Rights and Wrongs: How 2005 turned out


Richard Steinberg, senior managing director, Warburg Realty

Prediction for 2005: Prices in the apartment market would be up 15 percent at the end of 2005 compared to the end of 2004.

Results: Prices came down in 2005, putting them only 1 to 2 percent up over 2004, according to various market reports.

But Steinberg explains: “I do high-end residential and the last 15 transactions I have done on upper-end apartments and townhouses have done really well. The bubble has not burst. Prices are not appreciating as much as 2002 through 2004, but, that being said, properties in the $5 million and above range have easily appreciated 10 to 15 percent. If you go by Stribling & Associates, they say they went up 22 percent.”

Faith Hope Consolo, chairwoman, retail and leasing division, Prudential Douglas Elliman

Prediction for 2005: The retail market would remain hot.

Results: Consolo’s prediction provedécorrect. “It is the hottest market since 1999,” Consolo tells The Real Deal, repeating nearly verbatim what she said last year, “and has been incredible across the board, from luxury to discount with lots of new flagships, an influx of European retailers, and a number of American companies on a comeback. Especially in the youth market, it is one of the most exciting years in retail for a long time. We will also see a new group of luxury retailers from Asia and South America for the first time – also Russia and India.” Rents were up by double-digit percentages, especially in tonier districts like Fifth Avenue in Midtown and Soho.

Joanne Kennedy, president, Coldwell Banker Hunt Kennedy

Prediction for 2005: She predicted “an exodus greater than we’ve seen in two decades of young couples leaving the city.”

Results: Not quite. But the city, especially Manhattan, did get much more expensive in 2005, with the average apartment sales price settling above $1 million for most of the year. Still…

“Even with prices through the roof, we did not see an exodus,” Kennedy says. “My crystal ball broke. But 2006 will likely be another very good year – less frantic and more normal with a healthy supply of properties that will slow down the bidding wars, and an equal abundance of buyers who may even make a purchase for less than asking. Then again, when the clock strikes 2006, the madness could begin again. Much will depend on how great an impact the anticipated Wall Street bonuses actually have on the market.”

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Barbara Corcoran, founder, the Corcoran Group

Prediction for 2005: Long Island City would be the next hot area for real estate.

Results: It was one of several hot neighborhoods for both development and sales, and probably the most buzzed-about of the year. The first three luxury condominium developments in the neighborhood’s history hit the market in 2005, and at least eight more major new residential buildings are planned in Long Island City so far.

Most of this construction is happening near the East River, giving the new units spectacular views of Manhattan. “That, even in the short haul,” Corcoran says, “will redefine what Long Island City is in people’s minds. People just have to visit a brand-new condo with those incredible views, bought by someone who clearly could have afforded to live in Manhattan, to change their minds.”

Of course, Long Island City isn’t Manhattan. “More people still picture Archie Bunker than sexy new high-rises,” when they think of the neighborhood, Corcoran says. “I think they should rename the waterfront something sexy. The reality is better than the image.”

Louise Sunshine, chairwoman emeritus, the Sunshine Group

Prediction: Like Corcoran, she anticipated an up-and-coming Long Island City.

Results: She cites demand for the 237-unit Arris Lofts, a condo development expected to open this year in Long Island City. “We have a waiting list that exceeds 2,000 buyers who wish to purchase there,” Sunshine tells The Real Deal. “We could have 10 developments and fill them all up.”

Barry Gosin, vice chairman, Newmark

Prediction for 2005: The top end of the building sales market was overheated on the investment side, but, as long as interest rates remained low, a strong sales market there would continue.

Results: Pretty much correct – the market remains overheated, but no cooling down is expected, or even necessary, Gosin says.

“As long as there is continued capital-rate compression because of lack of alternative investment options,” he says, “all of the returns from the stock market and hedge funds make real estate look better. Positive absorption in office space makes the market better, and inventory is being taken off the market for conversion to residential. That drives a robust market.” The 2005 building sales market, in fact, was expected to trump the record market of 2004, when $14.5 billion worth of property traded hands.