NEW YORK CITY—Fifteen years ago, multifamily in Manhattan was dominated by condominium sales. 2000 was the beginning of the condo boom, which carried through right into the recession. That is according to Adrienne Albert, CEO and founder of the Marketing Directors, who recently chatted with GlobeSt.com on the evolution of space demand and performance in the multifamily sector in celebration of GlobeSt.com's 15th anniversary.
“Condominiums were smaller and designed for many different market segments (high-end, mid level, and entry level). Mortgages played a significant role in the buying power of the public, and demand was insatiable,” she tells GlobeSt.com. “Although there is always a foreign market, rentals were not as strong because tenant preference was to purchase a home. Rentals were populated by those who were temporary—looking to save money for a down payment on a condominium or coop or who could not afford to buy.”
Space demand was for the largest space affordable, she explains. However, condominiums averaged 800 square feet for a one bedroom and about 1250 square feet for a two bedroom and approximately 550 square feet for a studio, she says. Rentals were about 10-15% smaller, she adds.
“The finish level in rentals was considerably less than that of condos. Amenity programs in rental buildings were usually a gym, a community room, and a common laundry. Condominiums had much more extensive amenity programs,” she says. “The rule of thumb was the smaller the home, the higher the dollar per square foot because end prices were important.”
That was then. Today, according to Albert, “very little for-sale product is being built for the entry level or mid level markets.” Projects are aiming at the high end market, she says, “which demands large space, opulently appointed.”
And the foreign buyer is a major player in today's market, Albert notes. “Large homes that are well located are garnering astronomical prices, over $5000 per square foot in some cases, making a 3,000 square foot home a whopping $15 million,” she says.
Rentals are now extremely popular because the opportunity for home ownership is too expensive for all but the select few, she tells GlobeSt.com. “Rentals are now smaller space, at extremely high dollars, often topping $100 per square foot per year.” Additionally, she says, “it was easier to build rentals because institutions would readily finance a rental (and not a condominium) making new rental product available. And, the exit strategy for the developer often resulted in cashing out of their rental building at nose bleed prices with the sale to an institution who had to supply growth through income producing properties to their constituents.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
