On the Ground - Market Update - May 2021

The marketing is changing and it’s getting hotter and faster.

The promising market I depicted in January has come to fruition. By all markers, activity levels continue to surge and the data is encouraging.

MANHATTAN

Average sale price in Manhattan was $1.7 in Q1 down 9.4% from Q1 2020 $1.9M

• Average sale price for new devs was $2.1M in Q1 down 24.6% from Q1 2020 $2.8M

• Both metrics point to higher absorption rates, showing that sellers are meeting the discounts demanded by buyers and trading accordingly

• Listing Discount off last price down to 4.6% v. 7% Q1 2020

• Average overall price per square foot down to $1,387/sf from $1,536/sf Q1 2020

• Absorption is escalating in Manhattan, in both Condo and Coop markets

• Signed contracts increased by 45% from January to April

• All price points thriving, coop contracts $1-4M up over 1000% YOY, condo contracts $1-4M up over 600% YOY

• Condo luxury market $4M+ received 89 signed contracts in April

• Coop luxury market $4M+ received 39 signed contracts in April

BROOKLYN

Brooklyn total deals larger part of pie than a year ago accounting for 53% of total deals an increase of 2 pts over LY 51%

• Brooklyn contract pricing overall less discounted than Manhattan

• Average Brooklyn new listing sales price increased by 10% hitting $1.1M over LY $1.0M

• This is in stark contrast to Manhattan sales prices which have declined by 9% likely due to overall need for discounting

• COVID 19 affected Brooklyn inventory differently than Manhattan

• Brooklyn inventory weeks of supply have remained flat throughout the pandemic, while Manhattan inventory peaked in Summer 20 and remains elevated over LY

• Additionally, Manhattan properties are sitting on the market for an average of 138 days v. 89 in Brooklyn

The Great Florida Migration: Fact of Fiction?

What does the great Florida migration mean for me, a New York condo/coop owner?

Jean Denoyer, the owner of La Goulue, the clubby Upper East Side Madison Avenue mainstay, vocally declared “I have escaped New York!” when he proudly opened an outpost in Palm Beach. Any quick scan of recent headlines would reveal that scores of New Yorkers have fled to Miami and Palm Beach with little interest in returning. However, with vaccinations rolling out arguably ahead of schedule, this is likely to be more fluid.

Data from the US Postal Service shows that in 2020, 2,246 people filed permanent address changes from Manhattan to Miami-Dade County, and 1,741 folks changed from Manhattan to Palm Beach, comprising about 10% of all out-of-state moves from the borough. And the pandemic has prompted many big firms to consider leaving Wall Street for the Miami-to-West Palm Beach corridor, with recent announcements from Goldman Sachs and Paul Singer’s Elliot Management leading the charge. Carl Icahn and Ken Griffin’s Citadel followed suit. A year of working from home to avoid Covid-19 has led to many finance and investing companies (to say nothing about over-leased law firms) to conclude that they can cut back on ultra-pricey Manhattan office space without sacrificing revenue.

However, there are a few key pieces here that are important to understand. Florida home prices in both the city centers and the surrounding suburban environs (Boca Raton, Ft. Lauderdale, etc) have seen pricing surge as much as 30%, making the financial appeal of this area lose a bit of lustre each week.

And of course, a croque monsieur at La Goulue in Palm Beach is not accompanied by the theater, museums, restaurants, Lincoln Center, Carnegie Hall, and many other cultural havens whose opening may not be too far around the corner.

I think what this data really shows is how the pandemic expedited globalization. Every company and industry is rethinking structuring around in-office time as well as making permanent certain aspects of working from home—many firms toying with 2-3 days per week in v. 2-3 at home.

Miami has long been an adjunct for wealthy New Yorkers---now it just means there will be more fluidity of movement for those formerly-known-as-snowbirds. Maybe New York is not relocating to Florida, but merely expanding, like having a pied a terre where there’s always good weather and oh, yeah, the office rents are also dirt cheap.

Contracts Signed Report - February 2021

In deconstructing the data from February’s sales activity, I am struck by a few compelling data points which show where the market is most healthy...see below

• 60% of all condo contracts were at or below $3M, proving the luxury condo market is still depressed but the ‘prosaic’ condo market doing well

• 40% of all condo contracts were btwn $1-2M, which is a curiously limited bracket, meaning most condo buyers were buying smaller and older 2BRs OR newer, larger 1BRs

• the avg sales price for condos was $2.929M, up from $2.826M in Feb ‘20

• the avg sales price for coops was $1.452M, up from $1.226M in Feb ‘20

• only 14% of coop sales were at $2M and above, showing that there is still minimal movement within the larger ‘family’ apt demo

• the East side is beating out the West for transactions, comprising 29% of all contracts opposed to 20% for the West side

• the West side seems to be holding pricing more firmly than the East, but transacting less frequently, which is an unexpected shift

• Downtown sales comprised only 33% of contracts, whereas the remaining 67% across uptown/midtown are the bulk of what’s moving

• Brooklyn is thriving, with over twice as many contracts signed Feb ‘21 over prior year (both condo and coop)

• Condos $2M-4M in Brooklyn received 3x as many contracts YOY

• The single-family Townhouse market in Brooklyn is off the hook, with almost 5x as many signed contracts YOY with the sweetspot of $2-4M homes comprising 40% of all signed contracts

Anecdotally, our team is equally busy in both the condo and coop spheres but we notice the coop market moving more efficiently with lesser discounts off of last asking price. The condo deals on the buy side are more aggressive, but not as frequently as one might expect—many condo owners are still leasing their apts out, waiting for better markets. The Brooklyn market is obviously the one to jump into as the BK submarkets are among the few actually appreciating through the pandemic.

On the Ground Market Update - Oct 2020

The average price of apts which received signed contracts in October ‘20 was $1,170M for coops, $2,904M for condos

• YOY, average price of coops went UP from October ‘19 by 4.7%, whereas average price of condos went UP 27.8%

• Average discount in October was 10.3% from original price for coops, 11.9% for condos, both increased by over 30% from October ‘19