NEW YORK – “Cautious optimism” were the words of New York City real estate brokers during a panel discussion at the Real Estate Connect conference Wednesday.
Willie Kathryn Suggs, the principal of Willie Kathryn Suggs of Harlem in New York, talked about the Harlem real estate boom. “It began in 1994 when we noticed the change. It really became crazy in the last three years. People from all over the world are calling me about Harlem,” she said.
One reason for the sudden interest in Harlem real estate is the drop in crime, Suggs said. “That allowed African-Americans such as myself to come back and non-African-Americans who wanted an affordable place to live to also move here. There is still value in Harlem compared with the rest of city but it is getting harder to find it.”
She noted a property in contract for $3 million, which will be the highest price on record in Harlem. “Harlem also has had pockets of affluence but it was the surrounding neighborhood that frightened people,” she said. “You’d have to go through the dangerous parts of Harlem to reach the nice areas.”
Elaine Reimer, managing director at Coldwell Banker Hunt Kennedy, said she felt the New York market might experience a slowdown at times, with prices rising more slowly than they have been recently. But the need for housing in New York will be filled at a premium price, she said.
“The inventory of apartments has grown but not enough. Construction is moving ahead although perhaps people are now buying to actually move in as opposed to selling as soon as they buy. New York has always been more cautious than other parts of the country in terms of flipping contracts,” she said.
Susan Greenfield, a vice president at Brown Harris Stevens, expressed concern regarding prices. “The young people who have come into this market in the past three or four years and experienced this frenzy are not ready for a downturn,” she said. “I believe the average appreciation is 3-5 percent; we’ve never experienced anything like what has occurred — 20-30 percent appreciation per year is not going to continue.”
Greenfield views a market change as an adjustment back to reality. “We don’t have multiple bids at this time but I don’t see the market slowing down. The big properties are in demand now; there is a glut of smaller properties such as one bedrooms and studios,” Greenfield said.
Patricia Dugan, senior vice president and director of exclusive sales services at The Corcoran Group, said 27,000 new units are coming onto the market. “All are very upper-end and the question is how many people on Wall Street will buy them,” she said.
“For young people becoming first-time buyers, it’s a stretch. Even though all of us have wealthy clients, there is such a thing as value and I believe people will step back and look at the ‘value’ aspect. The average two-bedroom apartment in a nice New York building is now $2 million. On the Upper East Side, you can still find two-bedroom apartments in post-war buildings for $1 million.”
However, 740 Park Ave. does not have $1 million apartments. Michael Gross, the author of “740 Park: The Story Of The World’s Richest Apartment Building,” explained that the building broke ground a few days before the stock market crashed in 1929.
“It was actually under water, financially, from 1930 until about 1979,” he explained. “That is where an apartment sold by Saul Steinberg sold for $29.9 million. It was valued at $250,000 when built and later was sublet to John D. Rockefeller, Jr., who spent the next 15 years trying to get the building to become a co-op so he could (buy) the apartment. In 1953, the building went co-op and he paid himself $38,000 for the apartment. Nineteen years later, Steinberg bought the apartment from the Rockefeller estate for $225,000.”
“Status is the word in New York retail,” said Faith Consolo, chairman of retail leasing at Prudential Douglas Elliman. “New York City is all about image and where brands are built. In retail, you can have hundreds of stores in Europe but you need a New York presence. It’s like an ad in the New York Times. You have to be here. It’s an exciting landscape and every day a new neighborhood emerges.”
For example, she noted, five years ago Bleeker Street in the Village had a butcher, baker and candlestick maker, and “Now you have Mark Jacobs and Ralph Lauren and the area is now a shopper’s paradise.”
“Retailers are like sheep,” Consolo said. “All you need is one and the rest follow.” In the meat packing district, for example, “Jeffrey came from Atlanta and opened and everyone followed. Stella McCartney and others of her status were right behind. And food follows fashion, so every hip eatery wanted to be there. Rents, which were $25 per square foot, are now $250 per square foot and that is considered a bargain.”
“740 Park and Ralph Lauren share one thing – they are both brands that people strive to achieve,” concluded Gross. “Buying an apartment at 740 Park is an entry to the American ruling class. There are six or so buildings like this in New York. It’s all about the address. It’s a trophy.”
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