Is New York City’s Condo Market Making a Comeback?
Rachel Medalie, broker at Douglas Elliman and principal at Bespoke Living, on her expectations for the metro and why investors are confident in 2021.
When most New York City developments postponed launching sales last year, Bespoke Living Principal & Douglas Elliman Broker Rachel Medalie had a totally different approach for 300 West, a 15-story condo building in South Harlem. During one of the most insecure times in the world, the project achieved a waitlist of 700 registrants. Here’s how Medalie did it and what her thoughts are on the New York City condo market.
New York City was the first COVID-19 epicenter in the U.S. Has that generated any lingering effects on the city’s urban markets?
Medalie: New York City bore the brunt of the pandemic, and an election year always makes things interesting. When it first hit, many New Yorkers immediately left their urban lifestyle for beach homes or family homes in the suburbs, but the real estate market is making a comeback as an influx of buyers and residents return.
Especially with the ongoing vaccine distribution, buyers have more confidence in New York City’s market. The skyrocketing sales numbers since the New Year—and even in the fourth quarter last year—certainly reflect that. True New Yorkers, who love the city for its plethora of shopping, dining and entertainment options and endless professional opportunities, will always return because they recognize that they cannot find this unique and all-encompassing lifestyle anywhere else. There was so much uncertainty in 2020, but now we all are seeing the light at the end of the tunnel.
Is New York City still a good investment option? Why or why not?
Medalie: New York City’s real estate market is considered by some as one of the best spectator sports and, like any industry, will always have its ups and downs. This past year especially has been challenging on multiple fronts, but it has also demonstrated the resiliency of this great city and those who live here. New York is the cultural hub of the world, known for its diversity, liveliness and endless opportunities—whether personal or professional—and while the pandemic has forced us to rethink the ways in which we live, people will always want to be here.
How have New York City buyers’ priorities changed since the onset of the pandemic?
Medalie: With today’s social distancing measures and stay-at-home lifestyles, we value our homes and their design more than ever. Before, many defined luxury as beautiful finishings and super tall condos, but now New York City buyers are prioritizing functionality and privacy, in-building amenities, and, of course, space. People are upgrading to larger and more expensive homes because the pandemic made them realize they need more than what they currently have. Today’s luxury homes need to be fully equipped to support our everyday lifestyle, especially while work-from-home and virtual classes remain in effect.
With all this in mind, certain amenities or home features have grown in appeal since the start of the pandemic. People are searching for spacious and flexible layouts, private outdoor terraces and expansive kitchens with enough cabinetry and storage. At 300 West in Southwest Harlem, buyers have really taken notice of these details that make post-COVID-19 living a little easier.
What do New York City buyers want nowadays? What is your strategy to cater to their needs and get deals done?
Medalie: New York City buyers are looking for something valuable and unique that will hold its value no matter the market. Throughout the pandemic, we’ve seen a trend of luxury buyers looking for homes outside of downtown Manhattan, whether that’s in Harlem, Brooklyn or even New Jersey’s Gold Coast.
As for my strategy, I’m a salesperson at heart and love working with people. A buyer’s priorities are unique to the individual, and you need to be able to anticipate change. One of the most important parts of my job, both as a developer and broker, is building relationships. You have to gain and maintain trust in people extremely quickly in this industry, and you have to remain conscious of the fact that we are in a pandemic and many buyers’ lifestyles have been altered.
The homes really speak for themselves, but I draw attention to the specific features that matter to buyers at this moment, whether that’s an expansive, open kitchen suited for home cooking, bonus space for the perfect work-from-home office, or a warm, comforting design that makes stay-at-home life more relaxing.
How is the current economic environment affecting New York City brokers?
Medalie: There’s no doubt that we’ve seen discounts and incentives for buyers across the city to match today’s economic environment. However, over the past few weeks, there’s been this ongoing positive sales momentum in the real estate market, with numbers that we haven’t seen since way before the pandemic even hit. New York City is well on its way towards recovery and beyond, and hopefully, this impressive velocity and fresh confidence will encourage more people to buy, as well.
Back in the spring, brokers and all of the real estate industry had to learn and adapt to changes brought on by COVID-19. Buyers reevaluated their priorities, many viewings for listings went virtual, developers updated their timelines and so on, but the recent numbers prove we’ve succeeded in meeting these new standards and overcoming the pandemic’s challenge. Those who recognized that the market bottomed out last year are far better positioned because they’re not waiting to purchase homes or condos. Once everything opens back up and you can travel internationally again, it will be a field day.
How difficult is it for New York City developers to adapt their projects on the fly to meet pandemic-induced requirements?
Medalie: Developments take years to plan and require a rigorous approval process. To provide a superior product to the marketplace, you have to anticipate value and understand that needs and styles can change, but you must know what is important. I assist in the ground-up planning of new buildings and I’ve learned that aesthetics are equally vital. Especially in the post-COVID-19 world, your home will no longer just be a space that you inhabit—it’s now your sanctuary, office and social club. It needs to feel comfortable and livable. I think we’ll continue to see an uptick in flex rooms, adaptive reuses of space typically reserved for closets or an additional bathroom, outdoor spaces, etc.
We decided to add a working library to 300 West as a direct result of the pandemic. We know that this is an imperative feature to buyers and so we created it with multiple seating areas where you can read or work from home or go to unwind at the end of a busy day.
What multifamily projects are you currently working on?
Medalie: I’m currently working on 300 West in Southwest Harlem, on the corner of West 122nd Street and Frederick Douglass Boulevard. We have an amazing design team and it contextually fits with the surrounding historic neighborhood, which really appealed to me. I fell in love with Harlem while doing several smaller projects here in the past and this is my biggest one to date.
300 West features architecture by Issac & Stern and interiors by Paris Forino; this is Forino’s first project in Harlem. There are 170 residences, two lobbies and a huge selection of amenities spread across multiple floors that cater to all ages. We have a variety of spaces for sports and fitness, swim and spa, leisure and social, creative and children’s activities, including the neighborhood’s only indoor pool. There are multiple private outdoor areas, including the landscaped courtyard, which is directly adjacent to the residents’ lounge, and a massive, 3,000-square-foot rooftop terrace that is equipped with an outdoor kitchen and grills and amazing city views. Residents will be able to move into the building by the second quarter of 2021 and the development has already been declared effective, surpassing the offering plan’s threshold.
In addition to 300 West, Bespoke’s portfolio includes participation at The Museum House at 805 Washington Ave., which comprises 37 condo units, as well as 834 Pacific St., a 113-unit luxury rental project that is set to open imminently. Each project of ours is run independently as a separate financial entity, including construction, development and sales.
Launching sales for 300 West in Harlem in the middle of the pandemic must have been a challenge. Did you expect to see so much interest in the building, considering the uncertain times we’re facing?
Medalie: No one could have predicted the pandemic, and it was a challenge because the state of the world was so uncertain at the time, but it was one we took head-on. Our strategy was bold and because of it, we continue to see success today. While most buildings pushed off launching from the spring to the fall selling season, we chose to launch in the heat of summer because of our confidence in the market and the strong feedback we’d received from prospective buyers during the peak of the pandemic.
We had over 700 registrants sign up for more information during this period and then, in the first 60 days of being on the market, we had more than 20 contracts out on apartments throughout the building. Among our contracts signed were two large, three-bedroom residences, which sold for a combined total of nearly $4.7 million. Our buyers are mostly local—because you can’t travel right now, obviously—with a mix of people from the neighborhood and Manhattan.
We’re attainably priced and the neighborhood continues to have a high return on investment with appreciating home values. Nearly 20 homes boast private outdoor space, including the penthouses at top of the building, and 50 percent to 60 percent of our units are under $1 million. That in itself is hard to come by because the market is overly saturated with higher-priced inventory. Our pricing begins at $499,000 for a studio and goes up to $3.4 million for a four-bedroom.
What are your expectations for the multifamily market in Brooklyn, Harlem and Manhattan?
Medalie: Manhattan real estate will always be a great place to purchase and invest because of its enduring appeal. The market here continues to have record-setting weeks and there are no signs of it slowing down. The same can be said for Brooklyn and Harlem. Long-time Manhattanites are leaving and purchasing or renting in both areas. People are wanting larger units and more in-building amenities, with nearby access to transportation hubs, which both of those areas have.
834 Pacific St. is close to Barclays Center. Residents here can take the subway to the city, drive or bike over the Brooklyn Bridge and Manhattan Bridge. 300 West is less than a 10-minute subway ride to Midtown Manhattan. As we continue to spend more time at home, I think we’ll continue to see that trend. Mobility is key.