Stephen G. Kliegerman
President of Development Marketing
Photo: Stephen Kliegerman and Roberta Benzilio manage the Development Marketing Team along with Bill Ross and Christopher Mathieson, not pictured.
Photo: The entire Halstead Property Development Marketing team.
Photo: Halstead's Development Marketing Team resides at 831 Broadway, the former home of an antique shop and La Belle Epoque dance hall. Fortunately, the new tenants have kept much of the building's original character.
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This week, we met up with Stephen Kliegerman, Executive Director Development Marketing for Halstead Property, one of New York's most successful residential real estate brokerages.
You might call Stephen Kliegerman a contrarian. He states that, despite the national downward trend in home prices, the New York City new condo market is set for a mid-term rise in pricing. Certainly, he has the credentials and experience to back up his statements. With the “505 Condo” nearly sold out, “Toren” selling nearly a unit a day, and the status as exclusive sales and marketing agent for the Toll Brothers' four new developments in Manhattan, Stephen and his Development Marketing team know a thing or two about what's going on in NYC's new condo market. Learn more about Stephen's take on the future of NYC's new condo market.
There Is Too Much Demand
While financing for residential home purchases has continued to tighten, New York City developers seeking capital face a much more daunting task than their retail clientèle. Banks are being much more stringent with new development financing, increasingly setting controls and minimums on factors such as pricing of new units.
“The real challenge is developers getting financing to continue to develop. It appears that supply [of new condo units] is going to drop off faster than demand. Prices are going to go up again.”
With the one-two punch of restrictive financing and the repeal of 421-A tax breaks, developers are going to find it increasingly difficult to identify profitable opportunities.
“Land owners have not come to the realization yet that their property is worth less without 421-A. Cost of financing and cost of materials have not changed. The only cost that a developer can control is the price they offer for the land. This could cause a freeze in developable land purchases, only to break when landowners need to sell.”
This trend could cause a lot of smaller and exclusively local developers to possibly exit the market.
“The smaller developer is going to get squeezed. Number one, they cannot get money. Number two, there are going to be in competition with the bigger developers for the better sites. Number three, they may not have the wherewithal to hold out [through the downturn].”
Consequently, the emerging trend is for developers to look into new markets, both in terms of geography and property type.
“We are starting to see new types of opportunities like fractional or time-share ownership, which is very popular to the European community with a strong Euro. These units command higher rates and offer more options, because they can be traded.”
In fact, Stephen met with a fractional ownership client right after our interview. Rentals are also a new focus for the Stephen's Development Marketing team.
“In brokerage, you need to be flexible, to get ahead of the market and look at what the emerging trend shows. We spend 50% of our effort on pre-development planning and marketing and 50% directed to selling on-site. We like to get involved very early, before the property is even purchased and provide input into amenities, layouts, budget, zoning, and unit mix.”
Perhaps once constrained supply pushes new condo prices rise high enough, developers will once again find it worth their while to re-enter the market. What's driving the demand side of the equation?
“Rents are outrageous, with some rents at 75 to 80 dollars per square foot. For a while, the rent vs. buy decision was falling to the rent side. Cash-on-cash, in many situations, it makes more sense to buy.”
That said, Stephen does predict a near-term price dip, as developers with units to sell now cut deals.
“I see a relatively stable marketplace going forward. Prices may drop a little bit. And there may be a few concessions on the part of sponsors: paying for the transfer tax, common charges for a few months, or an attorney’s fee. But overall, there’s too much demand for a bubble to burst.”
About Stephen Kliegerman
As Executive Director of Development Marketing for Halstead Property, LLC, Stephen is responsible for the operations, direction and management of new business, client relations, pre-development planning, marketing and sales.
A graduate of The George Washington University and a Licensed Real Estate Broker since 1989, Stephen previously owned and operated his own real estate brokerage, management and consulting firm, Herbert H. Kliegerman Associates, Inc. In 1998, the firm, which specialized in the management, sale and leasing of Coops, Condos, and Lofts in Downtown Manhattan, merged with Halstead Property and Stephen was appointed Executive Director of Downtown Sales.
Over the past 17 years, Stephen has established himself as a leader in the brokerage community through his efforts in the Downtown Brokers Association of which he served a five year term as its President. Stephen is also a highly active member and leader of The Real Estate Board of New York for which he has served three terms on the Residential Ethics Committees (twice as Chairman) and four terms as Chairman of the Downtown Committee. Additionally, Stephen was among the catalysts for the renowned industry RLS and 72 hour co-broke rule which helped to revolutionize the way brokerage firms cooperate throughout the city.
In addition to having an active and passionate professional life, Kliegerman has an equally active personal life where he enjoys skiing, fishing, baseball, the arts and spending quality time with his children.
Thursday, July 17, 2008