Monthly Archives: January 2018

Billionaire'sRow, Real estate

Clock is ticking for Extell’s sales at Central Park Tower

by  Brian Silvestry

Extell developement, the developer behind the One57 condo on Billionaire’s Row in Manhattan was able to secure financing to go ahead with their newest development on West 57th street. The building is a projected $4 billion sellout. With the market for super luxury slowing in the last couple years, one of the terms of the lenders is to have $500 million in sales by 2020. Central Park Tower will have 179 units and 20 of those units will be asking $60mm or more. The price per square foot will be just north of $7k psf.

The building will have a Nordstrom’s at it’s base and will rise 1550 feet.

Full Story

Buying tips for your NYC apartment, Investment

How new tax law helps investment real estate

by  Brian Silvestry

The new tax law can be a big boost to investment real estate and gives an advantage over art collection. The reason is the IRS code 1031. The 1031 exchange allows owners of investment real estate to sell one property and buy another and defer the taxes. Generally, the property being sold is sold first, possible purchase properties are identified within 45 days of closing and must be closed and purchased within 180 days of the first closing. The 1031 exchange has facilitated the buying and selling of Manhattan property and in other states for years. It is a staple of the real estate investor. It used to apply to art as well as stocks. But now the new tax law has eliminated 1031 exchanges for anything but real estate.

This will seem to be a boon to the real estate industry and could play into an elevated market for investment real estate as well.

NYT How the Tax code Rewrite Favors Real Estate over Art

FinancialDistrict, Real estate, Rentals, Yorkville

Which two nabes show most rental appreciation?

by  Brian Silvestry

Currently, the rental market in most of Manhattan is declining in terms of price and a record number of apartments are being rented with concessions either of free rent or other incentives. However, two neighborhoods in Manhattan saw increases in rent year over year. One was the Financial District and the other was Yorkville, the northern edge of Manhattan’s upper east side adjacent to East Harlem.

See report here from Curbed NY

Real estate

Manhattan residential market data analyzed

by  Brian Silvestry

Industry pros weigh in on several market segments and take a look ahead to 2018 in the latest edition of the Cooperator. As previous reported here, the luxury market is in a buyer’s market and less expensive properties are still holding with similar price per square foot year over year.

This is confirmed by more personal experience where some sellers can be reluctant to adjust to a changing market and instead insist on their price which holds firm the price per square foot.

Real estate

Multi-family market ready to benefit from Tax Reform

by  Brian Silvestry

One segment of the market that may benefit from the Tax Reform may be multi-family. According to Real estate weekly, some people may decide to rent instead of buying and rents may rise as a result. Also, foreign investors may move into more multi-family properties due to the decrease of the Corporate tax rate to 21%.

Rents have been declining for the last 2 years in the Manhattan market but if more people who can buy decide not to buy this can affect the rental market.

Also, if interest rates rise, this may be a secondary consequence of the new tax law, and they may affect the starter apartment market in Manhattan and increase the amount of renters.

Buying tips for your NYC apartment, MidtownEast, TurtleBay

Thinking of buying in Midtown?

by  Brian Silvestry

If you are thinking of buying in Midtown, Manhattan, take a look the profile of Turtle Bay written by the NYT. One of the few areas that remains a neighborhood and still has affordable apartments relative to the surrounding neighborhoods. As Manhattan nabes expand, will this be a great investment?

Harlem

About to renovate your Harlem Brownstone?

by  Brian Silvestry

If you are considering renovating a NYC brownstone in Harlem, Brooklyn or anywhere in the city, take a look at this article from Brick Underground. Granted it is a little bit of an adverticle but it does give you the basics as far as timelines, potential costs and pitfalls.

Not that long ago, I came into contact with a contractor who renovates Harlem brownstones and he told me that $175 per square foot would be a very middle of the road renovation. A property that I sold in Hamilton Heights achieved a full renovation for $400,000 and it had about 3200 square foot but she was a seasoned investor and was very hands on in the project.

Another investor that I am dealing with from out of state hired contractors and each succeeding one had to redo the mistakes of the previous one and that ended up being costly. So, I would say if you are seasoned investor you are obviously going to spend less and if you are rookie might be better to pay more and have the process managed by someone that you can trust.

 

Buying tips for your NYC apartment, CentralParkWest, Upperwestside

Manhattan buildings that may appreciate the most in 2018

by  Brian Silvestry

Right now due to the new tax laws, some parts of the real estate market will be see price depreciation. See previous coverage.

However, some developments like the Upper West side’s Park West Village may see continued price stability and appreciation. The reason is that real estate taxes and SALT (state and local taxes) will no longer be deductible beyond $10,000. So if you have the funds to purchase an apartment and your cap is below $2.5 million, paying $22,000 per year in taxes may not seem as appealing. Or let’s say your budget is $1.5 million and knowing that in one apartment you will pay $15,000 per year in taxes, most of which will not be deductible or $3600 per year in taxes? Which apartment will you gravitate towards?

This is why Park West Village which is a 4 building condo development built in early 1960’s  and other developments with tax abatement may see a surge in activity as the upper middle class purchasers get more discerning due to the lack of subsidy from the eliminated deduction.

Park west Village is located between West 97th street and West 100th street, Central Park west and Columbus avenue. Each of the four buildings has just over 400 apartments, concierge, gyms, storage, children’s playroom, live-in-super and parking available. Average common charges and taxes combine for a very low $1 per square foot. Apartment sizes range from studios of about 540 sqft (50m2) start at about $800k, to 2 bedroom/2bathrooms of 1140 sqft(106m2)which start at $1.5 million.

Real estate

What impact will the tax reform have on Manhattan apartment sales?

by  Brian Silvestry

The Manhattan real estate market saw a slower than usual 4th quarter as per many reports ahead of the tax reform. I had one listing where a buyer made an offer only to withdraw that offer for fear of what the final tax reform might be. Her particular fear was that the mortgage interest deduction(MID) was going to be eliminated. The MID was amended to $750,000 which means the interest on a loan of up to $750k can be deducted. The primary residence $500,000 exemption and 1031 exchange remained in effect. However, with a lid of $10,000 on the SALT (state and local taxes) which include real estate taxes this may effect the market but not in the way that Moody’s predicts which was a 10% decrease in values.

Buyers at the low end of the Manhattan real estate market(up to $3mm) will not see any tax reform related decreases due to low inventory.  Also with interest rates rising and the MID capped at $750k you might see less buyers upgrading and/or moving to the suburbs (at least the ones with $20k-$30k in taxes). Less sellers can also help to keep the inventory low.

At the high end($6mm+) the market was already in a buyer’s market for some time, so luxury Manhattan real estate will continue along the same trend with longer days on the market and more price reductions.  I showed a penthouse not that long ago for just under $13mm which originally was asking $30mm. At the high end, buyers will continue to buy but they will have more options. The tax reform will not really affect the buyer of luxury Manhattan real estate.

In the middle($3-6mm)  is where it can get interesting. This buyer is buying a larger apartment in Manhattan instead of renting or instead of buying in the suburbs. Now with those apartments having annual taxes from $15k to $60k on average, maybe this buyer decides to continue renting due to the MID cap and more so to the $10k SALT cap. Or perhaps they decide to purchase in a tax abated building or move to a suburb where the taxes are not so high….This market could see some decreases and longer days on the market just like the upper echelons on the market.

Tax abated buildings or buildings with low annual taxes may see a surge in interest. More on that in another post…

Harlem

Mama’s One Sauce by Harlem legend Vy Higgensen

In a 100 year old brownstone on West 126th street, entrepreneur, philanthropist and living legend Vy Higgensen produces here latest success Mama’s One Sauce. Through the joint efforts of Harlem non for profits, Whole Foods, Columbia and lots of sweat equity of Higgensen, Mama’s One Sauce is flying off the shelves at Harlem’s Whole Foods location according to CNBC.