7 ms·

I moved to Manhattan 10 years ago and it's been really sad to watch the decline, both in commercial and residential, more and more full city blocks of store fro

by neom 8y ago

I moved to Manhattan 10 years ago and it's been really sad to watch the decline, both in commercial and residential, more and more full city blocks of store fronts sit empty, and friends who have bought homes are experiencing a depreciation in their investments. Wealthy folks from outside the US have or had a "cottage" in Manhattan, but people are trying to sell their 2nd or 3rd houses, and people are not buying a 2rd or 3rd house. My biggest concern, however, is if the changes in weather and environment are going to impact this Island.

usaphp 8y ago
> more and more full city blocks of store fronts sit empty Hmm, which part of manhattan are you talking about? Living in the upper east side I don’t notice any change at all
- neom 8y ago
  From what I've seen if you walk up Broadway from Houston it is getting worse and worse, I think generally between 1st and 6th above Houston but lower than 14th is thinning (I realize that's a fairly large area)
  - notyourday 8y ago
    That's just historic leases and options to extend running out. Lets presume the commercial leases on storefronts are 10 years with an option for another 10. The holdouts that you are seeing signed leases in 1998-1999. They are still paying 1998-1999 rents with a slight YOY escalation. That's how Pearl River Mart was able to afford its place. 1999 that section of Manhattan was a dump. Here's a walk down the memory lane: * In 1997 my girlfriend at the time bought a two floor condo in Park Slope (2,400 sq feet) for $220,000. Her friends told her that she overpaid. * In 1999 a friend of mine had her generation skipping trust buy two buildings in Soho next to each other for $1.27M. They had to modify trust documents because with that buy trust was over exposed to real estate. * In 1999 apartments on Broome St in Soho were lofts with the kind of showers one would expect in the third world countries. 5-6 artists would live in one because they split 3000 sq foot one floor apartment 5 ways for a grand total of $1200/mo. Residential leases are simply too short which is why we do not see the massive spikes in rents as the lease is being re-negotiated the way we see them in commercial real estate.
- kevstev 8y ago
  go downtown- soho, the west village, meatpacking, Union Square. To a lesser extent, but still noticeable, midtown. You may also find this more noticeable if you are into food, great restaurants getting booted out of their space, only to have that space sit there and remain vacant.
  - neom 8y ago
    Not sure why you're getting downvoted, you're totally correct, especially about the food scene stuff, some of the best Indian spots in Murray Hill are disappearing because the rent is on the rise.
addicted 8y ago
NYC landlords need to stop waiting for the big pay day and start dropping prices. And that appears to be what’s happening. Commercial landlords apparently are still waiting, hence the empty storefronts, but it seems the residential landlords have finally realized the market needs to correct.
- neom 8y ago
  I was speaking to the owner of the building I work in (335 Madison) about this, he said because so much is owned by families and paid off, (his included) they can afford to leave them empty vs lower the rent, therefore lowering the property values that are leveraged.
  - refurb 8y ago
    Indeed. If you're signing multi-year contracts, losing 12 months of rent can be a smaller hit than signing a contract for a lower price.
  - dmoy 8y ago
    Curious - what's the property tax rate? Is there a tax if it's not occupied?
    - sethhochberg 8y ago
      We do not have a vacancy tax, no. There is lots of discussion locally about adding one in some form, for both residential and commercial properties.
  - JiNCMG 8y ago
    Yeah I know companies in "Silicon Alley" that have moved to Brooklyn (not Dumbo) because the rent is out of control. Old buildings in 23rd Street go years with minimum repairs and rent hikes just cause the landlord can sit it out. Property Managers are freaking out because they only earn on rent collection.
- crag 8y ago
  And it's about time too. Prices were just stupid in NYC. Even in Queens and Brooklyn. It needs a long correction.
babygoat 8y ago
It's been really sad to see people still continue to equate homes with investments like 2008 never happened.
- dsfyu404ed 8y ago
  Your primary residence is an investment, just not one you can liquidate at will (or at all in some cases) or that you can expect to appreciate. Your 2-N homes are also investments, just riskier ones than they were thought to be previously. Whether people know this or are just blindly parroting outdated advice remains to be seen.
  - TheCowboy 8y ago
    A primary residence is not by definition an investment. It is a depreciating asset, but that does not mean it is an investment. The reasons for having one or more homes are not primarily or always to generate a return or income. It is possible to use your primary residence as an investment, but everyone still needs a place to live, so it is also a form of consumption. If you want to consider it an investment by definition, then you should actually explain how it is an investment.
  - DINKDINK 8y ago
    An investment is an entity you allocate capital to, to enable wealth creation. e.g. A baker buying an oven. Speculation is allocation of capital to an entity because you believe you or someone else will need it in the future. e.g. A banker buying a baker's oven. A primary residence is at best an investment (you need to live somewhere to earn an income), a second residence is purely speculation. The housing market is highly highly leverage with the median ratio ~= 14:1 [1]. Since small changes to the amount of money inflated by commercial banks and the Federal Reserve can have extreme consequences on prices, it's highly inadvisable to speculate in highly leverage markets. [1] 7% median down payment, 1/.07~=14 https://www.attomdata.com/news/mortgage-and-finance/q3-2017-u-s-home-loan-origination-report/ https://www.attomdata.com/news/mortgage-and-finance/q3-2017-...
  - CydeWeys 8y ago
    Your primary residence is not an investment. It's a place for you to live. It usually makes sense to buy even if you would lose money over time simply because you'd likely lose more from paying rent. Being able to sell your house for more than you paid for it at some point in the future is a nice bonus if you were fortunate and it appreciated above inflation over that time period, but this is by no means guaranteed, and you shouldn't count on it. The average American loses money on real estate once you factor in inflation, property taxes, interest, and maintenance. Yes, we hear all sorts of stories about houses appreciating six figures per year in the Bay Area but that is very, very far from the typical American experience.
gamblor956 8y ago
One of the nice things about Downtown LA's recent building renaissance is that the overwhelming majority of property owners don't wait for the whale retail tenants. Largely this is because in LA most companies/residents strongly prefer buildings with occupied ground-level, to the point where otherwise identical buildings with differences in ground-level occupancy can see double digit differences in above-ground occupancy rates! (This played out earlier this year and last year in the Little Tokyo and South Park neighborhoods.) Due to the sprawl of LA, ground-level commercial spaces don't command a significant enough premium over the above-ground offices/apartments rental prices to let the ground level remain empty. In contrast, in NY, land, office space, and residential space is at such a premium that tenants don't really have much of a choice, so landlords can afford to wait out poor leasing conditions for their ground-level units since an empty storefront doesn't impact the rent they can charge for their above-ground units.
Alex3917 8y ago
> more and more full city blocks of store fronts sit empty Large parts of Tribeca right now are empty and boarded up. You'd think it was London during The Blitz and everyone was just hiding or something. For all that people complain about SF, it's pretty amazing that you can go there after not having visited for ten years and not a single thing has changed. All the houses are the same color, all the same little shops and restaurants are still in business, etc. Whereas you walk down St. Marks or Carmine St. and the majority of businesses are less than a year old.
- CydeWeys 8y ago
  Most neighborhoods aren't like that, by the way. None of the ones I typically frequent anyway. As for there being many businesses starting all the time, that's a good thing. It means the city's economy is vibrant, and less profitable businesses are turning over to make room for ones that can be more profitable. Neighborhoods that only have the same businesses that have been there forever generally aren't doing very well economically-speaking, as they haven't been able to attract investment or growth.
- throwawaymath 8y ago
  I live in NYC and it has not been my experience that large parts of TriBeCa are boarded up. Can you maybe give a few example streets you're talking about?
  - Alex3917 8y ago
    I haven't been down there in a year so I don't remember exactly, but it was more the part north of city hall rather than the part to the west. You can see on Google Maps just going along Leonard St. or whatever that pretty much every storefront is vacant.
naravara 8y ago
> My biggest concern, however, is if the changes in weather and environment are going to impact this Island. Manhattan has the wealth and technology to build infrastructure to mitigate against changes in weather and environment. What is lacks is competent administration and the political will to tax the rich to build any of it.
ido 8y ago
friends who have bought homes are experiencing a depreciation in their investments Wait...So lack of affordable housing is a bad thing, and housing becoming more affordable is also a bad thing?
- deleted 8y ago
  [deleted]
- dlp211 8y ago
  > Wait...So lack of affordable housing is a bad thing, and housing becoming more affordable is also a bad thing? Yes. They just are bad for different sets of people.
CydeWeys 8y ago
What "decline" are you talking about? Manhattan is more vibrant and bustling than ever before. Your home shouldn't be an investment. It's actually good if home prices go down because that makes housing more affordable. Housing can be either affordable or an investment, but not both. There's plenty of other investments you can park your money into so it's better that housing be affordable. I'm used to seeing HN comments where people who don't live here say all sorts of obviously untrue things about NYC (like how a lot of it is vacant) -- but you've lived here for ten years. In what way exactly do you think Manhattan is declining? (Except subway service, that's well known.) Why is it a problem if people are not buying second or third houses?! Is this a 1%er problem?
- StanislavPetrov 8y ago
  The entire infrastructure is crumbling, not just the subways. Roads, bridges, tunnels, LIRR, water treatment and supply - all are crumbling and are among the lowest rated in the country. https://www.timesunion.com/news/article/New-York-s-infrastructure-ranked-as-one-of-the-13137687.php https://www.timesunion.com/news/article/New-York-s-infrastru...
hendersoon 8y ago
It's Manhattan. They'll put up seawalls. Queens and parts of Brooklyn are likely out of luck, but Manhattan will be protected.

by neom 8y ago

usaphp 8y ago

> more and more full city blocks of store fronts sit empty Hmm, which part of manhattan are you talking about? Living in the upper east side I don’t notice any change at all

neom 8y ago
From what I've seen if you walk up Broadway from Houston it is getting worse and worse, I think generally between 1st and 6th above Houston but lower than 14th is thinning (I realize that's a fairly large area)
- notyourday 8y ago
  That's just historic leases and options to extend running out. Lets presume the commercial leases on storefronts are 10 years with an option for another 10. The holdouts that you are seeing signed leases in 1998-1999. They are still paying 1998-1999 rents with a slight YOY escalation. That's how Pearl River Mart was able to afford its place. 1999 that section of Manhattan was a dump. Here's a walk down the memory lane: * In 1997 my girlfriend at the time bought a two floor condo in Park Slope (2,400 sq feet) for $220,000. Her friends told her that she overpaid. * In 1999 a friend of mine had her generation skipping trust buy two buildings in Soho next to each other for $1.27M. They had to modify trust documents because with that buy trust was over exposed to real estate. * In 1999 apartments on Broome St in Soho were lofts with the kind of showers one would expect in the third world countries. 5-6 artists would live in one because they split 3000 sq foot one floor apartment 5 ways for a grand total of $1200/mo. Residential leases are simply too short which is why we do not see the massive spikes in rents as the lease is being re-negotiated the way we see them in commercial real estate.
kevstev 8y ago
go downtown- soho, the west village, meatpacking, Union Square. To a lesser extent, but still noticeable, midtown. You may also find this more noticeable if you are into food, great restaurants getting booted out of their space, only to have that space sit there and remain vacant.
- neom 8y ago
  Not sure why you're getting downvoted, you're totally correct, especially about the food scene stuff, some of the best Indian spots in Murray Hill are disappearing because the rent is on the rise.

addicted 8y ago

NYC landlords need to stop waiting for the big pay day and start dropping prices. And that appears to be what’s happening. Commercial landlords apparently are still waiting, hence the empty storefronts, but it seems the residential landlords have finally realized the market needs to correct.

neom 8y ago
I was speaking to the owner of the building I work in (335 Madison) about this, he said because so much is owned by families and paid off, (his included) they can afford to leave them empty vs lower the rent, therefore lowering the property values that are leveraged.
- refurb 8y ago
  Indeed. If you're signing multi-year contracts, losing 12 months of rent can be a smaller hit than signing a contract for a lower price.
- dmoy 8y ago
  Curious - what's the property tax rate? Is there a tax if it's not occupied?
  - sethhochberg 8y ago
    We do not have a vacancy tax, no. There is lots of discussion locally about adding one in some form, for both residential and commercial properties.
- JiNCMG 8y ago
  Yeah I know companies in "Silicon Alley" that have moved to Brooklyn (not Dumbo) because the rent is out of control. Old buildings in 23rd Street go years with minimum repairs and rent hikes just cause the landlord can sit it out. Property Managers are freaking out because they only earn on rent collection.
crag 8y ago
And it's about time too. Prices were just stupid in NYC. Even in Queens and Brooklyn. It needs a long correction.

babygoat 8y ago

It's been really sad to see people still continue to equate homes with investments like 2008 never happened.

dsfyu404ed 8y ago
Your primary residence is an investment, just not one you can liquidate at will (or at all in some cases) or that you can expect to appreciate. Your 2-N homes are also investments, just riskier ones than they were thought to be previously. Whether people know this or are just blindly parroting outdated advice remains to be seen.
- TheCowboy 8y ago
  A primary residence is not by definition an investment. It is a depreciating asset, but that does not mean it is an investment. The reasons for having one or more homes are not primarily or always to generate a return or income. It is possible to use your primary residence as an investment, but everyone still needs a place to live, so it is also a form of consumption. If you want to consider it an investment by definition, then you should actually explain how it is an investment.
- DINKDINK 8y ago
  An investment is an entity you allocate capital to, to enable wealth creation. e.g. A baker buying an oven. Speculation is allocation of capital to an entity because you believe you or someone else will need it in the future. e.g. A banker buying a baker's oven. A primary residence is at best an investment (you need to live somewhere to earn an income), a second residence is purely speculation. The housing market is highly highly leverage with the median ratio ~= 14:1 [1]. Since small changes to the amount of money inflated by commercial banks and the Federal Reserve can have extreme consequences on prices, it's highly inadvisable to speculate in highly leverage markets. [1] 7% median down payment, 1/.07~=14 https://www.attomdata.com/news/mortgage-and-finance/q3-2017-u-s-home-loan-origination-report/ https://www.attomdata.com/news/mortgage-and-finance/q3-2017-...
- CydeWeys 8y ago
  Your primary residence is not an investment. It's a place for you to live. It usually makes sense to buy even if you would lose money over time simply because you'd likely lose more from paying rent. Being able to sell your house for more than you paid for it at some point in the future is a nice bonus if you were fortunate and it appreciated above inflation over that time period, but this is by no means guaranteed, and you shouldn't count on it. The average American loses money on real estate once you factor in inflation, property taxes, interest, and maintenance. Yes, we hear all sorts of stories about houses appreciating six figures per year in the Bay Area but that is very, very far from the typical American experience.

gamblor956 8y ago

One of the nice things about Downtown LA's recent building renaissance is that the overwhelming majority of property owners don't wait for the whale retail tenants. Largely this is because in LA most companies/residents strongly prefer buildings with occupied ground-level, to the point where otherwise identical buildings with differences in ground-level occupancy can see double digit differences in above-ground occupancy rates! (This played out earlier this year and last year in the Little Tokyo and South Park neighborhoods.) Due to the sprawl of LA, ground-level commercial spaces don't command a significant enough premium over the above-ground offices/apartments rental prices to let the ground level remain empty. In contrast, in NY, land, office space, and residential space is at such a premium that tenants don't really have much of a choice, so landlords can afford to wait out poor leasing conditions for their ground-level units since an empty storefront doesn't impact the rent they can charge for their above-ground units.

Alex3917 8y ago

> more and more full city blocks of store fronts sit empty Large parts of Tribeca right now are empty and boarded up. You'd think it was London during The Blitz and everyone was just hiding or something. For all that people complain about SF, it's pretty amazing that you can go there after not having visited for ten years and not a single thing has changed. All the houses are the same color, all the same little shops and restaurants are still in business, etc. Whereas you walk down St. Marks or Carmine St. and the majority of businesses are less than a year old.

CydeWeys 8y ago
Most neighborhoods aren't like that, by the way. None of the ones I typically frequent anyway. As for there being many businesses starting all the time, that's a good thing. It means the city's economy is vibrant, and less profitable businesses are turning over to make room for ones that can be more profitable. Neighborhoods that only have the same businesses that have been there forever generally aren't doing very well economically-speaking, as they haven't been able to attract investment or growth.
throwawaymath 8y ago
I live in NYC and it has not been my experience that large parts of TriBeCa are boarded up. Can you maybe give a few example streets you're talking about?
- Alex3917 8y ago
  I haven't been down there in a year so I don't remember exactly, but it was more the part north of city hall rather than the part to the west. You can see on Google Maps just going along Leonard St. or whatever that pretty much every storefront is vacant.

naravara 8y ago

> My biggest concern, however, is if the changes in weather and environment are going to impact this Island. Manhattan has the wealth and technology to build infrastructure to mitigate against changes in weather and environment. What is lacks is competent administration and the political will to tax the rich to build any of it.

ido 8y ago

friends who have bought homes are experiencing a depreciation in their investments Wait...So lack of affordable housing is a bad thing, and housing becoming more affordable is also a bad thing?

deleted 8y ago
[deleted]
dlp211 8y ago
> Wait...So lack of affordable housing is a bad thing, and housing becoming more affordable is also a bad thing? Yes. They just are bad for different sets of people.

CydeWeys 8y ago

What "decline" are you talking about? Manhattan is more vibrant and bustling than ever before. Your home shouldn't be an investment. It's actually good if home prices go down because that makes housing more affordable. Housing can be either affordable or an investment, but not both. There's plenty of other investments you can park your money into so it's better that housing be affordable. I'm used to seeing HN comments where people who don't live here say all sorts of obviously untrue things about NYC (like how a lot of it is vacant) -- but you've lived here for ten years. In what way exactly do you think Manhattan is declining? (Except subway service, that's well known.) Why is it a problem if people are not buying second or third houses?! Is this a 1%er problem?

StanislavPetrov 8y ago
The entire infrastructure is crumbling, not just the subways. Roads, bridges, tunnels, LIRR, water treatment and supply - all are crumbling and are among the lowest rated in the country. https://www.timesunion.com/news/article/New-York-s-infrastructure-ranked-as-one-of-the-13137687.php https://www.timesunion.com/news/article/New-York-s-infrastru...

hendersoon 8y ago

It's Manhattan. They'll put up seawalls. Queens and parts of Brooklyn are likely out of luck, but Manhattan will be protected.