Financial District - the future of FiDi

1. There is very little consensus on prices, but I think the overall sentiment says that prices will fall significantly more than the additional 10% you reference. Though I like Fidi, I'm in the minority. It will be a fringe neighborhood for a while, it is overbuilt, and there are many, many troubled developments, flooding the area with some nice to very nice inventory. I think whatever broader declines occur, FiDi will be hit relatively harder.

2. It's tough to say, but it's not a safe bet. I think union square or UWS will settle at $1K/sf and stay there for several years to come, and FiDi will sell at a discount to them for at least 15 years, if not forever.

3. I hope not.

1. Yes, I think FiDi will be hit as would most other areas in Manhattan. However, I personally believe it's in better shape than many others, because....

2. ....of the guranteed Federal moneys dedicated to the re-development of the area, its future is brighter than most others in Manhattan. Additionally, don't forget about the re-development of South Street Seaport. When and if it happens, that's got to help the area tremendously. So, yes, in a long run, a solid condo in FiDi should be a good investment.

3. Tiffany might pull out, given its recent struggle. Hermes...I don't know. But Apple has a lot to gain from a location there in my opinion because NYU, Pace, and the New School now have big dorms in FiDi. Also, tourists simply love that area.

Some additional points:

A. Don't pay attention to peole who know nothing about FiDi yet tell you that it's not a good area because there's no supermarkets, restaurants, etc. That's just not true.

B. Be sure the bldg. is financially solid. Unfortunately, 15 Broad (though VERY nice) hasn't been doing that great, and its future is uncertain, w/ lots of failed flipping efforts. I personally believe it's still over-priced and may need to come down further. Others have mentioned more solid bldgs. there, so you might want to explore those before making an offer.

Good luck.

Thanks. So I guess these first to comments reflect what I'm feeling about the whole situation and FiDi in general: uncertainty! It's a tough call. I might just go in with a very low offer and if the seller bites, take the plunge. We'll see.

Vanderveen, you said that "Others have mentioned more solid bldgs. there, so you might want to explore those before making an offer." Could you elaborate on those buildings? And how would I find out about the financial health of a building?

Again, thanks.

Things are uncertain, Nypaloto, but I am confident when I say that FiDi is a RELATIVELY safe bet in Manhattan for the reasons I cited above. People are making a HUGE assumption when they say, "FiDi will die because Wall Streeters are all out of work" because most residents there don't work there based on my personal interactions. I think Union Square and most parts of UWS would actually be hit harder because they were much more dramatically inflated during the bubble than was FiDi.

About the financial health of a development, your attorney can tell you when s/he reviews the prospectus/contract. If you have an agent, you can ask her/him about the % sold AND CLOSED. If not, you can call the sales office and get those numbers. As the economy declines, more contracts WILL inevitably be broken and some buyers/flippers would be unable to keep up w/ mortgage/common charges, so you should really focus on buying at developments that are solid RIGHT NOW, so the bldg. can withstand the anticipated beatings in the coming years. 15 Broad, with too many unsold/in-contract/off-market units, makes me nervous.

As you are looking, you should make sure that a new construction/conversion is at least 70% sold AND closed in this climate. 20 Pine and the District are clearly troubled, and 15 broad and 25 Broad aren't doing too great, either, with little hope for selling too many more units.

The "healthiest" new construction/conversion option in FiDi right now would probably be 90 William, but it may be too plain for your taste if you are in the market for a "mansion"--like 15 Broad. The finishes and amenities are not as flashy, but I've seen some spectacular units (the A and B lines) that are sunny (w/ a park view), gigantic, and well-priced, and C lines are also really nice but not as sunny. When I went there a couple of months ago, the rep there said they were paying 100% of the closing costs. That would be a good investment because you aren't over-paying in the first place. Ask your realtor about this bldg. and see what s/he thinks. Good luck.

Nypaloto, may I ask what the rush is? New York is just starting to feel the effect of no bonuses, wait until the lack of money flushes through.

15 Broad isn't necessarily troubled. It is sold through and has been for a while. The units on the market are all resales, and while the large number of flippers is disconcerting, many of them bought in at prices of 5-600/sf, making their carrying costs relatively low. 25 Broad, on the other hand, is a disaster and is likely going rental.

59 John is a pretty nice building. The views aren't great, but the units appear solid and spacious, and the building is sold through.

I also was considering 15 Broad because I liked the amenities and size of the apts for the relatively low maintenance charge. However, I could not find an apt. with the right layout and/or lighting in my price-range (up to 1 million, and I can put 60% down). Can anyone recommend similar buildings (it does not have to be located in the FiDi) with decent layout, view, light, size. I am not in a rush to buy -- but started to look because mortgage rates are down and prices seem negotiable. What would you consider a low-ball offer that might be accepted?

lajeep405, you see, the question wasn't about if he should be buying, was it? I think we have seen repeatedly in various fora here that not everyone wants or needs to buy at the bottom of the market.

newbie, you must know something I don't. From what I had heard, the unsold units, which they have many, have been offered as rentals (not so successfully, no less) and the sponsor really needs to get rid of them. While I agree that it is not troubled per se (you see, I never said it was troubled), I don't think it's sold as smoothly as they had anticipated back in 2006--or as you picture it. And they are now competing with dozens of flippers. Not a good scenario. Correct me if I am wrong because I am pretty sure the sponsor holds many unsold units--and I want to know if I am wrong.

A few brokers that showed me 15 Broad stated that about 10% of the apartments are available in this building. They said all are resales, a number that they stated is healthy for a building with so many units (320 units), since this building is in the market for 3 years and many bought it to flip (after it was bought from JP Morgan.

Vanderveen,

can you please explain what exactly you mean when you say District is "clearly troubled." there are only 25 out of 163 apts left for sale. all the amenities have been completed - roof deck done, gym is opening this thursday, pool area soon to follow. and the screening room and library are about to be open to residents.. i agree with you on 20 Pine, but District is in very good shape indeed. if anyone is considering purchasing in FIDI, i would at least check out District. this condo was priced appropriately from the beginning (approx. 1k psf)

Here is some evidence of price declines in FiDi:

15 Broad St.:

http: //www.streeteasy.com/nyc/sale/376069-condo-15-broad-st-financial-district-new-york

$701 psf on 19th floor

Here is a smaller apt on the 9th floor being offered at the same price:

http: //www.streeteasy.com/nyc/sale/231146-condo-15-broad-street-financial-district-new-york

$1036 psf on 9th floor

And same line on higher floor:

http: //www.streeteasy.com/nyc/sale/357569-condo-15-broad-street-financial-district-new-york

$842 psf on 22nd floor.

20 Pine:

The first sale of Sponsor discounted units at 20 Pine has hit ACRIS - Apt. 901 (1005 sq ft.) sold for $700,000. Contract signed in Dec. 2008. 501 closed at $1,145k, 601 closed at $995k in Sept. 801 is listed in Street Easy at $1,015k, so the sale of 901 represents a discount of 31%.

http: //www.streeteasy.com/nyc/closing/782516

This will be a test of the market in the FiDi luxury market, as $700 is the lowest I have seen in luxury buildings.

NYpalto --

I recently moved into 15 Broad with my family from Tribeca and have to say that we are very happy with the move. The building has some great amenities that are very well used (deck, gym, pool) and the maint+tax abatement make carrying much lower than many other bldgs we looked at (59 John,etc.). 15 Broad is not without its challenges, though. The old management company was terrible, and has replaced with a new one which seems to be doing a much better job. And, as a large building there are definitely different schools of thought (dog people vs. kid people; wealthy types vs. family types) but all in all the building is "settling in".

To clear up a few points that have been incorrect... the building is not in "bad financial shape". All of the sponsor units have been sold for 2 years now. The sales on the market are flips which were purchased in the $500-$700sft range back in 2006. You can check this all for yourself on ACRIS (or Streeteasy!). Many were "friends and family" buys of 2-3 units, so I wouldn't feel bad for anyone left holding a unit right now. The building itself does have a larger % of rentals than I would prefer, but I think the rush to invest has met the reality of the market. Financially, the condo board is running a nice surplus and is starting to grow out of its "new building" phase into a well managed property. One thing that is true is that the developer (sponsor) has been having problems with its other development (20 Pine) as well as with the large retail spaces neighboring 15 Broad. I don't believe that will impact 15 Borad, but always good to check the details with your lawyer.

Good luck!

At last count, District had 60 closings and a little less than 60 in contract. How many of the latter actually close is a matter for debate. Not all available units are listed, and many are reserved for the developer.

My guess is that the contracts they have now represent 40 future closings, which means that 100 of the 163 will have been sold. Not a great sell through.

And yes, to my understanding, 15 Broad has been sold through completely for a while. I believe the sponsor retained some units as is standard practice in even the most successful of buildings. The large number of resales is good for buyers, but it does not represent financial distress.

I have been living at 15 Broad for almost 2 years now.. Certainly, all NYC nabes are being hit in this financial climate that we are in.. But I can tell you that I couldnt be happier where we are..

1. If you are looking to live there for a short period of time or wish to Flip your property, then buying in Fidi or anywhere for that matter is not for you.

2. 15 Broad is fully sold.. all units for sale are resales, not developers units.
3. You're getting large units with very low maintenance costs and a ton of amenities.. AND 10 years or so left on tax abatements
4. Sure you may lose money in the short run, but thats with any neighborhood right now....

5. As far as retail is concerned, sure its all doom and gloom for now, but at some point, retailers are going to have to position themselves for a recovery.. and the retail space in our building is prime commercial location... and we will benefit.. the question is just when...

I'm bullish on FiDi for the fact that there is no low income residential in the area. Some apts in BPC were allotted to low/middle income, but the area is nowhere near a ghetto. This fact will boost FiDi's values when the next surge in RE values come 25 yrs later. The number of homeless on the otherhand, could be better.

Also -- a quick note on $psft in 15 Broad. . . it is nearly impossible to do $psft comps in the building for different lines as some layouts are vastly superior over others. For example, there are huge lofts that are 1500sft+ in which most of the space is windowless interior. The better units have more classic layouts and are priced that way. Anything for $700/sft probably is a weird layout with little light, yet a vast amount of square footage. If you look at the sales for the building, most of what has yet to "flip" is this level of inventory . . .

The conclusion, I think, is that I'll go for it; FiDi, that is. Whether it'll be 15 Broad or another building is TBC. I'll have my broker review the condition of 15 Broad very thoroughly, though, and meanwhile, consider other buildings as well.

Vanderveen, thanks for pointing out 90 William, I'll check what they have available and visit the building.

Markznyc, your comments from an actual 15 Broad insider are very helpful and appreciated. Same goes for darthbrooklyn. Apart from confirming what you get for your $, it's also about the general vibe you get when entering a building. Both my wife and I just felt good at 15 Broad, despite being more into the Scandinavian/Japanese minimalism, not the flashy over-the-top Starck-style. So it's good to hear that you like it there.

And a quick comment to lajeep405: I hear you, and are concerned about the continuing down-cycle. But our current lease expires in June and, after reviewing different scenarios, getting an apartment seems a viable option. But only if we get a really good deal, of course. Some folks also floated the notion that there's lots of negotiating power for potential buyers (i.e. making offers 20% below asking has become sort of standard) right now, and that might soften come Spring. Also, once I (the common buyer) notices that prices are nudging up, I've already missed the bottom.

Anyway, I just hope I'm not completely wrong.

Cheers.

Nypaoloto.. dont have your broker review the condition of the building or any building for that matter... Hes going to tell you its great because he/she wants to make a sale... Make sure your LAWYER reviews all details about the building.. whether all CO's are in place, leins on the building, leins on the seller etc etc.. this goes for all real estate, not just 15 broad.. As for 90 william, the building looks nice, but the floorplans are small IMO... and it seems they are out of their minds asking over $1200/sq ft.. also factor in common charges and whether there is a tax abatement... I think 15 Broad is one of the only buildings charging less than $1/sq ft for Maintenance... Have you seen the Cocoa Exchange building?? There maint charges are astronomical, and there are no amenities at all...

My broker is also a good friend, so I'd say he'll be frank with his assessment (even though I understand that he wants to make the sale). But I'll have my lawyer check the building as well.

I agree with you, darthbrooklyn, that 90 William is not an alternative, at least based on what's listed here. It doesn't warrant almost $450 more per square foot, compared to 15 Broad. Same goes for the Cocoa. Nice apartments, if you like the particular layouts, but yes, high common charges and very little amenities.

Nypaloto,

im telling u man, if you are looking in FIDI, check out District. the pricing is great, the finishes in the apts are beautiful (depending on your taste), common areas ready to roll, etc.. IMHO

I think (hope) that the neighborhood will be OK long-term as well, particularly as the WTC, Fulton Street Station, etc. get finished. The city has made too big of an investment to let it fail, and the fact that most of the housing targets mid-to-high income levels is definitely a good thing. It will probably stay at a discount to UWS, Union Square, etc. though.

One question I had is whether anyone had insight on 75 Wall. The building looks great from the outside and the layouts that I have seen look to be much more functional (traditional room designs, good lighting, etc.) as opposed to some building like District which have poles all over the place and/or rooms with no windows. Plus the amenities should be great since part of the building will be a hotel.

The few units I have seen on the market were a little pricey but does anyone know how they are selling ?
Also, will having the hotel likely help or hurt the value long-term ?

matthewP,

you are mistaken. District has 0 apt with no windows. and poles all over the place? i looked at several apt in district and there we no obtrusive poles. are you talking about 59 john?

I like the District, but it does have poles. And any unit that faces north and is 5th floor or lower might as well have no windows.

I'm might have a peak at the District, just out of curiosity. But it's not on my shortlist because of its location and financial, say, challenges. I'm also a bit turned off by its marketing; it's so 90s (not knowing how 15 Broad, my current favorite, was promoting itself when it converted...).

The District is a nice building. It looks better than its marketing materials might have you believe. The pictures on the website make the lobby look like a club. It's actually very classy in real life.

That said, the kitchens are completely useless. They look nice, but they are too small to be practical.

LOL, I guess my comment on the District got everyone onto that building. I was actually curious if anyone had an opinion about 75 Wall. Looks great from the outside and on the web but does anyone have any insight on the different units, management, financial status, etc. Thanks

Nypalato - I agree with Newbie's comments about District - certain units have poles about 3 ft from the window. The agent told me that "you can use that to break up the room", like I could use a 3' by 4' space for anything useful. Plus, your views are terrible. I walked away from a contract on a unit (for financial reasons) and my "view" was the Ann St. parking garage. As Newbie said, the lower floors get very little light because the streets are so narrow. That aside, the amenities are nice and, from what I hear, almost ready for use, unlike 20 Pine. In terms of value, District is overpriced @ $1,000 per sq. ft., compared to what is going on at 20 Pine and 15 Broad, where units are available at $700 per sq. ft. Same principal Sponsor (Leviev) involved in all 3 and is in financial trouble.
As noted, 15 Broad is strong, 20 Pine is in trouble and the jury is still out on the District as they have only closed about 60 units to date, although pre-construction closings are still proceeding.
Good luck!

this will certainly help the future of FIDI

FIDI

Long run, I absolutely think FiDi will improve. Even if Wall Street never recovers to where it was, that means that residential will probably play an even bigger part. You simply can't find high end buildings with good schools plus all the parks and riverfront and amenities on the island of manhattan south of 96th for anywhere near the price.

That being said, it is absolutely getting its ass kicked right now. WAAAAY much more supply than demand, and that won't improve anytime soon. So you have IMHO at least a year or two before you even need to think of getting it.

Once we bottom in a couple of years, I think it will represent great value... though I am specifically not saying "investment". If thats what you want, don't look at RE.