Dead Cat Bounce?

inonada

Well-known member
Don’t forget the PH.



03/02/2021Modlin Group Listing sold$19,950,000
Sale recorded$15,500,000
11/30/2020Later Listed by Modlin Group$19,950,000
10/05/2020Compass Listing is no longer available on StreetEasy Last priced at $22,650,000$22,650,000
01/23/2019Later Listed by Compass$25,000,000
09/14/2018CORE Listing is no longer available on StreetEasy$25,000,000
06/12/2018Later Listed by CORE$25,000,000
10/16/2017Listing is no longer available on StreetEasy$22,500,000
09/05/2017Price decreased by 8%$22,500,000 ↓
02/28/2017Price decreased by 9%$24,500,000 ↓
03/22/2016Price decreased by 9%$26,900,000 ↓
09/17/2015Price decreased by 12%$29,500,000 ↓
04/28/2015Listed by Douglas Elliman$33,500,000
 

inonada

Well-known member
Building was bought for $26.6M in Jan 2014 at $1027 ppsf. Original asks in 2015 added up to around $86M ($3323 ppsf). Four sales at just under $7M, a couple at the end of 2016 and a couple mid 2017. Then these two at $15.5M and (let’s guess) $8M. Adds up to $51M ($1970 ppsf), $35M less than developer hoped in 2015.

I wonder if the development broke even, ignoring financing costs & developer’s time. David, how do you think this pencils out? Renovations, both interior & exterior, seem extensive and very well done.
 

David Goldsmith

All Powerful Moderator
Staff member
Without spending a lot of time on calculations I'm guessing they were over $40M just in hard costs. It's hard to imagine soft costs, sales costs, carrying, etc being less than $10M especially given the time involved.

I'll note with all the talk of how blazing hot the market is - and perhaps I've just missed the press releases - is the dearth of announcements from developers about reaching sales milestones on their projects. In fact the only thing I've seen is the opposite, that being developers passing on releasing sales figures except in the most general "we are happy with increases" way. Using one of my favorite buildings to pick on 1 Manhattan Square I only see 32 sales this year out of 815 units. Is it surprising Extell doesn't want to talk about that? Although I do have to give Gary Barnett credit for admitting they would be losing money on half their current projects.

As for another Extell project - 1 City Point in Downtown Brooklyn - we heard from the sales team how well sales were doing before closings started. Then we heard how even more super amazingly well they were doing on top of that when they slashed prices and brought in Serhant to take over marketing and sales. So I'm confused as to why with the upcoming 1 year anniversary of the first closing it looks like they only have approximately 166 units out of 458 units closed or in contract, which is barely more than one third.
 

David Goldsmith

All Powerful Moderator
Staff member
One of the reasons I think there may be a rocky road ahead for the Manhattan office market is just how much office space is under construction or planned. Although it definitely rubs me the wrong way that we are told by Governor Cuomo, Mayor DeBlasio, Pat Foye, etc how we need "congestion pricing" because of how overcrowded Midtown is, but at the same time Midtown East was upzoned for millions more square feet of office space, the State of New York wants to condemn a string of properties to build a huge project around Penn Station, and the MTA is supporting a zoning variance to double the square footage on the project replacing their former headquarters on Madison Avenue to line their own pockets. And why does the "congestion zone" include Avenue D but not 61st Street? Is there any issue which one is more congested?

AFAIK we are still seeing less than 25% of office workers returned. An increasing amount of tension associated with that. When it comes to permanent WFH it looks like we have gone through denial and are somewhere between anger and bargaining. The quicker we move through depression to acceptance the better. I've read several articles claiming an increasing number of employees are quitting rather than returning to 100% in office jobs. I think the employers who have indicated they will be "disappointed' if everyone isn't back after Labor Day may be in for a rude awakening when other sailors steal their wind (i.e. workforce).
How does this sound for planning?
- Cause congestion on purpose by closing lanes, closing streets (calling it "Open Streets"), etc until NYC becomes the most congested city in the entire country
- Enact "Congestion Pricing" to tax anyone who dares to take a vehicle below 61st St, while upzoning Midtown East forillions more square feet of office space and planning a multi-million square foot expansion of an enormous Penn Station complex.
- Vastly reduce subway and bus service so people can't commute by public transportation:

I’m Miserable’: Why the Wait for the Subway Feels Longer Than Ever​

The pandemic and a hiring freeze have led to a shortage of train operators, conductors and workers in New York City, forcing thousands of subway trips to be canceled.

Then be shocked when we're not back to 100% office occupancy after Labor Day.
 

David Goldsmith

All Powerful Moderator
Staff member
My experience with the MTA is that they usually don't admit to things being as bad as they actually are. So if they are admitting that ridership won't return to 80% to 90% of pre-pandemic ridership until 2024, what does it say about people returning to offices post Labor Day?

MTA leaders mull big train, bus, subway service cuts for 2023; expect transit ridership won’t hit pre-pandemic levels​

Metropolitan Transportation Authority Chief Financial Officer Bob Foran pointed to projections from the consulting firm McKinsey and Co. that estimate the MTA’s ridership by 2024 would only recover to 80% to 90% of prepandemic levels.
 

David Goldsmith

All Powerful Moderator
Staff member
Apparently the market is so hot right now you can sell your One57 Billionaires Row condo for only 27% off 2015 prices.

Shark Tank’s Robert Herjavec Buys One57 Condo for Big Discount​

The IT security firm founder and reality show star paid about $34.5 million for the roughly 6,200-square-foot spread​

Robert Herjavec, founder of an eponymous IT security firm who appears on the investment reality show “Shark Tank,” has snapped up an apartment at New York’s One57 for roughly $34.5 million, he confirmed.

The deal represents a major loss for the seller, a limited-liability company with an address at the offices of Pacific American, a company with ties to Chinese conglomerate HNA Group. The company paid $47.37 million for the unit about six years ago, The Wall Street Journal reported, and the apartment was listed for $45 million in July 2020, according to listing website StreetEasy.
 

David Goldsmith

All Powerful Moderator
Staff member

At 432 Park, a $30M condo is in default and its owner has vanished​

The $30 million condo unit high atop East 57th Street sits empty, stripped of its furniture and possibly abandoned. The mortgage on the 72nd floor residence at 432 Park Avenue is in default, its guarantor appears to be in custody in China and the unit owner’s identity is uncertain.

Now the firm that owns the debt wants to seize the 4,000-square-foot property on Billionaires’ Row, where high-end real estate purchases are often shrouded behind layers of LLCs.

In a lawsuit filed last week, Maverick Real Estate Partners is seeking to foreclose on the three-bedroom unit, hoping to sell it “on an expedited basis on the grounds that the property is vacant and/or abandoned.”

Maverick alleges the owner of unit 72A — listed as an offshore LLC — has failed to make mortgage payments since March, throwing the loan into default.
 
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