Why Are More Millionaires Renting?

Nada, Look at the owner. Did you think he got a discount on the way in and threw in free sculpture? More importantly, I would think this segement of the market in $/per sqft terms is down since 2016.

https://streeteasy.com/closing/10432484

Yes, I was aware. Looking at other initial sales in the line, it looks like he may have been granted a modest discount — perhaps 5% — but nowhere near enough to cover the cost of the sculpture, I would guess.

In terms of price, hard to say anything more than “sideways”. In this building, many of the 2016 sales are from 2013 contract dates. This one was up 7% since the 2013 contract price:

https://streeteasy.com/building/56-leonard/33be

Very modest work done, it appears (closets).

I think you need to go a notch higher in the market than these to see the more dramatic changes. You need an attitude of “Screw it, I don’t care about the price” on both the way in and the way out. The higher-end you go, the less likely you are in the world of people who cannot afford to “sell at a loss”, whether the reason is financial or mental.

I see. So basically $14mm some thing equivalent price. I think $5k/per sq ft ask is little steep for that micro location in Tribeca even though the views are unbeatable. My guess is that the market is more of $4k or perhaps lower, which gets it closer to your estimate of $15mm - even below.

Sorry, I missed you post. When so much premium per sq ft from 33rd to 47th? I guess it is the view towards West.

When = Why

Yeah, somewhere in that ballpark. You gotta imagine if the price on this thing were $17M, someone would’ve showed up and there’d be a deal closed after 10 months.

Public figures about the owner’s net worth are all over the place, but pretty clearly 9-figure. So I imagine the reluctance to meet the market where it stands is mental, not due to finances. Or he thinks the market is due for an uptick and wants to play a little longer.

And there are still building ultra-luxury ish. 80 Clarkson and West Side Highway.

>> Why so much premium per sq ft from 33rd to 47th? I guess it is the view towards West.

Probably a combination of factors. Views to the west are better to than the east, especially 33rd floor vs 47th floor because of building heights to the east. And 33 is mostly facing south (worst views, also in the direction with tallest buildings). While 47 has some north (best views). Exposures in 47 much better — look at number of windows / corners compared to 33. Finally, 47 has higher ceilings. And better/more outdoor space.

Worth ~50% more ppsf? Depends on your preferences and wallet. Also important to note that monthlies & taxes go proportionate to the sq ft of the apt, not the value.

Yes. I didn't know about higher ceilings on 47th. West and North are indeed very nice views.

Do you mean for this building? Current Attorney General rule for condos is monthlies and taxes have to be in proportion to value.

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Also important to note that monthlies & taxes go proportionate to the sq ft of the apt, not the value.

I meant for this building, though I might be wrong. How long have current AG rules been in effect, and how does it work? Based on original offering docs?

I suppose you can say that, but once it’s set according to original offering, then you cannot really change after the first condo is sold. “Oops, sorry, we cut prices on the other condos… so now you have to pay 2%, not 1%, of common charges.” And if you can do whatever based on original offering docs and then immediately change it, what’s the point?

Genuinely curious on what “based on value” means in practice. Please enlighten!

"Did you think he got a discount on the way in and threw in free sculpture? "

More likely that he took the apartment as payment for the commission. (partial payment? Maybe. Lots of ways to cover the commission, foundry, and moving/installation costs).

A couple smaller works coming up soon in London:
https://www.phillips.com/detail/anish-kapoor/226352
https://www.phillips.com/detail/anish-kapoor/224155

I don't know of any big works that have come up for auction, but I don't regularly follow his stuff. Many are public commissions, so unlikely to come up for sale any time soon.

Also keep in mind 56 has a bad reputation with water damage etc.

>> More likely that he took the apartment as payment for the commission.

In what sense? The sale record shows a transaction at (near) market rate with no factors affecting sale price and taxes paid on the full transaction amount. do you have any evidence suggesting otherwise?

I’m sure the developer paid his company for the artwork, which, BTW took several years to complete. But going from there to saying “he took the apartment as payment” seems like a stretch. I’m sure they would have had no problem paying him for the artwork and selling the apartment to someone else, like the other ~150 apartments they sold.

Indeed. Believe, once the share % is set in the offering plan, it can't be changed otherwise people who already signed the contract to buy the unit will have their allocation change.

% allocation of CC based on market value doesn't make sense (it should be by sq ft) but that what it is in the offering plans - at least that is what I have been told. I guess one can rationalize cc allocation as a percentage of offering plan expected MV by saying that higher floors cost more to maintain facade and use elevators for longer rides.
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I suppose you can say that, but once it’s set according to original offering, then you cannot really change after the first condo is sold. “Oops, sorry, we cut prices on the other condos… so now you have to pay 2%, not 1%, of common charges.” And if you can do whatever based on original offering docs and then immediately change it, what’s the point?

"% allocation of CC based on market value doesn't make sense (it should be by sq ft) but that what it is in the offering plans - at least that is what I have been told. I guess one can rationalize cc allocation as a percentage of offering plan expected MV by saying that higher floors cost more to maintain facade and use elevators for longer rides."

Real Estate Tax MUST be ad valorem by law. So Percentage of Common Interest gets set ad valorem. This also leads to Common Charges being set ad valorem.

There was a certiorari case (Museum Tower?) where both kind of charges and real estate taxes were set based on square footage. Afterwards Department of Finance issued a policy memorandum stating that the department would not sign off on any offering plan unless Percentage of Common interests was set and valorem.

Since when, 30yrs? Museum Tower went up in the 80’s. 56 Leonard went up ~30 years later. Yet you can see both these units:

https://streeteasy.com/building/56-leonard/19bw
https://streeteasy.com/building/56-leonard/47west

Have cc+taxes that are $3.3-3.4 per sq ft per month, using indoor square footage.

Yet the (original) sales prices were $2560 ppsf versus $3800 ppsf, to say nothing of the modest discount given on the latter for the artist.

Whatever you guys think is supposed to happen seems not to have happened in this building, and I wonder why.

Cursory research suggests an evolution, with the practice of Offering Plans' setting common charges per the market desirability of a unit (as coops always did) not becoming universal until 2000. Accordingly, for any development with that was offered prior to 2000, common charges could have been set by percentage of ownership in the common elements by square foot.

56 Leonard’s offering plan was well after 2000. The first one in 2008, the reboot in 2013. According to the 2013 one, the most expensive apt was priced at 27x the cheapest but only had common interest that was 10x. So while practice may have shifted, I don’t really see any sort of “rule” being followed via enforcement by the AG or whatever.

My cursory research suggested that the AG pretty much defers to whatever the developer sets unless the inequity is glaring.

Look at page 32 of PDF. Section 12. First paragraph. It is as per square footage with some adjustments.
https://a836-acris.nyc.gov/DS/DocumentSearch/DocumentImageView?doc_id=2016031001225001

No, as it specifically states "relative to value."

I'm not even going to respond because I stated a historical fact. I really don't care about your feelings that it should be different, regardless of how much y'all bend over backwards to manufacture "evidence" roflmao

"My cursory research suggested that the AG pretty much defers to whatever the developer sets unless the inequity is glaring."

MCR,
This is true. However, the DOF must sign off on it beforehand, and the DOF won't.

@30yrs - I took Inonada's point to be that the DOF did sign off on 56 Leonard's Offering Plan despite the fact that the ad valorem weighting of PCI was "off." One could write a dissertation on this topic, and indeed much has been written about it by lawyers. I said my research was "cursory," because I do not want to go down this rabbit hole; I am putting a pin in it for offline discussion.

The current law on common interest allocations (this variant in place since 2014) seems to give wide latitude to the sponsor in deciding what method to follow:

https://www.nysenate.gov/legislation/laws/RPP/339-I

§ 339-i. Common elements. 1. Each unit shall have appurtenant thereto a common interest as expressed in the declaration. Such interest shall be (i) in the approximate proportion that the fair value of the unit at the date of the declaration bears to the then aggregate fair value of all the units or (ii) in the approximate proportion that the floor area of the unit at the date of the declaration bears to the then aggregate floor area of all the units, but such proportion shall reflect the substantially exclusive advantages enjoyed by one or more but not all units in a part or parts of the common elements or (iii) the interest of each of the units shall be in equal percentages, one for each unit as of the date of filing the declaration, or in equal percentages within separate classifications of units as of the date of filing the declaration, or (iv) upon floor space, subject to the location of such space and the additional factors of relative value to other space in the condominium, the uniqueness of the unit, the availability of common elements for exclusive or shared use, and the overall dimensions of the particular unit.

(iii) would be fun — equal for all!

The 56 Leonard offering notes that their estimated division of estimated taxes was based on the common charges but it was ultimately up to NYC tax authorities. Obviously, said authorities went with common charge proportions on this one, which seems to basically follow sq ft.

It didn’t take much going down a rabbit hole to figure this much out. Just read the law referenced in the section 300 noted, and then looked for Real Estate Taxes in the condo offering.

By "the rabbit hole," I meant all the add-on discussions, the most interesting of which (to me at least) is how whatever formula is adopted ages.

What's there to discuss? Rights for some asset are enshrined according to some rules. "You get to live here for $X upfront (set in stone) plus monthlies into the indefinite future that generally vary according to Y, with a degree of uncertainty about the variation." In 2010, someone pays some amount for those rights. In 2020, someone pays some different amount for those rights. The division of common charges is one of a multitude of factors affecting how prices people are willing to pay might vary over time. And not one that creates that much variation across time compared to the other factors, from what I can tell.

Nada,
Here is my take. The state law gives a bunch of options. AG may approve as long as it is stated in the offering plan which option is used. However, DOF for NYC may have a preference for one of these methods, viewpoint and enforcement of which may have evolved over time. Currently, it does seems to be by value as per what I have been told by condo attorney. But that is just one condo attorney. I also realize that the enforcement may have been very dependent on the person who reviewed it till the time DOF NYC policies were firmed up.

Also, I have seen a Penthouse apartment (huge terrace) where the percentage of common interest was set to high relative to other lower floor apartments that it traded at almost 50% discount per square foot adjusting for outdoor space and views and need for reno. Initial sale price was also less than the offering plan by 15-20% if memory serves me right.

https://streeteasy.com/closing/10540276

One of the reasons for these discrepencies seems to be that years back (call it 20 years), RE taxes were small relateive to the CC which itself was small relative to the price of the apartment. Overtime, both CC and RE Taxes have grown above inflation and Manhattan real estate at best may have done inflation. So you can see how these calcs can get so out of whack over time.

https://streeteasy.com/building/188-east-70-street-new_york/30a?utm_campaign=sale_listing&utm_medium=share&utm_source=web&lstt=xDfRO-4zuPDV4vB9r9bYDc0t12nfFy7IoIi1QtrO2TGOv7x61L1HXOCryL9qE94qGxgvoOh4-mumkyf7

Condominium units are not assessed individually. The entire building is assessed and then the individual units get their valuation pro rata from percentage of common interest. So the only way for individual units to receive ad valorem assessment is if percentage of common interest is also ad valorem.

Note that this is cast in stone in the initial version of the Offering Plan, so talking about current taxes vs current values is irrelevant.

+1 on 30 yrs comment re taxes.
w/r/t the rabbit hole - not going down there, but there is more to discuss.

@30yrs isn't it the same for coop owners? The number of your shares is set in stone, isn't it? Your shares are your shares. The board can't lower or raise your portion of them after you've bought, can they? Maybe I'm missing your point.

Only if you make a deal to buy part of a hallway etc.

MTH,
I'm not understanding the point you're trying to make. However, Coops actually can reallocate shares. Also, Coops and Condos pay taxes differently. Condominiums have individual tax lots and pay taxes directly to the city (except when you have a mortgage the bank usually collects the taxes from the unit owner and then they pay the taxes. This is to make sure the taxes get paid and the unit doesn't get a tax lien which would be superior the the bank's position).

With Coops there is one tax lot for the entire building. The Coop makes the payments to the city for the one tax bill.

OK, I guess that makes sense, though common interest and shares sound analogous. But I get that one is taxed as a building, the other by unit owner. In either case isn't the city looking at comparable rents of individual units in the vicinity to determine property taxes?

What they are looking at are values of comparable rental buildings

OK - assessed value is based on the value of nearby rental buildings (lots) if they were to sell the building. Interesting - thanks. I suppose I can get all this from AI but I don't (yet) entirely trust it. It has given me some wacky results.