Updates and market analysis

THE NOVACK TEAM UPDATE | June 26, 2017

GLOBAL DEVELOPMENT ADVANTAGE

We are pleased to announce the launch of Sotheby’s International Realty Development Advisors.

The Novack Team is now uniquely positioned to successfully market and sell new development inventory given:

  • Sotheby’s unrivaled global referral network of 20,000 agents in 880 offices located across 70 countries.
  • Our strategic relationship with the auction house and access to its affluent clientele around the world.
  • The ability to accurately position inventory since we are entering the market when there has already been a reassessment about appropriate price levels and unit mixes.
  • The full backing of a dedicated new development team with the resources and personnel to optimally support all facets of a project including pre-construction consulting, strategy, in-house and outside marketing, and (most importantly) sell out!

PLEASE CLICK HERE FOR FURTHER DETAILS

Thank you for your continued referrals!

Sincerely,
Sybille and Alexander

Updates and market analysis

THE NOVACK TEAM UPDATE | April 18, 2017

THE LOWER EAST SIDE – BEST OF OLD AND NEW

 

The Lower East Side (‘LES’) is undergoing a renaissance with 9 new luxury condo projects currently on the market or soon to be listed. We are seeing a mix of both personal use and investment buyers.

  • Much of the LES’ appeal centers on the following points:
    • Unlike Hudson Yards or other mega-project areas, this is an established neighborhood with existing diverse and fantastic restaurants and retail that cannot be replicated by a developer irrespective of how much money they invest.
    • Walking distance to some of the most coveted downtown locations (e.g. Soho, Nolita, Tribeca) where new condos are significantly more expensive on an overall and price per square foot basis. Since 2012 the LES’ average price per square foot has risen more slowly than other downtown locations, creating potential opportunities for future appreciation.
    • Developers are mixing high-end finishes and large windows with more efficient floor plans that maximize the number of bedrooms relative to square feet.
    • Limited plots of developable land in neighborhood.
  • Below are just some of the new residential offerings:
    • 150 Rivington: former site of Strait’s Matzo Factory which will include 45 condos ranging from a ~$995K 1-bedroom to a $3.9 million 3-bedroom.
    • 196 Orchard: created from the sale of the air rights over neighborhood favorite Katz’s Deli.  Includes two-story Equinox and 94 apartments ranging from a ~$1 million studio to a ~$4.2 million 3-bedroom.
    • 215 Chrystie Street: Ultra-luxury new development launched in 2014 as a partnership between Herzog & de Meruon and Ian Schrager. Prices start at ~$4 million (with the majority of units over $7 million).  All units are already under contract other than one.
    • 242 Broome: one of the buildings slated for the Essex Crossing SPURA site with 55 apartments ranging from a ~$1.3 million 1-bedroom to a ~$5.25 million 2-bedroom.
  • Another highly significant project is the ~1.65 million square foot Essex Crossing Redevelopment that is transforming the six-acre section of the LES commonly known as the Seward Park Urban Renewal Area (‘SPURA’) which had remained largely vacant since 1967.
    • Upon fruition the project will include approximately 1,000 units of housing, retail, a park, offices, movie theater, and an indoor ‘Market Line’ housing the Essex Street Market and other vendors. Phased construction began in 2015 and is anticipated for completion in 2024.

Thank you for your continued referrals!

Sincerely,

Sybille and Alexander

TheNovackTeam.com

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Updates and market analysis

THE NOVACK TEAM UPDATE | December 5, 2016

READING TEA LEAVES

As individuals look forward in the wake of a uniquely charged election, one area of focus (among many) is the new administration’s effect on New York real estate.

No one can predict the future, and a great deal will certainly depend on cabinet appointments and actual policy implementation.  That said, below are some areas to consider that could affect the New York real estate market based upon the information we have thus far:

  • Wall Street: Wall Street has seen some increases following the election, particularly for construction companies such as Caterpillar. Bank shares have also done well with SPDR Financial Select Sector exchange-traded funds reaching their highest point since 2008.  In addition, the proposed loosening of financial regulations could facilitate lending and provide a boost in the near term.
  • Infrastructure: The proposed investment in infrastructure could have a positive effect on New Yorkers’ physical surroundings and the overall housing market if implemented properly.
  • International Purchasers: New York is generally still considered a global safe haven for real estate investment. Notwithstanding, the tone of rhetoric and the administration’s foreign policy, immigration, and trade stances must certainly be closely watched.
  • Taxes: The president-elect has generally proposed a lessening of income taxes (particularly for more affluent individuals), corporate taxes, and perhaps the inheritance tax – all of which should benefit the purchasing power of the luxury New York buyer base. Accordingly we may see an increase in real estate investment.
We appreciate your continued referrals.
Best,
 
Alexander and Sybille

Updates and market analysis

THE NOVACK TEAM UPDATE | October 28, 2016

PRE-ELECTION STATE OF AFFAIRS

There are several competing factors influencing the market in advance of November 2016’s election that are, frankly, creating a lot of noise. We thought it would be helpful to look at them individually and their effect on NY Real Estate…

I) NOVEMBER 8, 2016 PRESIDENTIAL ELECTION:  While it is normal to experience some hesitancy in the months leading up to an election, the current presidential race has been particularly polarizing and attracted more international attention than any in history.

    • WHAT DOES IT MEAN?  We have seen a little slowdown in traffic as some individuals wish to see the results before making a major financial or investment decision.  That said, decisive buyers are smartly capitalizing on great properties today, while sellers are in some instances actually benefiting by listing now before what will likely be an uptick in competing inventory when many chose to list in November.  Interestingly, not all international groups are responding in the same manner.  We are experiencing increased interest from certain nationalities while others are temporarily holding off.

II) NEW DEVELOPMENT INVENTORY:  There is a large pipeline of current and future new development inventory.

    • WHAT DOES IT MEAN?  Many developers are choosing to release product in smaller groups so that they do not flood the market.  We are seeing a clear disparity in the great success of certain developments while others experience sluggish sales.  Buyers are now more focused on new construction that provides a strong location, views, and usable square footage.  Projects which offer these attributes are selling very quickly – often even without a model unit.  Others which are very expensive but offer huge square footage relative to the number of bedrooms without intrinsically desirable neighborhoods or architecture simply aren’t moving.

III) INTEREST RATES:  It is likely that the Fed will begin a gradual increasing of interest rates by the end of the year.

    • WHAT DOES IT MEAN?  Interest rates are still at historical lows which is a strong driver for buyers who want to lock in a long term low cost of borrowing. This correspondingly benefits sellers who can take advantage of a motivated buyer pool.  The anticipation and ultimate reality of gradual interest rate increases should create a greater sense of urgency among buyers as they realize that the unprecedentedly favorable lending environment will not last forever.

We appreciate your continued referrals.

Best,

 

Sybille and Alexander

Updates and market analysis

THE NOVACK TEAM UPDATE | August 26, 2016

THE NOVACK TEAM GUIDE TO NEW DEVELOPMENTS

  • Overview/Process:
    • Typically begin marketing ~1-2 years before estimated completion
    • Imperative to review offering plan to understand finished project specifics and special risks section
    • Offering plan’s ‘Schedule A’ lists asking prices, estimated square footage, and carrying costs of individual units
    • Schedule A amended when/if prices increase commiserate with completion of construction
    • Generally new development sponsors are more likely to negotiate a concession in closing costs vs. a below ask sale in order to avoid undermining the sellout pricing of the building as a whole
    • Sponsor can declare plan effective after 15% of units have gone into contract and must do so after 80% of units are in contract
    • Purchaser typically pays 10% deposit at contract signing and another 5% six months later
    • For a fee, certain lenders will allow purchasers to lock in an interest ceiling today while rates are still at historic lows, and then fund at the lower of current market rates or the established ceiling at the time of closing 6 – 18 months later
    • In order to begin closings condo declaration must be recorded with city registrar and temporary certificate of occupancy must be issued. Sponsor issues closing letter ~ 3 weeks in advance of closing date
  • Pros:
    • Potential for discounted pre-completion pricing if purchased early on
    • Benefit from appreciating neighborhood
    • Completely new building, finishes, and latest design features
    • Unique amenities that are not available in older buildings
  • Considerations/Cons:
    • Limited moderately priced inventory — there is a premium for new construction
    • Uncertain closing date
    • Some components of common space may be unfinished at time of closing
    • Quality and track record of sponsor/developer/architect and an understanding of the offering plan are key since you are relying on their future execution
    • Carrying costs frequently higher than resale condos (often due to amenity package) and may increase beyond estimate provided in offering plan
We appreciate your continued referrals.
Best,
Sybille and Alexander

TheNovackTeam.com

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Updates and market analysis

THE NOVACK TEAM UPDATE | July 15, 2016

BREXIT’S IMPACT ON NYC REAL ESTATE:

  • The surprise decision by Great Britain to exit the EU after 40 years of membership and status as the Union’s second largest economy has had a global impact on the market. This has been further compounded by the fact that there is currently no finalized exit timetable or structure.
  • Three of the UK’s largest real estate funds (M&G Investments, Aviva Investors, and Standard Life Investments) have already frozen approximately £9 Billion in assets given the overwhelming influx of parties looking to redeem.
    Real estate has become a core component of investment portfolios and BREXIT has prompted many to question the stability of Great Britain and Europe. Investors, particularly conservative ones, will be looking elsewhere to purchase with New York likely being first on their list.
  • We anticipate a diversion of international capital to NYC residential properties commiserate with a desire to hold US Dollar based assets perceived as a more stable means of storing wealth.
  • At the local level, the uncertainty surrounding BREXIT has necessitated a deft handling of in-process negotiations between buyers and sellers — even though the ultimate impact of the exit will likely be neutral to slightly positive for New York real estate.

Let us know if any of your friends might like to receive the Novack Team Update!

We appreciate your continued referrals.

Best,

Sybille and Alexander

TheNovackTeam.com

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Updates and market analysis

THE NOVACK TEAM UPDATE | April 19, 2016

Are Co-Op Boards Finally Listening to Buyers’ Needs?

  • The continuously widening premium paid for condos vs. co-ops now represents in excess of 25%+ for like-kind product.
    • This is primarily due to condos’ appeal to investors, internationals, and buyers who either want or need to finance — especially younger purchasers with strong earnings that are still building their net-worth.
  • A growing number of co-op shareholders are focused on protecting their investment and accordingly we are seeing a gradual easing of board purchase requirements.
  • These adjustments include:
    • An increase in the amount of financing permitted.
    • More lenient renovation policies (e.g., no ‘summer work rules’).
    • Some flexibility on pied-a-terre policy.  What it means to be ‘tied to NY’ has changed in response to a more global buyer base and a larger number of empty nesters who may split their time between multiple homes.
    • A more logical and open-minded case-by-case assessment on permitting trusts and non-US buyers.
    • More reasonable post-closing liquidity requirements.
    • Gifts and family loans frequently permitted.
    • Sublet rules have been the slowest to change.  Many boards are moving towards a policy which accounts for unavoidable circumstances (such as a job transfer) while avoiding a transient tenant base.
  • We certainly view these changes as positive for both buyers and sellers.

Let us know if any of your friends might like to receive the Novack Team Update!

We appreciate your continued referrals.
Best,
Sybille and Alexander

TheNovackTeam.com

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Sybille and Alexander NovackSotheby’s International Realty | East Side Manhattan Brokerage
212 606-7605
alexander.novack@sothebyshomes.com

Updates and market analysis

THE NOVACK TEAM UPDATE | February 1, 2016

THE #1 QUESTION YOU ARE ASKING US:

HOW IS THE MARKET?

  • Overall stabilization with three pronounced sub-markets:
    • i) ~$1 million – $3 million: Very brisk sales activity and frequent bidding wars for quality properties. Limited inventory since developers have almost completely ignored this price segment given the cost of buying land in New York City.
    • ii) ~$3 million – $10 million: Still large customer base but greater inventory available due to new condo developments coming online. Customers are making thoughtful rather than rushed decisions about their purchases.
    • iii) $10 million plus. “Large and Condo” is no longer enough to make buyers pull the trigger. Assets have to be truly special (e.g. superior views, location, and architecture) to close the sale.
  • For all three segments owners are no longer able to sell properties at unrealistic prices with no actual foundation in the market. At the high end of the market ($3 million and greater) global political and financial fluctuations have led to a more conservative buyer/investor.
  • It is now more important than ever for both buyers and sellers to work with an analytical and experienced broker to recognize value and price units appropriately.
  • The best thing about New York City real estate is the City itself. NYC is still viewed with not only equal, but greater, confidence by the global community as a preeminent destination for quality of life, security, new and existing industries, and vibrant neighborhoods and culture.
Let us know if any of your friends might like to receive The Novack Team Update!
We appreciate your continued referrals.
Best,
Sybille and Alexander

Updates and market analysis

THE NOVACK TEAM UPDATE | December 2, 2015

THE DRYLINE

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  •    Per New York City’s first-ever Recovery and Resiliency Director Daniel Zarrilli, prior to Hurricane Sandy’s approximately $19 billion in damages to NYC it had been almost impossible to raise funding for climate-change related projects.
  •     While much of New York City rests above other world metropolises, lower Manhattan is not much further above sea level than Venice or Amsterdam.
  •     The city now has a budget of $1 billion dedicated to ‘The Dryline’, with a significant remainder of the project to be funded through private interests and partnerships.
  •     The ‘Dryline’ (or ‘Big U’, as it is often termed) will be comprised of 10 miles of raised parkland and public space that will camouflage barriers and deployable walls that would protect against rising waters in a storm.
  •     The project is being spear-headed by Danish design firm Bjarke Ingels Group (BIG), which staved off fierce global competition in its bid to build the critical defenses.
  •     When fully completed it will circle the coast of Manhattan from West 57th Street, down to Battery Park City, and up to East 42nd Street.
  •     The Big U will be developed in 3 phases, the first of which will focus on the Lower East Side and could be completed within the next 5 years.
  •     BIG interviewed local businesses and residents as part of their design process to ensure the project served a dual purpose.  As Mr. Ingels elaborated: “We’re doing it in a way that will be a dialogue with all the neighborhoods along The Dryline, so that what we’re doing will never be perceived as a war zone or a piece of resilient architecture… when you go there in the future you will see amenities that are tailored to the neighborhoods. Undulating landscapes, street furniture, and pavilions that are part of an environmental and social program.”

Let us know if any of your friends might like to receive The Novack Team Update!

We appreciate your continued referrals.
Best,
Sybille and Alexander

TheNovackTeam.com

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Updates and market analysis

THE NOVACK TEAM UPDATE | October 7, 2015

Real Estate’s Gold Standard

  • Recent global market volatility has caused many to seek relative safe havens to invest their capital.
  • Of course no asset is immune from market cycles. High-quality New York real estate which possesses limited and intrinsically valuable geography/architecture, however, has proven itself to best maintain value in a downswing and be the first to rise in an up market.
  • Internationals facing devaluations in their currencies are also utilizing New York real estate as a US dollar-linked investment.
  • Many of our customers are focusing on hard assets to provide long term inflation-adjusted appreciation.
  • So What Qualities are Key for New York Real Estate in the Long Term?
    • An A+ location. Prime areas are finite. They are never creating another Central Park, Greenwich Village, etc.
    • Light and views
    • Gracious proportions and layouts
    • Not trendy amenities which can result in high maintenance and just be topped by the next fad
    • Proximity to transportation
    • Rentability
    • Flexible financing policies
    • Reasonable boards for co-ops
  • While gold may have traditionally been the ‘safe’ asset for protecting wealth over the longer term, the advent of ETF’s (and a resulting speculative market) has led many to seek more tangible and limited alternatives.
  • Underscoring this is a quote from Laurence Fink, Chairman of the world’s largest asset manager BlackRock: “The two greatest stores of wealth internationally today are contemporary art….and apartments in Manhattan, apartments in Vancouver, in London.”

Let us know if any of your friends might like to receive The Novack Team Update!

We appreciate your continued referrals.
Best,
Sybille and Alexander

TheNovackTeam.com

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