Author Topic: Leaving New York City  (Read 20318 times)

HJ

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Re: Leaving New York City
« Reply #20 on: November 18, 2020, 09:43:35 AM »
Who knew people prefer larger living quarters when they can't go out much, and smaller ones when they can go out a lot?

Life is trade-offs, I guess.

So you mean to tell me that if there was a virus that is very contagious and it make people want to leave densely populated cities with high rent, I am supposed to be shocked at that kind of rationale behavior by the upper middle to rich class?   

Wow, I would've never thought of that.  2008/2009 was scary as well.  People tried to jack my tenants.  Every 7-10 years, you have to experience some pain in real estate.  It's just life.  This is round 2 for me with 2008/2009 being more scary in general but NYC holding up better.  This round is more specific for NYC.  Back in 2008/2009, I was pretty bearish about NYC because all the revenue and profit center that drove that boom was so tied to mortgage packaging.  That was totally going to go away.

covid is precipitating trends that are not friendly to NYC.  the biggest in my mind is the risk that "front office" as well as "back office" of the securities/finance industry will leave NYC.  the latter has already mostly happened. covid is encouraging the former.  if NYC loses much of the financial sector, then it will be shot to hell

NYC lost the Madison Avenue advertising businesses, (think Mad Man), and it was once the fashion capital of US with its garment district, and the media center of the US with all big 3 broadcasters.  Finance is obviously hugely important to NYC today, but there are fundamental forces that give NYC its regenerative capacity.  Geography, for one, makes immigration benefit NY more than elsewhere in the US, and so are the transportation infrastructure, education institutions, etc.  There's reason why finance was centered around NY in the first place. 

That said, it's going to be on a down hill for a while, especially with characters like AOC having influence over decisions surrounding Amazon HQ2.  It'll take a while, but it's more about how it's run that will determine its future than just finance.


Gregmal

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Re: Leaving New York City
« Reply #21 on: November 18, 2020, 09:52:20 AM »
I've personally sold all my NYC focused REITs and purchased a boutique hotel in Belgrade, as it's the future.

https://nypost.com/2020/11/17/serbia-is-a-new-unlikely-oasis-for-nyc-residents-fleeing-the-city/

How much NYC office do you still own?  This is what makes a market.

low teens % of portfolio and dropping.

What was it at peak and how do you typically size?

Pupil and Gregmal trimming their office REITs... Uh oh...

Run, don't walk!

To be fair, I have, over the past few months come across one of the most exciting invest opportunities Ive seen in a long time, and its not in the real estate space. Given my massive real estate exposure, my incentive to reallocate to a new and somewhat diversifying core position is large.

Jurgis

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Re: Leaving New York City
« Reply #22 on: November 18, 2020, 10:48:06 AM »
I've personally sold all my NYC focused REITs and purchased a boutique hotel in Belgrade, as it's the future.

https://nypost.com/2020/11/17/serbia-is-a-new-unlikely-oasis-for-nyc-residents-fleeing-the-city/

You're my kind of guy. Can you buy me a houseboat in Belgrade?


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BG2008

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Re: Leaving New York City
« Reply #23 on: November 18, 2020, 11:12:36 AM »
Who knew people prefer larger living quarters when they can't go out much, and smaller ones when they can go out a lot?

Life is trade-offs, I guess.

So you mean to tell me that if there was a virus that is very contagious and it make people want to leave densely populated cities with high rent, I am supposed to be shocked at that kind of rationale behavior by the upper middle to rich class?   

Wow, I would've never thought of that.  2008/2009 was scary as well.  People tried to jack my tenants.  Every 7-10 years, you have to experience some pain in real estate.  It's just life.  This is round 2 for me with 2008/2009 being more scary in general but NYC holding up better.  This round is more specific for NYC.  Back in 2008/2009, I was pretty bearish about NYC because all the revenue and profit center that drove that boom was so tied to mortgage packaging.  That was totally going to go away.

covid is precipitating trends that are not friendly to NYC.  the biggest in my mind is the risk that "front office" as well as "back office" of the securities/finance industry will leave NYC.  the latter has already mostly happened. covid is encouraging the former.  if NYC loses much of the financial sector, then it will be shot to hell

NYC lost the Madison Avenue advertising businesses, (think Mad Man), and it was once the fashion capital of US with its garment district, and the media center of the US with all big 3 broadcasters.  Finance is obviously hugely important to NYC today, but there are fundamental forces that give NYC its regenerative capacity.  Geography, for one, makes immigration benefit NY more than elsewhere in the US, and so are the transportation infrastructure, education institutions, etc.  There's reason why finance was centered around NY in the first place. 

That said, it's going to be on a down hill for a while, especially with characters like AOC having influence over decisions surrounding Amazon HQ2.  It'll take a while, but it's more about how it's run that will determine its future than just finance.


Why don't people talk about biology?  Why don't people talk about the fact that if you are 22-35, single, horny, and promising, you want to be in NYC to meet others just like you.  If you are 25, Asian (East and South), and can code or build complex financial models or just trying to revolutionize the world, you want to be here.  Your odds are slimmer in Wichita.  If you are LGBTQ, this is a great place for you.  If you want Dim Sum, this is the place for you (although capacity leaving the market temporarily).  50% of my thesis is that this is the deepest liquidity pool for dating.  I will continue to bet on biology. 

thepupil

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Re: Leaving New York City
« Reply #24 on: November 18, 2020, 11:29:17 AM »
not to mention the pricing from a consumer standpoint is starting to get super attractive in my view:

https://streeteasy.com/building/360-east-57-street-new_york/10b

this apartment (well one a few floors up or down) was $5100 when i lived there in the early 2010's. it's now $4200. rent down 20% from almost 10 years ago, while salaries/all-in comp for elite fields is probably up 20% (or more in some instances, I'm honestly not as in tune with entry level comp for banking/consulting/tech)

the living room can be a 3rd bedroom, that's $1,400 / month average for 3 dudes to live in manhattan making like mid $100's 1st year out of college (finance/tech/whatever), or $2000/month for recently graduated big law types making $250K (you get your own bathroom and a full living room for having to deal with law school). i'm sure this apartment is not the cheapest/most expensive, i just picked this one because i have a great sense of comparability and know what it's like to actually live there (it's nice, doorman building, perfectly acceptable). it's not a hip spot, the neighborhood's kind of boring, but you're a walk away from the offices in midtown and a wasted cab ride away from lots of night life.

people make a lot more today than in the early 2010's, the disposable income of the yuppie crowd. rents down = massive increase in disposable income for playing and getting ahead in the greatest city in the world and that applies at all levels.

think how cheap its getting to share apartments in outer boroughs. sure that's bad for near term NOI, but it also creates an attractive pull.  you can say "well ya but you could get a house or your own apartment for that in XXX", sure, but it's not in NYC.

rents are skyrocketing in the places people are leaving to. like in south Florida for example.

the NYC premium collapsing should help buffer the "exodus"

EDIT: for context, the 2BR I shared in the south immediately after my time in NYC is now $2000 up from $1500. So the spread went from $3,700/month to $2,200/month.
« Last Edit: November 18, 2020, 11:56:13 AM by thepupil »

mattee2264

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Re: Leaving New York City
« Reply #25 on: November 18, 2020, 02:44:40 PM »

 If there is any doubt that NYC isn't still a very big deal just look at the market reaction when NYC closed the schools. All the other tightening restrictions barely moved the needle.

rb

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Re: Leaving New York City
« Reply #26 on: November 18, 2020, 04:54:57 PM »
I've personally sold all my NYC focused REITs and purchased a boutique hotel in Belgrade, as it's the future.

https://nypost.com/2020/11/17/serbia-is-a-new-unlikely-oasis-for-nyc-residents-fleeing-the-city/
If I recall correctly for the 08/09 cycle Buenos Aires had that particular distinction. Too bad you didn't buy a boutique hotel there. But I see you're learning. You are the pupil after all  :D.

TwoCitiesCapital

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Re: Leaving New York City
« Reply #27 on: November 18, 2020, 05:04:14 PM »
All this talk of the end of NYC is hilarious. Y'all might have a case of COVID can't be solved and population density is forever a threat, but in the event of actual vaccines and or herd immunity, NYC is back in business in 2-3 years.

High paying jobs are still there. Bars/restaurants/nightlife/entertainment is still there and unparalleled in most cities.

Covid throws a kink in that - no one wants to pay 4k/month for a 600 sq ft apartment you can't leave - especially if you can work remotely - but ultimately the solving of COVID will solve that and people will go back to paying 4k/month for apartments just to sleep in again.

Disclosure: lived in NYC for 7 years and left in 2017

merkhet

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Re: Leaving New York City
« Reply #28 on: November 20, 2020, 05:06:52 AM »
Why don't people talk about biology?  Why don't people talk about the fact that if you are 22-35, single, horny, and promising, you want to be in NYC to meet others just like you.  If you are 25, Asian (East and South), and can code or build complex financial models or just trying to revolutionize the world, you want to be here.  Your odds are slimmer in Wichita.  If you are LGBTQ, this is a great place for you.  If you want Dim Sum, this is the place for you (although capacity leaving the market temporarily).  50% of my thesis is that this is the deepest liquidity pool for dating.  I will continue to bet on biology.

not to mention the pricing from a consumer standpoint is starting to get super attractive in my view:

https://streeteasy.com/building/360-east-57-street-new_york/10b

this apartment (well one a few floors up or down) was $5100 when i lived there in the early 2010's. it's now $4200. rent down 20% from almost 10 years ago, while salaries/all-in comp for elite fields is probably up 20% (or more in some instances, I'm honestly not as in tune with entry level comp for banking/consulting/tech)

the living room can be a 3rd bedroom, that's $1,400 / month average for 3 dudes to live in manhattan making like mid $100's 1st year out of college (finance/tech/whatever), or $2000/month for recently graduated big law types making $250K (you get your own bathroom and a full living room for having to deal with law school). i'm sure this apartment is not the cheapest/most expensive, i just picked this one because i have a great sense of comparability and know what it's like to actually live there (it's nice, doorman building, perfectly acceptable). it's not a hip spot, the neighborhood's kind of boring, but you're a walk away from the offices in midtown and a wasted cab ride away from lots of night life.

people make a lot more today than in the early 2010's, the disposable income of the yuppie crowd. rents down = massive increase in disposable income for playing and getting ahead in the greatest city in the world and that applies at all levels.

think how cheap its getting to share apartments in outer boroughs. sure that's bad for near term NOI, but it also creates an attractive pull.  you can say "well ya but you could get a house or your own apartment for that in XXX", sure, but it's not in NYC.

rents are skyrocketing in the places people are leaving to. like in south Florida for example.

the NYC premium collapsing should help buffer the "exodus"

EDIT: for context, the 2BR I shared in the south immediately after my time in NYC is now $2000 up from $1500. So the spread went from $3,700/month to $2,200/month.


+1 to both -- if you're a young and single person, you will almost certainly be back in NYC in a few years regardless of whether you can do your work from Des Moines -- because then you would have to live in Des Moines.

thepupil inspired me to take a look at my old apartment in NYC. https://bit.ly/2IMTBJ8

The gross rent is maybe two hundred bucks north of where it was when I moved to NYC in 2007. As a 24 year old newly minted lawyer, I was more than happy to apply part of my $160k salary (now $190k for anyone starting NYC Biglaw) to a nice crib. Y'all are crazy if you think people won't want to live in NYC again.

cubsfan

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Re: Leaving New York City
« Reply #29 on: November 20, 2020, 05:19:34 AM »
^ Damn Merkhet, you were living large!  Somehow I never envisioned you living in Des Moines anyway!