A look at the real estate market that wasn’t

Stuart Elliott

The tumult of the dark days of the recession has faded and we’ve had months of stronger activity. There’s now enough distance to put the whole bust in perspective. Which is exactly what we’ve done this month, with an in-depth story package that looks at the last 100 years of booms and busts in New York City real estate.

It’s the first time that prices for 100 years of Manhattan real estate have been collected in one chart. Reporter Sarah Ryley painstakingly searched through back issues of the now-defunct Real Estate Record and Builders’ Guide — once the city’s preeminent real estate weekly — for market reports covering the first half of the 20th century.

She is in good company. In 2005, Yale University economist Robert Shiller compiled a chart of U.S. prices going back to 1890 in the second edition of his prescient book “Irrational Exuberance” — the first time a national chart had been compiled.

What Ryley found was that New York City’s most recent downturn, painful and sudden as it seemed, was only the fourth-worst over the past century. Manhattan struggled more during the Great Depression, the downturn of the 1970s, and the savings-and-loan crisis of the late 1980s and early 1990s. Which sounds about right.

Maybe it’s good we got the boom out of the way. Imagine if we were still in the middle of the spectacular run-up that ended with the credit crunch? Not pretty.

In fact, it’s worth playing a little “ghosts of real estate past.” Here’s what another couple of years of growth fueled by lax lending might have looked like:

Annual building sales volume tops $100 billion for the first time ever. In Brooklyn, with the Williamsburg waterfront fully built out, 40- and 50-story residential high-rises begin to be planned for the Red Hook waterfront (developers skip Dumbo and Brooklyn Heights because they are largely spoken for as historic districts). At the same time, hipsters, who were first priced out of Williamsburg and then East Williamsburg, now cross over the Queens border to Maspeth as the next hip neighborhood, angering yet another group of longtime residents.

Back in Manhattan, Harry Macklowe earns industry-wide praise for his ingenious investment in $7 billion worth of Manhattan real estate for only $50 million down, as the value of the property he bought just a few years earlier breaks the $10 billion mark. Bernie Madoff and relatives continue to serve on the board of the Securities Industry and Financial Markets Association, the primary securities industry group.

Finally, the Zeckendorfs buy and tear down the Century at 25 Central Park West, next door to 15 Central Park West. They build a second phase of their record-breaking condo project, where a Manhattan apartment for the first time sells for more than $10,000 a square foot.

Scary, no?

In 2013, in the more severe economic downturn that might have followed, we might have seen blue-chip developers like the Related Companies auction off their entire inventory of unsold condos; apartment sales disappear to the point where superbroker Dolly Lenz is forced to primarily do rentals for recent college graduates; Chinese investors and Russian billionaire Mikhail Prokhorov buying up blocks of Manhattan real estate for a song; and the new Citi Field and Yankee Stadium used as tent cities for the newly unemployed.

Such are the vicious cycles of booms and busts. Obviously, we’ve thankfully escaped that harsh (and tongue-in-cheek) scenario.

So back to reality, where the market seems to be steadily improving.

In her package of stories this month on “Navigating the New World of Lending,” reporter Candace Taylor explores how builders and new condo buyers are finding new ways to get access to money. It’s definitely worth a look, as is C.J. Hughes’ piece on the most prolific Manhattan residential developers, who have kept the faith and continued building during the last three years.

Finally, check out the story by Adam Pincus on Cushman & Wakefield’s plan to remake itself under its new CEO, Glenn Rufrano, following some recent setbacks.

Enjoy the issue.

 Stuart Elliott