A holiday with less cheer

It’s a lump of coal in brokers’ holiday stockings.

Real estate pros are more uniformly sounding the alarm that the Manhattan residential market has slowed down, and not just for über-luxe trophy apartments.

The traditional post-Labor Day uptick never materialized, leading to more price reductions. That means brokers might find a smaller commission check under the tree this year — or no check at all.

But the question of how the market is performing at this important inflection point still depends on which segment you’re talking about. That’s why our reporter E.B. Solomont took an in-depth look at several key price ranges in the Manhattan market.

Thankfully, the $1-million-to-$3-million market is still going strong. Brokers attribute that to the fact that many of these purchases are less discretionary and more necessitated by milestone life decisions (kids, marriage, divorce and the like).

In addition, foreigners are increasingly gravitating toward that segment of the market. It’s telling that the developer who kicked off the Billionaires’ Row craze with One57 is now making a big push in the $1-million-to-$3-million space. Gary Barnett’s massive 800-unit tower on the Lower East Side is being exclusively marketed in China, Malaysia and Singapore.

The market for $3-to-$5-million apartments, as well as the market for $5-million-plus, is hurting in comparison. Part of that softening can be traced back to the stream of new development projects coming online. But it’s also partly a product of sellers with unrealistic expectations, fueled by years of hearing about $5,000-and- $6,000-a-square-foot prices at new development.

Brokers are banging the drum to get them to drop their asking prices because the quicker sellers recalibrate, the quicker deals will get done. Already, 70 percent of properties priced between $5 million and $10 million have seen a price cut at some point.

Elsewhere in the issue, in what might not necessarily bring holiday cheer either, the retail sector is seeing a huge disconnect between rents at the upper end of the market — on major thoroughfares in Times Square, Fifth Avenue and Soho — and more modest side streets. Whether this speaks to stability for the broader market or a bubble at the high-end, it seems these days there are the super deep-pocketed and then everyone else. “The spread has grown,” broker Jason Pruger of Newmark Grubb Knight Frank told us. “I think it’s gone from a 10-to-1 difference to 50-to-1” over the past few years, he said.

Meanwhile, our main cover package this month looks at one of the biggest forces in the New York office market these days: WeWork. The shared-office-space giant was, shockingly, operating with less than $8 million in venture capital funding only two years ago, and today has a $10 billion valuation. The company is now NYC’s fastest-growing office tenant, on track to lease more than 1 million square feet, and is even spearheading its own development projects. It also seems to be packing in people tighter in NYC than ever before (at one building, WeWork applied for a permit to increase maximum occupancy per floor to 275 people from 150) while at the same time stretching its reach across the globe (Berlin and Shanghai are said to be next).

We’ve also got a story on the Chinese development firm Kuafu, which is ramping up quickly after establishing a unique niche in the market, and a look at the mostly under-the-radar real estate players who are shaping the face of Brooklyn.

Finally, allow me a brief aside. The NYC real estate industry should start to seriously entertain what effect a Trump presidency would have on the real estate market here, besides the negative impact it would have on the country as a whole. I’m still not totally convinced Trump actually wants to be president (his candidacy still feels like a PR gimmick run wildly amok), but at this stage it would be irresponsible to assume he doesn’t want to hold the country’s highest office. So my question is, what would it take to buy Donald Trump out of the presidential race — a one-hour slot on NBC every night at 8 p.m., or a guaranteed first place spot on the Times’ bestseller list for every future book he writes? We might want to collectively explore that.

Enjoy the issue.