Editor’s note: Déjà vu all over again

Stuart Elliott
Stuart Elliott

A decade ago this month, I wrote an editor’s note about the state of the condo market in Manhattan. It was February 2010, during the Great Recession, and things were not looking good.

There were more than 500 stalled construction sites in the city, and developers were trying to eke out what little money they could from their land while waiting for the market to turn up.

“Developers are replacing their dreams — shiny new glass condo buildings — with parking lots and small, one-story ‘taxpayer’ buildings that will house nail salons and dry cleaners on their stalled construction sites,” I wrote. “Call it building 2.0: Developers generate a small amount of income to keep their land and delay big building plans until the market recovers.”

At the same time, buyers that had speculated on a never-ending bull run during the aughts were losing money and selling for big losses. “New condos that sold off most of their units two and three years ago are seeing resale units hit the market in droves,” I wrote, “as investors who bought with the idea of flipping quickly can no longer afford to carry them.”

The more things change, the more they stay the same. A decade later, similarities abound, even if the situation is obviously not as severe. There is a weak new development condo market, with fears that the other shoe could drop amid an upcoming recession. That’s the focus of this month’s cover story by Sylvia Varnham O’Regan. With business cycles, it can feel like we’ve been here before — and sometimes we have. 

As O’Regan writes, condo projects conceived at the peak of the market are launching sales at a time defined by oversupply and uncertainty, forcing developers to cut prices, seek lender lifelines and come up with creative concessions to stay afloat.

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In 2019, the dollar volume of luxury homes that went into contract in the city was the lowest since 2012. One in four luxury condos in Manhattan is sitting unsold, according to a recent analysis by StreetEasy. Meanwhile, $33 billion worth of new development inventory is lurking in the shadows — and will eventually hit the market.

But while some see distress and foreclosure ahead for developers, others see light at the end of the tunnel.

The broader slowdown in the market has been going on for a while — prices peaked in 2016 and continued to fall through the end of 2019. While there may be some further price correction, appraiser Jonathan Miller told us that he believes the “heavy lifting,” by and large, is over.

And for broader context about all aspects of the market, check out our 15th annual Data Book — the comprehensive almanac of the past year in New York City real estate, with facts and figures galore. After reading the cover story, a good place to start would be page 29 of the Data Book, which looks at the history of the co-op and condo market over the past decade, and where we are in the cycle.

Elsewhere in this issue, we’ve got stories on the recent setbacks to Mayor de Blasio’s housing plans; the insatiable appetite of the city’s biggest commercial landlord, Brookfield Asset Management; antagonism and alliances in the residential brokerage world; and co-working company Knotel’s attempts to paint itself as the anti-WeWork.

Finally, if you are holding this issue in your hands while you are at the beach, you just might be at Future City, our second annual C-suite gathering in the Bahamas that brings together the worlds of tech and real estate. Top execs from Google, NYU, Columbia, Sidewalk Labs and REBNY will be there, alongside some of the biggest developers, architects, brokerage heads, VC players and more. It’s not too late to sign up for the event, which runs from Feb. 23 to 25.

Enjoy the issue!