Douglas Elliman is still struggling with the new development slump.
In the second quarter, the brokerage’s revenues rose to $205.6 million, compared with $198.7 million a year earlier. But net income was $5.9 million, falling from $16.1 million last year, according to Vector Group, which owns Elliman and New Valley, a real estate investment vehicle.
“One area is the lack of really much revenue on the new development side,” CEO Howard Lorber said on the earnings call. “We do expect more of that starting this quarter.”
The brokerage sold $7.5 billion worth of real estate during the second quarter, up slightly from $7.2 billion in the second quarter of 2017. Lorber noted that the while the Florida market has been stronger, it’s a lower-margin region than New York City.
“The place where the bulk of the money is made, traditionally, has always been New York,” he said.
In New York, new development sales have traditionally proven profitable for Elliman. But sales have been falling in Manhattan, as inventory piles up. In the second quarter, the median sale price for a Manhattan apartment saw its fourth straight decline. New development, in particular, has slumped — with a 37 percent drop in sales volume.
Lorber mentioned the market is resetting, and is likely to be fare better some time next year, though it’s tough to pinpoint specific timing.
“It’s a cyclical business,” he said. “ We’ve had big run-ups, now this is the adjustment phase.”
Last quarter — during which Elliman sold $6.1 billion worth of real estate — Lorber said the New York market was starting to pick up, as sellers readjusted their expectations for pricing.
Overall, Vector Group reported $481.5 million in revenues during the second quarter, compared with $472.0 million a year earlier. Net income for the quarter was $17.8 million, down from $26.8 million.