Friday – The Coming Commercial Office Market Collapse Has Little To Do With Residential Housing

Because the tether between home and work locations was broken by Work From Home (WFH), the damage to the commercial office market is unlikely to spill over into residential housing.

Because leasing rates are down sharply….

and landlords can’t price rents too low or they can’t pay their debt service so they wait and hope things get better…yet WFH is not going away. Sure, it may rise and fall in the future but as a market factor, it is here to stay…

This is the biggest obstacle to an office market recovery – a high vacancy rate destroys profitability…

Residential home prices have climbed well above the housing bubble era while office building values have tanked. The connection was broken by WFH.

Many of our Housing Notes readers grew up with this reality: When you became an adult, you woke up, got dressed, drove to the office, and stayed there whether you were done with your work or not, often just hanging out. There wasn’t a gig economy and staying at home was a sign of weakness and kept you off the corporate ladder. That era is over. WFH changed everything.

I remember watching a lot of car commercials between Gilligan’s Island and McHale’s Navy reruns just before I got my driver’s license. Although I had no idea what rich Corinthian leather was, I knew that I had to have it. Then reality set in and I got a used Ford Pinto station wagon that fit 8 members of our high school cross-country team, smelled of the prior owner’s cigarette smoke, had a top speed of 45mph up mountain roads on my way skiing, and belched blue smoke at all times while a Bungie cord held up the by then decorative rusted out muffler.

Did you miss yesterday’s Housing Notes?

This Is A Whole New Thing – Housing Notes Daily

Well, I’ve been writing this Housing Notes newsletter since March 2015 (more than 9 years as a weekly exercise) and at last count was at nearly 500 weekly iterations, evolving into a Friday 2 pm launch date no matter where I was in the world, whether or not I was on vacation, and what was going on in my personal life. It was such a consistent routine that many subscribers told me it marked the beginning of their weekend.

What is going to be so new about Housing Notes? The content will largely remain the same but shorter and the delivery of it will be daily instead of weekly. Starting immediately, Housing Notes will be released 5 weekdays each week at that same 2 pm Eastern time moment. Each note will be shorter but more timely. My sidebar passion project Appraiserville is being moved to the Beehiiv platform soon and I plan on releasing it weekly while linking from here temporarily. More on that soon.

But I digress…

432 Park Is Experiencing Some Extended Drama


After yesterday’s NYPost histrionics analysis that I presented about The Plaza condo and its abundance of listings, today we turn our attention to another Manhattan building that is getting some unwanted attention: 432 Park Avenue. My firm and I have appraised many units in the building and I have to say that personally, it’s one of my favorite Manhattan supertalls. I’ve seen the views near the top and they are spectacular. Despite the height, I find the units I have inspected to be very quiet. Often the wind noise from the windows, especially from the elevator shafts is quite loud within other supertalls we inspect, but less so at 432.

But a lawsuit between the developer and the condo board can’t seem to go away after more than three years, chronicled in the epic NYT story, The Downside to Life in a Supertall Tower: Leaks, Creaks, Breaks.

This week’s Wall Street Journal piece A Mega-Lawsuit, a Rush of Listings and Price Cuts Galore: What’s Going on at 432 Park? by the author of the epic read Billionaires Row chronicles market evidence that these problems are impacting its market. I always thought that the term “row” implied “fight.” As it turns out, I was probably right. Nikki and her team are legends in the business at the high end of the market so her concern should mean a lot.

Nikki Field, a Manhattan-based real-estate agent at Sotheby’s International Realty, said she won’t take buyers to 432 Park until the tower’s issues are resolved.

“The truth is that we’ve been avoiding the building,” she said, describing the litigation as “toxic.” “How can I advise my buyers to take that risk, and then expect them to work with me again if it goes bad?”


The analysis in the building shows that current listings represent 14% of total units and that’s about double the normal rate of 5% to 7% as I presented in yesterday’s NY Post piece on the Plaza. Yesterday the NY Post chimed in on the 432 Park situation with ‘Toxic’ lawsuit tanks sale prices at NYC ‘Billionaires’ Row’ luxury tower: report.

Still, with this type of living room below, I wouldn’t care.

Highest & Best Newsletter: 😎 Happy Home Insurance Vibes

If you’re interested in the Florida housing market, you should sign up for this Florida newsletter, Highest & Best, from Oshrat Carmiel, formerly of Bloomberg News…

This week’s post

😎 Happy Home Insurance VibesRate decreases in Florida? Plus: Elle magazine builds a condo

Charts of the week made by others

Non-serious charts of the week made by others

Brilliant Idea #1

If you need something rock solid in your life – particularly at 2:00 PM, Eastern Time (ET) every weekday – and someone forwarded this to you, you can sign up here for Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

– They’ll like the rich Corinthian leather;
– You’ll remember to insert a can of oil with every tank of gas;
– And I’ll work from home a lot more than I used to.

Brilliant Idea #2

You’re full of insights and ideas as a reader of Housing Notes. Consider sharing them with me early and often. I appreciate every email I receive, as it helps me craft future Housing Notes.

See you next week!

Jonathan J. Miller, CRE®, Member of RAC
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

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