Issue 14, March 2008: What Creates Value?

In the current vortex of Manhattan real estate, a key buzzword is value. With so much of the country facing housing problems and questions arising about the length of New York’s hot market, buyers want more than fluff.

This renewed emphasis on value is sailing a new course today as buyers, in addition to embracing location, apartment size and views, look at amenities. New buildings are filled with a king’s ransom of extras that include concierge services, basketball courts, bowling alleys, private dining rooms and spas for animals. Which of these really has value and will have an impact on the resale price of a property? Some are almost a necessity today as they are ever present, such as a fitness room or health club, which are now de rigor in most new and converted buildings. In fact, it is an expected amenity so in terms of real value, little is added.

Older post-war properties, which are competing with the newer and more lux amenity type buildings, may dwindle in value against these amenity-filled structures. Value is also based on a person’s lifestyle. Some 24/7 couples want top-flight concierge services to make restaurant and theater reservations and handle numerous other chores. They will seek buildings with this and for these people a concierge creates value. Another amenity that is coming onto the market is a refrigerator for deliveries of food. With the decrease in supermarkets in Manhattan and the increase in online food purchasing, these are becoming more important to some.

But, what really creates a lasting value that gives the property an edge when a person goes to sell an apartment? Location remains important. People should also look at the finishings in the apartment and the furnishings in the lobby. Do they incorporate a sense of the people/lifestyle envisioned at the purchase? The lobby indicates how a property presents itself and how it is perceived by visitors. Does it have a sophistication that adds to the luster of the building? The building is a reflection of the residents and the appearance should not insult them or their visitors. The finishings show the developers attention to detail and to the quality of the construction. Other amenities which add value, and I gain this knowledge from talking to the numerous buyers I work with, include a garage in the building and a playroom for young children, particularly for use in winter. Gardens, either ground-floor or rooftop, if properly kept, are an added advantage. The jury is still out on libraries, private reception and dining rooms and such, though buyers seem intrigued by them. With prices slightly off over the past few months, it behooves buyers to look at the purchase with a long-term view. They should evaluate whether many of the hot amenities today will be passé in a few years and should concentrate instead on those items that create lasting value.