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Speaking of SF vs NYC - both have obviously equivalent real estate prices; the top of the food chain in America. A Chinese investor just paid nearly $300M for an acre of dirt in DT SF to build a 910 ft and 605 ft building.
$300M in Chicago can buy you the Willis Tower or the JHC. Nobody cares what it gets you in Dubai since that is all oil money and there isn't a major economic driver for office tower construction like there is in NYC, SF, or most thriving North America/European cities.
Are the real estate prices really equivalent for SF and NYC? I'm curious--Manhattan and the areas of Queens and Brooklyn close to Manhattan are so packed and with substantial low-rise and mid-rise sections so I'd think that'd do a bit in driving the costs per square foot to be substantially higher than in SF. What would "skew" the stats in favor of making it seem like SF is equivalent would be because NYC's physical boundaries include a lot of area whose equivalent would be other, possibly far flung since Eastern Queens and Staten Island are pretty out there, municipalities outside of SF proper. I remember reading articles that SF proper has median list prices of something like $600 per square foot, while Manhattan is something like $1500 per square foot which jives more with my impression of what actual real estate price differences are between the two places.
^^^Depends area by area. Pricing is a factor of supply and demand, right? SF may be smaller, but it's in high demand and has very very limited supply. NYC is the only other city that has seen land pricing for new development that expensive. That's almost $6k/land ft, or $150-200 per developable sf, just in the land. For resi, the story is similar on a per land ft / per unit basis.
Barriers to entry in NYC are lower than they are in SF. SF's high barriers to entry and extremely limited opportunities, coupled with the insane demand by tech puts it on a NYC pricing level, unnecessarily.
I can pull comps between both cities, however, both construction costs, land costs, and development strategies/capital stacks are similar between the two cities, but for slightly different reasons.
Also, you have to look at what you can achieve in terms of a) condo pricing for condo developments, and b) rents for offices or apartments.
Right now, rents for offices and apartments are higher in SF. Condos average out very high in SF (>$1,000psf) but are substantially less than in NYC. A purely condo site in NYC will trade higher given that. An office site or multifamily site in SF *might* trade higher in SF given that.
^^^Depends area by area. Pricing is a factor of supply and demand, right? SF may be smaller, but it's in high demand and has very very limited supply. NYC is the only other city that has seen land pricing for new development that expensive. That's almost $6k/land ft, or $150-200 per developable sf, just in the land. For resi, the story is similar on a per land ft / per unit basis.
Barriers to entry in NYC are lower than they are in SF. SF's high barriers to entry and extremely limited opportunities, coupled with the insane demand by tech puts it on a NYC pricing level, unnecessarily.
I can pull comps between both cities, however, both construction costs, land costs, and development strategies/capital stacks are similar between the two cities, but for slightly different reasons.
Also, you have to look at what you can achieve in terms of a) condo pricing for condo developments, and b) rents for offices or apartments.
Right now, rents for offices and apartments are higher in SF. Condos average out very high in SF (>$1,000psf) but are less than in NYC. A purely condo site in NYC will trade higher given that. An office site or multifamily site in SF *might* trade higher in SF given that.
Yea, I think pulling up the stats would be helpful for a comparison. I think it'd be especially helpful if you can find the stats for Manhattan and the areas nearer midtown and downtown Manhattan in Brooklyn and Queens to get a more apples to apples comparison rather than doing a direct city to city comparison since, as stated before, NYC includes a lot of parts that are pretty remote from its primary employment centers.
^^^Well that's the same story in SF. Land will never trade in Queens what it will trade for in Manhattan no matter the use. It's the same in SF. This land is in the financial district and would be comparable to a land trade in Lower Manhattan or Midtown/Midtown West.
I can kind of tell you don't work in the industry
Sometime when I have time I'll look for comps, but even then, you'll be "taking my word for it" since I would have the ability to cherry pick. You can just trust me that high level, the two cities are quite comparable from a real estate perspective. Same players. Same type of deals/structures. Same pricing. Similar rents, which at the end of the day IS the ultimate supply and demand driven metric that drives land prices, etc etc.
SF's partly got really expensive because it's world profile increased significantly over the last 10 years or so. I honestly think it's America's 2nd city after NYC. Tech is just too important now and I feel like SF is far more important economically than Los Angeles and Chicago.
^^^Well that's the same story in SF. Land will never trade in Queens what it will trade for in Manhattan no matter the use. It's the same in SF. This land is in the financial district and would be comparable to a land trade in Lower Manhattan or Midtown/Midtown West.
I can kind of tell you don't work in the industry
Sometime when I have time I'll look for comps, but even then, you'll be "taking my word for it" since I would have the ability to cherry pick. You can just trust me that high level, the two cities are quite comparable from a real estate perspective. Same players. Same type of deals/structures. Same pricing. Similar rents, which at the end of the day IS the ultimate supply and demand driven metric that drives land prices, etc etc.
I'm not sure if I really communicated what I was saying to you.
I think it's obvious that places further out from the core are going to be less expensive--that's a given and doesn't require industry knowledge. What I'm saying is that when you're counting the stats but being inclusive of those far out areas that are within NYC city boundaries for which there aren't really equivalents for in SF's much smaller physical boundaries, then you will get very skewed stats, hence the reason why taking broad municipal-level stats like that aren't going to be very accurate.
From personal experience, though I've only done short-term rentals in SF (but know many people living there), the prices for renting what are roughly equivalent amounts of space in roughly comparable neighborhoods seems to point to NYC be substantially more expensive. It seemed to me that you get a bit more space for your money in SF's prime areas compared to NYC's--which I think is a good thing. I'm pretty much all for planting a fat tax on people who are purchasing property as investments in NYC and not having those properties as their primary residences. It'd be terrible for formerly wonderful, central neighborhoods in NYC to go the way London's have.
Last edited by OyCrumbler; 01-15-2015 at 02:49 PM..
^^^SF doesn't have an equivalent for TriBeca, no. But on average, the closer half of SF (inner half closer to downtown) rental prices are comparable to Manhattan, if not higher now, both in terms of sheer amount and by price per sf. SF as a whole has higher rental prices than NYC as a whole.
To your point about the two cities not being apples to apples, consider that NYC is 10x the population of SF, so it would make sense that it stretches out more, even if at greater densities. For all intents and purposes, Queens is to Manhattan as the Sunset is to the inner core of SF. So technically both cities have core and non core areas, we're just scaling for size.
I get what you're saying, but I also sense a bit of disbelief on your part that SF in general has similar pricing across real estate classes and development sites to NYC.
The other thing to consider is that in Queens commercial areas, a developer can build up. This automatically adds value to land. In the Sunset in SF, a developer cannot. So in this case, one should consider land price per developable sf or per unit.
This is similar for each CBD, as well. What I like about the comp I shared is that it is for a site zoned for a significant height, so it provides a good apples to apples for Manhattan office pricing on a sheer $ amt/$/ac basis. For another comp, a Chicago firm just paid "only" $173M for a similar size parcel for a site zoned for 1 office building of only 2/3 the height and well less than half the developable sf (600k sf office only vs 2 million sf of office/condos on this site).
So again, these comps on a sheer $/ac or $/land foot are pretty on par with on average larger developments in Manhattan, but the best metric is $/developable sf, as that is really apples to apples and can allow for comparing against different zoning practices.
And again, in no other city is pricing this high outside of NYC and SF. The same Chinese developer that bought ~1 Ac in DT SF for ~$300M bought 6 in DTLA for 4 towers (Metropolis going up now) for $100M.
To give perspective, Sears Tower is ~$800-900M at 4.5 million sf (so @ equivalent 2 million sf is $350-375M) and JHC in Chicago is ~$400M in total. we're talking an acre of land alone (smaller than the land under the Sears Tower) selling for $300M. Again, only NYC and SF.
^^^SF doesn't have an equivalent for TriBeca, no. But on average, the closer half of SF (inner half closer to downtown) rental prices are comparable to Manhattan, if not higher now, both in terms of sheer amount and by price per sf. SF as a whole has higher rental prices than NYC as a whole.
To your point about the two cities not being apples to apples, consider that NYC is 10x the population of SF, so it would make sense that it stretches out more, even if at greater densities. For all intents and purposes, Queens is to Manhattan as the Sunset is to the inner core of SF. So technically both cities have core and non core areas, we're just scaling for size.
I get what you're saying, but I also sense a bit of disbelief on your part that SF in general has similar pricing across real estate classes and development sites to NYC.
The other thing to consider is that in Queens commercial areas, a developer can build up. This automatically adds value to land. In the Sunset in SF, a developer cannot. So in this case, one should consider land price per developable sf or per unit.
This is similar for each CBD, as well. What I like about the comp I shared is that it is for a site zoned for a significant height, so it provides a good apples to apples for Manhattan office pricing on a sheer $ amt/$/ac basis. For another comp, a Chicago firm just paid "only" $173M for a similar size parcel for a site zoned for 1 office building of only 2/3 the height and well less than half the developable sf (600k sf office only vs 2 million sf of office/condos on this site).
So again, these comps on a sheer $/ac or $/land foot are pretty on par with on average larger developments in Manhattan, but the best metric is $/developable sf, as that is really apples to apples and can allow for comparing against different zoning practices.
And again, in no other city is pricing this high outside of NYC and SF. The same Chinese developer that bought ~1 Ac in DT SF for ~$300M bought 6 in DTLA for 4 towers (Metropolis going up now) for $100M.
To give perspective, Sears Tower is ~$800-900M at 4.5 million sf (so @ equivalent 2 million sf is $350-375M) and JHC in Chicago is ~$400M in total. we're talking an acre of land alone (smaller than the land under the Sears Tower) selling for $300M. Again, only NYC and SF.
So the first thing I bold'd is exactly the issue with a lot of the comparisons--they're taking two entities with very different physical boundaries. It's also throws a wrinkle in the idea that being 10x population means what should be up for comparison should be that much more expansive than that for SF. I can see Western Queens to Manhattan as comparable to Sunset to the inner core of SF because that's sort of about how far out the commuting distance to the CBD would be, but what really skews the stats are the central and eastern parts of the borough which are very far out while the closer western parts of Queens is fairly pricey.
Yea, SF and NYC are more expensive than LA and Chicago by pretty much any metric. I'm curious as to what the scale of difference is though, so I'm trying to think through what a closest apples to apples comparison would be.
^^^Yes, but Queens overall is far more linked to the rest of the city via efficient transit. The Sunset in SF is not. The Richmond has essentially 1 bus line and no train lines. So distance wise might be closer to FiDi SF than outer Queens is to Manhattan, however, the links that give Outer Queens residents a direct connection to a major downtown are not present in SF. But for all intents and purposes, the Sunset/Richmond are like SF's outer boroughs and Hunters Point/Bayview/Visitacion Valley are like SF's Bronx, with no real Staten Island equivalent.
You're starting to get a little too technical for a high level C-D thread/discussion. I think here again, my point/analogy is well taken and you're looking for an argument.
For all intents and purposes, my initial comparison was a land deal in DT SF, really thinking of a similar comp in Lower or Midtown Manhattan. I wasn't trying to say a land deal in DT SF or Midtown Manhattan is equivalent to a land deal in outer Queens, or even LIC, or Sunset, etc. But, as before, I would go so far as to say that equalizing for zoning/product type, etc, pricing in the CBDs of Manhattan is similar to pricing in SF's. In the example cited where the deal is zoned for and planned for a Manhattan size development, the absolute price paid for the land and by acre is similar to CBD Manhattan absolute pricing.
Again, all things equalized (zoning, FAR, etc), Sunset and Outer Queens or even parts of Inner Queens will have similar pricing to each other. They serve similar roles for their respective cities, the difference being that zoning in Queens (Inner or Outer) is far more favorable for upward development than it is in Sunset.
If you want to know about one of the only high rise complexes in Sunset and its pricing - a 3,221 unit multi-tower vintage 50s Metlife built Co-Op not unlike those found around NYC was just valued at $420k a unit, or about $1.35Bn, as a piece of the capital stack sold to a group of NYC developers looking to implement a newly approved redevelopment plan. How's that for another comp?
I'm trying to keep this extremely high level and my initial post wasn't even trying to be competitive, merely a "hey, the two cities are both outrageously expensive!" You've sort of turned it into some kind of intellectual debate. Let me just tell you that I work for a New York investment advisor focused primarily on real estate, and I have worked on deals in both cities. I can take it there, believe me, but I'd rather not. You're very good at research, as you've demonstrated. Why don't you just answer your own questions?
^^^Yes, but Queens overall is far more linked to the rest of the city via efficient transit. The Sunset in SF is not. The Richmond has essentially 1 bus line and no train lines. So distance wise might be closer to FiDi SF than outer Queens is to Manhattan, however, the links that give Outer Queens residents a direct connection to a major downtown are not present in SF. But for all intents and purposes, the Sunset/Richmond are like SF's outer boroughs and Hunters Point/Bayview/Visitacion Valley are like SF's Bronx, with no real Staten Island equivalent.
You're starting to get a little too technical for a high level C-D thread/discussion. I think here again, my point/analogy is well taken and you're looking for an argument.
For all intents and purposes, my initial comparison was a land deal in DT SF, really thinking of a similar comp in Lower or Midtown Manhattan. I wasn't trying to say a land deal in DT SF or Midtown Manhattan is equivalent to a land deal in outer Queens, or even LIC, or Sunset, etc. But, as before, I would go so far as to say that equalizing for zoning/product type, etc, pricing in the CBDs of Manhattan is similar to pricing in SF's. In the example cited where the deal is zoned for and planned for a Manhattan size development, the absolute price paid for the land and by acre is similar to CBD Manhattan absolute pricing.
Again, all things equalized (zoning, FAR, etc), Sunset and Outer Queens or even parts of Inner Queens will have similar pricing to each other. They serve similar roles for their respective cities, the difference being that zoning in Queens (Inner or Outer) is far more favorable for upward development than it is in Sunset.
If you want to know about one of the only high rise complexes in Sunset and its pricing - a 3,221 unit multi-tower vintage 50s Metlife built Co-Op not unlike those found around NYC was just valued at $420k a unit, or about $1.35Bn, as a piece of the capital stack sold to a group of NYC developers looking to implement a newly approved redevelopment plan. How's that for another comp?
I'm trying to keep this extremely high level and my initial post wasn't even trying to be competitive, merely a "hey, the two cities are both outrageously expensive!" You've sort of turned it into some kind of intellectual debate. Let me just tell you that I work for a New York investment advisor focused primarily on real estate, and I have worked on deals in both cities. I can take it there, believe me, but I'd rather not. You're very good at research, as you've demonstrated. Why don't you just answer your own questions?
Pretty sure it's not too technical. The straightforward argument is how long does it really take to get from the neighborhood to Midtown and Downtown and how contiguous the thing is. Eastern Queens is massive and there is no simple transit to the CBD aside from commuter rail. Do I wish there was an expansion of the transit system further out? Sure, but it's not happening. I think you might just not understand the geography of the outer boroughs--there is no rapid transit out there. It's fine, since you don't live here and aren't too familiar with the city it seems. The idea of factoring in how bad mass transit in SF to this discussion is pretty interesting though.
And there's not much intellectual about this--the stats get skewed because of legal physical boundaries of the cities, but it doesn't actually make for a very reasonable comparison because of the extremely different physical boundaries (with NYC being over six times the physical size so including a huge amount of suburban places far from the CBD). That's all. I figured maybe you want to prove otherwise.
Last edited by OyCrumbler; 01-15-2015 at 05:27 PM..
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