New York – paradox – part two

My last blog highlighted some of the statistics about the state of residential accommodation in New York. It remains an amazing place – aspirational, buzzing and alive.

The Woolworth Building -show suite!

The Woolworth Building -show suite!

But there is a huge paradox – and we saw four developments in two days which highlight this.

Firstly we were whisked up to the 19th floor of the offices of Related – their boardroom overlooks Central Park – the hospitality, food and views were excellent. They started out as a ‘social landlord’ and now have $20bn of assets. The President, Bruce Beal spoke to us about his passion for the residential sector. In particular they are developing the Hudson Yards at the northern end of the High Line. This is development on a massive scale – 8m square feet of offices and countless apartments. Due to the tax breaks some (around 20%) will be affordable.

Then we met Joel Breitkopf – principal of Alchemy Properties. He showed us two projects – one of which is the 30 upper floors of the Woolworth Building – an iconic 1930’s pile in Tribeca. The floors are being refurbished (which does’t really describe what is being done!) into 34 apartments. The top one is spread over seven floors – and is on the market for $110,000,000… There is no affordable property here.

Then the sobering trip up town to The Bronx. I have never been so far North – up to 149th Street. We had a look around a gated ‘community’ known as Via Verde. It comprises around 500 apartments built on a difficult site. It is aimed at the rental market and like most ‘affordable’ schemes was massively over-subsrcibed. It is not unusual for subscription applications to number 75,000 for a relative handful of flats. Rents are around $975 per month for a 2 bed apartment.

We then headed back to Williamsburg and met the developer who has put together a scheme known as The Edge. This is out of Manhattan and has quickly filled up with those who can’t afford to be on Manhattan. We looked at a modest duplex – extending to around 2,000 sq ft – being marketed for $3m. 80 apartments in this complex were ‘affordable’ and the applications were around 50,000 in number.

In these four developments you really get a sense of the ‘haves’ and the ‘have nots’. It’s great to see the very cool developments (The Woolworth Building in particular). There is the very high end, the top end and the rest. There’s little in the middle – and certainly next to nothing if you are close to the breadline.

New York – a paradox – part one

I had hoped to keep the blog up to date – but the time zone has got the better of me! Yesterday was my first day proper on this study tour.

The_Bronx

Our day started at the NYU Schack Institute of Real Estate where we had a discussion with two of the teaching professors – Hugh Kelly and Emily Youssof. Both provided an interesting introduction to the New York property market. In a couple of hours they confirmed some things, some of which I already knew:

1. New York does not need to ‘compete on cost’ – it is sufficiently strong to rise above a race to the bottom.

2. It is City of incredibly high productivity – partly due to it’s badge as a 24 hour city.

3. There are nearly 8.4m people – but it remains a relatively safe city.

4. Residential capital values are now between $1,500 and $3,000 per square foot. (In context a 500 ft studio will cost you a  minimum of $750,000 – c.£467,000)

5. There is no obligation to provide affordable Housing – although doing so will earn tax breaks (the UK Planning system will impose a requirement to provide Affordable Housing of 20-30%)

6. Close proximity to a subway line has a positive impact on values – typically an uplift of 15% within 500m of a station

7. Studies suggest that 750,000 new homes are needed in New York – with a pledge of 200,000 to be ‘affordable’. There is not a square inch more land – so density and height are the only place to go.

8. Rents in NYC have increased by 23% since 2010. The average rent in New York is now $3153 per month ( c.£2,500)

9. There are 3,083,393 households – only 32.3% are owned – this is a city of renters.

10. Although Banking and Finance still remain key employers – the ‘Eds and Meds’ are starting to have a major influence – there are 500,000 people in the ‘health sector’ – 127 Nobel Prize winners work in the City.

This was the supposed good news story – growth, success and vibrancy. But you will see s story emerge about those who haven’t. More on that in the next post!

New York – study Tour 2014

I am lucky to be back in New York again – this time it is work. I was invited by a client to join a study tour. As it is my favourite city this was difficult one to decline!

new_york_skylineThe pack sent to me just before we left Blighty said,

“Over the past five or so years the City of New York has been undergoing a major transformation of the quality of life and experience of the city. Initiatives include the high profile traffic experiment in Times Square, the creation of pedestrian plazas and pocket parks across all five boroughs, to the ambitious roll out of cycling lanes. These are just some of the Bloomberg administration’s achievements, aimed at shaping great neighbourhoods – walkable, cycle-friendly places, and wonderful riverside parks.

The new Mayoral administration has picked up this Bloomberg agenda continuing the drive to make the city ever more liveable. However, the new Mayor Bill de Blasio has also turned his attention to the same issue perplexing London: how do we house a growing population, and not just those who can afford the ever-rising purchase and rental levels?”

When I was in New York two weeks ago there was news that the penthouse apartment at the newest 89 story 432 Park Avenue scheme has pre-sold for $95m.

Whilst Nottingham doesn’t quite have this issue – the housing problem in the UK is not getting better. Certainly the cost of entry into the market in London is making it difficult for young people. There was a headline in the London Standard last week which suggested that you really needed a salary of £100,000 to get on the housing ladder. The average age of a first time buyer is now over 40. That can’t be sustainable.

I have always wondered about an apartment in New York (on the basis that I might win the lottery!) – a studio in Manhattan is going to be starting at around $300,000 in any semblance of a decent area!

So, I’m looking forward to finding out what plans Gotham City has for the future and whether it can buck the economics of people wanting and / or needing to be in this place…

New York – part two…

This was intended to be a bit of a preview of my second trip to New York in three weeks. I’m in the Big Apple on a study tour – essentially looking at a number of regeneration projects.

Yesterday was the first part – an introduction.

But sadly I missed the start! This was courtesy of British Airways. All seemed to go OK as we boarded the plane for a 9.55am take off slot – getting us into JFK at 12 midday.

But things quickly went wrong – a part was needed. 15 minutes was the delay. This became 45 minutes then an hour. And then two. The part hadn’t worked and the hydraulic line to the brakes was spilling its juice out. There wasn’t a bucket big enough, nor duct tape strong enough.

We were de-planed. We needed a new one which had just landed from Boston (the good news) The new departure was 2.45pm. As that time approached there was a bit of a problem. The crew were in danger of being out of hours (the bad news). A new crew was needed. And they were not actually in the airport.

Vouchers were offered – to allow croissants and coffee.

The time shifted to 5.15pm. Then 7.15. We took off at 7.55pm – 10 hours after our departure time.

I try not to make this a moaning blog – but the way in which passengers are treated by airlines is astonishing. The planning that goes into a pre-flight check is second to none (I know I still have a pilots Licence!). But the planning of passenger treatment is at the opposite end of the scale.

I do know that shouting at the ground staff doesn’t work – nor does complaining to the steward about the turbulence when we were in the air. Some things are out of their control; but some are not.

MIPIM UK

I blogged before about the fact the Cote D’Azur was being shifted to Olympia for a few days – where MIPIM was to be hosted. I was there today.

jon_collins_greg_clark

If I’m honest it wasn’t a great start to the day. It was raining – not at all Cannes like. Then I had to fight my way through some protestors who mistook me for a developer – one guy asked me if I knew that what I did made his rent un-affordable? An odd connection but they do have a point otherwise. At least I was there before the Police lockdown (and mud was thrown). Then as I got in the building I was ‘sniffed’ by an ‘explosives’ dog. It didn’t explode – things were looking up.

Once inside there were the usual suspects in sight – most of the Nottingham ‘South Of France’ team had turned up and Nottingham had a great stand. Evidently enquiries to the team were brisk throughout the day. Greg Clark, Minister for Cities, Universities and Science showed up and was given an overview of some of the opportunities. This was high profile stuff and good for Nottingham.

I also saw Stoke on Trent who have massive ambitions around HS2 – they are trying to get the line ‘moved’ away from Crewe to their part of the world. Leicester were well represented too as were Derby. There was a buzz to the whole place. A good test (of planning) is whether you have any business cards left – and I’m clean out!

Tonight I went to a Connected Cities event – which focussed on the HS2 line when it leaves Birmingham – and heads towards Leeds. Jon Collins, leader of the Council spoke and I thought made some really good comments. His point was that the Cities like Derby, Nottingham, Sheffield, Manchester and Leeds need to present a coherent front. Government don’t want to see squabbles about where the line will go. If we have tight budgets in the next Parliament – we don’t need to give an excuse to shelve or cut back on the project…

Building as an art canvas

There’s often a debate in architecture about the blurring of art and architecture. Perhaps Frank Ghery does this best – making buildings that really are works of art. They set out to be that way; whether they do it for you is a matter of taste.

190_Bowery_doorway_NYC

But wandering around New York this week I saw a building which looks abandoned – strewn with graffiti and with boarded up windows. We walked past it a few times and wondered how this could be so. It’s on The Bowery – at the eastern edge of SOHO. I figured it had probably been a Bank in the past – big stone facade and built to last – a statement if ever there was one. Except it is plastered in posters, graffiti and ‘art’.

Google is a wonderful thing and a few milliseconds of research solved this issue.

It was a Germania Bank – built in 1898. It has six floors and 72 rooms – totalling 35,000 sq ft of accommodation! Although the outside may have an abandoned persona it is, apparently, perfectly habitable of the inside. It is occupied by three people…

The story goes that Jay Maisel, a famous photographer bough the ‘pile’ in 1966 – for $102,000 (£63,000 at todays change rate). Even allowing for the ravages of inflation the sum factored up would be around $750,000 (£466,000). With New York apartments  – in Manhattan starting at c£300,000 (for a studio room!) this was clearly bargain of the Century. It is estimated to be worth around $70m today.

As for the art – the City want it cleaned up but Maisel (interview in 2008) said it was just impossible – he did try to clean it off, but the artists came back and started again on a new clean canvas. It once had Roy Lichtenstein as sub-tenant and Keith Haring chalked baby paintings numerous times!

Maybe not pretty but certainly art…

It takes all sorts

I am in New York – the second time this year. I’ll be back again in a couple of weeks (more on that later as it is work related). But tonight (it’s still yesterday in NYC) we headed off to the Radio City Music Hall – to see Bastille.

radio_city_bastille

It’s a cavernous place – holding 6,000 folks. Bastille have sold out two nights – impressive for a bunch of London boys.

One lady in front wasn’t as impressed though. Halfway through she whipped out an iPad and started playing Candy Crush Saga. I figure she was a reluctant parent looking after her two daughters.

Sadly there was no responsible adult in sight chaperoning the 16 year olds behind us tonight. I was taken back to 1987 when I saw A-Ha in Birmingham – my ears still bleed at the thought of the girls behind who yelled and screamed their way through the whole gig. And this happened again tonight. I was immersed in some sort of hormonal cesspit. Except this time it was to the tune of a shotgun New York delivery of drivel – “He’s so Human”, “I want him to sing at my Wedding”, “He is just so lush”. Ad nauseum. And loud. And then they screamed. Any dog within half a mile would have been sent cowering.

These were proper fans – they even knew the words (all of them) to songs the band had never played before…

Suddenly I realised that I must be getting old. There’s no need for comments to agree. All I can suggest is that I did go to the gig and danced and sang. In a conservative sensible sort of way.

Bastille were rather good though. Shame about the unofficial backing track.

Valuing in good times?

I spoke at the Geldards property conference on Friday  – worryingly I was between the delegates and their lunch! But they were well behaved and patient. You expect this of lawyers?

RICS logo

Trying to get across some complex constructs in 40 minutes is quite a challenge. The tile of the talk was a clue – “The black art of valuation”. Although we have a framework (The Red Book as an example) we also have a number of conventions (like Zoning shops). These aren’t written down – even in the Code of Measuring Practice.

There were a few raised eyebrows when my confession about the use of proper English measurements (“Metric is from France and so is Rabies” is the surveyors with grey hairs mantra).

The hardest part of the seminar was explain the use of yields in capitalising rents. Not specifically the mathematical element but how you arrive at a suitable multiple to reflect risk.

So often we hear the phrase that ‘valuation is an art and not a science” – although the method of getting to an answer needs a formulaic approach. But when the maths are done there is a necessity to step back and consider the figures. Experience is the part that is hard to explain. It’s the part where you take the figure and step back. You have to think about the number in the context of standing outside the asset to be valued on a cold winter morning in the pouring rain and asking yourself, “would someone really pay £1,000,000 for this?”

A sobering moment! But the real part of valuation!

In these improving markets it would be very easy to get carried away – but as we know – markets can go up as well as down!

Best and Final bids

I blogged on Friday about our new phone contract with EE. For a long time, since being over-promised on a private contract, we have only used the main suppliers direct (O2, Vodaphone and EE – formerly known as Orange).

dom-joly-phone

A few months ago I approached all three and asked them to bid for our work. We asked them for their best pricing plans and how they would help us fund replacement phones.

The response was interesting – O2 just didn’t bother responding. But EE and Vodaphone (our current supplier) both did. And EE were more favourable by a considerable margin. So we arranged the switch.

You can then guess what happened – a call from the retention team at Vodaphone. It appears that the ‘best price’ isn’t quite a Ronseal moment. The nice lady at Vodaphone has a different pot of money to keep customers. This is really irritating – but a real turn off for me. So we’re staying with EE. There was much disappointment all round at Vodaphone apparently (we’re a really valuable customer etc.)

And I had a similar experience two weeks ago with BT. We have shifted our landlines to a private supplier at a considerable cost reduction. But more importantly I can give 1 months notice to terminate (unlike the 2 years at BT!). Initially the man at BT was disinterested to say the lease – I think the response was “OK”. But then someone in head office thought that we were “a really valuable customer” – and if it was about price they could reduce the costs “significantly”. No thanks.

There is something here about big organisations – but also about looking after your customers – especially if they truly are “really valuable”?

Bendy Phone’s

It might not surprise you to know that my iPhone 6 is on order. We have shifted our office account to EE (from Vodaphone) principally to get access to the 4G network – but also take advantage of some aggressive pricing on the new iPhone release. We should have them in the next couple of weeks.

Screen Shot 2014-09-26 at 20.39.38

I have the option of the iPhone 6 or 6 plus. And my temptation is the plus – if only to take advantage of the new screen size and extended battery life. The  5.5inch screen mode is anticipated to have a 16 hour battery life. My IPhone 5s is 10 hours allegedly – although three or four is probably more like it. The battery life is nothing short of appalling.

But the big story of the week is that some users have had an issue with bending. The issue seems to be that the unit is so thin that those who sit on the phones have been bending them! The rumours of ‘a few users’ has turned into ‘lots of users’. As usual we don’t really know the truth!

One report I read was that someone had put his phone in his back pocket and sat on it – causing the unit to bend.

I can’t ever remember doing this. Or dropping my phone. Or dunking it in water.

These amazing bits of technology do need a modicum of common sense in how you use them?