REAL ESTATE: BOOM OR BUST?

March 15, 2019 at 5:00 am

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

Aired on March 14, 2019. 

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>>> 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.

Mutual of America PSEG

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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