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Tuesday September 15, 4:38 pm Eastern Time
Wall St. jitters shake New York apartment market
By Holly Rosenkrantz
NEW YORK, Sept 15 (Reuters) - The jitters that have spooked Wall Street this summer have begun seeping into New York
City's real estate business, where the stock and real estate markets are more closely linked than in many other cities.
Prices are still holding at their lofty levels, but top Manhattan residential real estate companies said buyers have been behaving
more cautiously during the stock market decline of recent weeks. Some buyers have even backed out of deals, blaming their eleventh-hour concerns on the stock
market.
Barbara Corcoran, chairman and chief executive of the Corcoran Group, one of the Manhattan's largest residential real estate companies, said five buyers canceled
their deals on August 28, the day after Dow Jones Industrial Average tumbled 357 points. One of those buyers was a Wall Street investment banker.
And Brown Harris Stevens, one of the largest sellers of luxury apartments in Manhattan, said it has seen about 15 percent of its buyers pull out of their deals in
recent weeks. About half of them, though, later came back, saying their original need to buy an apartment had not gone away.
''Since the last week of August, everyone has gotten a little nervous, and it has nothing to do with the value of real estate,'' said Kent Swig, co-chairman of Brown
Harris Stevens. ''People have been shook up by what's happening on Wall Street and are saying, 'let's re-evaluate what we're doing,'' he added.
Amid the Wall Street bull market of the nineties, the real estate business in New York has been booming, and prices for apartments, already among the highest in the
country, have grown astronomical in the past few years.
But with the stock market poised to continue the roller coaster ride it began in August, real estate companies in New York City said they are bracing for more
uncertainty after years of booming business.
The Corcoran Group, for example, has begun training its brokers on how to calm apartment buyers who are now scared of where Wall Street is headed.
Other companies said they are hoping that people looking into buying a New York apartment are savvy enough to understand that volatility on Wall Street generally
does not hurt property values over the long haul.
''Most of our buyers seem to be hardened after 10 years of a gyrating stock market,'' said Clark Halstead, managing partner of Halstead Property Co.
''After (the 1987 stock market crash), everyone was paralyzed for 90 days, but by now, I think people understand that we have a sound regional and national
economy,'' he said.
In the short-term, of course, New York City's local economy could be hurt if Wall Street faces more troubles.
Brokerages companies have said they do not expect this market downturn to produce anything like the wave of layoffs that came in 1987.
However, several commercial real estate brokers said they were concerned that companies -- particularly the financial services firms -- will hold off on expanding
their office space in New York if the stock market takes a bigger and more damaging tumble.
''We're beginning to detect anxiety,'' said Tom Falus, president of the New York office of Cushman & Wakefield, one of the city's largest commerical real estate
companies. |
