Distressed Downtown Real Estate Indicators Point South
The first Baron Rothschild is said to have advised, “the time to buy is when there’s blood in the streets, even if the blood is your own.” If he was correct, this may be an auspicious moment to purchase real estate in Lower Manhattan, where the distress is acute.
This anxiety is evidenced by a slew of recent reports, the most comprehensive of which is the “Lower Manhattan Market Real Estate Report” for the third quarter, from the Downtown Alliance, which documents (among other indicators) that the median rents for apartments Downtown fell 6.4 percent (to $3,568) from the second quarter, and almost 11 percent from the third quarter of 2019, to levels last seen in mid-2017. This is a sharper drop than experienced by Manhattan as a whole, where rents fell by only 5.6 percent from the second quarter of this year.
For apartment sales, the Alliance report shows, the picture is less grim, with a third-quarter median sales price of $2.05 million, a figure that is 82 percent higher than in the second quarter, and 120 percent higher than one year ago. The number of sales also jumped, nearly doubling from the second quarter (when transactions halted almost entirely, due to public health restrictions), while sales prices per share foot increased to an average of $1,771—a hike of nine percent since the second quarter and almost 43 percent from the third quarter of 2019.
These encouraging indicators may mask deeper troubles in the Lower Manhattan market for condominiums, however, which had already begun to undermine sales before the pandemic emerged earlier this year. A 2019 report from the Halstead Property Company, says that there may be an invisible elephant in the Downtown condominium market. This analysis finds that, after a binge of luxury development that began around 2010, Manhattan as a whole has an unsold inventory of more than 7,000 new luxury condominium units. Some 6,000 of these apartments have never been offered for sale, by builders who are afraid of flooding an already-sluggish market with excess supply. The largest share of these are located in Lower Manhattan, where only 96 such new units are listed as being available, out of an inventory of nearly 1,000 completed (and unoccupied) apartments.
The Halstead report concluded (before the financial slowdown unleashed by the pandemic coronavirus) that it may take up to six years for the market to absorb such a backlog inventory. Whether developers can wait that long before offering radical reductions in price, or going bankrupt, remains to be seen.
The current Downtown Alliance report notes that there are approximately 2,650 additional apartment units (in 15 buildings) either under construction or planned for development, with about 39 percent (or slightly more than 1,000) of these planned as rentals, and 61 percent (or roughly 1,600 units) as condos.
Elsewhere in the Alliance report, the local hotel industry is struggling, with 13 of 37 Downtown hostelries still closed (three of them permanently), and the others operating at greatly reduced capacity, with average daily room rates hovering at about $130—a drop of more than 50 percent from the third quarter of 2019. In two further indicators of trouble for the Downtown hotel sector, several facilities are being used as temporary homeless shelters (with one, at 52 William Street, the focus of plans for permanent conversion into a shelter), while the Holiday Inn at 99 Washington Street has fallen more than $85 million behind on its loans, according to a separate report.
On the retail front, the Downtown Alliance’s team of researchers shows that more than three quarters of the 1,140 shops, bars, restaurants, and service establishments in Lower Manhattan closed during the shutdown that began on March 20. (The exceptions were stores deemed “essential,” such as pharmacies, groceries, and hardware vendors.)
In the months that followed, more than 800 (or roughly 70 percent of the total) have reopened, but 95 have shuttered permanently, among them highly regarded local landmarks, such as Century 21, the Amish Market, Antonella’s Barbershop (on Beekman Street), and the Financier Patisserie. On an upbeat, contrarian note, however, the Alliance report also notes that 25 new shops have recently opened their doors in Lower Manhattan.
Perhaps the direst portent for the local economy is found in the commercial leasing sector, however. In this area, new leases totaled 455,000 square feet in the third quarter—an all-time low, which was worse than an already-dismal second quarter by 12 percent, and 64 percent below the five-year quarterly average for Lower Manhattan.
The Alliance also partnered with SIS Research International to gauge the state of office work in Lower Manhattan. The results of this inquiry show that 57 percent of Downtown office workers have not yet returned to their physical work spaces, while the majority of the remainder have resumed coming to their offices for only three days each week, or fewer.
A separate report from the online real estate database company, StreetEasy, found that for all of Lower Manhattan, median asking prices for condominiums and cooperatives have dropped by 10.3 percent, while median asking rents have fallen 15.3 percent (to $3,300), compared with the third quarter of 2019. Another telling indicator from the StreetEasy analysis is the 25 percent gap between median asking prices ($1.75 million) in Lower Manhattan and median sales prices ($1.3 million).
A third report, from PropertyShark, a real estate web site and search engine that tracks sales and price data, provides a further indicator of real estate distress in Lower Manhattan. For the first time in five years, Tribeca has fallen out of the firm’s tabulation of the most expensive zip codes in the United States, with its two zip codes placing eleventh and thirteenth. In a historic first, not a single zip code anywhere in the five boroughs ranked among the nation’s ten most expensive.
As recently as 2017, Tribeca’s 10013 was the second priciest in America, with a $4.1 million median sales price, while neighboring 10007 was fourth, at $3.9 million. Both sections of the community contracted by double digits, with 10007’s price point shrinking by 19 percent from 2019 to 2020 (dropping from $3.9 million to $3.15 million), while 10013 retraced by 15 percent (to just $3.15 million).
Trinity Church Offers Food to Those In Need
Trinity Church has launched its Compassion Market to aid New Yorkers experiencing food insecurity during this economic downturn unleashed by the pandemic coronavirus. Although Lower Manhattan may not seem like a community where very many people suffer from need, it is. In addition the hundreds of local homeless men who camp out beneath the FDR Drive every night, one of out every five elderly residents City-wide (a total of more than 200,000 seniors) relies on soup kitchens and food pantries for at least part of their nutrition, while three out of ten veterans are dependent on the same outlets for sustenance.
I want to report some confusing inaccuracies in Matthew Fenton’s article about Poets House’s temporary suspension of operations.The key word is: temporary. Poets House will be taking a pause to restructure its operations, realign resources and preserve its world-class collections. Poets House will reopen when the pandemic is over.
The organization has a stable Board, which has given generously throughout the pandemic to keep the full staff on salary with full benefits. But the Board has made the difficult decision to downsize now to ensure that the organization and collections survive in this beautiful space. Emergency funds are harder to come by and expenses are outpacing income in this unprecedented time. The organization is using its limited reserve funds to pay staff severance and vacation pay.
While Poets House did enter the pandemic with a relatively modest operating deficit from last year—for the first time—the six figure numbers reported in the article as deficits include depreciation on the substantial investments in our physical space, a condition of our long-term tenancy.
And, finally, although I will be stepping down, I will stay on temporarily for succession planning and visioning of library services in a post-COVID world. Our long-time Managing Director and CFO, Jane Preston, is not retiring and will manage Poets House business.
Now, and always, I want to thank the downtown community: the Poets House space in Battery Park City and the lively presence of readers, writers and students from all over the city has been one of the supreme joys of my life.
The National Museum of the American Indian’s Native Cinema Showcase is an annual celebration of the best in Native film. This year, for the 20th-anniversary showcase, the museum presents the full program online, streaming new films, fan favorite classics, and conversations with filmmakers. The showcase provides a unique forum for engagement with Native filmmakers and stories from Indigenous communities throughout the Western Hemisphere and Arctic. Free
The Tale of the Ticker Tape, or How Adversity and Spontaneity Hatched a New York Tradition
What was Planned as a Grand Affair became a Comedy of Errors
New York’s first ticker-tape parade erupted spontaneously from bad weather
and an over-zealous stockbroker.
While the festivities in New York Harbor didn’t go as scripted that afternoon, the spontaneous gesture it generated from the brokerage houses lining Broadway famously lives on more than a century later.
On October 28, 1886, Liberty Enlightening the World was to be unveiled to New York City and the world as it stood atop its tall base on Bedloe’s Island. But the morning mist had turned to afternoon fog, blurring the view of the statue from revelers on the Manhattan shore and the long parade of three hundred ships on the Hudson River.
What was planned as a grand affair-with President Grover Cleveland as the main speaker-became a comedy of errors. The fog prevented efficient communication between the dignitaries on the island and the ships awaiting orders to fire their salutes and blast their horns at the given signal.
Even the dramatic unveiling moment itself went awry. To read more…
TODAY IN HISTORY
1924 ~ Hubble at the telescope
534 BC – Thespis of Icaria becomes the first recorded actor to portray a character on stage.
1644 – John Milton publishes Areopagitica, a pamphlet decrying censorship.
1876 – Corrupt Tammany Hall leader William Magear Tweed (better known as Boss Tweed) is delivered to authorities in New York City after being captured in Spain.
1890 – King William III of the Netherlands dies without a male heir and a special law is passed to allow his daughter Princess Wilhelmina to succeed him.
1924 – Edwin Hubble’s discovery, that the Andromeda “nebula” is actually another island galaxy far outside of our own Milky Way, is first published in The New York Times.
1981 – Iran–Contra affair: Ronald Reagan signs the top secret National Security Decision Directive 17 giving the Central Intelligence Agency the authority to recruit and support Contra rebels in Nicaragua.
2005 – Ellen Johnson Sirleaf is elected president of Liberia and becomes the first woman to lead an African country.
870 – Alexander, Byzantine emperor (d. 913)
1804 – Franklin Pierce, American general, lawyer, and politician, 14th President of the United States (d. 1869)
1888 – Harpo Marx, American comedian and musician (d. 1964)
1503 – Margaret of York (b. 1446)
1814 – Elbridge Gerry, American merchant and politician, 5th Vice President of the United States of America (b. 1744)
1990 – Roald Dahl, British novelist, poet, and screenwriter (b. 1916)
2014 – Marion Barry, 2nd Mayor of the District of Columbia (b. 1936)
Judge Will Rule Next Monday on Whether to Allow FiDi Shelter Plans
Hearings before State Supreme Court Justice Debra James on Monday and Tuesday left unresolved the question of whether the administration of Mayor Bill de Blasio will be allowed to implement a controversial plan to move more than 200 homeless men from a hotel on the Upper West Side to another hotel in the Financial District, which the City plans to convert into a permanent shelter.
Court Rules That FiDi Condo Buyers Can Recover Damages from Developer for Shoddy Construction
More than a decade ago, real estate developers in Lower Manhattan were performing a feat that seemed akin to alchemy. Buying up unglamorous office buildings (abandoned by financial firms that had decamped for Midtown after the terrorist attacks of September 11, 2001) and converting them into high-priced residential towers, such developers rode the wave that was transforming Downtown into a chic residential district.
One example among many in this narrative was 90 William Street, a 17-story back-office facility constructed in 1967, that was rebranded as “Be@William,” a 113-unit condominium in 2008.
But residents began to notice problems with the building within weeks of plunking down a million dollars or more per apartment. To read more…
A Victim’s Vengeance
New Sculpture on Centre Street Inverts Myth to Send a Feminist Message
In a caustic counterpoint to the “Fearless Girl” statue that attracted worldwide attention after it was unveiled at Bowling Green in 2017, a new feminist icon is calling Lower Manhattan’s streetscape home.
Standing in the center of Collect Pond Park (bounded by Centre, Lafayette, and White Streets), “Medusa with the Head of Perseus” makes a stark statement about violence against women. The bronze depicts the Medusa of Greek myth holding aloft the head of the hero who is said to have slain her. To read more…
Contract One, Station One
The Jewel in
Just below the surface of City Hall Park sits one of New York’s architectural gems. Built during the City Beautiful movement, its design sought to uplift the spirits of New Yorkers on their daily commute.
City Hall Loop station—Contract One, Station One—was the flagship of New York’s first subway and the focus of the international press on October 27, 1904, when Mayor George McClellan connected the Tiffany-designed motorman’s handle to propel the first train north to its endpoint on 145th Street and Broadway.
The design of the other twenty-seven stations it stopped at that afternoon was dictated by the practical needs of subway efficiency—the architect’s only role was to choose the tile work that would cover the structural columns and walls. But the station below City Hall Park is different. Here, design and structure are one in the same.
City Hall subway station, was designed to be the showpiece of the new subway system with its elegant platform and mezzanine featured Guastavino tile, skylights, colored glass tilework and brass chandeliers.