How does everyone see the current NYC resi market?
How does everyone see Manhattan/Brooklyn resi market?
And let's discuss Jersey City too if interested.
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Brooklyn is obviously picking up
What? Brooklyn is slowing down drastically. Look at the most recent data... I know a guy at the top BK brokerage and he says the numbers are even worse than the data that's been put out to the public.
They talk about extreme demand for rental housing in the Burroughs. Yes, that's true, but not most of the demand still out there will not pay the ridiculous rents necessary for the developer to hit his profit projections. I think the market is starting to change and you'll see some developers miss their rent projections and get hurt as a result.
I've hear dof development deals, where they referb half a building to get high rents, then self that half finish project pro-forma. Makes you wonder if that is all the absorption in the market and the developer knew that.
Areas that are good today will stay good. Areas on the margin or still prospective will be hit badly, especially for developers. There's obv some concern and speculation as to the L train shut down, but I don't think it will be as significant as people think overall. Maybe a temporary slow down, but not long enough to affect sale prices and Williamsburg and the western half of Bushwick will pick up right where they left off.
Any NYC guys actively doing deals? Seems like everyone I speak to is at a stalemate with NYC RE. No room for returns in any new acquisitions.
Brooklyn Downtown Rental - As you probably heard from WSJ, there are lots of new supply. Go to roof top of any high-rise building and look around. So many cranes building units.
Williamsburg - L line will be cut off in 2019 for 18 months, and yes, this will definitely affect the area negatively, probably not right this moment though.
NYC Rental - Yes, new supply is coming in bulk and should affect the market negatively a bit. But in medium to long term, many executives agree that the new supply will be fully absorbed.
NYC Condo - Under $3M is selling like hotcake. Luxury ones, not so much. Condo developers who built larger units (3 BR / 4 BR) are having trouble selling those while the new developments focus on what people really want (1 BR / 2 BR).
That's what I think.
According to Barry Sternlicht (let's all genuflect in our offices at mention of His name), rents are down 15% in Manhattan, and there's a tremendous amount of overbuilding happening. There's lot of new supply on the market.
I remain optimistic, nonetheless. The NYC renter population is so transient that those bright-eyed 20somethings will pay the high prices for a few years and then head back home.
Still though, given the asset prices from a few years ago, I'm sure the pro-forma underwriting must have been very aggressive for most dev shops. Then of course there are all the shops that have held the land for years - and they're poised to make a decent buck.
Adding to this: Where do you think are the best places for first year analysts to move to this late Summer? Also any advice on the process?
If you want to be close to NYC and still want it to be nice, most people move to Astoria or LIC in Queens, OR DUMBO or Williamsburg in Brooklyn.
What? Nothing against any of those neighborhoods, but that is not where most first year analysts move.
Depends on lifestyle preferences, $$, where you're working, and how many hours you expect to be working, but most of my friends who are analysts and/or associates tend to live in neighborhoods like Murray Hill, Hell's Kitchen, Gramercy Park, or perhaps East Village.
Yes you're probably right. I was thinking along the lines of my age group, not 1st year analysts and associates. Those who've been in the city for a while and want decent rent and space for the money.
I'm of the opinion that rents and home prices will either stay flat or go slightly down for the next 3-4 years. A lot of supply coming onto the market and a lot of people don't seem to be as enamored with Manhattan.
I think this is a super broad question, so there are about a million ways to answer this, but I think there are still neighborhoods that are decent from an investment perspective. I like East Village and LES right now. The stream of bright-eyed 20 somethings who are willing to pay $1400-$2000 a month and don't mind living in absolutely dumpy buildings....doesn't seem to be going away anytime soon. Just my $.02.
I think you're right in that there's long term opportunity and rent and demand for those properties will stay high, so those that have been in the area collecting checks will continue to do well for a long time. But cap rates went down very steeply in the EV/LES starting 2-3 years ago (even compared with the rest of the city) which has left a slim margin for anyone trying to find deals recently. A lot of the internal upside opportunities (vacate, renovate, rinse, repeat) have been worked already too, so you'd need to see a lot of market growth make a real buck there, which I don't think is going to happen.
It's hard to say if any given neighborhood is great to invest in right now, most of the upside from future subways, college campuses, etc has been heavily speculated and baked into sale prices anyways. Best strategy might be to look for good internal economics and ignore the neighborhood (with some reservation of course) until we get a clearer picture of what happens with a potential downswing, raise in rates, L train shutdown etc. From that deal by deal perspective, there are always some opportunities out there.
So more simply I suppose it's not a bad place if you're looking to park your money, but not much opportunity from short term growth, which I think is a good reflection of the market in general right now.
You'd have to be an idiot to buy a NYC apartment for an investment purpose. And I mean this in terms of the average person, if you have 10 mil in the bank then go ahead and buy that spec condo unit in the NoMad district.(Aside- someone mentioned first year Analysts are living in Gramercy really? I know people making upwards of 500k who live there so how can an Analyst afford it) You are buying at such a high premium from what the rental market is in many cases that just to rent it out could cost you money. Pick up a 6-10 cap in Charlotte, Atlanta or Tampa, much better return and when you refinance in 5-10 years it will then be a pretty safe investment.
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