Manhattan’s Value Menu

sitdownsw 20090209 ny 4085 Manhattans Value MenuLocation: Things are bad out there. Who’s buying apartments in Manhattan right now?

Ms. Ramirez: Apartments, to some degree—not to some degree—they’re your homes. It’s the people that need homes. Life goes on and you need homes. … The bottom-line issue of who is buying is, it’s all value purchases.

 

What do you mean by that?

The sales that we’re seeing are the buyer perceiving it as value; and that definition is in the mind of the buyer. It’s your first-time buyers; your renters who don’t have an apartment to sell; and cash is king, to some degree, and even at the low end, the younger buyers are finding ways, through parental help or whatever. But then it’s someone who needs to move up—they have a larger family, they’re buying the five- or six-million-dollar apartment. It’s value; it’s all very much a value-driven purchase.

 

You got into the business in the mid-1980s?

I actually got into the business in the mid-1970s.

 

How does this compare, the current crisis, with past ones in the city—especially the mid-1970s, because everybody says that might happen again?

The mid-1970s was very different and the city was going bankrupt, so that was an interesting time. It was a very different time because it was before the co-op conversion craze; this was a renter’s town back then. … The late 1980s, we were in a recession, but the difference was, we went into that recession following a development boom; we had a lot of product that was for the investor market, and, if you’ll recall, the tax laws changed. So we had a great deal of studios and one-bedrooms in the marketplace, truly an oversupply. … That really hurt us. That’s why we stayed, in New York, in a recession longer than, I think, a lot of the other cities did.

In this instance, we really went into this current crisis as a city in relatively good stead. We were economically doing better than the nation. Now, things have tumbled for everybody—but we still went into it strong; our supply numbers were, as you know, dreadful. We had no supply. That’s what made me believe we were going to be able to slip through the crisis in the beginning. But, what it turns out [to be] is, the supply is not really the issue right now; it’s the demand. And the demand will eventually impact our supply.

 

How so?

By the demand being off, the supply is going to slowly build. So that’s what we have to keep our eye on. It’s that incredible hesitancy—and, I want to even say, fear—that’s in the marketplace that has the demand off.

 

Two questions brokerage-related. Given the economy and given the state of the market, have the number of brokerages peaked? Are we going to see a lot of acquisitions, mergers, some going out of business?

Yes. I think it’s that turning time in the marketplace, whenever there’s a crisis. I say, when you say ‘acquisitions,’ I think it’s going to be more like ‘tuck-ins.’ I don’t think there’s going to be a big buying spree; I don’t think anyone’s willing to pay huge numbers for companies at this point. I think there will be people that go out of business.

 

Do you have anybody in mind?

No. You can’t predict; I’m not looking at their books. And maybe it isn’t necessarily go out of business, but maybe align themselves with other firms. This is a time you’re going to see things happening.

 

How do sales brokers’ marketing budgets work?

Every agent has a budget, and it’s based on their production.