Issue 41, December 2012: Storm Surge

In the wake of the hurricane, with nearly 40,000 people left homeless and a swath of downtown businesses permanently shuttered, experts were left to wonder what the legacy of the super storm would be for the New York real estate market. Would the flood zone of a particular neighborhood or building affect one’s decision where to live? In a city where so many were left without power for days or even weeks, how would Sandy be remembered? From the luxury market to the first-time buyer and renter, uptown and downtown, east and west, everyone was impacted. Residents of the ultra-chic Superior Ink building at 400 West 12th Street won’t be returning home for months. The banking, credit and insurance industries sustained a difficult blow, and with an inventory of a mere 6,000 properties for sale (the lowest levels since the early 2000’s), the options may seem few and uncertain for many.

Real estate feels the effects of such a disaster immediately. In this case, the demand for short-term rentals, extended hotel stays, smaller apartments, furnished sublets and new condominiums fuels the response. Long before the storm, investors and developers recognized the need to build, and with the two weeks before Hurricane Sandy deemed “blockbuster” ones for Manhattan real estate by The Business Insider, a climate of opportunity comes just in time for a busy Holiday season.

Buyers remained determined even in the darkest hours–literally. A $6.95 million dollar townhouse on West 15th closed just days after Sandy hit, despite not having power. In the week that followed, the market rebounded with 20 contracts signed on listings priced at $4 million and higher, with 3 sold at or above $20 million. One of these was a townhouse for $24.5 million that sold for $12.85 million just three years ago. Thinking long-term, such extreme weather conditions are just one symptom of climate change. This week alone, a study was released citing the melting of the Polar Ice Caps and Greenland Ice Sheets occurring at a rate three times greater than was previously thought. Equally true, the Atlantic appears to be rising faster than elsewhere. While this certainly spells trouble for certain coastal communities, cities already immensely valuable as New York will likely make climate change adaptations to the city’s infrastructure. Preventing the flooding of streets and subways will translate into public and private costs, as well as increased engineering expenses and operational challenges. Where and how we build will assuredly change, with mechanicals installed on higher floors, electrical alterations and structures designed to withstand hotter temperatures. There is no question the environment will determine what Manhattan will look like and how we will live in the very near future. Historically, the city doesn’t just survive catastrophes like Hurricane Sandy–it thrives despite them. While efforts at recovery continue strong and hopes for those seriously affected remain in our hearts, there is always comfort to be found in the tenacity of New Yorkers.