02-JUL-09

2 Quarter reports indicate residential sales market is weak

Reports for the second quarter of 2009 released today indicated that the Manhattan luxury condo and co-op apartment markets continue to be weak and are faltering, although they have not collapsed.

The Brown Harris Stevens report noted that "an 82 percent decline in closings over $10 million helped bring the average cooperative price down 29 percent from the second quarter of 2008 to $918,795" while the average price of a condominium apartment declined only 18 percent from the previous year’s second quarter but the report noted that if closings at The Plaza and 15 Central Park West were removed, the average condo price "would be just 2 percent lower than a year ago."

This report found that "new development apartments sold for an average of $1,198 per square foot," 16 percent less than the comparable period a year ago. It also noted that apartments spent an average of 129 days on the market, 48 percent longer than the same period in 2008 and that sellers received 92.6 percent of the last asking price for their units compared to 97.5 percent a year ago.

The Prudential Douglas Elliman report, prepared by Miller Samuel Inc., found that "there were 1,532 co-op and condo sales in the current quarter, 50.3 percent below the 3,081 sales of the prior year but up 28.2 percent from the prior quarter."

"Listing inventory is up a modest 7.8 percent to 9,378 units from 8,626 units in the prior year quarter, but fell by 10.2 percent from the prior quarter total of 10,445, the highest quarterly level in a decade," the report continued, noting that "First time and entry-level apartment buyers played a key role in the increase in activity this spring, albeit seasonal, with a 54 percent entry-level market share, up from 50 percent in the prior quarter."

"New development," the study declared, "has seen limited changes to pricing despite the fall market correction, reflected in the decline of new development market share. In the current quarter, market share of new development units sold fell to 27 percent from 35 percent in the prior year quarter and from 42.8 percent in the prior quarter. The 73 percent re-sale market share in the second quarter was at its highest level since the second half of 2007."

The report declared that "the days on market for Manhattan condos exceeded six months for the first time since this metric has been tracked over the past decade."

"In terms of reflecting the recession’s initial impact, this quarter and the next will be the most telling in terms of establishing a new level of pricing for Manhattan," declared Pam Liebman, chief executive office of the Corcoran Group.

"It is no secret that, since3Q 2008, Manhattan’s housing market has experienced one of its most challenging periods in twenty years," she said, adding that "in the wake of the global financial crisis, home sales in the borough have slowed by half. Total closings decreased 50-60 percent of 2008’s busy second quarter, but were up by 10-15 percent over the prior quarter as of this writing and will most likely increase further (based on a reasonable estimate of additional Second Quarter sales reaching the public record at a later date). In addition trends in recent months have been very encouraging with strong seasonal activity in May and June, particularly in modestly-scaled units."

"As reduced demand and intense downward pressure has taken a toll on condominium prices (re-sale condos lost 14 percent in price per square foot), we have also seen a resurgence of the co-op market as buyers have found their prices more attractive," according to Ms. Liebman.

"Townhouse sales in every neighborhood were down approximately 40 percent of more versus last year," according to the Corcoran report, which also found that "the loft market experienced a 25 percent decline in median price to $1,420 million and a 10 percent decline in average price per square foot to $1,083."

01-JUL-09

Home prices rise in 8 of 20 areas followed by Case-Shiller Index

Robert Shiller, a co-founder of a popular home-price index, told Alison Sider and Thomas R. Kenne of Bloomberg Radio yesterday that home prices saw a "striking improvement in the rate of decline" in April and he added that trading in funds launched yesterday indicated investors believe the U.S. housing slump is nearing a bottom.

"At this point, people are thinking the fall is over," Shiller was quoted as declaring, adding that "The market is predicting the declines are over."

The Standard & Poor Case-Shiller Home-Price Index for prices in 20 major metropolitan areas in the country, the article continued, fell in April at a slower pace than forecast and sales of existing homes showed gains in April and May while housing starts jumped in May from a record low.

Although Mr. Shiller told Bloomberg Television that he guessed that "home prices are going to level off - they're not going to keep falling," he added that he was "not optimistic that we're going to see any sharp rebound."

The article said that Karl Case, the other co-founder of the index, said that "these numbers are really showing that there's been a change in mood."

Home prices rose in eight of the cities measured on a monthly basis: Dallas, Denver, Cleveland, the District of Columbia, San Francisco, Boston, Atlanta and Seattle.

01-JUL-09

Foreclosure action reported taken against tower planned at 313-317 East 46th Street

Swedbank AB initiated a foreclosure suit June 26 in New York State Supreme Court against East 46th Street Borrower, a concern headed by Alexander Gurevich, the developer of a planned 18-story residential condominium building at 313-317 East 46th Street.

In an article in this afternoon's edition of therealdeal.com, Adam Pincus wrote that court papers indicated that the bank was foreclosing on about $38 million in loans secured by the project and the suit also named six construction firms that have filed about $4.675 million in mechanic's liens against the property, which is between 1st and 2nd Avenue.

According to the article, the loan went into default October 31 and the loans had been transferred in December to Swedbank from Lehman Brothers Holdings.

The bank's first quarter report this year indicated that it had taken over 69 Lehman Brothers loans secured by 55 properties that were valued in March at $1.35 billion, the article said.

Swebank, the article continued, joined with ING Real estate Finance recently in suing an entity of Aby Rosen's RFR Holding for repayment of about $144.2 million in loans for a mixed-use project at 610 Lexington Avenue, a former YWCA building recently demolished. That project was to have included a Shangri-La Hotel and 17 condominium apartments and had been designed by Sir Norman Foster.

Swedbank was party to another foreclosure lawsuit filed this month. It joined with ING Real Estate Finance in suing an entity of Aby Rosen's RFR Holding that was to develop the Shangri-La Hotel New York at 610 Lexington Avenue, seeking repayment of $144.2 million in loans.

And Gurevich is in a dispute with another lender. In February, Alexander Gurevich sued Chinatrust Bank (U.S.A.) for $110 million, claiming the bank withheld advances on the building loan at a Borough Park, Brooklyn, condo project at 4102 13th Avenue.

The bank responded in court papers filed March 20 that the developer was in default on its $10.4 million loan.

The 46th Street site had been acquired by Mr. Gurevitch's concern for $40,950,000 from Imico-BRG LLC, which was formerly Intell-BRG LLC, part of Extell Development. A permit for the mid-block site was approved November 29, 2005 and plans had been filed by Cetra-Ruddy.

01-JUL-09

Report says that store rents in Manhattan have declined 11 percent from last fall

Retail rents in Manhattan fell 11 percent from last fall to this spring, according to a report issued recently by the Real Estate Board of New York, but "new retail tenants are looking at store space in New York for the first time" as "no doubt declining prices are attracting tenants for whom the city is becoming more affordable."

Madison Avenue asking rents declined 14 percent since last fall while Broadway on the Upper West Side fell 5 percent and Fifth Avenue in the 50s dropped 3 percent, according to the report.

Fifth Avenue in the Flatiron District and Broadway in SoHo, however, showed modest gains in the same period.

The report said that its advisory group "see the recent decline in asking rents as an anticipated market correction in a market that was experiencing unsustainable rent growth." It said that an "emerging issue" is "the rise in sublet space."

The report found that the average asking rent on Madison Avenue from 57th to 72nd Street was $979 this spring, compared to $1,143 last fall and $1,066 a year ago. On Fifth Avenue from 49th to 59th Streets, it was $1,631 this spring, compared to $1,675 last fall and $1,958 a year ago. On Broadway from 42nd to 47th Street, it was $1,381 to $775 last fall, and $809 a year ago. In the Meatpacking District, asking rents on 14th Street between 9th and 10th Avenues was $417 this spring compared to $304 last fall and $462 a year ago. In the Financial District, asking rents on Broadway from Battery Park to Chambers Street was $251 this spring, $251 last fall and $198 a year ago.

On June 30, Bloomberg News reported that a study by CB Richard Ellis Group Inc. indicated that "New York city kept its top rank from a year earlier as the most expensive retail market even as asking rents on Manhattan's fifth Avenue fell 10 percent to $1,800 a square foot a year."

That report found that "rents in Hong Kong's most desirable shopping area ranked second at $975 a square foot and Moscow was third at $790" and "Paris and Tokyo followed at $776 and $771, respectively."

Ray Torto, global chief economist for CB Richard Ellis, told Bloomberg that in the United States store rents will "eventually decline 25 percent from the market peak in mid-2008" and retailers in good locations are "negotiating for extended terms or reduced rent."

The article quoted Faith Hope Consolo, chairman of Prudential Douglas Elliman's retail and leasing division that jewelers Richard Mille of Paris and Tous of Madrid are looking for space on Madison Avenue at a rate of about $800 a square foot as indicated that some foreign retailers are taking advantage of lower demand to enter the city's market.

30-JUN-09

City Council approves Forhdam's expansion south of Lincoln Center

The New York City Council voted today to approve a major expansion of Fordham University's campus south of the Lincoln Center for the Performing Arts.

According to an article in the on-line edition of Crain's by Theresa Agovino, "the vote was practically guaranteed since earlier this month Gale Brewer, D-Manhattan, who represents the Upper West side neighborhood, extracted some concessions from the school to win her support."

"She negotiated to reduce the heights of the buildings that Fordham will erect. She also got the school to agree to build a public atrium on Columbus Avenue and an escalator to lift people to elevated public open space," the article maintained.

"The first phase of the plan," according to the article, "includes construction of a new law school, including a dormitory on its upper floors. The remainder of the initial phase includes a new student center, dormitory and interim public park/plaza on Columbus Avenue. Eventually, the school will build a Graduate School of Business Administration with dormitory space; a Graduate Schools of Social Services and Education with dormitory space; a new space for the Quinn Library; and a Theatre for the Dramatic Arts."

The campus was initially designed to serve about 3,500 students on a site between West 60th and West 62nd Streets and Amsterdam and Columbus Avenues and the expansion, which will take place over about 25 years, will permit it to serve more than 10,000 students.

Despite strong opposition from Community Board 7, which had unanimously voted against the project in January, the City Planning Commission approved the university's plans in April unanimously.

The revised plan approved in April cut 206,000 square feet from the 3 million square foot proposal by lowering some building heights and moving some floor space below ground and eliminated 56 percent of the planned parking spaces.

The expansion will significantly change the ambiance of the Lincoln Center for the Performing Arts just to the north as the university's site will love a great deal of its substantial open space and sprout six new large towers.