The Real Deal started publishing at the beginning of an epic real estate boom back in 2003, so it’s fitting that as we celebrate our 10th anniversary this month, another boom looks to be on the way.
Back then, right before our first issue came out, publisher Amir Korangy, marketing director Yoav Barilan and I watched the “shock and awe” bombing of Baghdad on CNN at a Park Avenue South bar while discussing the magazine’s direction.
(I wrote a freelance story for the first issue. I guess Amir liked it, because I was promoted to editor-in-chief after that.)
There was a mild recession at the start of the Iraq War, and the idea that the market was poised for a huge run-up seemed seriously unlikely. (That’s not to mention that it was harder for me to discern what would happen because I knew very little about real estate.)
But being on the front lines for the last 10 years, amid a roller coaster ride that’s seen some dramatic highs and lows, it’s become a little easier to try to read the tea leaves (even if the last decade has taught me that nobody ever really knows what’s going to happen).
Brokers may throw around terms like “boom market” and “bidding wars” casually, but I try not to. That said, it does look like the stars are aligned for a hot market ahead — the kind of market that gets the adrenaline pumping, and can make New York real estate an exciting blood sport or spectator sport (depending on your vantage point).
This time, it’s all about the inventory, and supply versus demand run amok, as we write about in many stories in this issue.
As we all know, developers basically stopped building new projects during the recession, meaning there are few new homes coming on the market today. All the while, the city’s population has been increasing at a faster rate, and international money continues to flow in.
A few key stats show we may be in for some prolonged good times:
• The number of homes on the market in Manhattan is at a 10-year low. And available inventory dropped by one-third in the last year alone to around 4,900 units, down from 7,600. When you have that sort of shortage of for-sale apartments, with demand still present, it sends prices up significantly, as reporter Hayley Kaplan spells out in “Crazy for condos.”
• Some neighborhoods have almost nothing on the market. In Soho, for example, there were between 400 and 500 apartments for sale at any given time in each of the last five years. According to the most recent numbers, there are now just 160 apartments on the market. (Our sister consumer publication, Luxury Listings NYC, has some of these dramatic by-neighborhood inventory figures in its latest issue. Go to LLNYC.com.)
• In the last decade, the number of housing units grew by only around 5 percent in New York City, while the population jumped by nearly 10 percent, as we mention in “Turning 10: Learning to live without friends.” We haven’t been building enough to match the number of people moving to the city, by a long shot.
• Finally, if market guru Jonathan Miller said it, it must be true. “This market has choked off supply with two hands,” the appraiser noted. “That’s providing upward pressure [on prices], and we don’t anticipate much relief this year in terms of new supply.”
Of course, financing is still tight, and other hurdles like political gridlock in D.C. could present bigger issues, but signs do look positive.
Meanwhile, there is a lot to feast on in this large issue.
We have a comprehensive look back on the last decade (“The Real Deal’s tenth anniversary issue: A decade in NYC real estate”); a story on where investors should put their money in New York real estate today (“Where should real estate investors put their cash?”); a status report on big condo projects that launched during the boom and are still finishing up their sales (“Boom-time megaprojects: Where are they now?”); a profile of 56 Leonard, which will be Tribeca’s tallest building and likely an iconic addition to the city’s skyline (“56 Leonard: Back from the boom?”); a look at big changes at the top for massive REITs Boston Properties and Vornado (“Boston Properties’ unlikely new CEO takes the reins” and “Behind Vornado CEO Fascitelli’s departure,” respectively); a story about how more real estate companies are mining “big data” to make decisions (“Behind ‘Big Data’: Start-ups gear up to fill real estate’s information needs”); and much more.
I also want to thank each and every member of our talented staff for all their tireless hard work and dedication, and for making the magazine what it is today. And thanks for reading.
Enjoy our anniversary issue!
Stuart Elliott