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Residential market needs more good news.

The good news is that, at long last, New York's residential market has picked up. Investors are aggressively buying occupied apartments, while end users are purchasing vacant apartments with an urgency not seen for years. There are both a pent-up demand and a belief -- which happens to be accurate--that the market has bottomed out.

Proof? As I write this in early June, Three Lincoln Center on the West Side has recorded 45 sales in just 10 weeks, while The Oxford on the East Side has described, a number of properties simsold 23 apartments since January. Nor are sales limited to such ultra-luxurious buildings; we've sold 121 residences at The Pinnacle in Queens since last June-and at prices higher than were obtained at the two previous auctions there.

From the point of view of developers, the good news is even better than this. Because supply is low, there is little inventory in the pipeline, and banks are not financing new construction. At most, perhaps 1,000 units will come on stream in New York in the next couple of years.

Well, then, what is the bad news? Despite the positive developments I've ply are not selling as well as they should. And since today's marketplace is not the main problem, the question remains: why aren't these buildings selling?

There are several answers:

1) Presentations to the end-user are too pared down. It's understandable that, with the close of the 80's boom, glitz became unfashionable. However, in any market, you must still find a way to excite a prospective buyer.

2) Salespeople feel unmotivated. Beaten down by events of the last couple of years, too many salespeople fail to present product properly or follow up as they should. In all too many cases, they have simply given up. Thus, you must stimulate your staff and, in some cases, teach them skills afresh.

3) Few salespeople are advising prospective buyers about the strength of the market. For example, rents are much firmer today. It's true that they don't appear appreciably higher yet. But landlords are providing fewer concessions (such as an extra month's free rent or larger commissions), and the next step will be higher rents. And when rents approach the cost of carrying a new purchase, people buy rather than rent. Salespeople must point out all of this to potential buyers, however, and they haven't been doing so.

4) Yesterday's product is often not appropriate today. During the boom years, location may have been enough. Today, however, consumers insist on quality in the home as well. In their search for better bathrooms, kitchens and windows, buyers are no longer willing to pay for location, rip up their new apartment and install their own finishes. In other words, you can touch the right "buy" button by installing the fine finishing touches in advance.

That's the "buy word" for recovery in the residential market.
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Title Annotation:Mid-Year Review & Forecast, Section IV; evaluation of New York, New York residential real estate market
Author:Albert, Adrienne
Publication:Real Estate Weekly
Article Type:Column
Date:Jun 23, 1993
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