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with Kathleen Hayes and Pim Fox on Bloomberg Radio. New York's condo slowdown is up ending the market for one of the most coveted assets in tightly packed Manhattan, and that is Land. Sales of parcels for development are plummeting as builders seeing signs that a once hot property market is cooling, offer prices that sellers won't agree to. A triviic story to Day Bar Bloomberg News colleague Sarah Maholland
and David Levitt. I want to welcome back to the show now someone who can talk to us about the trend in Manhattan when it comes to land, when it comes to luxury condo prices, and what it might portend for other hot markets across the country. Jonathan Miller is President and CEO of Miller Samuel. Welcome. Great to be here. So I think you in your you know the reports that you do on Manhattan, say as Rentals, Brooklyn, et cetera, You've been kind of foreshadowing and touching on at least
part of this trend for a while. John, what's going on well, I think what's happening. Um Really, the slowdown began about a year and a half, two years ago, but landowners are really holding out for higher prices. It takes when a market transitions, it takes a couple of years they for them to uh capitulate to the new condition. Back in two thousand and fourteen, we were talking about how too much was being built at the high end. At that point we started to see, um uh sort
of this this pullback in future construction. But you have to remember that so much is in the pipeline that it it doesn't feel like it's slowing down to the landowner, um necessarily um uh. You know, they tend to lag reality a bit by a couple of years. What kind of market are we talking about here? There's some prices so that we understand about the condo market. It is not a homogeneous industry by any means. No, it isn't,
uh so the way to think of it. And and really the focus of new development and the land uh prices that have been were chronicled in the Bloomberg story.
You're really looking at a market that's averaging right now about three thousand dollars a foot for luxury condos the low end foot and then you know it's up to five six thousand a foot UM, So you're really talking about, you know, something in the six really starting at you know, five six million dollars and up prem there that market is has really been overbuilt UM and is sort of night and day with the market to the blow that
in price. The softness of the Manhattan market is really isolated in the top say seven eight percent of the market where truly starts at four or five million dollars, and that's where this slowdown is coming into play. Units um are just not not moving. The volume of contracts has fallen sharply, and that backs into land when when you know, the the high end market isn't getting the activity or volume, it doesn't justify the land price, and the land seller takes a couple of years uh to
get with the program, so to speak. You know. Our Bloomer News story points out that a lot of what has driven these these gigantic buildings and luxury condo buying is overseas investors who want to park their money outside their own countries. Right, We're trying to slow down, and the oil prices have fallen so much has happened that money apparently has has cooled off, and that's that's money has been seen again in other parts of the country
as well. What does this mean if I'm an investor in the sense of thinking of buying an apartment in New York or San Francisco or Boston, or if I'm an investor in commercial real estate or apartment buildings, what's the implication. Well, I think the implication is that the era of this super luxury sort of no holds barred
on prising, that era has officially ended. That we we we we certainly are having sales in you know, sort of north of five seven million dollars a year UM in this market and other markets, but it's nowhere near the velocity that it was before. And the way that I would think of it as is that the period we went through was the anomaly, and what we've done is returned to um a more historically sustainable level of activity. We just got a little bit over excited the market itself.
UM After you know, three or four years of drought of no none of this kind of activity after the financial crisis, we had this three or four year boom, and that boom has passed um the balance of the market. South of five million dollars, we're seeing steady, regular activity and when you get into the one to three million dollar range, it's pretty pretty uh, there's a fair amount
of activity. This is something we're seeing across other housing markets like Miami, San Francisco, l A. Housing markets in the new development space are soft at the top, and that is, uh, that is a US phenomenon from the lender perspective, Jonathan, what's uh, what are their ground rules
right now? Well, so lenders, So what's really interesting without this whole process is commercial lenders for construction loans to build these buildings were largely on the sidelines this in this cycle sort of grappling with the legacy of bad
lighting decisions in the last cycle. And really the player has been financial services institutions, Wall Street, sovereign wealth funds, private capital And in my anecdotal view January one, I think everybody woke up in that realm and looked out the window and saw seven or eight bill things being built around them and really grew concerned. And so right now, financing availability for this is really been curtailed. And you know,
it's just a market that you know is overbuilt. That you know, the supply and demand is causing the supply to slow down in terms of what's coming into the market. Thank you very much. Jonathan Miller is the president and the chief executive of Miller Samuel based in New York. He's explaining the New York City condo slowdown is up ending the market for one of the most coveted assets in real estate, and that's land. This is taking stock
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