Best Areas to Invest in Manhattan
Posted by Wei Min Tan on January 27, 2020
What is the best area to invest in property in Manhattan? This is perhaps the most common question we get from buyer clients. Answer is, going back to my Finance class from 20+ years ago, It Depends. There is no best area per se as it depends on the buyer’s objectives and long term goals. Objectives include price point, holding period and whether the buyer intends to rent it out or hold as a vacation home. Based on these objectives, we guide global investor buyers on a strategy that provides the best fit. Put yourselves in my shoes, if I were to ask which is the best area to invest in your city, you’d likely give the same response.
Every area has upsides and downsides, the below are five examples. If everything in an area is perfect, then the downside is price, as one of the examples below demonstrate.
Financial District (Oversupply, Value Opportunity)
Upside: FiDi has the World Trade Center, the largest development in Manhattan. The WTC consists of four office buildings, Westfield Mall which is the largest mall in Manhattan, the Oculus transportation hub and in construction, a performing arts center. Fifteen years ago, the area used to be dark after work hours but since the prior new development boom of 2006 to 2008, there are now many residential buildings in FiDi. Along with this came grocery stores and restaurants which has made FiDi more livable than in 2005.
Downside: This is the area with the most new launch property in the pipeline. For example, the high end One Wall Street, 125 Greenwich, 77 Greenwich, 130 William, One Seaport. High end developments will have problems selling. The “affordable luxury” segments will do better. New owners will need to compete with other landlords who are renting out their property after closing.
Upper East Side (Fifth and Park Avenues mostly coops)
Upside: Upper East Side is home to Museum Mile along Fifth Avenue and ultra expensive cooperative apartments on Fifth and Park Avenues. This was where apartment living started for the wealthy after the 1920s, when architects like Rosario Candela and Emery Roth built grands apartments on Fifth Avenue. UES has a residential feel with many prewar apartment buildings. In the Spring, tulips are planted along Park Avenue which makes it a joy to the senses.
Downside: UES is residential, which means landlords are competing with every other building for tenants. The tree-lined and expensive area is along Fifth and Park Avenues where they are mostly cooperatives and hence not investor friendly. Most condos are between First and Third Avenues. The limited condos on Park Avenue and close to Central Park, such as 502 Park Avenue, will command a premium price.
Tribeca (High prices)
Upside: Tribeca is one of Manhattan’s most expensive neighborhoods and full of high end restaurants like Marc Forgione, Locanda Verde, Tribeca Grill. This is a neighborhood of both luxury high rise condos (111 Murray, 101 Warren, 200 Chambers) and low rise loft buildings that span 2,000 to 4,000 square feet of space with 12 feet ceilings. Prices in Tribeca are high but rents are commensurately high as well when compared to Manhattan averages.
Downside: The main downside is higher price point, for both resale and new launch property. New developments like 111 Murray are almost all sold out. While current buyers are getting a better deal than pre-construction buyers, prices are definitely Tribeca level.
West Village (Constant seller’s market and high prices)
Upside: Inventory in West Village is extremely tight and this area is still a seller’s market despite the Manhattan market correction. The Village comprise low rise buildings and tree-lined streets. Full of personality and celebrities, West Village can be mistaken for a European town if you forget you’re in Manhattan. There are few new launch projects in West Village and it’s partly because much of the Village is landmarked. Condo projects like Ian Schrager’s 160 Leroy and Cook + Fox’s 150 Charles Street are among the best success stories for new development projects in Manhattan.
Downside: Prices are high and inventory limited. Doing a quick search on streeteasy for condos between $1 to $2 million, there are only 20 listings on the market. For comparison, a similar search for FiDi shows 145 listings. For the same price of a luxury building in FiDi, one gets a studio in an old building in West Village. Many West Village condos are not full service residential condominiums with nice amenities. New development projects are small boutique developments with large units and commensurately high prices.
Billionaire’s Row (Trophy building, need Central Park views)
Upside: Billionaire’s Row is not really a neighborhood but rather a stretch on 57th Street between Fifth and Eight Avenues. The term was coined when Extell built One 57 which was the most expensive building at that time. The key to getting a condo in Billionaire’s Row is the status and prestige. Most important is to get into a trophy building, eg One 57, 432 Park Avenue (not technically in Billionaire’s Row) with views of Central Park. This is a way the ultra rich preserve property value and wealth in the most exclusive buildings in this financial capital of the world.
Downside: Oversupply, as competing buildings started being built after One 57. Currently there are Central Park Tower, 111 West 57 Street, 220 Central Park South. This ultra luxury segment has a very specific clientele and in this down market, will have a tough time selling.
What We Do
We focus on global investors buying Manhattan condos for portfolio diversification and long term return-on-investment.
1) Identify the right buy based on objectives
2) Manage the buy process
3) Rent out the property
4) Manage tenants
5) Market the property at the eventual sale
1) 959 First Avenue. Toll Brothers’ new property project required only 10 percent reservation deposit. Represented multiple buyers at $2 million price point. Buy decision driven by location close to United Nations, Blackstone, Blackrock headquarters.
2) 200 Chambers Street. Luxury building in Tribeca with premium price and rents. The low carrying costs and high demand make this a good investment. Located next to Whole Foods, World Trade Center, Goldman Sachs headquarters. This apartment faces the building’s zen garden and comes with a washer/dryer within the apartment.
3) Parc Vendome, Midtown West. Value buy one block from Billionaire’s Row but required renovation of the entire apartment. Renovations in Manhattan are more time consuming because of licensing/permits/limited elevator usage etc. The buy decision based on southern exposure with plenty of light and proximity to Central Park. Rented out immediately after renovation project was completed.
Article was updated January 27, 2020