Last week, we noted an uptick in Manhattan real estate sales over the past three months. Mildly positive second half sales numbers in 2009 (up from the lowest lows of March) were fueling optimism among buyers and leasers. But is this more of the same turbulence we've been hearing about for months, or is a foul new wind really blowing the market back toward its obscene, pre-crash peaks?
NY1 filed a report on Cushman and Wakefield, one of Manhattan's largest commercial real estate firms. According to COO John Harbert, their year-end report gels with the Times story last week, and finds that the "trend line is definitely up" and that there are "a lot of positive signs." He claims the retail market has bottomed out, and sees increased demand as a marker for an upcoming turnaround.
But where is that increased demand coming from? Joblessness hasn't improved much over the holidays, and if anything, has gotten worse in certain areas of the city. According to the Wall Street Journal, much of the private real estate demand is from financial workers, and their buxom new bonuses:
Last week, an employee from a big bank inked a contract in the $6 million range for a four-bedroom unit on Central Park West, said Jacky Teplitzky, managing director with Prudential Douglas Elliman, who considered the deal a good start to the new year and a good sign of more deals to come.
"It shows a comeback," she said. "Four months ago, they didn't feel comfortable buying," she said. Now, however, "after they found out what their bonus was going to be they felt very comfortable proceeding with the purchase."
As Noah Rosenblatt points out on UrbanDigs.com, a website dedicated to "macro economic discussions and investment strategy for Manhattan real estate," there are two marked changes between now and last March's nadir, and neither has much to do with the economy—a decrease in available inventory/units, and a confidence shift: "It doesn't matter about future headwinds (rates, taxes, carry trade unwind, less cash bonuses, stock selloff, etc.), whether you believe in it or not, and whether you think the rally is artificial in nature! Humans are irrational creatures! The markets certainly are NOT rational! Markets are not efficient, sentiment does matter, history usually repeats itself, and we tend to operate with a herd like mentality!"
