I’m back with an all-new Padkos. For 2022, I’ve decided that I’ll be adding a “sidebar” at the end of each blog, which will cover one interesting thing that I’d like to share with you. Either a book, a new artist, a news article, a product, etc.
Thanks to everyone for making this blog grow from a few close friends and family to a larger audience of industry and nonindustry peers. I always look forward to hearing your feedback, so please keep the comments coming. I renew my commitment to keep Padkos unfiltered, no bullshit, and marketing free.
Throughout the course of the year, I make predictions and discuss noticeable trends. When you work with developers, the more you can predict the future, the more successful your project will be. History has also shown us that luck and timing are more of a winning formula when it comes to the success of selling a project. I try to base my opinions and predictions on both data and real-time feedback I gather from agents, buyers, sellers, and friends. The real estate market is always full of surprises. I knew with certainty that the market in NYC would rebound but had no idea how fast it would happen. Especially in the midst of a pandemic.
Here are three takeaways from 2021:
- New York’s survival – In the depths of the pandemic, at times it felt like me and Jerry Seinfeld were the only two people advocating for NYC. I begged everyone I knew to buy up as much distressed real estate as possible. I assembled a number of bulk deal packages for sale at a fraction of the price they are trading at today. Like in 2008, not many people had the balls to take advantage of the dip. Instead, they panicked, packed their bags and fled to tax havens with warmer weather. One thing became very clear though – our cities are here to stay. They may have some problems, but we always find a way of working them out, and in New York City, my expectations are high. We have a new mayor and people are back in town. Jane Jacobs said “A well-used city street is apt to be a safe city street. A deserted city street is apt to be unsafe.” Now that people are walking around, the future of NYC looks brighter. The market (both rentals and sales) rebounded and prices are now higher than pre-pandemic levels. With low inventory and an abundance of buyers, this market is positioned perfectly for sellers.
- Will We Work? – The line of VC evangelists, con artists, and swindler CEOs seems to grow by the hour. If someone could please explain the business model to me where a company has no eye on profitability but only on gaining market share, please enlighten me and let me know how this has a happy ending for anyone other than the founder. Adam Neumann was rewarded with a $1.7Bn payday and is now back in business investing in real estate. From electric cars to ride-sharing and real estate brokerage, it seems like no industry is immune to being swindled with the hopes of being the next unicorn company. Some people are too easily swept off their feet by the skillful sales acumen of a charlatan who is an industry outsider. The amount of real estate Adam Neumann amassed with OPM (other peoples money) for WeWork was unprecedented. Now that the business is being run by real business people who do business the old fashioned way, maybe it will survive and ultimately thrive. I personally believe that most people would still prefer to spend more of their income on investing in a well designed home office environment – in their homes or apartment building – than being a transient in a remote office building. I saw this trend coming when I walked through countless apartments with make shift closets, hallways, second bedrooms, and kitchen counters retrofitted to work space. “Rose Hill”, a project we designed 4 years ago, includes “smart rooms” in the apartments that function as a home office, study, den, or anything else you might want to do – not in your bedroom, living room, or kitchen. The pandemic reinforced my thesis that work from home is here to stay.
- Zoom and FaceTime – real buyers became more comfortable viewing properties and making big decisions over video. More properties were sold over video than ever before. Some agents even became comfortable sending their clients to the showings while they dialed in and said to the exclusive agent “I’ll be joining via FaceTime”.
Side Bar – The Poster Child
If you’re one of the few people who hasn’t yet read ”Bad Blood” by John Carryou – I highly recommend it. This week, in what may be the final chapter of the Theranos saga, Elizabeth Holmes was found guilty of fraud and will probably be spending a few years locked up. Is this the start of a trend where we will see VC founders of unicorn “disrupting” companies held accountable for squandering investors' money?
Probably not.
One thing is sure, 2022 will bring a new set of challenges and market conditions to navigate and I expect the landscape to favor the seller.
Let’s do this!
-Shaun