Luxury R/E Panel-Manhattan/Hamptons/South Florida

8-6-23

Opening Comments

My last note entitled, “38 Hours in Manhattan Rosen Report Style” saw opens down decently. Not sure if it was holiday travels. The most opened links were the emotional intelligence quiz and the marlin jumping into the boat.

I redeemed myself a bit with dinner Wednesday in New York at Cecchi’s (6th Ave and 13th Street) and then Lobster Club. Cecchi’s is new and although did not blow me away, it has potential. Service was slow and the food was fully priced. The vibe was good and liked the room. I felt the wines by the glass were weak. My burger was solid despite being served 30 minutes after the appetizer, but the overall pricing was concerning for what you get. At the Lobster Club, I just tasted various dishes, as I had just eaten and had been there before. The wagyu sando is one of the two best I have ever had (ZZs or Lobster Club-Both Major Food Groups). I had a great toro hand roll and the tomahawk steak is a winner. The desserts were fun and everyone loved the huge shaved ice.

I parked my car in a lot at 64th between 1st and 2nd and took a cab to 452 5th Avenue (1.7 miles). I tried an Uber and it was $33-42 at 10:30am. The CEO of Uber lost it over a $52 Uber ride which was 3 miles in NYC. I am not trying to hate NYC, but I do not understand how people afford to live there. The cost of living (shelter, food, transportation, taxes…) are so high and am not convinced many people make enough to have any quality of life.

The Rosen family is back in Boca Raton after two months of travels in the Northeast. I only drove 3,700 miles this summer compared to over 9,000 last year, as I refused Jack (my golf crazed son) of his tour of Alabama, Mississippi, Tennessee, Georgia and Kentucky after last year’s debacles. I am a better person for not having done that journey two years in a row.

In the coming months, I will be doing more video content. I will be posting on YouTube, LinkedIn and Instagram (never used it), as I have a number of interviews set up with market leaders and will be posting sound bites more regularly. As though you don’t get enough of me already.

• Pictures of the Day-Recent ABC News Poll on Presidential Candidates

• Luxury Real Estate Panel

• Quick Bites

  • Markets

  • Non-Farm Payrolls/Treasury Market

  • Consumer

  • More Professors Accused of Lying About Heritage

• Other Headlines

• Real Estate

  • McKinsey Commercial R/E Report

  • Miami Beach Mansion Sale

  • Woolworth Building Manhattan PH Sale-Finally

  • Midwest Workers Returning to the Office

Picture of the Day-Recent ABC News Poll on Presidential Candidates

• I have been consistently critical of Trump and Biden for different reasons. I do not want either to run in 2024 and definitely do not want either as President of the United States. This ABC News poll is troubling and concerning for both candidates. The pictures say it all. We need to demand better. Trump was released on bond under strict rules after pleading not-guilty on conspiracy charges. Trump posted on Truth Social “"IF YOU GO AFTER ME, I’M COMING AFTER YOU," resulting in the prosecutor seeking a protective order. Despite Biden’s consistent denial of having any knowledge or conversations about Hunter’s business dealings, the evidence mounts to suggest otherwise. I would like to be able to be proud of the leader of the free world and vote for someone rather than against someone else. The polling numbers suggest Americans do not care for either candidate. A new poll shows Glenn Youngkin (Gov. VA) would beat Biden head-to-head in VA.

Luxury Real Estate Panel (Manhattan/Hamptons/South Florida)

I moderated a panel with 3i Members and leaders in the luxury residential real estate markets in Manhattan, Hamptons, and South Florida. I was excited to assemble a world-class panel of agents who collectively sold almost $20bn. Below are the main questions and an outline of times in the webinar when topics are discussed. Additionally, I have links to each question in 2-4 minute clips. You can hear directly from market leaders about what is happening in their luxury markets. As a result, I am keeping my comments shorter today so you have the opportunity to listen to the areas of interest. It is clear that Manhattan high-end condos are under some pressure and South Florida high-end remains hot, especially in Miami and Palm Beach. I remain shocked at the price per foot in Miami Condos today ($5,000-7,000+) at the high-end. The Hamptons inventory levels are down, but there are transactions to be had. The full, one-hour podcast is available if you click the picture below or this link here. The individual sections are outlined in the chart. Some are the individual short clips and others take you to the section which discusses the description. We had some issues with YouTube.

Thank you to John Burger (Brown Harris-Manhattan), Tim Davis (Corcoran-Hamptons), Devin Kay (Douglas Elliman-South Florida). If you have needs in these markets, be sure to reach out to them and tell them the Rosen Report sent you.

Time Description of Question Location Discussed

0-1:25 Introduction Manhattan/Hamptons/South FL

1:25 Most Overvalued & Undervalued Manhattan/Hamptons/South FL

6:00 Miami Condo Buildings Good & Bad Miami

8:35 Impact of Lower Inventory Hamptons

10:25 Most Liquid Price Point Hamptons

11:40 Condo or Co-op. Why Manhattan

16:00 Raleigh vs Shore Club Miami

17:11 Entry Price for Beach Front Hamptons

18:00 Who is the Marginal FL Buyer South Florida

19:03 Impact on NYC of the Great Migration NYC

21:00 Price Point Which Defines Luxury Hamptons/South FL/Manhattan

22:33 High-End Deals Above $5mm all Cash Manhattan/South FL/Hamptons

24:00 How did COVID Impact Hamptons Hamptons

26:36 Availability of Construction Financing South FL/Manhattan

28:40 Office to Residential Conversions Manhattan

31:59 Best Advice to Buyers & Sellers Hamptons/Manhattan

33:40 Brickell/Downtown & Pricing Trends Miami

37:08 Hamptons/South FL Pricing Trends Hamptons/South FL

40:40 Schools/Insurance/Golf- South FL South FL

43:08 Best Questions Not Asked Manhattan

46:06 Builder Finance Options Hamptons

47:43 Impact of Foreign Buyers Manhattan

49:02 Infrastructure Issues South FL/Hamptons

54:25 Crazy R/E Stories/Closing Comments

1:00.2 New Rosen Report Hats

Quick Bites

• The S&P 500 and Nasdaq slumped Friday for a fourth straight session, and notched their worst weeks since March, as traders seemed to book profits following the latest corporate earnings releases and U.S. jobs data. The S&P 500 shed 0.53%, while the Nasdaq dipped 0.36%. The Dow lost 150.27 points or 0.43%. All the major indexes reversed earlier gains during afternoon trading and finished the week with losses. The Nasdaq and S&P dropped about 2.9% and 2.3%, respectively, to notch their worst weeks since March. YTD, the Dow is +5.8%, S&P +16.6%, and the Nasdaq+ 32.9% despite this week’s selloff. Oil prices rose for the 6th day, as Saudi announced an extension of the 1mm barrel/day production cuts. They also suggested the cuts could be “extended and deepened.” Oil is up almost 5% on the year after being down nearly 20% and is up 22%+ since June 27th. I had written a couple of weeks ago that VIX was too low at 13, and it is back up to 17.

  

• Job growth in July was less than expected, pointing to a slower pace in the U.S. economy though perhaps not a long-anticipated recession, the Labor Department reported Friday. Nonfarm payrolls expanded by 187,000 for the month, slightly below the Dow Jones estimate of 200,000. Though the headline number was a miss, it actually represented a modest gain from the downwardly revised 185,000 for June. Despite the cooler headline numbers, average hourly wages pointed toward more inflation and came in ahead of expectations, rising 0.4% for the month, and 4.4% on an annualized basis. That came in slightly ahead of the 0.3% and 4.2% expected, respectively. Look at the massive move lower on Treasury yields from 2-30 years (3rd chart) post the payroll data. There is now a 20% chance of a 25bps cut by November as of Friday afternoon. I have a lot of my money in Treasuries as I have stated. I started to go slightly longer and got a little lucky as some of my shorter-dated bonds matured in the last week.

• I am consistently concerned about the consumer and here are other telling charts. The good news is we are earning more interest income, but the bad news is we are paying far more than the gains in higher interest. American households are earning $121 billion more in investment interest income versus a year ago but are paying $151 billion more in interest on mortgages, credit cards and other loans. The average American credit card balance hit $7,300 (new high) and the median household has $5,300 in savings. The average rate on a 48-month new car loan is 7.59%, the highest in 16 years. Last I saw, approximately 17% of new car monthly payments are $1,000 or more. Only one in 10 low-income workers between the ages of 51 and 64 had any retirement savings in 2019 — a significant decline compared with one in five low-income workers in 2007, according to a troubling report recently published by the US Government Accountability Office. Couple higher rates and inflation with tighter bank lending standards and consumers are getting squeezed. week. The rejection rate for auto loans increased to 14.2% from 9.1% in February, a new series high. For perspective, auto loan rejection rates were 5.8% in October of 2022 and in October 2018 it was 4.5%. Rejection rates increased for credit cards, credit card limit increase requests, mortgages, and mortgage refinance applications to 21.5%, 30.7%, 13.2%, and 20.8%, respectively.

• Three University of Kansas professors, historian Kent Blansett, biologist Raymond Pierotti and geographer Jay Johnson, now have been accused of fraudulently representing themselves as Native Americans. The Kansas City Star recently reported that “some Native grassroots groups and researchers allege [Professor] Raymond Pierotti in the department of ecology and evolutionary biology and [Professor] Jay Johnson in the department of geography and atmospheric science are also ‘pretendians’ – slang to designate someone faking Native American heritage.” Universities are often eager to hire as many outspokenly Native American faculty members as possible because this gives them access to funding, such as the Melon Foundation NAIS grant for Native American and indigenous studies, Keeler said. This is reminiscent of the infamous Elizabeth Warren incident where she claimed she was Native American between 1986-1995 and listed herself as a minority. According to the Boston Globe, Warren was 1/32 American Indian, as her great-great-great- grandmother had been listed as a Cherokee on a marriage document in 1894. When she applied to Rutgers in 1973, she did not identify as a minority. However, in 1986, she wrote “American Indian” for the Texas bar registration card. She also checked the Native American box when she applied to Penn and Harvard knowing this was false according to the WAPO link.

Other Headlines

• JPMorgan backs off recession call even with ‘very elevated’ risks

• Bank of America Reversed Recession Call on Strong Jobs and Spending, CEO Says

• The sunset of the Trump tax cuts will cast darkness on the economy

  • The non-permanent provisions of the Trump tax cuts expire at the end of 2025. The article walks through the impacts at various brackets. I am a pro-growth believer and do not believe we can tax our way into prosperity. The clowns in DC have proven to be AWFUL stewards of capital and wrote a recent piece, “I’m From The Government and am Here to Help,” outlining the trillions of waste at the hands of the government. We have run massive deficits regardless of our tax policy because we do not run spending properly.

    

• Amazon stock rallies after blowout quarter

  • Revenues +11% and the stock was +8%. Bezos made $12bn on the day. Not bad for a guy who seems to be on a $500mm yacht smooching his fiancee all day.

• Apple shares fall most since September 2022 after third-quarter earnings report

  • Shares fell 4.8% on Friday, but remain +40% on the year.

• Berkshire Hathaway’s operating earnings rise nearly 7%, cash pile approaches $150 billion

• Carl Icahn’s company stock drops 23% after IEP slashes quarterly dividend in half

  • I thought Icahn would have done a “Go Private,” but he has not done so. His desire for leverage and power (board seats) is driving the decision, I believe. Icahn’s net worth is -$17bn since April.

    

• NYC Sales Tax Collections Slow Down as Broadway, Retail Struggle

  • What happens when office, retail and apartment buildings in NYC demand tax concessions due to fractional valuations from peak? All R/E taxes (commercial and residential) were 54.1% of NYC tax collections. I have never seen more retail vacancies around Manhattan. I presume the owners will be demanding tax breaks with no tenants.

• How Saudi Arabia is buying the world

  • As the kingdom’s model of capitalism without democracy thrives, the prospect of a Saudi century has consequences for us all. I wrote a piece recently entitled, “The Economics of Absurdity-Everyone Has a Price,” about the Saudi buying binge.

• Fully remote work leads to 18% drop in productivity, shows research

  • I’m shocked WFH does not lead to more of a productivity drop. I will take the over on 18%. The study was done by MIT and UCLA.

• Ron DeSantis agrees to debate Gavin Newsom on Fox News

  • Both are young and were thought to be future leaders of their party. I am not so sure anymore. DeSantis’ state has fared better, but very controversial and his strong views on abortion and Disney have seen supporters run. Also of note, more stories suggest DeSantis does not have much personality and I have spoken with multiple people who have met him who have confirmed it. Newsom is the governor of CA and his track record on homeless, crime, pandemic mandates, taxes, gas prices, energy prices, power grid… are not good, but he has a huge following and it is likely going to be a major player in the next decade on a national level. I will be watching the debate.

• MSNBC Trounces Fox News, CNN Under Maddow Charge, as Trump Jack Smith Indictment Revealed and Debated on Tuesday Night

• Bill Barr delivers devastating takedown of Trump’s Jan 6 indictment defense

• Dianne Feinstein, 90, cedes power of attorney to daughter — but still serves in Congress

  • I have been consistently hard on politicians over age and cognitive issues. One reader told me his father was a 3-term Senator from GA and developed Parkinson’s and retired MIDTERM because he felt he could not do the job properly. He did the RIGHT thing for the constituents. What a novel idea by a politician. Plenty of politicians today can learn a thing or two from him.

• Clarence Thomas’s $267,230 R.V. and the Friend Who Financed It

  • Too many questionable decisions from a Supreme Court judge. These need to be investigated. We have heard of unreported R/E transactions and now RV purchases.

• Central Park among NYC areas considered to house migrants: ‘Everything is on the table'

• NYC landlord installs loudspeaker to ward off urinators

  • I watched so many people sitting on stoops and doing drugs. I love the idea of the homeowner. I just would want not to live next door.

• Oregon county lost $1 billion in 2020 as residents fled crime, homelessness: 'It's like Portland died'

• Six Mississippi police officers admit torturing Black men

  • Awful story. I hope the cops called the “Goon Squad” pay the price for their crimes.

• Ex-Auburn football player helps bail out wife, her lover who are accused of plotting his murder

  • The wife cheated on him and tried to have him murdered, yet the husband bailed her and her boyfriend out of jail. I can assure you Jill, my wife, if you attempt to murder me, I will not be springing you and your boyfriend free. So, if you were thinking about it after seeing this story; don’t do it. I am not so forgiving.

• YouTuber Kai Cenat ARRESTED after riot erupts at PS5 giveaway event in park

  • The incident took place in Union Square Park, blocks from my old apartment. Hundreds of free PlayStations were promised and 2,000 people showed up. Videos in the link of the pandemonium. I took my kids to this park hundreds of times over the years. I believe 65 were arrested.

• Lizzo Record Sales, Streaming, Airplay Collapse in One Day After Harassment Scandal Breaks Wide: Career Crisis

  • You cannot possibly make up these stories.

• Man buys two poodles for $150 only to realize they are giant rodents on steroids

  • This one is ridiculous. Ferrets that were sold as poodles? Come on, man.

• Ex-Google recruiter shares the No. 1 thing to do after applying for a job: ‘Everyone fails’ at it

• FDA approves first pill for postpartum depression

• These 8 daily habits could add up to 24 years to your life, new study says: ‘Even adding only one’ may lead to 4 extra years

  • I look pretty good on the list. I do drink wine and need to improve my stress, but the others are dialed in.

    

• Is an Ivy League degree worth it? Report finds advantages beyond future earnings

• Getting an MBA is still worth it—the 10 business schools that pay off the most right away

  • I am not a fan of an MBA generally. I received mine at the University of Chicago and thought it was not worth my time. I learned more during undergrad at a state school. IF you want to get an MBA, go to a top program or don’t go because of the perception of value even if it will not teach you much. If you have a strong business undergrad, no need for an MBA in my opinion.

• What you should know about the latest Covid-19 surge. A doctor explains

  • I am hearing about a surge in the press and have heard about more people testing positive. However, the data I see is hardly showing something of concern.

    

• Pilots Are Seeing Some Very Strange Things In Arizona’s Military Training Ranges

  • U.S. fighter jets are having worrisome aerial encounters in Arizona’s restricted air combat training areas, which fits with a broader trend. What is going on recently? The number of reported sightings is through the roof. This article is entitled, “A monumental UFO scandal is looming,” and worth a read.

• In pictures: Taylor Swift’s ‘Eras Tour’

  • I wrote a piece on Swift’s greatness entitled, “Why I Love Taylor Swift” which outlined her accomplishments. I thought this article and pictures only added to her story. I was informed my daughter is going to her concert in Miami next year, as one was not enough.

Real Estate

• A reader and contributor, “Marty,” sent me this great link on a McKinsey study entitled, “Empty spaces and hybrid places-The pandemic’s lasting impact on real estate,” from July 2023. It is far too much for me to attempt to summarize at 88 pages but the charts and information are great. Lots of discussion on the hybrid model. The data is overwhelming in this link.

  • Demand for office expected to be 13% lower in 2030 than it was in 2019

  • 37% of respondents are in the office 5 days per week and only 14% are 0-1.

  • Pendulum near the middle around 3.4 days in the office.

    

  

  

• In Miami Beach, Fla., a waterfront home once owned by the singer and actress Cher is coming on the market for $42.5 million. Located on La Gorce Island, a gated community connected by bridge to Miami Beach, the home was originally built in 1953, according to listing agent Dina Goldentayer of Douglas Elliman. Cher owned the house in the 1990s, according to the 2011 book “Cher: You Haven’t Seen the Last of Me.” The current owners are Canadian financier James Eaton and his wife, Cecily Eaton, who paid $17 million in 2020, property records show. Beautiful pictures in the link. Not sure how much work the buyers did to it, but a double from 2020 seems low to me. This is the listing from the prior sale.

• The Woolworth Building’s “Pinnacle” PH sold for $30mm after asking $110mm. The building was built in 1913 (tallest in the world at the time) and was designed by Cass Gilbert. To be clear, this is an awful location to live in Manhattan from my perspective. The pictures of the unit are stunning, but you need to live that far downtown and that is a non-starter for me at any price. Rendering below from the StreetEasy listing.

  

  

• Workers in the US Midwest are coming into offices more often than the rest of the country, new research shows. The region’s offices posted a 60% weekly average peak occupancy rate in the first half of the year, the highest in the nation by far, according to data from Basking.io, a workplace-occupancy analytics company. The Northeast averaged just 24% peak occupancy over the same period. Midwestern offices also enjoyed more frequent visits compared with the rest of the US, with a greater share of people coming in four or five days a week. Basking.io calculates occupancy rates as a share of building capacity, as opposed to other workplace data providers who track attendance compared with a pre-pandemic baseline.