As a kid visiting NYC in the 80’s, I was always fascinated by the graffiti covering subway cars and buildings. However, by the time I moved here as a young adult in 2001, the city had been cleaned up.  I was on Davis Street in LIC this morning, and happened upon one of the last graffiti-covered blocks I know of.  As LIC has now been as part of the Hunters Point Subdistrict Rezoning, these buildings (in their current form) may not be around for much longer:

Photo by our own Informed Appraiser, Marc Kushner.

The reported reason for the change is that the planned shell would have been too expensive and dangerous to maintain. In addition, doing without the shell will shave some $20 million off the construction costs. (Considering that One WTC is already the most expensive office building ever constructed, and running nearly $1 billion over budget, that’s probably not a bad thing.)

Just last month, One WTC became the tallest building in NY State when it reached 1,271 feet, edging past the venerable Empire State Building. One WTC’s lengthy antenna was specifically designed to bring the tower up to the symbolically significant height of 1,776 feet. At that size, it would register as the tallest building on the continent. However, now that the decision has been made to do without the antenna’s external shell, questions are being raised about whether this part of the structure will actually count towards the official height of the building. (Without those additional 408 feet, One WTC’s base building height of 1,368 feet would make it only the third-tallest building in the country – close, but no cigar. However, that number might hold some appeal to China when they eventually take over the country, as construction of the current Great Wall of China began in the year 1368.)

This design change is significant in this context because under the commonly accepted rules for measuring building height, architectural spires are included in overall building height, but plain old antennas are not. With the ornamental shell, there would have been no question that the antenna’s structure would qualify as a spire. Without the shell, however, it may well be considered no more than a mere antenna. Although the building’s owners steadfastly maintain that this uppermost part of the building will indeed still be a spire, others in the know are decidedly less sure. Ultimately, the decision will rest in the hands of the Council on Tall Buildings and Urban Habitat, which has yet to make the call.

Even if One WTC loses the height contest, I would submit that the building’s monolithic, octagonally tapering design is still nothing short of in“spire”ing.

I’ve been working on project in Prospect Heights, Brooklyn, a neighborhood just north of Prospect Park, which has become greatly gentrified over the past decade. Many of the buildings in Prospect Heights are under cooperative ownership. Washington Avenue, which runs diagonal through the photo below, is the traditional boundary between Prospect Heights on the west side and the neighboring Crown Heights neighborhood to the east. The stark contrast of the revitalization of Prospect Heights is apparent by the building roofs: on the Prospect Heights side most roofs are covered in fresh “silver coat” (aluminum-based reflective material to keep energy-costs down in the summer), whereas on the east side of Washington Avenue, Crown Heights, the roofs are clearly not as well maintained.

I agree with the comments of Bill Garber, the director of government and external relations for the Appraisal Institute, that comparing the values with prices can be misleading.  I did not review the study that Ms. Satow referred to in her article but from my many years in this profession I have seen how frequently appraisals are misinterpreted.  Price and value are not synonymous.  For example:

• What was the time difference between the date of value in the appraisal and the eventual sale? Remember that the appraised value represents a point in time and a sale six months, a year or more after that time can reflect very different market conditions.
• Is the study confusing a stabilized value for an “as is” value?  If a property is not operating at stabilized occupancy (whatever that is for a particular property type in a particular submarket) the lender will typically ask for a future value upon stabilization as well as the value based on the lower occupancy (in its “as is” condition).  Was the property in the same condition and occupancy at the time of sale as premised in the appraisal?
• Was the appraisal based on any extraordinary assumptions.  Per the Uniform Standards of Professional Appraisal Practice (USPAP) any specific assumptions regarding a property must be clearly specified in the report.  For example, did the appraisal assume that a major lease that was out for signature get executed, whereas by the time the property sold that lease negotiation fell through?
• Did the circumstances of sale truly meet the definition of market value?

The list of potential differences between the premises of the appraisals and the circumstances of actual sale can go on and on.

In other words, the Boston Fed is making the case that above all else, the housing crisis was brought on by basic human psychology (itself being susceptible to the wiles of Greed & Folly, of course) and the madness of crowds. If history is any guide, it seems that the occasional asset bubble is an unavoidable, inherent quirk of free market behavior. After all, if it can happen to tulips, it can happen to houses, too.

Step 1: Become famous.
Step 2: Buy a condo apartment.
Step 3: Wait for values in the building to rise as a result of your fame.
Step 4: Sell at a tidy profit.

Of course, this process can be repeated again and again in as many different buildings as you’d like. Eventually you might become even more famous due to your real estate prowess, which would then lead to greater fame-induced profits, which would lead to more fame, and so on.

Sound to good to be true? According to a recent Wall Street Journal article, Alex Rodriguez of the Yankees has recently done exactly this. He closed on a 3,600 SF, four-bedroom apartment on the 35th floor of the Rushmore (80 Riverside Boulevard) in June 2011 for $5.5 million. Brokers have stated (or perhaps more accurately, speculated) that A-Rod’s well-publicized purchase led to increased sales activity and prices within the building.

Just four months later in October 2011, Mr. Rodriguez put the apartment back on the market with an asking price of $8 million. The unit went into contract in January 2012, and brokers familiar with the sale reported that the contract price was sufficiently high so as to net Alex a substantial profit on the unit. (As of this writing, City records do not show a deed transfer for this deal, so apparently the sale has not yet closed.)

Now, that’s what I call a HOME run!

One basic aspect of a property’s location is the street along which it is situated. Within a given neighborhood, some streets are typically regarded as more desirable than others, for any number of possible reasons. While we don’t normally pay much attention to the character of a street’s name in and of itself, it is entirely possible that in some cases, the particular name of a street may have an effect – for better or for worse – on its image and appeal.

As covered in the NY Times and elsewhere, a group of shareholders in the Southgate co-op complex are convinced that changing the name of their street would result in higher property values. The Southgate complex is located along the easternmost block of East 52nd Street in the prestigious Turtle Bay neighborhood of Manhattan. These co-op owners are seeking to change the name of the street along their block to something more elegant; a leading contender is “River Place”. Their theory is that this renaming would give the block greater cachet, and bring property values up to the levels enjoyed by similar properties located nearby on Beekman Place to the south and Sutton Place to the north.

While it is unclear whether their efforts will be met with any success (full-blown street name changes within Manhattan are by no means an everyday occurrence), I must agree that River Place has a better ring to it than East 52nd Street. Would such a name change actually result in higher values? Some brokers interview by the NY Times believe that it would. Ultimately, only the market could answer that question definitively.

In Joseph Berger’s article in the New York Times last week, No Longer Burning, The South Bronx Gentrifies, the South Bronx is described as the next new thing where young professionals are coming in search of that holy grail, SPACE!  And not just space, but affordable space.  It’s true that at one time the Grand Concourse was a status symbol designed after the Champs Elysee in Paris…but that was a long time ago.  But slowly, some of these buildings are coming back..much of of it in the form of government-subsidized housing.  We are still a long way from seeing a Starbucks and truffled mac ‘n cheese there, but will no doubt be interesting to watch what happens here next.

We live in a vertical city.  Elevators shuttle us to our offices and apartment. However, much of NYC’s housing-stock still consists of walk-up brownstones, and while most are just 3 to 5 stories, for the elderly or anyone that has trouble climbing stairs, this poses a problem, but to install a traditional elevator in a brownstone, if it’s even feasible, will typically run from around $120,000 to $150,000 for the equipment, labor and typical work required on the house, on top of this.

Enter the pneumatic elevator.  They take up less than half the space of the smallest of traditional elevators, and cost a fraction of the price.  Typically around $30,000 to $35,000.  Pneumatic or tube elevators work by creating a vacuum, which sucks the cylinder car up to the floors.  I took a ride in one, and they work great.  Despite being widely available around the US, these are not yet approved for use in the five boroughs, however, I’ve heard that the NYC Buildings Department may soon be approving them.  Overall, they’re a practical and cost effective alternative to a traditional elevator for smaller buildings.