A Rising Tide for Brooklyn Economy?

brooklyn-aerial-092110.jpg
Brooklyn’s doing just fine, if you believe yesterday’s bullish article in Crain’s: In the first six months of the year, almost 25,000 borough residents found work, more than 200,000 square feet of commercial space was rented and retail rents began to stabilize. Why? Brooklyn’s such a desirable place to live now. Certainly, for anyone under 30, Brooklyn is now their first choice and not their second choice, says Doug Steiner, president of Steiner Studios and not totally unbiased given his interests in real estate development (80 Met). Let’s hope Crain’s is onto something!
Brooklyn Feels the Love of Rising Economy [Crain's]

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  • rising tides are not a good thing when living at sea level.

  • People who live at sea level know when the tides are rising and falling. It happens twice a day.

    I really feel for BHO and the fact that he’ll likley remain “homeless.”

  • I think the persistently negative, anti-everything brooklyn vibe is really contagious…..

  • i actually find it embarrassing that i live in brooklyn.

    *rob*

  • it’s funny when you talk to your friends on facebook who live in various places around the country and they ask if all the stereotypes are true, and you honestly can’t say anything but yeah, they are true and then some. THAT is why it’s kind of embarrassing to live here.

    *rob*

  • Rising tide but NYC/Brooklyn still naked.

    ***Bid half off peak comps***

  • “it’s funny when you talk to your friends on facebook”

    Loser

  • Does it even make sense to refer to “Brooklyn” as a whole in terms of economy, retail, etc? Places like East New York, Vinegar Hill, and Sheepshead Bay are practically different cities.

  • Rob what stereotype are you???

  • quote:
    Rob what stereotype are you???

    the happy nihilist.

    *rob*

  • Pathetic – so willing to classify, ridicule and judge everyone else; but cant even take a half-way honest look at himself.

  • Brooklyn RE prices go nowhere but off a cliff without Wall St profits…

    Wall Street’s Profit Engines Slow Down, NY Times Business Day, 9/19/10

    http://tinyurl.com/2e6yjpr

    “After an unusually sharp slowdown in trading this summer, analysts are rethinking their profit forecasts for 2010.”

    “The activities at the heart of what Wall Street does — selling and trading stocks and bonds, and advising on mergers — are running at levels well below where they were at this point last year, said Meredith Whitney, a bank analyst who was among the first to warn of the subprime mortgage disaster and its impact on big banks.”

    “The downward slide on Wall Street parallels a similar shift in the broader economy, which has slowed considerably since showing signs of a nascent recovery this spring. And if banks come under pressure, all but the safest borrowers may struggle to get loans.”

    “As a result, executives, portfolio managers and analysts say that even the mighty Goldman Sachs, which posted a profit every day for the first three months of the year, is unlikely to deliver the kind of profit growth that investors have come to expect.”

    “Banks are also scaling back on making bets with their own money — known as proprietary trading — another huge profit source in recent years that will soon be forbidden under terms of the financial reform legislation passed by Congress this summer.”

    “To make matters worse, he said, many Wall Street firms increased their work forces in the first half of the year, before the mood shifted and worries of a double-dip recession arose. If activity remains anemic, firms could soon begin cutting jobs again.”

    “Ms. Whitney says the gloomy short-term predictions foreshadow a series of lean years in the broader financial services industry.”

    “Indeed, she said the Street faced a ‘resizing’ not seen since the cutbacks that followed the bursting of the dot-com bubble a decade ago.”

    “‘We expect compensation to be down dramatically this year,’ she [Meredith Whitney, a bank analyst who was among the first to warn of the subprime mortgage disaster and its impact on big banks] wrote in a recent report. She predicts the American banking industry will lay off 40,000 to 80,000 employees, or as many as 1 in 10 of its workers.”

    “…the boom years are not coming back anytime soon. As both consumers and companies cut back on debt, and financial reform rules put the brakes on profitable niches like derivatives and proprietary trading, the engines of earnings growth for the last decade will continue to sputter.”

    Game Over for the Brooklyn economy. Wanna know where we’re headed, study both the Great Depression and the lost Japanese decades.

    Cashing out or short-selling won’t get any better than NOW. Capture near peak comps today or regret it later. Buy back in at steep discounts in the years ahead.

    ***Bid half off peak comps***

  • You’re starting to look like a true nutjob with posts like that, BHO.

  • Brooklyn RE prices go nowhere but off a cliff without Wall St profits…

    FWIW, the Dow will be up a couple of thousand points over the next few months as in becomes clear that the House, and quite possibly the Senate will be controlled by the GOP-Tea Party. Of course, a few months later, inflation will become the new concern, but that’s at least “good” for real estate

    (me @ParisParamus on Twitter)

  • Wow–we are really in inflamed rhetoric mode today on all sides. Somehow I suspect neither the bulliest of the bullish predictions (Crains) or the direst of the doomsaying (BHO) will come to pass.

    And for what its worth I am very happy to live in Brooklyn in the early 21st century. Few places I would rather live really. Sydney maybe, or perhaps Paris if I had no employment obligations.

  • Brooklyn is great. Except for the Toren ;-)

  • BHO problem is that he has sort of bought his own BS. It is very possible that housing in Brooklyn will no longer appreciate,in fact it might even depreciate,
    but the reality is no one knows and where at one time a guy like BHO was a refreshing (and wise) alternative view to the perpetual, definitive (and wrong) view that RE was and always will be a winning investment;

    now BHO has sort of become that which he despised, because his definitive and absolute view is no less ridiculous (in its certainty) than the ones predicting a persistent bull market.

    It is really simple when it comes to RE IMHO – if you can reasonably afford it and plan on a long-term stay – then buy what you want – its not an “investment” its a house; if its for the short-term, rent and if you are buying RE for investment, all you should be concerned with is the rate of return – betting on appreciation is akin to going to vegas.

  • Toren is the name of some crotchfruit you were forced to meet in a bar, wasnt it

    *rob*

  • well said fsrq. though I respect BHO enough to hope that he responds to this fairly cutting criticism. but yeah, beware always the unbending opinion.

  • The Toren looks like some “modern” German building that Dieter lives in. Emulating Lego in architecture is fine as a joke for a drawing or something that will exist for a little while, but NOT for a building.

  • Look like? I AM a true nutjob. It takes one to filter through all the bullshit in the mainstream media (no bubble, soft landing, no contagion, no recession, okay recession, recovery, recession over, no double dip, multiple RE bottoms, etc etc etc) and distribute the truth to the brownstone masses.

    Nothing has been fixed since Lehman failed. The RE losses on bank balance sheets or those of Fannie/Freddie are still there but hidden through Enron-sytle accounting (suspension of mark-to-market forced upon FASB by congress). We will not have a real recovery until the bad debt is defaulted and written down out in the open.

    The stock market is propped up on paper thin volume. Investors are fleeing and the Fed is rushing in via primary dealers with their high frequency trading super computers to buy buy buy and prop prop prop (remember the flash crash?). Government/elite continue to hide our depressionary status by patching up what would be a > 10 percent contraction in GDP by borrowing and spending via treasuries (essentially another growing Ponzi scheme).

    Yes, ‘Couch, DOW will be up until it goes down. But inflation would not lift wages and therefore would not lift home prices, only food and energy. And that’s if we get it. We might not. If we do, it’ll likely be hyperinflation which is synonomous with a currency collapse.

    ***Bid half off peak comps***

  • Now Couch is an architecture critic as well. So many talents.

  • BHO, the Dow (which I only mention because of the comment re Wall Street and Brooklyn) is depressed because the Democrats still have a chance (in the eyes of enough people) to continue their devastatingly destructive agenda: higher taxes, higher spending, Obamacare, C(r)ap + Trade, etc. Once the House flips, “no more” will be possible, even if the Senate stays Democrat (I suspect it won’t but we’re talking worst case scenarios here), and President Obamao is still in office.

    In other words, things are currently bad for two reasons: because the Dems have already destroyed; and because there is fear they will do still more. 50% off fear is a relative good thing.

  • couch–you sound just as nuts here. the house will go repub for sure but your pal Christine O’Donnell kinda put the kibosh on chances of a republican senate.

  • By wasder on September 21, 2010 11:30 AM

    Yeah, she isn’t my cup of Tea, but I’d still rather have a nut that believes in conservative principles, than a leftist and/or Marxist nut such as coons. Even a conservative witch is better than a leftist, n’est ce pas?

    As for the Senate flipping (1) flipping with Castle would be illusory; (2) there are other ways the Senate may flip. That dolt Feingold is going down; the CT seat looks like it’s up for grabs; Washington’s seat may go to Rossi.

    The anti-Dem wave is still building…

  • Also, I just read that the W VA seat is now up for grabs.

    PS: I really can’t tell if Christine McDonnell is as “bad” as claimed; for all I know she is really being slandered a la Sarah Palin. But what I wrote above maintains even if it’s true.

  • I think the Toren is unspeakably ugly.

    Don’t know how anyone can reasonably predict the Dow 2000 points higher in 2 months, but I sure hope you are right.

    I am looking for a home because I can “reasonably afford it”, but I can’t find anything I like that looks like a decent buy.

  • Brooklyn is a great place to live, wasder, but right now, a terrible place to buy real estate above 10x rent roll and/or 3x median income. It’s a great time to get out of the market with a gain or a minimized loss. Prevailing prices are still bubblicious and have yet to fully correct. I’m predicting another -37.5%.

    “BHO has sort of become that which he despised”

    I just despise bubblicious, Ponzi home prices sanctioned by our elected officials. Just let them collapse to their natural equilibrium already. I also despise secrecy and opacity practiced by the Federal Reserve Bank which smoothly fools most into thinking they are a government agency when in fact they are a secret society of our too-big-to-fail banks. I have become none of that, fsrq. I don’t despise the bulls, they have a stake to protect (though cashing out or minimize loss is advised).

    “his definitive and absolute view is no less ridiculous (in its certainty) than the ones predicting a persistent bull market”

    Difference is, fsrq, my view becomes more and more commonplace, more and more evident, and more and more supported by data (sales plunge -27%, market redemptions up, bank failures up YOY, GDP constantly revised down yet propped up with unprecedented Keynesian borrowing/spending, poverty way up, unemployment still way up, soverign debt crisis not abating as reported but SPREADING to Ireland/Spain/Italy, etc etc etc).

    My certainty that the DOW would plunge to 8,000 was equally ridiculous with only The What as my sole backer. DIBS never signed on (in fact ridiculed me) but later bragged about profitting from such. 9 times out of 10, things are worse than they seem. The reGOVery only bought time.

    “if you can reasonably afford it and plan on a long-term stay – then buy what you want – its not an ‘investment’ its a house”

    The problem is that most of the buyers right now are first time and they CANNOT afford it. That’s why there’s a need for FHA status for Toren/Oro/etc. Most buyers profiled here (3rd & Bond, Adam Dahill saving every penny, etc) and in the Times are barely scraping up the down payment to overpay for still historically and fundamentally overvalued assets on risky credit and little skin in the game. You have your well heeled buyers but even they are taking a hit in this unofficial but real depression and can afford, or are only willing to pay, lower prices.

    And the buy vs rent calc flawfully assumes appreciation and/or the certainty of a longterm timeframe ignoring job loss/relocation/marriage/divorce/kids/etc.

    People wouldn’t be buying if they didn’t someday expect appreciation but it won’t happen in real terms for the remainder of OUR lives. They may not say “investment” but it’s in their mind.

    No one knows the future but history is there for you to read. It repeats. That’s some of us saw this housing collapse coming from a mile away. You take a position on the economy whether you want to or not. Doing nothing is still a position.

    ***Bid half off peak comps***

  • “50% off fear is a relative good thing”

    Exactly, DCB. It’s called prudence.

    “I am looking for a home because I can ‘reasonably afford it’, but I can’t find anything I like that looks like a decent buy.”

    Well heeled? Overpaying for a fundamentally overvalued asset is not how you got there (nor how your parents got there if you’re a trustfund baby – this is how trustfund babies lose fortunes along with pro athletes and entertainers). Hence the lack of a decent buy.

    ***Bid half off peak comps***

  • It’s remarkable that nearly all comments on this site are from the same menagerie of freaks.

  • Don’t know how anyone can reasonably predict the Dow 2000 points higher in 2 months, but I sure hope you are right.

    I did not intend to say “in the next two months”; I mean more like 2000-3000 by March 2010. Too bad I have no $ to invest ;-(

  • ***
    The smattering of new statewide polls released over the last few days yields no new significant trends, although a new poll on the West Virginia Senate race shows the Democrat, Joe Manchin, maintaining narrow but consistent lead over Republican candidate John Raese in September.

    The new survey, from automated pollster Rasmussen Reports, gives Manchin a seven-point lead (50% to 43%)

  • I’m not a trust fund baby – in fact I was broke through a messy divorce just a few years ago.

  • Couch – maybe you should go live in a state that believes in your CONservative GoverMENt principals. That way you won’t be represented by liberal senators and have your electoral votes go Dem. Also, you won’t have to look at the Toren.
    Maybe the UES would be a better start. . . . . .

  • By 11217 on September 21, 2010 12:34 PM:

    PPP: West Virginia Senate Race: GOP Candidate Raese Leads By 3
    It’s a tossup, which means, the Republican is favored.
    http://minx.cc/?post=305962

  • BHO I am going to assume that should your prognostications occur you are going to be rich, I mean super-duper rich; Warren Buffett George Soros kinda rich – cause if you are this sure, this absolute in your beleifs I have to assume that you are putting your $ where your mouth is – I fo one have none of your type of hubris and so while I have a view on RE and the economy in general, I learned a long time ago that my predictions can as easily be wrong (especially on timing) as right and so I might change the weighting of my exposures based on personal beleifs I’m not going to bet the farm one way or another.

    You on the other hand seem to ridicule even the possibility of being incorrect or too one-sided, therefore after the market collapses I will be looking for you in the pages of Forbes.

  • By lincolnlimestone on September 21, 2010 12:43 PM

    Maybe, but for the moment, I am content to impart some conservative-ish thoughts into the Liberal-Leftist BORG of NYC and Brooklyn–didn’t Reagan win NY?

  • “I’m not a trust fund baby – in fact I was broke through a messy divorce just a few years ago.”

    I figured you weren’t a Hilton or a Johnson. Just a side note about overpaying for a depreciating asset whether you’re wealthy or not. Divorce sucks. Cheaper to keep her (him too ladies). Congrats on your recovery (evidently a real one!).

    Bad assumption, fsrq. Like you said, shorting the markets like Henry Paulson requires timing (but you didn’t mention leverage). Near impossible and dangerous for outsiders like myself in this rigged, manipulated, maximum overdriven, man against machine, supercomputer, frontloading, HFT casino we call the capital markets. Even the right call too early could lead to a deadly margin call. Deleverage is a biotch. I value my marriage. I’ll be happy to preserve cash (hedge a little with metals/commodities) and let prices come down to me.

    Look for me right here on brownstoner.

    ***Bid half off peak comps***

  • Couch, if the Toren is so bad, what is an example of a good building?

  • By lincolnlimestone on September 21, 2010 3:46 PM

    No clear answer, and yes, I dislike mosr modern architecture, but it’s the color and materials on this building, I just think its hyper-frivolous, hyper-synthetic. Yes, its just my opinion (unless it falls down, in which case, I will consider myself a psychic)

  • “The problem is that most of the buyers right now are first time and they CANNOT afford it. That’s why there’s a need for FHA status for Toren/Oro/etc. Most buyers profiled here (3rd & Bond, Adam Dahill saving every penny, etc) and in the Times are barely scraping up the down payment to overpay for still historically and fundamentally overvalued assets on risky credit and little skin in the game. You have your well heeled buyers but even they are taking a hit in this unofficial but real depression and can afford, or are only willing to pay, lower prices.”

    This. I mean, I think that this is true. I’ve stopped actively following the market because it is too damn depressing that a three-person family making what we make can’t actually afford anything that isn’t in a really poor area. And even then, we’d be leveraging it all to hell.

  • Heather, I believe there may be some little pockets where you can find a two bedroom apartment in an area with decent schools for $300,000 or so. I am thinking of Jackson Heights, maybe some of the areas further out in Brooklyn such as Bay Ridge, maybe Inwood (not familiar w the schools there), etc. Or just rent. Nothing wrong w that.

  • Our economy is slowly dying, it is kept alive artificially. No one is proposing a solution because no one has the slightest idea of why it is happening and many have vested interest in the present system. However an objective observation of the phenomenon can help us understand it and provide us with an innovative solution. Of course we can’t solve the problem with the tools that brought us there in the first place and we need a new ideology.

    _______________________________

    - Do you feel that your ideology pushed you to make decisions that you wish you had not made?

    - Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to — to exist, you need an ideology. The question is whether it is accurate or not. And what I’m saying to you is, yes, I found a flaw. I don’t know how significant or permanent it is, but I’ve been very distressed by that fact.

    - You found a flaw in the reality…(!!!???)

    - Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

    - In other words, you found that your view of the world, your ideology, was not right, it was not working?

    - That is — precisely. No, that’s precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.

    _______________________________

    An Innovative Credit Free, Free Market, Post Crash Economy

    A Tract on Monetary Reform

    http://post-crash.com/credit-free.html

    _______________________________

  • Or just wait ’til prices come down to you range and employment becomes stable. Nothing wrong with that either. In fact, something very wrong without that if you’re not wealthy.

    ***Bid half off peak comps***