MANHATTAN - That Family Town

by Michael J. Wolfe,
President Midboro Management, Inc.

As Published in the February 2000, Edition of the NYARM News

If there were any way to characterize the nature of the multi-family housing market during the late 1990's, it would be that Manhattan is going to the families. After nearly 40 years, New York City is becoming a place where people are choosing to raise their kids -- and the exodus is largely coming from the suburbs.

The result is the greatest surge in the apartment sales market perhaps in the history of New York City. It has certainly outpaced the boom in the mid-1980s in both product and price. In addition, this cycle, which commenced somewhere between 1993 and 1994, has exceeded our expectations for longevity and consistency.

In the third quarter of 1999, it was estimated the apartment sales prices in Manhattan increased 20 percent on the East side and 17 percent on the West side. Not only are Manhattan co-op buildings largely owner-occupied today, we are seeing a resurgence of the "family building" in nearly all neighborhoods.

Reinforcing this trend is the unprecedented number of applications we have received here at Midboro for combining apartments, i.e., adjacent one-bedroom and two-bedroom units turned into family-size homes. We initially began seeing an increase in requests in early 1998. Up until then, many large-unit buyers held out for the large, family-size units that were supposed to appear on the market as the result of the 1997 capital gains laws. But when those large units didn't materialize, apartment buyers began demonstrating unique ingenuity in creating their desired space requirements wherever existing space was available.

That demand then filtered into new construction and conversions in the city, which started as small units downtown for upscale, single professionals, and developed into larger, family-style apartments throughout the city. As for the amenities, family-oriented playrooms, storage rooms and bicycle rooms joined the grown-up fitness rooms as the norm.

Consistent with the changing demographic of homeowners from singles to families, and well-heeled ones at that, has come the renewal of many co-ops and condominiums in terms of physical restoration through fiscal health. The passing of Local Law 11 in March 1998 -- and its individual regulations in January 1999 -- made it necessary to execute specific exterior repairs, but it was the collective commitment to apartment ownership that made it possible. The ability to complete important repairs, refinance mortgages, and even implement cosmetic improvements reflects a different type of homeowner from in the past.

Whereas the traditional co-op shareholder or condo unit owner was typically concerned with holding down the bottom line, the new apartment owner is focused on appreciating the value of the building and the unit, as well as maintaining basic comforts. So, within this decade, the market has had a remarkable renewal, the apartment owner profile in Manhattan has changed dramatically, and the city itself has become family-friendly. Moreover, it is a trend that is becoming more and more ensconced in the overall cultural fabric of the city.