New York real estate

Trump’s Lavish NYC Real Estate Portfolio Shines Despite Temporary CEO Ban

By Columbus International,20 February 202420 February 2024

For decades, Donald Trump has been a part of the majestic skyline of New York City. His name is emblazoned on some of its most iconic buildings. However, a recent ruling by a Manhattan judge threatens his real estate empire. After facing financial turbulence in the early 1990s, Trump decided to license his name as a strategy to strengthen his global presence and finances without bearing the typical risks associated with real estate development.

This tactic allowed him to enjoy substantial profits while avoiding potential liabilities. His licensing agreements have led to a vast portfolio of luxury hotels and golf courses worldwide, each bearing the Trump brand, contributing to his substantial income. However, most of these investments are concentrated in the United States, with 14 Trump-branded properties generating revenue through licensing or management agreements, as reported by The Washington Post and The New York Post.

Now, with the recent court ruling temporarily banning Trump from his role as CEO of the Trump Organization (found guilty of fraud, the New York judge revoked his business licenses – “a punishment decided after establishing that Trump defrauded banks and insurance companies by inflating the value of his assets to obtain economic advantages and better loans” writes Corriere della Sera), his grip on the real estate world faces a delicate moment, threatening to “deflate” his longstanding influence in the industry he once dominated.

It’s a Good Time to Make a Deal in New York Real Estate, Forbes Reports

By Columbus International,11 October 2023

New York City’s real estate market has responded robustly to the economic uncertainties of the first half of 2023. Many potential buyers in our market initially postponed their plans following the 50 basis point increase in the Federal Reserve rate in December (which came after several 75 basis point increases). As mortgage rates continued to rise and the stock market declined, transaction volume, which had been steadily declining throughout the second half of 2022, remained sluggish in January.

Surprisingly, February saw a turnaround, and March brought further improvements. However, the successful deals were strongly linked to price reductions or setting highly realistic listing prices. There is no room for overly optimistic pricing in 2023. The high-end market (homes priced at $10 million and above) has borne the brunt of this correction year.

During the first two months of the year, few high-end listings found buyers, and the ones that did either possessed unique features or were fortunate to connect with that one buyer whose needs aligned perfectly with the property. Owners who purchased their properties since 2014 or 2015 have had to accept significant losses to make a sale. In the $4 million to $10 million market, the Olshan Luxury Market Report, which tracks contract activity at $4 million and above, saw a notable increase from just over 16 deals per week in January to an average of 25 deals per week in February, and nearly 32 deals per week for the first three weeks of March. Nevertheless, many luxury properties with seven, eight, or nine rooms can still linger on the market for extended periods, primarily due to pricing.

Since January, half of the emails received by New York agents have announced price reductions! Arguably, the most active market in the city is for lower-priced units, especially those priced at $2,500,000 and below. The rental market remains exceedingly strong, currently at its highest point in recent memory (though somewhat weaker than six months ago). Properties in the $2 million and below range tend to favor buying over renting, especially on an after-tax basis. Inventory remains limited at this level. Despite disruptions caused by the collapses of Silicon Valley Bank and Signature Bank, the New York market has experienced increased activity as spring approaches.

The Federal Reserve’s decision to raise its target rate by only 25 basis points, a repeat of its late January decision, suggests a halt to the more substantial increases that took the Fed rate from 0.25% to just under 5% within a year. Although the correlation between the Fed rate and mortgage rates is not perfect (mortgage rates are more influenced by the bond market), it’s clear that the considerable increase in the Fed rates has driven mortgage rates upward, impacting buyer confidence as monthly purchase costs rise.

Especially for younger buyers who’ve grown accustomed to the artificially low rates prevailing since the 2008 recession, a mortgage rate of 5% or 6% remains low by historical standards. The gradual acceptance of this reality by buyers has played a role in the real estate market’s gradual recovery. Several factors make it challenging to predict the second quarter accurately. The stability of regional banks remains uncertain, and the Credit Suisse merger with UBS signals that the banking crisis is not confined to the United States. Meanwhile, inventory remains tight in various segments of the New York market, and even cautious buyers often struggle to find suitable listings. Stock market volatility and inflation may continue, but the worst of the significant price declines seems to be behind us, and property costs have stabilized. Forbes reports that it’s an opportune time to strike a deal!

New York Real Estate Market: Co-ops Struggle, New Developments Forced, Brooklyn Triumphs

By Columbus International,11 October 202311 October 2023

The decline in New York home sales has left virtually no one in the real estate industry unscathed, with particular areas of the city’s market experiencing the most acute pain. Despite the seasonal increase in property listings this fall, the market won’t escape the grip of the low-supply environment that has kept prices high, even as mortgage rates have surged, further dissuading potential buyers. For instance, on Staten Island, new property listings in August saw a 17 percent drop, and inventory plummeted by 37 percent compared to the previous year. Simultaneously, the median price rose by 3 percent, and the days a property spent on the market increased by a staggering 50 percent, as reported by the Staten Island Board of Realtors. “These are challenging times for the real estate market,” stated Sandy Krueger, CEO of the organization. “But challenges also create opportunities for those who remain attentive to the market’s signals.”

Here are three key signals to watch as the fall selling season gets underway:

Co-ops: The Losers
Co-op properties were already facing difficulties before the increase in mortgage rates impacted sales. Cheaper co-ops have been particularly affected by the rising rates. Buyers in recent years had become increasingly discouraged by the antiquated rules and bureaucracy of co-op boards. Now, with higher mortgage rates, homebuyers on the lower end of the income spectrum find themselves priced out due to co-ops’ stringent debt-to-income and post-close liquidity requirements. Just a year earlier, a couple earning $240,000 annually could borrow $600,000 for a co-op valued at $750,000 and successfully pass a board application. However, in today’s market, this is no longer possible. This situation is striking, considering that $240,000 is roughly three times the area’s median income in New York City, and $750,000 often represents the starting point for homes in many neighborhoods. Monthly charges are also rising in many co-op buildings due to Local Law 97, which caps greenhouse gas emissions in larger buildings, and Local Law 11, which mandates facade inspections and repairs for buildings taller than six stories every five years. This, in addition to rising rents, makes it increasingly challenging for lower-end and first-time buyers to enter the market.

New Development: The Losers
Developers who had been waiting for a more favorable economic climate before launching their projects may now be compelled by their loan terms to list properties this fall. Projects with units lingering on the market may be forced to offer price reductions. Developers have pre-payment milestones with their lenders and can no longer delay their projects. While some units were overpriced for the current rate environment, others missed the post-lockdown market boom due to supply and labor shortages. For instance, the last available penthouse at One Clinton Street in Brooklyn Heights recently sold for $8 million, down from the original asking price of $10.2 million. An opportunistic buyer’s broker can search for older properties that may have been overlooked, presenting an excellent investment opportunity in the city.

Brooklyn: The Winner
Brooklyn’s real estate market has remained strong throughout the year, a trend that is expected to continue into the fall. Brooklyn has been outperforming Manhattan in terms of market expediency, primarily due to the demand for more space and outdoor living. Brooklyn has been growing into a primary market for years, a trend that accelerated during the lockdown period of the pandemic. Buyers sought to avoid high-rise elevators, subways, and crowded streets. Although transit use has mostly recovered, the shift towards Brooklyn shows no signs of slowing down. “The trend for Brooklyn has been on fire,” remarked UrbanDigs founder John Walkup.

Source: TRD

Repurposing Office Buildings: American Universities’ Novel Approach to Campus Expansion

By Columbus International,11 October 2023

In an unexpected trend, colleges and universities across the United States have found a unique solution to their campus expansion needs by repurposing vacant office buildings. This innovative approach allows educational institutions to acquire office spaces at attractive prices in a sluggish real estate market and subsequently adapt them for academic use. However, while it effectively addresses their need for additional facilities, it doesn’t alleviate the broader problem of empty office spaces, which has been exacerbated by the shift to remote work during the pandemic.

A New Approach to Campus Expansion
For colleges and universities in the United States, acquiring office buildings has become an increasingly popular means of expanding their campuses. The availability of such spaces at bargain prices, attributed to a sluggish office market, makes this approach particularly appealing. The renovations required to adapt these structures for academic use are typically less costly and time-consuming than constructing new buildings from the ground up.

A Sluggish Office Market
While this creative approach serves the purpose of academic expansion, it doesn’t mitigate the underlying issue of a sluggish office market. The COVID-19 pandemic has drastically reduced the demand for office spaces, with the nationwide office availability rate exceeding 24%. This increase from 17% before the pandemic reflects the reduced demand for leased office space, forcing property owners to grapple with this surplus. Some office buildings have lost so much value that mortgage-holding banks have taken control of them.

Government Initiatives
In light of the current environment, there is growing interest in converting office buildings into residential spaces to address the national housing shortage. However, this transition involves overcoming various regulatory and architectural hurdles, such as rezoning for residential use, kitchen and bathroom installations, and ensuring access to natural light.

College Diversification
Colleges and universities have explored a range of real estate diversification options. In response to the increasing demand for on-campus accommodation and the limited availability of dorm space, some institutions have even ventured into acquiring hotels. However, the low costs of office buildings have proven particularly attractive to many institutions, even when they do not have an immediate use for the space.

Various Case Studies
Several institutions have embarked on this novel approach to acquiring office buildings. For instance, the University of Southern California purchased an office building in Washington, D.C., to serve as an immediate satellite campus. The University of Louisville was even offered an office building for free by Humana, a health insurance company. While these acquisitions benefit the institutions, they can also have implications for towns and cities, as colleges and universities typically do not pay taxes on their academic buildings and dorms, effectively removing these properties from tax rolls.

Overcoming Challenges
Repurposing office buildings for academic use comes with its own set of challenges. For example, buildings designed for office work may not have sufficient ceiling height to accommodate the ductwork required for improved ventilation, and large floor plans can make ensuring natural light in every classroom a challenge. This transformative approach to campus expansion showcases the ability of educational institutions to adapt and evolve within a changing real estate landscape. These creative solutions help universities grow while providing opportunities for towns and cities to revitalize downtown areas and bring life to quiet districts that have suffered due to remote work trends.

Please note that the information provided is based on The New York Times article.