to stay somewhere “special.” Luxury and lifestyle hotels are popping up everywhere and dated hotels are getting facelifts and going green. Noteworthy….. Aloft Manhattan Downtown, The Paul, The Knickerbocker, Marmara Park Avenue, New York Edition, SLS New York, The Beekman and the Baccarat Hotel.

Where’s the value opportunity? The Bronx.  With record breaking pricing and low cap rates in Queens and Brooklyn, many investors flocked to the Bronx for less expensive assets with upside and growth.

 

 

Read the article here