REAL ESTATE: BOOM OR BUST?

What will Hudson Yards’ financial impact be on Manhattan’s skyrocketing real estate market?

Aired on March 14, 2019. 

TRANSCRIPT

> EXCITEMENT ABOUNDS AS THE HUDSON YARDS DEVELOPMENT PROJECT OPENS TO THE PUBLIC.

BUT DESPITE TAX BREAKS LARGER THAN THOSE OFFERED TO AMAZON AND A SUBWAY EXTENSION MEANT TO SERVE ITS INCOMING RESIDENTS, WHO CAN AFFORD TO MOVE THERE?

THE MULTIMILLION DOLLAR LUXURY APARTMENTS MIGHT BE A TOUGH SELL.

SOME REAL ESTATE EXPERTS SAY THE LUXURY CONDO MARKET IS FLOODED AND THAT WILL CUT INTO THE HUDSON YARDS' BOTTOM LINE.

HOME PRICES IN MANHATTAN HAVE SLID MORE THAN 3% ACCORDING TO A RECENT REPORT CONDUCTED BY STREET EASY.

BUT THE DEVELOPERS AT HUDSON YARDS HAVE ONE AMENITY NOT FOUND IN EVERY LUXURY DEVELOPMENT IN MANHATTAN.

HERE WITH DETAILS ON WHAT THAT LURE MIGHT BE AND THE SCOOP ON NEW YORK'S HOTTEST NEW NEIGHBORHOOD IS JAMES TAMRY, REAL ESTATE REPORTER FOR 'BLOOMBERG NEWS.'

WELCOME TO THE PROGRAM.

THANK YOU FOR HAVING ME.

FIRST WHAT IS IT THAT'S HAPPENING?

THIS IS BEING PRESENTED AS THE GRAND OPENING OF THE HUDSON YARDS.

WELL, HUDSON YARDS HAS ACTUALLY BEEN OPEN SINCE 2016.

PEOPLE HAVE BEEN IN THE COMMERCIAL SPACES FOR SEVERAL YEARS NOW.

THE GRAND OPENING IT'S HAVING THIS WEEK IS THE GRAND OPENING OF THE PUBLIC SPACES.

THE RESTAURANTS, THE VESSEL WHICH IS THE ART OBJECT THAT HAS STAIRS THAT PEOPLE CAN CLIMB, THE PUBLIC KIND OF GARDENS AND AREAS, AND OF COURSE ALSO THE NEIMAN MARCUS.

ALL RIGHT.

SO WITH ALL OF THE HUBBUB THAT'S BEEN AROUND ALL OF THIS, WHAT IS I GUESS THE HOPE FOR THE DEVELOPERS?

IS THIS JUST REALLY LIKE A LUXURY DEVELOPMENT?

OR IS THIS MORE OF A PUBLIC INTERACTIVE SPACE?

THE IDEA IS THAT IT'S SOMETHING FOR EVERYONE.

THE IDEA IS THAT IT'S A CITY WITHIN A CITY, EFFECTIVELY.

AND SO THERE ARE RESIDENTIAL TOWERS, THERE ARE OFFICE TOWERS, THERE'S THIS KIND OF MALL WITH RESTAURANTS THAT WE'RE TALKING ABOUT, IN PHASE TWO OF THE PROGRAM THERE'S SUPPOSED TO BE A PUBLIC SCHOOL AND FURTHER RESIDENTIAL BUILDINGS.

IT'S SUPPOSED TO BE AN ENTIRE COMMUNITY WITHIN NEW YORK CITY.

AND I NOTICE THAT THE WAY A LOT OF PEOPLE KEEP TALKING ABOUT IT, IT'S VERY MUCH LIKE, WELL, IT'S SUPPOSED TO BE, BECAUSE THERE'S BEEN NOTHING LIKE THIS, CORRECT?

THAT'S TRUE.

THE CLOSEST ANALOG IS PROBABLY BATTERY PARK CITY, BUT THAT WASN'T NEARLY AS AMBITIOUS OR LARGE OR AS EXPANSIVE IN TERMS WHAT WAS IT'S OFFERING.

IT'S PRIMARILY RESIDENTIAL.

IN THE SENSE THAT IT WAS A PLANNED COMMUNITY, YES.

BATTERY PARK CITY IS AS CLOSE AS IT GETS.

NEW YORK REALLY HASN'T SEEN ANYTHING LIKE THIS IN ITS HISTORY.

WELL, OF COURSE GOING BACK TO THE PUBLIC SPACES, A LOT HAS BEEN MADE ABOUT -- I HESITATE TO CALL IT A MALL BECAUSE I FEEL LIKE THIS IS NOT A MALL IN THE TRADITIONAL SENSE THAT WE KNOW IT.

BUT IS THERE ANY INDICATION THAT HAVING THIS RETAIL SPACE THAT OFFERS RESTAURANTS AND HIGH-END SHOPPING, ET CETERA, IS THAT ACTUALLY HELPING TO SELL SOME OF THESE HIGH-END PROPERTIES?

HUDSON YARDS IS ON THE FAR WEST SIDE OF MANHATTAN IN A NEIGHBORHOOD THAT'S RELATIVELY INACCESSIBLE OR WAS RELATIVELY INACCESSIBLE UNTIL THE 7 TRAIN WAS EXTENDED BY THE CITY FOR THE COST OF AROUND $2.4 BILLION.

IT IS NOT NECESSARILY PART OF ANY OTHER NEIGHBORHOOD.

SO THE IDEA IS THAT ALL OF THESE AMENITIES THAT ARE BEING OFFERED VIA THE COMMUNITY OF HUDSON YARDS WILL DRAW TENANTS, COMMERCIAL AND OTHERWISE, AND BUYERS FOR THE CONDOMINIUMS THAT ARE QUITE HIGH-END THAT ARE GOING UP.

BUT THE MARKET HAS ACTUALLY BEEN CHANGING.

WE'VE SEEN SO MANY LUXURY DEVELOPMENTS COME ONLINE IN THE NEW YORK CITY MARKET.

AND IS IT STILL AS HOT AS IT WAS?

OR IS IT STARTING TO DECLINE?

THE SHORT ANSWER IS, NO.

SO THE NEW YORK CITY CONDO MARKET, RESIDENTIAL REAL ESTATE MARKET ABOVE -- LUXURY REAL ESTATE MARKET HAS BEEN IN DECLINE PRETTY MUCH SINCE 2016.

THE PROBLEM IS THAT THERE CONTINUES TO BE A LOT OF NEW INVENTORY THAT'S HITTING THE MARKET YEAR OVER YEAR OVER YEAR.

SINCE 2016 A LOT OF DEVELOPERS HAVE ACTUALLY BEEN HOLDING BACK EXISTING MATERIAL BECAUSE THEY KNOW THAT THE MARKET HAS SOFTENED SOMEWHAT.

AND SO AS A CONSEQUENCE, YOU HAVE A BACKSTOCK OF INVENTORY AND MORE INVENTORY COMING ON THE MARKET.

AS A CONSEQUENCE YOU HAVE THIS REAL GLUT OF AVAILABLE MATERIAL AND A HEAVILY SLACKENED DEMAND FROM BUYERS.

THAT'S FASCINATING CONSIDERING HOW MUCH THE ISSUE OF AFFORDABLE HOUSING HAS BEEN ON THE FOREFRONT OF SO MANY DISCUSSIONS HERE IN NEW YORK.

I DO WANT TO PIVOT A LITTLE BIT TOWARDS THE ISSUE OF TAX BREAKS.

NOW ACTUALLY THERE WAS RECENTLY A STORY PRINTED IN THE 'TIMES' ABOUT HOW THIS PROJECT GOT HUGE AMOUNTS OF TAX BREAKS TO BE DONE.

ACTUALLY BIGGER THAN AMAZON, WHICH GOT A LOT OF PUBLIC ATTENTION, DREW A LOT OF IRE.

I KNOW THEY'RE NOT A ONE-TO-ONE COMPARISON BUT I WANTED TO GET YOUR TAKE ON WHY AMAZON GOT SO MUCH ATTENTION, AND YET THIS PROJECT GOT MORE TAX BREAKS BUT NOBODY SEEMED TO NOTICE.

RIGHT.

I THINK -- I CAN ONLY COMMENT ON THIS SLIGHTLY.

BUT I THINK THE FUNDAMENTAL POINT IS TWOFOLD.

ONE, THESE ARE VERY DIFFERENT ISSUES WHEREIN HUDSON YARDS IS ACTUAL DEVELOPMENT.

IT'S CREATING AN ENTIRELY NEW BUSINESS DISTRICT WHICH THEORETICALLY, AT LEAST, IS BRINGING IN TONS OF NEW JOBS.

AND THEN TWO, IT'S REALLY A QUESTION OF PR, RIGHT?

MANY COMPANIES AROUND THE COUNTRY GET TAX BREAKS FOR DEVELOPING IN DIFFERENT CITIES.

THAT'S A COMMON PRACTICE.

EVERYWHERE.

YEAH.

AMAZON, WHICH IS HELMED BY THE RICHEST PERSON ON THE PLANET, DID A VERY PUBLIC CAMPAIGN WHEREIN THEY WENT AROUND THE COUNTRY GETTING SOLICITATIONS FOR PEOPLE WHO WERE BENDING OVER BACKWARDS TO GIVE THEM TAX BREAKS AND TAX INCENTIVES IN WHATEVER CONTEXT.

AND SO BECAUSE THEY WERE PUBLICIZING THIS, PEOPLE WERE PAYING MORE ATTENTION TO IT.

AND THEN IN MANY RESPECTS THE BACKLASH WAS SOMEWHAT INEVITABLE.

ALL RIGHT.

FINAL QUESTION, THEN.

AS THE REAL ESTATE SALES, LET'S SAY, START CLOSING AND PEOPLE START MOVING INTO HUDSON YARDS, WHAT IS IT WE SHOULD BE LOOKING FOR TO DETERMINE HOW SUCCESSFUL OF A PROJECT THIS IS AND HOW MUCH TIME SHOULD WE GIVE IT?

WE NEED TO GIVE IT A LOT OF TIME.

THIS IS NOT A FIVE-YEAR PROJECT, A TEN-YEAR PROJECT.

IT'S A 20, 25-YEAR PROJECT.

THAT SAID THE DEVELOP WEIRS LOVE TO SELL OUT THESE CONDOMINIUMS THEY'RE BUILDING.

THEY'RE VERY EXPENSIVE.

THE CURRENT AVAILABLE APARTMENTS AT 15 HUDSON YARDS STARTED AROUND $4 MILLION, AND GO UP TO OVER $30 MILLION.

THE MORE EXPENSIVE CONDOMINIUM IS 35 HUDSON YARDS AND THAT HAS YET TO BE BUILT BUT APARTMENTS START AROUND $5 MILLION.

RIGHT?

THERE ARE HUNDREDS OF APARTMENTS IN THESE BUILDINGS.

THERE ARE NOT NECESSARILY HUNDREDS OF PEOPLE RIGHT NOW EAGER TO BE SPENDING $5 MILLION, $10 MILLION ON A RELATIVELY UNTESTED PART OF NEW YORK CITY.

SO THE DEVELOPER UNDERSTANDS, I THINK, TO SOME DEGREE, THAT THIS IS NOT GOING TO BE AN OVERNIGHT BLOWOUT SUCCESS.

ALL RIGHT.

THAT'S ASKING FOR PATIENCE FROM NEW YORKERS.

THAT IN AND OF ITSELF I THINK IS A HUGE -- THAT WOULD BE A BIG GET.

JAMES, THANK YOU SO MUCH FOR YOUR REPORTING AND HELPING US GET A BETTER UNDERSTANDING OF WHAT'S GOING ON, PARTICULARLY WITH THE REAL ESTATE ANGLE OF THE HUDSON YARDS DEVELOPMENT.

WE'D LOVE TO HAVE YOU BACK.

THANK YOU SO MUCH FOR HAVING ME.

ABSOLUTELY.

Funders

MetroFocus is made possible by James and Merryl Tisch, Sue and Edgar Wachenheim III, the Sylvia A. and Simon B. Poyta Programming Endowment to Fight Anti-Semitism, Bernard and Irene Schwartz, Rosalind P. Walter, Barbara Hope Zuckerberg, Jody and John Arnhold, the Cheryl and Philip Milstein Family, Janet Prindle Seidler, Judy and Josh Weston and the Dr. Robert C. and Tina Sohn Foundation.

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