The NY Times reported this week that, as the ultra luxury real estate market in New York City continues to cool, developers appear to be making two kinds of product adjustments: (1) they are converting the penthouses and rooftops of their buildings from premium residential space into amenity spaces for the broader building and (2) they are shrinking unit sizes to help with overall sales and leasing velocity.
According to the New York Times, condo prices on Billionaires’ Row in midtown are down 20-40% since the peak of the market in 2014 when this record was set. So developers are responding with more studios and 1 bedrooms, and amenity spaces – many of which now include high end restaurants also open to the public – that ensure no other building has something you don’t have.
However, there are naturally some differences between condo and rental buildings. Since 2016, 35% of rentals projects in the city have had some sort of penthouse amenity, whereas the number is only 13% for condo buildings. This makes sense given that amenities are such a big driver of leasing. You definitely want your amenities ready for when your leasing office opens.
What product changes, if any, are you seeing in your market right now?
Photo by Aaron Burson on Unsplash
At the beginning of this year, Bloomberg published this article talking about how the vast majority of electric car drivers lease, rather than own, their cars. The stats are as follows: In the US, about 80% of electric battery vehicles and about 55% of plug-in hybrids are leased, whereas only about 30% of all vehicles in the country are leased.
It is, however, important to note that the above doesn’t include any data points from Tesla. Since they sell their cars direct to customers, as opposed to through dealers, they have no obligation to publicly release this data. And so apparently they don’t.
Conventional wisdom suggests that if you plan to drive the same car for an extended period of time – the average age of a car on the road in the US is over 11 years – it makes financial sense to buy. But in this case, people seem to be worried about technological obsolescence and the weak resale market for electric vehicles. This may also speak to the type of customers who are currently buying electric vehicles; they are early adopters and don’t want old cars.
I’ve also seen someone argue that because some states require a percentage of car sales to be zero electric vehicles, it can be more cost effective for manufacturers to sell/lease them at a loss than pay the penalties or buy the ZEV credits. And with a lease, they at least get parts back at the end of the term. But I honestly don’t know much of a factor this plays.
I hadn’t thought of this before I stumbled across the Bloomberg article, but it all makes sense to me. I find this reversal in ownership interesting because it tells me that how we consume cars can very easily change, and probably will moving forward.
When I was in graduate school in the U.S., I remember it being a pain having to always sign a 1 year lease. I only wanted 8 months so that I could take off during the summers. Too bad Flip wasn’t around back then.
Flip is a startup that I just discovered, which is positioning itself as the “easiest way to sublet or get out of your lease.” It’s all about reconciling the conflict between lease and life, which don’t always match up.
The platform is free to listers. So you don’t get charged to post a lease or to flip a lease. Renters get charged a service fee equal to 5% of one month’s rent.
It’s interesting to think about the surge in short-term rentals and platforms such as Flip that are effectively helping to reduce lease terms by way of streamlining the “flipping” process.
Are millennials ushering in a new era of mobility and transience?
One feature that I think is neat and that I would like to point out is “Bounties.” The platform allows listers to attach a bounty ($) to any listing. Users are then able to grab a unique URL that can be shared around online. If someone takes over a lease via one of your links, you get paid the bounty. Smart.
In case you’re curious – I certainly was – here’s a ranking of all 50 U.S. states according to how friendly they are to subletters. It also summarizes how to legally sublet. On the friendly side is New York and on the less friendly side is Wyoming.