Posted by Jonathan J. Miller -Wednesday, May 16, 2012, 3:34 PM 1 Comment
Crazy?
In the past few days there have been some pretty serious announcements of high end sales in the Manhattan apartment market. First there was the $52M co-op sale at 740 Park Avenue and then there was the $70M condo sale at 50 Central Park South. The former was a record – the highest sales price of a co-op apartment in Manhattan history and the second was a near record sale for a Manhattan condo. One could say this $70M sale was the highest arm’s length condo sale in history since it appears from what I’ve read that the $88M sale at 15 CPW a few months ago was more of a global divorce strategy play.
In appraising we use the “paired sale” technique to extract what certain amenities are worth. One could argue that these 2 recent sales were very similar:
Both were about 10,000 square feet.
Both are duplexes (2 levels).
Both had terraces.
Both located on well known streets/addresses.
Both were located in pre-war buildings.
Both sold at about the same time.
Both appeal to an affluent buyer who doesn’t require financing.
Simplistically speaking the key differences are the form of ownership (co-op v. condo) and the view. The 50 CPS property has full frontage on Central Park, the most sought-after view in Manhattan. The 740 Park Avenue is located on the 12th and 13th floor has city views that do not clear the roof lines of most buildings in the immediate area.
In our market, the premium for a Central Park view can be about 25% of an apartment’s value. In our co-authored research paper on Manhattan co-op v. condo value with NYU Furman Center, the inherent difference in value between a co-op and condo after controlling for all differences is about 9%.
25% + 9% = 34%
This 34% total is pretty consistent with the 34.6% difference between the $52M co-op and the $70M condo sales prices.
So the numbers aren’t so crazy after all.
Wynn lands Ritz-Carlton penthouse for $70M [The Real Deal]
Park Avenue co-op sells for record $52.5 million [CNN/Money]
Fertilizer King Rybolovlev Sued By Wife For $88 Million 15 CPW Purchase [NYO]
The Condominium v. Cooperative Puzzle: An Empirical Analysis of Housing in New York City [Miller Samuel]
Posted by Jonathan J. Miller -Thursday, May 10, 2012, 9:51 AM 1 Comment
Last night the championship dreams for Knicks fans that began in earnest with Linsanity, was officially over, ending with a final loss to Miami in Miami. The Knicks resurgence has been one of the few feel good stories of the year. I will now shift my sports focus to the Yankees and, oh yes, Tebow. Seriously considering following Curling instead.
During the regular season, my sons and I began to collect “Clydisms” by Walt “Clyde” Frazier, our Knicks hero from the championship years. He uses sing-songy phrases to describe the action. Even his new restaurant name has the same style to it.
When one of us wasn’t able to watch a game, the others texted the rest of us new phrases hoping to discover a new one to add to our list.
Moving and grooving
Sliding and Gliding
Swishing and dishing
Rebounding and astounding
Running and stunning
He’s the Novack in novocaine
He’s the Guadeloupe with the hoop
Whacked and hacked
Cruisin’ and Bruisin’
Perculating and devastating
Fields with the steal
Hanging and banging
Duke and hoop
Dishing and swishing
Tantalizing and mesmerizing
Huffing and puffing
Penetrate and devastate
Posting and toasting
Hustling and muscling
Resounding rebounding
Dooming and glooming
Hounding and pounding
Hang and bang
Hanging and banging
Thriving and driving
Duping and hooping
Stops and pops
The Knicks with the knack
Eratic, dramatic, ecstatic and charismatic
Straining and paining
Slammin’ and jammin’
Winning and grinning
In the Knick of time
Slicing and dicing
Wishing they were swishing
Huff and stuff
Sharing and caring
Using and abusing
In the Knick of time
Hurrying and worrying
Hustling and bustling
Spinning and winning
Shakin’ and bakin’
Shake and bake
Stumbling and bumbling
Puffing and stuffing
Penetrating and creating
Agile and hostile
Elton got branded
Swoops to the hoop
Contagious and outrageous
Duping and hooping
A little more pep in their step
Amazing grace
Wheeling and dealing
Hustle with muscle
Transitioning and swishing
Stoppin’ and poppin’
Velcro “d”, stickin’ to the man
Plays with heart and smart
Hacking and whacking
Cruising and bruising
Fortitude and aptitude
Wheels and deals
Bounded and astounded
Posting and toasting
Stooping and hooping
Pulverized in the paint
Huffs and stuffs
Fire and desire
Spinning and winning
So nice we’ll show it twice
Showing his amazing grace
Tenacity and sagacity
Penetrating and creating
Hustling and bustling
Shaking and faking
Dancing and prancing
Prancing on the perimeter
Nasty and sassy
Synergy and energy
The attack, attacking the rack
Trying to keep from crying
Moving and grooving
Stumbling and bumbling
Not hesitating but devastating
Posted by Jonathan J. Miller -Monday, April 2, 2012, 11:35 AM Comments Off
New York City has a slew of entertainment celebrities that buy and sell real estate. Like Wall Street and Silicon Alley, it’s a key segment of our market. Conventional wisdom (I know, I know) says that celebrities add additional value to a property sale.
Selling: Adding Value
When celebrities sell something, it is assumed that they receive a premium over what a regular Joe would receive. Bragging rights to a buyer somehow translates into more value. I’m not aware of any good studies on the topic (idea!).
Buying: Overpaying
Perhaps the same goes for when a celebrity buys a property like Justin Bieber’s situation – (hat tip to @NickTimiraos) they might overpay because they are not advised properly so when they go to sell it for less than what they paid for it a few years later, the “premium” works against them – but it’s because they initially overpaid rather than adding value to the property for gracing it with their presence.
I’ve personally seen more of the overpaying scenario than the adding value scenario.
…and the real estate agent marketing the property sings it loud and clear (hey, you gotta use what you’ve got). Or perhaps Lindsey Lohan lived here before she got her make-over., etc.
I’d even argue that in our celebrity, reality tv culture, there is even more of a stereotype applied today than a few decades ago since so many “celebrities” are celebrities for being celebrities without any discernible talents like Paris Hilton, The Khardashians, etc.
But I digress.
Well I hate to burst anyone’s bubble here, but the celebrity premium is a myth or at the very minimum, there is no rule-of-thumb. It goes something like this:
Q: Have buyers paid more for a property that WAS previously owned by a celebrity?
A: Of course!
and…
Q: Have buyers paid more for a property that WAS NOT previously owned by a celebrity?
A: Of course!
In housing markets that have a high concentration of celebrities like the bi-coastal entertainment meccas of New York City and Los Angeles, there is a lot of celebrity real estate activity and the minutia is scrutinized in the media. It sells newspapers because people like to read about it – I do.
Celebrities that buy and sell homes are an important part of the sales mix especially at the high end of the market. Throw in the fact that housing prices are generally higher in these entertainment meccas than I’m markets that surround them and voila! a correlation is made: Celebrities add a premium to a real estate property? The same logic probably applies to other markets.
I’m not saying the celebrity factor is not helpful – it’s a marketing angle and may attract more eyeballs to a listing and perhaps help it sell the property faster. However I’ve never seen it in the context as some sort of obvious premium to tack on to a property.
In fact, quite often the celebrity real estate scenario goes something like this:
Over price the listing because it is a celebrity (on advice from an advisor or manager).
Languishes on market.
Drop the price.
The property sells.
Gets extra media coverage and readers don’t know the local market.
Assume it sold for a premium which reinforces the stereotype.
Posted by Jonathan J. Miller -Tuesday, October 11, 2011, 6:30 AM 3 Comments
My wife and I saw Moneyball the other evening and thought it was one of the best movies we had seen in years. I’ve long been a fan of the author Michael Lewis whose books all dot my book shelf and now iPad such as Liar’s Poker, The Big Short, The New New Thing, The Blind Side, The Money Culture, Panic and Next. I just bought his new book, Boomerang.
The Moneyball script was amazing – the movie theatre was packed it was all about its quality dialog and nuance of facial gestures+great acting. Several fits of laughter enveloped the theatre after some hilarious quips.
The premise was how the Oakland A’s general manager came to the realization that a small market team could not compete with the payroll of teams like the New York Yankees and they had to think different (sound familiar?) by taking a fresh approach to the analytics of baseball. The scouts were relying on factors that didn’t really have much to do with a player’s performance. “An ugly girlfriend means no confidence.”
I see a parallel in real estate. (Of course I would since that’s what this blog is about). It’s like the long term reliance of housing price trends as some sort of statement of market health, when in fact, its just about the very last thing an observer should be relying on.
In the movie the metric of vital importance was on-base percentage and runs, not batting average. In housing it is number of sales, not price.
Posted by Jonathan J. Miller -Friday, October 7, 2011, 11:33 AM Comments Off
[click to read about logo]
When the world got the news about the loss of a great innovator, I got a little choked up and took a look at what his vision has meant to me. I’ve been in the Cult of Mac since 1986. Originally as contrarians, we originally built our appraisal firms Miller Samuel and Miller Cicero with Apple products. (confession: Mac appraisal software ceased to exist a few years ago so we were forced to convert to PC’s for Miller Samuel – except me)
I took a look back at my firm’s 25 years of history valuing real estate in New York City to draw some parallels. In reality, this is likely my attempt to pay homage to someone I’ve always admired greatly, so here goes:
Create a great product – people are attracted to great things in good times and bad. Think about the long lines for the new iPhone during the Great Recession. Think about buildings like 15 Central Park West in Manhattan that appreciated in value during recent rough economic times while other buildings sat idle.
Think Different – As an appraisal firm, Miller Samuel introduced many new ways of looking at Manhattan real estate over the years that we now take for granted: price per square foot, median sales price, number of bedrooms, days on market and other metrics that are now standard. It’s hard to imagine analyzing the market without these metrics, but we were criticized for each of them.
Learn from your mistakes – Steve Jobs was fired from the company he founded because he didn’t focus on the future. He learned from that experience and came back to push Apple to higher levels. In many ways, politics aside, our current mayor, Michael Bloomberg, has kept New York City focused on the future, working to make the city competitive on a global scale to remain an essential international destination, much like London.
Price/Cost does not equal value – Apple continually enjoys some of the highest profit margins in the industry because they conveyed their value to their customers. The opportunities afforded those who live in New York City usually outweigh the high cost of living in the city. If that weren’t true, there would be a population exodus in search of a lower cost of living. Instead, real estate has thrived over the long run as the city has instilled value in its residents.
He was rude, aggressive and unyielding, but people loved him – Why? Because he had a vision that was hard to argue against. New York City pushes people to perform and has a reputation for things such as not making eye contact with others on the street as they hurry to get somewhere. I never wish to attain Steve Jobs’ personality, but I do aspire to get things done.
See where the future will take us before anyone else does – After Steve Jobs was fired from Apple, he started a new computer company called Next. I remember the outcry when the new machines didn’t have floppy disk drives. Apple eventually bought the firm, bringing Jobs back, primarily for it’s unique software, which eventually became OSX and ultimately saved Apple, pushing it to higher levels. Back in 2005 and through 2009, I remember calling out the deteriorating conditions of the appraisal industry and the weakening housing market very publicly, and being regularly chastised for it. Those same individuals who criticized my commentary eventually realized the reality we were facing.
Many people identify with being “in the know” – Mac nuts like me thrive on this. I think people who live in or near New York are drawn here for that reason. I have family in other parts of the country that view New York as an exciting, but scary place, saying they would never want to live here. But when they visit, they get a sense of the energy and pace and wistfully talk about moving here.
Love and passion make hard work fun – Steve Jobs tirelessly pursued his vision. We spend one third of our life sleeping, so there isn’t time left to waste. Do we want to spend it bored and unhappy? New York City has been described as the “City that never sleeps” and “a city where you can buy fresh strawberries at 3am”. I’ve never had the urge to buy them at that hour, but people want to be here for the potential to do just that. It’s things they can’t ordinarily do elsewhere that build long term value into the housing market.
Why has New York City remained one of the best performing housing markets in the country? Because continues to be “insanely great”.
Posted by Jonathan J. Miller -Tuesday, June 14, 2011, 3:18 PM Comments Off
Last night the Observer’s Power 100 got to rub elbows (aka back slap) with each other on a job well done. After all, I have it on good authority that the selections for the Power 100 were based on a highly scientific analytical process. Something akin placing your finger in a light socket.
Barbara Wagner of Rubenstein made sure this epic photo got taken – the bottom of the barrel that is the Observer Power 100. Lock is the blogfather of modern real estate and Steve is an in-the-trenches real estate reporter who has no claims to the LOL NYPost headlines of the past few weeks.
Posted by Jonathan J. Miller -Wednesday, May 25, 2011, 1:01 PM Comments Off
[starts after 15 second commercial]
Last Saturday morning, I was walking along Broadway on the way to our WOR Eye on Real Estate radio show and saw about a dozen media vehicles with satellite dishes and throngs of media types across the street from 71 Broadway – didn’t connect why they were there until Tuesday when I got a call from CBS TV.
Did a quick interview on the street about an hour before airtime. Was played at noon, 5 and 11 yesterday and then this morning. Wow, slow news day
Does a landlord want to put their tenants through this hassle? No.
Posted by Jonathan J. Miller -Tuesday, March 8, 2011, 10:40 AM 3 Comments
I had the pleasure of speaking with Guy Kawasaki, former Chief (Software) Evangelist at Apple Computer in the early days of Macintosh – who has become a prolific author in addition to being a technology entrepreneur. While I claim to avoid the self-help book genre, I realize I’ve read nearly all of his books. Guy released his 10th book today: Enchantment: The Art of Changing Hearts, Minds and Actions. Here are some reviews.
His first book, The Macintosh Way, is now a free download and was always one of my faves – because it came out as we were building our company, Miller Samuel, entirely by using Macs. He later ran ACIUS, developer of 4th Dimension, the database application we ran for about 15 years to manage our data.
This was a pure treat for me as I got to talk about the early days of Apple, reminisced about Guy’s one word email technique (I shared my 15 second voicemail rule), his other ventures such as Alltop.com and Garage.com, the state of marketing today and how to make yourself enchanting.
Now Mr. Roubini is trying to pull off his toughest feat yet. He is betting his business—Manhattan-based Roubini Global Economics—on the assumption that his clients will continue to pay him up to $100,000 a year for the intellectual rigor of his prognostications, not for his relentless negativity.
Note: My world is about to spin off its axis (and no, not because I bought a supercharged snow blower this weekend in 51 degree weather).
Had a fun interview with Tom and Sara this morning on the always MUST watch/listen Bloomberg Surveillance. We talked housing, rentals, vacancy and inventory. An added bonus was the addition of Adam Davidson – co-founder and co-host of Planet Money... Read More
