It might not be Manhattan’s hippest neighborhood, but Murray Hill is holding its own when it comes to residential real estate.
“It seems like almost everybody who lives in Murray Hill feels like they should live in a ‘cooler’ neighborhood — until cooler turns out to be 40 percent more rent and 30 percent less space,” said Bond New York broker Gus Waite.
In this month’s Q&A, The Real Deal talked to brokers who specialize in Murray Hill about everything from how a crackdown on temporary walls are impacting the rental market to how long apartments are sitting on the market.
The consensus? While Murray Hill has lost some fresh-out-of-college renters to places like the Far West Side and Midtown, where brand-new buildings are offering amenities and concessions, more than ever, the neighborhood’s selling point has become its value.
On the sales side, unlike in many other neighborhoods, there is little new inventory that’s been built. The only new condo selling now is 303 East 33rd, a Toll Brothers building, which started move-ins over the summer. That lack of new inventory has helped keep prices from freefalling and means that there aren’t a ton of apartments in the same vicinity constantly competing for buyers like there are on, say, the Upper East Side.
While prices have dropped, the number of transactions is up drastically in the last year for both sales and rentals. And apartments are selling — but only if they are priced right.
Meanwhile, a year ago, the majority of landlords were paying broker’s fees. But according to some, that’s now dropped drastically to about 10 percent of landlords.
For more on the changing boundaries of Murray Hill, which apartments are selling and renting fastest and slowest, and who is house hunting in the neighborhood these days, we turn to our panel of experts.
Andrew Barrocas
Andrew Barrocas
CEO, the Real Estate Group New York
What are sales prices like in Murray Hill today compared to a year ago?
The median comparable sales price a year ago in the area was about $831,000. Now it is about $780,000, so that’s about a [6] percent decrease over a year.
A recent report from your firm found that rents are down in both doorman and non-doorman buildings for all types of apartments in the neighborhood. What’s happening on the rental front?
A lot of younger people that would have once moved to Murray Hill moved instead to the Midtown West area to absorb those 3,000-plus units in brand-new luxury buildings, where they were able to get great incentives. … [Murray Hill] buildings are now competing with new luxury buildings.
Which kinds of apartments are selling best in the neighborhood?
The one-bedroom market is where we are seeing the most movement — a large one-bedroom or even a smaller two-bedroom. We are seeing a lot of people buying units of that size, whether it’s parents buying for children or people going to medical school in the area.
What are the most surprising trends you’re seeing in Murray Hill these days?
The lack of new inventory that’s come on the market. I can think of only two new buildings that have come to the area in the last couple of years — 303 East 33rd Street, a condo development, and the Charleston. There are very few condos or new rentals. There is really not a tremendous amount to choose from, which is only a help in keeping the prices where they are. There are some vacant lots that got delayed or pushed off, one of which is a property on First Avenue in the high 30s, where they planned to build a rental.
How long are both for-sale apartments and rentals staying on the market, and how does that compare to a year ago?
Rental apartments are on the market anywhere from 15 to 30 days. A lot of the larger landlords in the Murray Hill area price according to where the market is. They don’t have an emotional attachment. It’s a business for them, and if they can’t rent it for $3,000, they’ll rent it for $2,800 to get a paying tenant in there as quickly as possible. … For sales, absorption is all over the [map].
There’s been a big crackdown on landlords allowing temporary walls for roommate shares. Is that impacting the rental market in Murray Hill?
It was a temporary impact. It was the biggest shock to new renters who graduated in May and expected to move in with a friend. They came to the city and found out they couldn’t put up the temporary wall that they had seen online or heard about from friends who had graduated the previous year. Some wondered if they should be looking at a real two-bedroom in a smaller building as opposed to a luxury building. I think by next year people are going to work around it. They have already come up with other solutions, such as an almost V-shaped wall so there is no actual door. By next summer, when you see the rush of people come in, you won’t hear about the wall again.
Chris Peters
Chris Peters
senior executive vice president & director of sales, Prudential Douglas Elliman
How is the market doing in Murray Hill these days?
The market has picked up over the past year, so whatever is priced right sells pretty fast. The problem is, a lot of inventory is not priced well and then it stays on the market. Most of our agents are selling from one-third of the inventory — only a third is priced well … two-thirds is overpriced.
Which kinds of apartments are selling best in the area?
We’re doing better with the older apartments, believe it or not. A lot of those owners price correctly. People that bought new developments want to get back what they paid in 2007, so they lose a little bit. The larger apartments, two-bedrooms and over, have been doing better in Murray Hill. There is a very big demand. For the first-time homebuyers we sold a lot of studios and one-bedrooms — until April. That has eased down a little now.
What are the most surprising trends you’re currently seeing in Murray Hill?
I think what’s interesting is that the boundaries and the areas abutting Murray Hill are changing. Right now there are all these new hotels opening, as well as bars and restaurants. Places that aren’t really in Murray Hill have affected it, like the Eventi on Sixth Avenue and 29th, the Gansevoort at Park Avenue and 29th Street, the Setai on 37th and Fifth, and the Ace Hotel. All of these are really near Murray Hill. That part of Midtown is right next to it and it is really being built up big-time. These are bringing up the values of the whole area.
Deborah Abraham
licensed realtor, Manhattan sales, rental and commercial consultant, Century 21 New York Metro
What are you seeing on the rental front in Murray Hill?
People are not coming in asking for rents that will [allow them to live in] a doorman building. They are still trying to save money.
How long are for-sale apartments and rentals staying on the market in the area these days?
They’re moving more swiftly now than they were three to six months ago, and I would say they are also moving more swiftly compared to a year ago. The rental market is stronger this year than it was last year or the year before, but it’s not as strong as it was five years ago. But it’s coming back.
Are you seeing a change in who is interested in living in Murray Hill because of the market?
The neighborhood is still homogeneous.
There’s been a big crackdown on temporary walls for roommate shares. Is that impacting the rental market in Murray Hill?
It is not impacting prices, it is impacting renters being able to rent. If you can get a convertible two-bedroom that is $2,700, compared to a true two-bedroom that’s going to be over $3,000 and the landlord is not allowing the wall to go up, it doesn’t get rented. … It went from putting up walls to not putting up walls to now allowing walls again, but the structure of the walls are different. It used to be a pressurized wall; now they have to build these little niches and separate doorways for fire safety. That makes it cost-prohibitive for the client. Before you might be able to justify spending $1,000 for the wall, but if the walls are now more expensive, it doesn’t help you to save.
Gus Waite
Gus Waite
executive managing director, Bond New York Real Estate
How is the market doing in Murray Hill these days compared to three months ago, six months ago and a year ago?
The rental market is night and day from one year ago. A year ago, 80 percent of the landlords were paying the broker commission. At this point it’s probably less than 10 percent. Six months ago, there was still uncertainty in the market, but by late July and August demand in Murray Hill apartments [was strong]. JPMorgan, Pricewaterhouse and other firms were actively hiring, and there were scores of young people looking to move to Murray Hill. I know of current tenants facing increases in their rent from a year ago and landlords are being very inflexible.
One recent market report found that rents are down across the board in the neighborhood. Is that what you’re seeing?
In my experience this has not been the case. A decent studio doorman building in Murray Hill still starts at about $1,800; doorman one-bedrooms for under $2,600 [are] rare, and true two-bedroom apartments in a doorman building for under $4,500 [are] still a bargain.
What other trends are you seeing in the rental market?
Many [of those who would have been] newcomers to Murray Hill ended up taking advantage of the incentives that were still active in Stuy Town and Peter Cooper. Many of them also ended up moving to the Far West Side to take advantage of the new buildings still offering free months of rent and broker incentives.
Are young singles staying in the area longer because it’s more affordable?
I find that to be the case. It seems like almost everybody who lives in Murray Hill feels like they should live in a “cooler” neighborhood — until cooler turns out to be 40 percent more rent and 30 percent less space. I think you’re seeing more young families decide to stay. … It’s still a neighborhood where you get a lot of value for your dollar.
Richard Silver
Richard Silver
vice president and associate broker, the Corcoran Group
Are young singles now staying in Murray Hill longer because it’s more affordable?
I do have a few potential sellers who have recently had children, but can’t yet make the move to a two-bedroom due to the state of the economy or a fear of losing their jobs. These people are often getting ready to purchase next year when they have the savings needed for the larger purchase.
How is the market in Murray Hill doing compared to neighboring parts of Manhattan?
Murray Hill is my bread-and-butter neighborhood for sales. If you price an apartment properly it will sell, and I have been selling quicker in Murray Hill than other neighborhoods. The competition isn’t as tight as the Upper East Side, where there are constantly hundreds of apartments to compete with.
How do you think the new Toll Brothers condo at 303 East 33rd Street will impact the Murray Hill market?
Toll Brothers building in the neighborhood shows that they see a need for new construction here, as do I. There have only been a handful of new buildings built in Murray Hill, unlike other neighborhoods, and I think they will do well.
Sara Rotter
Sara Rotter
sales manager and associate broker, Citi Habitats
How is the market doing in Murray Hill these days?
Over the last year, on a quarterly basis, Murray Hill has been pretty consistent in the amount of sales closed, with a slightly higher spike in the second quarter of 2010, especially in June. Our database of sales indicates that on average, about 45 apartments were closing every month in the last year. However, in June alone, we saw about 75 apartments close. This makes a lot of sense … [because of the expiration of] the first-time homebuyer’s tax credit.
What about rental prices? What are you seeing on that front?
Our rental market research indicates that in August 2010 the average prices for studio, one-, two- and three-bedroom apartments in Murray Hill were $1,995, $2,447, $3,476 and $4,679 respectively. Last August, the prices were $1,886, $2,441, $3,295, and $4,775. So I’d say in most cases, though not in three-bedrooms, rents have risen over the past year.
What are sales prices like in Murray Hill today compared to a year ago?
Sales prices have definitely gone up since last year. For example, at the Horizon at 415 East 37th Street, apartments sold for an average of $864 per square foot so far this year. … In 2009, apartments that sold over the same period sold for $826 per square foot. So, prices in that building are up slightly. I think that’s a pretty fair representation of the Murray Hill market as a whole.
How long are both for-sale apartments and rentals staying on the market in Murray Hill these days?
Any property priced appropriately and in line with the competition in the immediate vicinity should sell in about 20 to 45 days. A major factor that could throw [off] this general rule of thumb is if there is an excess of available apartments in one building in the same size category. Seeing as there are many large buildings in Murray Hill, sellers need to be careful and monitor their building’s activities. Anything priced above its immediate competition will almost always take much longer to sell, if [it sells] at all.
Can you give us an example of a recent deal you’ve worked on that illustrates what’s going on in the Murray Hill market?
We recently listed a large three-bedroom, perfectly staged, in a full-service building at a very smart price. We’ve had a great response thus far and anticipate that it will sell quickly. … In contrast, we have a large one-bedroom in a large high-rise building, where most of the other apartments are more competitively priced, which is not getting much attention. Although it shows nicely … the owner simply wants to test the market and will likely need to take it off the market or dramatically reduce their price.
Lauren Cangiano
Lauren Cangiano
executive vice president, Halstead Property
How is the market doing in Murray Hill these days compared to a year ago?
There’s definitely been a recovery. In looking at sales from a year ago to now … the major change has been about a 40 percent increase in the amount of closed sales. That is a clear-cut indication of how the market is in Murray Hill now. More confidence and people signing contracts and getting the deal closed.
How is the market in Murray Hill doing compared to neighboring parts of Manhattan?
The townhouse market in Murray Hill has been a little tougher and harder to sell [than the apartment market]. I think there are not as many large families, and, besides investors, that is who buys a larger townhouse. So they have been sitting on the market longer than apartments. Also, townhouse prices became inflated so quickly from 2004 on, at such a fast rate, that I am not sure that townhouse prices have leveled yet. There are a lot of price tags of $5 million to $6 million on some of these really nice townhouses. Those are big numbers for this area.
How long are both for-sale apartments and rentals staying on the market in the area these days?
In 2007, apartments were flying off the shelf in a week. We take six-month exclusives now and we used to take much less. [Still], serious sellers are now pricing properly. That wasn’t happening 18 months ago because nobody knew where the market was. The ground has leveled and sellers understand where they need to price their apartment, so I think that apartments aren’t staying on the market as long. Everything is selling more quickly because sellers are more realistic.
Can you tell us about something you’re working on that illustrates what’s happening in the Murray Hill market?
I’m coming to market with [a new development] next year on East 30th Street. … It will be 15 floor-through condops. Two and a half townhouses were leveled, so it is a new construction, boutique condop. This is very exciting because there is a lack of new development in Murray Hill. There will be two- and three-bedroom apartments, very well located compared to the construction in the 1980s and ’90s that took place very far east at the FDR and First Avenue. This one is much closer to the middle, so that is exciting.