Realty Executives- Real Estate Article Review.

Today Article Review- "NYC's WHITE HOT CONDO MARKET"

Today's article is taken from the February 2014 edition of The Real Deal.  The article NYC's White Hot Condo Market deals with the latest condos that have hit the real estate market in Manhattan.  Katherine Clarke, the writer of given article, brings up the issue of the dilemma of pricing of the given condos.  For the few that don't have time to read through an entire article in The Real Deal, I will try to sum up her great article in layman's terms.

 

Clarke points out the trend of  an increase in pricing per square footage.  "The trend is partially a result of today's historically high land prices, which are prompting some developers to push the envelope on pricing to justify their land purchases."  Of roughly 47 projects, the average prices are hovering around the price of $3000 per square foot.  Let us look why the cost is so high.  Developers buying sites need to "earn the same dollars per square foot being achieved today" to break even.  If the market changes they will not be able to alter their pricing.  This does not even take into consideration the extra dollar amount that developers need to tack on for construction, soft costs, and marketing.  In the end, they need to charge up to $3000 to cover their costs. 

 

Where's the supply and are the units sinking? 

Most of the condos can be found in Downtown Manhattan.  "The shrinking availability of Manhattan land and increasing luxury prices are leading some developers to build smaller projects with larger units."  it seems developers are looking for smaller developments that they can easily rent out and decrease their chances of vacant rooms.

 

Be sure to read the whole article when you get the chance!