The Real Deal

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Publisher's note

Many people in real estate today feel like they are living in a bad movie, as if the entire New York City real estate market has boarded an elevator where an evil villain has cut the cable. There's a collective, sickening sense of free falling. It's not hard to see why people feel this way. We've seen giants in the industry fall and we've seen business slow to a near standstill, and experts say that we still have a lot more to endure.

But the fact is, there is a good amount of liquidity out there, provided the price is right. And the right price is invariably a steep discount, as one of our spreads this month explores. Buyers appear single-mindedly obsessed with getting a bargain. It's a stark about-face from as little as six months ago, when all anyone could talk about was "luxury." Brokers are shepherding their reluctant flock of sellers toward accepting this new reality, with the savviest high-end brokers slashing apartment and townhouse prices 20 or 30 percent lower than they would have just months ago.

What's next for this topsy-turvy New York real estate world, which seems to be defying all the old rules? Prepare yourself for auctions, which have been rare in New York City, and get ready to embrace the stability of co-ops. Even more mind-bending is the fact that some Manhattan rentals now offer a better bargain than those found in some highly desirable, outer-borough neighborhoods. See our series of stories beginning here.

Of course, big investors as well as individual buyers are eager for bargains, or distressed assets. We take a behind-the-scenes look into three groups formed to pick up distressed assets, varying in size, to see how they raise money, approach owners and snap up faltering properties. See our story, Diving into distress.

In our other feature package, we examine residential prices in Manhattan's neighborhoods, comparing the priciest listings and the steepest cuts, using customized data on past sales by PropertyShark and current listings by StreetEasy. Our analysis found a broad gulf between current listing prices and actual sales, or on a more fundamental level, between sellers and buyers. Experts we spoke to said prices would need to drop much further, to the actual median sales price of the last quarter of 2008, in order to sell, translating to shocking drops of 40 percent for some neighborhoods. See our report and check out the color-coded neighborhood map. (It's important to point out that, in comparing the median listing price in each neighborhood to last quarter's median sale prices, The Real Deal is not predicting what actual sales prices are going to be, but is only suggesting to what degree listing prices are possibly overpriced.)

In the last year, we've seen a lot of moguls lose their golden touch. So our curiosity led us to check in on billionaire developer Stephen Ross, CEO and founder of the Related Companies. His iconic portfolio is still growing impressively with successful projects like the ultra high-end condo Superior Ink, on the West Side Highway. And Ross is also the proud new majority owner of the Miami Dolphins. But he is being put to the test with Related's massive redevelopment of Hudson Yards. No doubt under pressure from the economy and frozen lending channels, Related recently got the MTA to delay its closing on the project by a year. We examine the challenges Ross and Related are facing in Related runs from recession.

On a final note, my walk home from the office takes me west on 37th Street from Eighth to 11th Avenue, where I can see a half dozen projects over 20 stories going up. I wonder about the success of these buildings, the fate of the developers behind them and the future of development in our city in the grips of the current crisis. So much remains to be seen, but we will continue to bring you the latest news as it happens, via the magazine and our Web site, www.therealdeal.com.