The Real DealBy Jake Mooney
Oct. 1, 2011
A view of the Financial District from the W New York Downtown hotel on Washington Street
The scenario is now vexingly familiar to Tali Berzak, a vice president at NestSeekers International: Potential buyers at 99 John Street, a Downtown condo conversion where she is the project manager, come to the sales office believing the Financial District is depressed, and make lowball offers accordingly.
In reality, the Financial District submarket has posted sharp gains in the last year, both in sales volume and in prices per square foot, according to the website StreetEasy and brokers who work in the neighborhood. The larger problem, brokers contend, is that accurate sales figures about FiDi are often not widely disseminated. The lack of information, they say, leads to lower offers being rejected -- and, in many cases, frustrates potential buyers into looking elsewhere.
"That's causing deals not to happen that should be happening," said Prudential Douglas Elliman's Heather McDonough, who currently has five listings at William Beaver House, the newly constructed condo and rental building at 15 William Street.
The solution, she argues, is better information about the Financial District. McDonough is in the process of trying to organize agents at various firms into a "special interest group," operated through the Real Estate Board of New York, to offer just that.
"There's a few of us that are trying to band together and tell the real story of what's going on, because it's transformational," she said.
Based on her own research, McDonough said, the average price per square foot for sales in FiDi between May and September was 13.5 percent higher than it was from January through April, and monthly absorption roughly doubled during the same period.
Figures compiled by StreetEasy for The Real Deal tell a similar story: Median prices in the district rose 6.63 percent to $761,706 in the second quarter of 2011, up from $714,341 in the same period of last year. By contrast, Downtown Manhattan as a whole saw median prices drop 3.13 percent to $847,573 during the same period.
Berzak, who is interested in joining McDonough's group, said she believes that FiDi's relative strength is due to upcoming improvements in the neighborhood, such as the redevelopment of the World Trade Center site, and lower prices than nearby neighborhoods like Soho and Tribeca.
But few potential buyers are aware of the improvement in the market in FiDi, Berzak and McDonough lamented. Quarterly market reports from major brokerages like Elliman and the Corcoran Group lump the Financial District in with other Downtown neighborhoods, Berzak argued. As a result, the area's recent gains don't show up in those reports.
Another problem, Berzak said, is that the newest FiDi comps tend not to get distributed to all the brokers working in the area. In part, that's because the city's large firms have less of a presence in the Financial District, an emerging market where prices are lower than in much of Manhattan. Instead, a relatively large percentage of the neighborhood's deals are handled by small brokerages.
Because of the area's relatively low prices, "larger companies consider the Financial District like the dump of NYC," said Tom Bouklis, a principal broker at the Bouklis Group, a Financial District firm with fewer than 20 agents. "They don't want to work here."
Small brokerages may not have the resources and technology in place to provide their agents with the same up-to-the-minute statistics and training as larger firms, Berzak said.
In addition, said Corcoran Sunshine's William Bish, the sales director at 75 Wall Street, the Financial District is home to a large amount of "shadow inventory" -- units that have been built but never listed. As a result, he said, it can be hard for some buyers, and even brokers, to know exactly what's available and for how much.
FiDi's concentration of large, new development buildings also makes it a target for unscrupulous agents who post fake listings, or generic listings with misleading prices and square-footage figures, Berzak and others said.
In the Financial District, "everything is large and new development," said Sofia Song, vice president for research at Street Easy.
While every neighborhood has problems with unethical behavior, large new buildings are "where we tend to find the shell listings," she said, referring to listings, usually without unit numbers, that do not correspond to specific, available apartments.
Recent sales in the Financial District are strong, but they could be stronger if not for the frustration arising from these transparency problems, McDonough said.
Though accurate sales figures for individual deals are already publicly available through the city's ACRIS property records database, she said, an effort to collect, distribute and publicize the data would help spur sales throughout FiDi.
Her proposed group would share information on sales and market conditions in real time, and hold educational events for brokers in the neighborhood.
The goal is "to provide real-time data to the companies that are smaller, that don't necessarily have the resources and mechanisms in place to give this kind of real-time data to their salespeople," she said, adding, "I would just like to see more awareness of what's going on down there."
Progress so far has been halting. Though several brokers have expressed interest in joining such a group, McDonough said her efforts to involve REBNY have so far been fruitless. (REBNY president Steven Spinola did not respond to calls for comment.)
There is talk of a dinner involving 10 or 15 brokers who do business in the neighborhood, she said, but none has yet been scheduled. Some brokers are skeptical of McDonough's idea. Bouklis said he had not yet heard of the plan, and while he conceded that big firms have more money for marketing, he disputed the notion that small firms have inferior data.
"I don't think we have less access," he said. "In our case, we specialize down here, so the Financial District is our backyard."
He said larger firms unfairly look down their noses at mom-and-pop FiDi firms.
"They look at a lot of the companies that are here as fly-by-night, or new," he said. "But there's a lot of companies that have been working here for years."
Ariel Cohen, an Elliman executive vice president who often works in the Financial District, said he has been frustrated by "knucklehead" brokers stealing his listing photos and changing unit numbers to misrepresent his exclusives as their own. He also said that some FiDi buildings suffer from a lack of exposure and marketing.
Still, he said he would be reluctant to join the group that McDonough is trying to organize. "If you have a seminar, I'm not sure it's going to help," he said.
The tricky part may be convincing brokers, in a competitive market, of the advantage of working together.
Bouklis said his interest in the proposed group would depend on the particulars, but said he believes a firm's success is based on how well it distributes information internally.
"If you don't specialize somewhere [and] you're not doing your own research, you can't possibly have access to everything going on in the area," he said. "If it's for my specific area, with no disrespect to anybody, we know everything here."
Licensed Associate Broker