Apartments in Manhattan’s Financial District aren’t exactly trading like blue chips on the nearby New York Stock Exchange.
Whether in converted Art Deco office buildings or new glass towers, units are spending more time on the market and often selling below asking prices. After a spurt of construction aimed at foreign buyers, whose numbers are dwindling, and finance workers, who have seen many of their jobs move uptown, the area is plagued by oversupply.
Financial District apartment inventory grew 24 percent from a year earlier in the second quarter, led by new developments, according to a report by Corcoran Group. With all that supply, the average price for resale condos dropped 11%, and average new development prices fell 46%. No previously owned condo was sold for more than $1,600 a square foot, the first time that’s happened since 2013.
“Buyers are keenly aware of the amount of inventory available, and want to negotiate at all price points,” said Garrett Derderian at the brokerage Core.
In May and June, the most recent months available, the median time that Financial District apartments had been on the market was longer than either downtown Brooklyn, an easy subway commute to Wall Street, or the Long Island City neighborhood of Queens, just across the river from midtown Manhattan, according to StreetEasy.
Meanwhile, the construction downtown continues. In the next year, new luxury residential towers are set to open at 130 William St., 77 Greenwich St., 25 Park Row and 1 Wall St. All those new buildings make it that much harder to sell the old, converted office properties.
When 15 Broad St., the former headquarters of a forerunner of JPMorgan Chase & Co., was completed in 1928 across the street from the NYSE, the neoclassical building stood at the center of the financial world.
In 2006, it was among the first office-to-luxury-apartment conversions in the area, but upscale apartment buildings are now plentiful in the Financial District. A 28th floor studio with two bathrooms is listed at $1.5 million in the building, while just steps away at 25 Broad St., a brand new, two-bedroom, two-bath unit with similar amenities is listed for only slightly more at $1.58 million.
“These buildings are approaching 15 and 20 years old and not one has done any updates or remodeling of the common spaces,” said Martin Eiden, a broker at Compass who has sold real estate all over New York City for more than 20 years. “Most of the buildings were designed to be ultra-trendy. As such, they aged faster than traditional designs.”
As some of the biggest banks have relocated to Midtown, taking with them the highest-paid jobs, developers in the neighborhood have taken to building more small apartments for the entry-level analysts and other employees who put in long hours in the Financial District.
“The majority of housing stock available for purchase consists of one-bedroom or studio floorplans,” said broker Gill Chowdhury at Warburg Realty. Since January, 179 listings have sold or gone into contract, with those two categories representing 62% of the total units.
For singles or young families who are set on living in Manhattan, the Financial District may offer the best chance, said Scott Avram, senior vice president of development at Lightstone Group, a developer of 130 William St.
“If you want to live in Manhattan, you can often get the best product and the best value, whereas people were previously priced out of Manhattan and had to move to Brooklyn and Long Island City,” Avram said.
— With assistance by Oshrat Carmiel
Many nations in recent years are trying to wall themselves off from the rest of the world, but financial markets are immune: Money is moving freely, showing financial markets at least remain as intertwined as ever.
And then, coming out of said recession as countries reverted to economies less dependent on foreign trade, global correlations would presumably break down. If the U.S. is going to trade less with China, the U.S. and Chinese economies would be less interdependent, and it wouldn’t make sense for their financial markets to move in unison.
We’ve been hearing for years that globalization has held down inflation in the U.S. as any build-up in inflation pressures has been easy to alleviate by importing cheap goods and cheap labor from abroad, or outsourcing jobs as wage pressures intensified. Those factors would be reduced. Just as increased globalization has led to a convergence in inflation and interest rates around the world, decreased globalization would do the opposite. There’s no reason why the U.S. couldn’t have 3% inflation even as Germany or China dealt with deflation.
That “new normal” might mean higher inflation and lower growth, which should give pause to investors who have driven long-term Treasury yields to record lows.
It’s understandable why investors have driven yields sharply lower over the past couple of weeks. People are worried about slow global growth and are reacting to negative headlines and tweets. Even as trade and immigration have headwinds, we haven’t seen the same for the flow of capital, driving foreign money into the perceived safe haven of the dollar and Treasuries.
But short-term financial market mechanics don’t square with the two longer-term economic realities we’re confronting. Neither the “breakdown of globalization” nor the “false alarm” scenario seems like good news for Treasury bonds once this moment of uncertainty passes.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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Conor Sen at firstname.lastname@example.org
By Theophilos Argitis May 27, 2019, 3:13 PM EDT
Photographer: Cole Burston/Bloomberg
The House of Representatives passed legislation Thursday that would make significant changes to the laws governing retirement savings accounts.
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