StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Development Finance and Funding: Manhattan Area Property Development - Essay Example

Cite this document
Summary
The following assignment discusses the main drivers for commercial property development in the central Manhattan area over the last 6 years. Furthermore, the writer seeks to investigate whether BIDS have been a significant factor for good in this area…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER92% of users find it useful
Development Finance and Funding: Manhattan Area Property Development
Read Text Preview

Extract of sample "Development Finance and Funding: Manhattan Area Property Development"

 Development finance and funding Introduction The Manhattan commercial property sector is one of the most successful sectors in real estate in the United States of America. The development of this sector has been driven by various factors that have an exponential development in the real estate sector in the Manhattan. The end of a decade marked the beginning of a new market. The second half of the 2009 Manhattan market of real estates reflected the start of a new era. This was marked by bankruptcy of the Lehman brothers in September 2008. sellers, buyers, and real estate professionals slowly adapted to changes including stringent if not irrational commercial properties underwriting, increased unemployment and retrenchments, reduced compensation, a high price correction, tax credit for first time commercial property buyers, rising foreclosures, decline of appraisal quality, expanded market times and a number of other challenges (Yudelson, 2009, p.45). The increased level of sales in the latter half of 2009 was encouraging; a recovery in real estate development department was later attained in 2012 by an increased employment rates and greater consumer access to credit. Question 1: Main drivers for commercial property development The property development sector in Manhattan has flourished recently. It has seen an influx of both the commercial property developers and tenants. This is attributed to several factors which include high commercial property demand, government incentives, Land regulations and rates of inflation. This factors among others are discussed in details below. Government incentives and Policies Government incentives and policies is among the major drivers to the property development in the Manhattan Business centre. The US administrators have come up with friendly policies that have created an ample atmosphere for investors in the Manhattan. The action of government in what it executes or it does not execute directly affects the property industry. Investors have ventured in investing their money in real estate. This has led to springing up of many commercial properties in the Manhattan. The government has played a great role since it has gone to an extent of reduced taxes so as to encourage development in the area (Giles, & Blakely, 2001, p.45). The state government regime has seen more funds been directed into property sector. For the last 4 years, the property market in the Manhattan has been flooded by new commercial property buyers. Many people have found it easy to get funds and this has this has led to a lot of money being created for the potential real estate owners (Booz, 2007, p.31). Despite this action creating an instability in the market, it has enabled many people to own commercial properties and hence property development in the Manhattan region. This increase is vividly indicated in the figure below. Inflation Rates In the last 4 years, the United States has seen a tremendous decrease in all its markets including the commercial property markets. However, this declining trend has helped the Manhattan market alive through foreign investors. The continued depreciation of the dollar and the Manhattan real estate, foreigners found an encouraging investment in this market. Before this decline, foreigners were putting their services in temporary commercial while visiting on work in the US. Now, they are buying condos and have the landlord as the company. This company saves the company a lot of dollars (Choi, 2009, p.37). Commercial properties ownership for foreigners used to be so expensive for the companies. When a firm owns a property in Manhattan, it not only saves monthly money, but it also invests in the country. Manhattan property sector has grown so much due to this effect. The changes in the demand for commercial property in the real estate over the last few years has been caused by the changes in the economic and contagion that has hit the global institutions including the commercial property sector of the United States During the recent years the Manhattan real estate has been on a rise. This has made this property more desirable. However in international real estate, property, in the big apple is almost considered cheap. Recent survey shows that the Manhattan commercial property market is ranked 15th most expensive in the world. As foreign currencies continue to rise, owning property in the Manhattan is always a sweet deal. When other investors buys a commercial property in the Manhattan, they instantly double the value of their money due to their favourable exchange rates. International companies find it a better option investing in Manhattan (Ang & Wilkinson, 2008, p.98). The New York real estate market has been kept alive by the increased interest in the Manhattan property. Even with the United States downward economic trend, the Manhattan property has continued to grow above the national trend. The average property sales is as indicated in the diagram below Competition Fierce competition in the Manhattan property market has led to increased efficiency and improved service provision. This has made the property desirable hence attractive. International buyers face it off in the New York estate market to acquire property in the Manhattan. They bid for property and may end up with high prices for the property (Miller, Spivey, & Florance, 2008, p.97). This has made more apartments to be brought which has seen a steady growth of the Manhattan. The presence of New York luxury real estate market has been a great driver in the Manhattan commercial property development (Blackman, 2009, p.22). The New York real estate market has remained incomparable to none other market in the US. This market has remained a significant reason as to why the Manhattan prices are so high compared to others. This market plays to its own level of supply and demand rules. The year 2012 was reported the most successful year for Manhattan real estate since 2008. Broker confidence in this market has also increased in January 2013. This markets stability has continued to be a big boost for the Manhattan market. The market trend is shown as below In 2007, the prices of real estate in Manhattan Beach reached a peak at 2,190,000 dollars. The main reason for the peak was the stock in Manhattan Beach which reached a low of 100 properties. Basically, when inventories in a region drop, the property prices in the area will increase in value. The historical bubble burst of increased prices coming with fewer inventories didn’t hold true in Manhattan since in 2011, Manhattan Beach median prices have dropped the same case with the inventory (Gaines, 2005, p.10). The low sales and low inventory has turned it to a buyers’ market. The number of migrants coming to the US has been increasing rapidly and it is estimated that the US will witness an increase in the number of immigrants in the tune of 12 million in 2012 up from 9 million in the recent past. The demand for commercial properties in the Manhattan is increasing and it is very high that it makes up 30% of the market share (Choi, 2009, pp.40-1). For the first time, they have had to account for 55%-60% of first time buyers which has been a great driver in the commercial property development in the Manhattan. This is illustrated in the figure below. Technology Technology has also played a substantial role in the Manhattan commercial property development. Many people have been involved in internet and engaging in the free flow of information provided by improved technology. The market scenario for property has changed tremendously. Around 77% of commercial property buyers surf through the internet to choose a commercial property of their choice (Cheikhrouhou, 2007, p.82). The realtors are also involved in the technology by providing necessary information through the internet to their buyers. There have been increased changes in advertising too. Consumers have ample information in their hands and now realtors have moved a notch higher in branding themselves more strongly since the consumer may switch to another option given the knowledge the consumer possesses. This has led to high qualities in the Manhattan real estate attributed to changes in technology. What is BIDs? A business Improvement District (BID) refers to a formal organization that is composed of persons who own properties and commercial tenants and have a vision of promote business development thus improving the quality of life the given region in which they operate. Business Improvement districts deliver services which include public safety, sanitation, maintenance, visitor services, capital improvements, marketing and promotional programs, and improving the aesthetics of the area. All these services are made possible by funds provided by special assessment that is provided by respective property owners. What BIDs does Business developments districts have helped in delivering essential services join the city of New York and Manhattan in particular. Such services that are provided include sanitation and maintenance. Sanitary services are provided as part of the business improvement district. It is the role of the BIDS to ensure that sanitation services are of the best quality and highly maintained to the appeal of home owners in the Manhattan (Blackman, 2009, p.42). This essential service has also to be maintained the BIDS to ensure that in case of breakages in the sanitation system the BIDS authority respond in urgency. Good management of this service has led to the Manhattan flourishing in terms of commercial property development. The BIDS also provide public safety and a visitor service to the people staying in the Manhattan. Safety is an essential factor to the development of any commercial property. BIDS ensure that security to the people and property is guaranteed and make sure that there is a serene environment in the Manhattan for residence and business purpose. Visitor services are provide for people new to the area or those seeking some services in the same area. Guarantee of security has made people confident with the Manhattan area and has contributed to the areas exponential development in commercial property (Cheikhrouhou, 2007, p.81). BIDS play a substantial role in marketing and promotional programs. This has been one of the major drivers in seeing the development of commercial property in the Manhattan. There have been numerous advertisements which have been aired and which lead to ore consumer awareness. BIDS have come up with many promotional strategies which are all geared to market property in the Manhattan. It is always advisable to go for the promotional device which reaches a bigger audience (Yudelson, 2009, p.45). Marketing for the Manhattan properties has also been the burden of the BIDS authorities. This has led to many people having sufficient knowledge on what is available in the Manhattan which has led to development of commercial property in the area. BIDS shoulder the responsibility of capital improvements. They bear the responsibility of making necessary improvements in the infrastructure of the area. It makes the service provision in the area reliable for comfort of the dwellers and occupants of the area. Well maintained capita encourages more settlement making development of the area fast. BIDS are also responsible for beautification of the area. This creates an appeal to the commercials and makes a person feeling good in staying in the area. Collection of garbage, planting of flowers, painting of lanes among other duties is some of the activities the BIDS are involved in. The maintenance of a beautiful environment has made the area desirable and attractive (Collier, Collier & Halperin, 2007, p.65). How BIDs have Changed Manhattan BIDs have restored values regarding maintenance of public space. It has embarked to simple things such as keeping the Manhattan sidewalks clean and safe. It has embarked on a simple policy that a city that has failed to control minor offences such as garbage is only creating room for a further disorder. BIDs have been on attraction of opposition more so in New York. Critics argue that some of the Manhattan BIDS have embarked on secret designs to drive out the poor out of public spaces. One Manhattan BID namely the Grand Central Partnership has been at the centre of controversy due to its program to assist the homeless (Abbey & Richards, 2009, p.65). The terminal and its environs have for a long time provided the first glimpse of New York town thousands of visitors daily. Conclusion From the discussions above, it is evident that commercial property development in Manhattan is flourishing. This has led to the business centre being thronged by both the commercial property developers and tenants. The thriving of commercial property development sector is attributed to many factors including increase in demand, conducive government policies, and conducive inflation rate conditions among others. The proper and procedural management of this business units is attributed to the presence of business improvement Districts. This BIDs units is mandated to overseeing the welfare of both the landlords and tenants in Manhattan. References 2005. Analysis and statistical appendix mobilizing finance and managing vulnerability. Washington, D.C., World Bank. http://site.ebrary.com/id/10078121. Abbey, R., & Richards, M. 2009. A Practical Approach to Commercial Conveyancing and Property. Oxford, OUP Oxford. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=665469. Ang, S.L. and S.J. Wilkinson. 2008. Is the Social Agenda Driving Sustainable Property Development in Melbourne, U.S? Property Management, 26:5, 331–43. Banks, E. 2006. Synthetic and Structured Assets. Chichester, John Wiley & Sons. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=244872userid=^u. Blackman, Elizabeth. 2009. Manhattan for rent, 1785-1850. Ithaca: Cornell University Press. Booz, Allen. 2007. Lower Manhattan market analysis report. New York, N.Y. (2 Lafayette St., New York, N.Y. 10027): Office of Lower Manhattan Development. Cheikhrouhou, H. 2007. Structured finance in Latin America: channeling pension funds to housing, infrastructure, and small businesses. Washington, D.C., World Bank. Choi, C. 2009. Removing Market Barriers to Green Development: Principles and Action Projects to Promote Widespread Adoption of Green Development Practices. Journal of Sustainable Real Estate, 1, 107–38. Collier, N. S., Collier, C. A., & Halperin, D. A. 2007. Construction funding: the process of real estate development, appraisal, and finance. Hoboken, N.J., John Wiley. Gaines, Steven, S. 2005. The sky's the limit: passion and property in Manhattan. New York: Little, Brown. Giles, S. L., & Blakely, E. J. 2001. Fundamentals of economic development finance. Thousand Oaks [u.a.], Sage. Miller, N., J. Spivey, & A. Florance. 2008. Does Green Pay Off. Journal of Real Estate Portfolio Management, 14:4, 385–401. Urban Land Institute. 2009. Retrofitting Office Buildings to be Green and Energy-Efficient: Optimizing Building Performance, Tenant Satisfaction, and Financial Return. Washington, D.C. Yudelson, J. 2010. Greening Existing Building. McGraw Hill Companies Inc. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Development Finance and Funding: Manhattan Area Property Development Essay”, n.d.)
Retrieved de https://studentshare.org/macro-microeconomics/1621270-development-finance-and-funding
(Development Finance and Funding: Manhattan Area Property Development Essay)
https://studentshare.org/macro-microeconomics/1621270-development-finance-and-funding.
“Development Finance and Funding: Manhattan Area Property Development Essay”, n.d. https://studentshare.org/macro-microeconomics/1621270-development-finance-and-funding.
  • Cited: 0 times

CHECK THESE SAMPLES OF Development Finance and Funding: Manhattan Area Property Development

INTEREIM PROJECT REPORT

There is a series of test for example clinical trials that can be used to tests and determine the managerial skills in project research and development in order to come up with individuals who are able to generate safety and efficacy in the project report.... STUDENT NO.... 30104711 SURNAME Mpinga PHONE NO....
8 Pages (2000 words) Essay

Commercial Property Development in the Central Manhattan Area

This paper addresses the main drivers for commercial property development in central Manhattan area over the last six years.... This paper addresses the main drivers for commercial property development in central Manhattan area over the last 6 years.... This adopts special reference to the fundamental economy of the USA, as well as the Times Square in Manhattan, which reflects the role of IBIDS in commercial property development.... Question 1: Main drivers for commercial property development demand Demand and supply are important factors in all markets....
12 Pages (3000 words) Essay

Community revitalization

Architectural works form part of a country's economic resource that directly or indirectly contribute to the development and growth of the economy.... In other word, existence of artistic buildings in a country is an indicator of better economic development.... The state and federal agencies contributing to economic development organize service provision according to regions; examples include the federal Economic development Administration, the Thruway Authority and Canal Corporation, Metropolitan Planning Organizations, and districts defined by the Department of Transportation, the Department of Environmental Conservation, the Division of Housing and Community Renewal, the Governor's Office of Small Cities, the Department of Agriculture and Markets, and the Empire State development Corporation and its Division of Marketing, Advertising and Tourism....
4 Pages (1000 words) Essay

The Impact of Socioeconomic Status on Learners Access to Education Resources

 … Following the standards-based education reform movement in the US, there has been considerable development of new standards for students.... s funds for education in the United States are raised and spent on an inter-state basis, through a system of local property taxes and state grants-in-aid, there are great disparities in resources for education between poor and wealthy districts.... There are two factors that determine the amount of money spent per pupil: the general education tax capacity rate, which is determined by state law, and the property wealth of the district....
10 Pages (2500 words) Essay

Development finance and funding

The development of this sector has been driven by various factors that have an exponential development in the housing sector in the Manhattan.... % comprised of new development of condo-ops apartments with condo rules.... These sales have led to a steady development of commercial property in the Manhattan region (Abbey & Richards, 2009, p....
11 Pages (2750 words) Essay

The Demand for Human Resource Training Services

The business will operate under the education services industry, but concentrating on employee training and development.... The demand for human resource training services is rapidly increasing in this century when companies are striving to achieve quality management for organizational growth and sustainability....
20 Pages (5000 words) Coursework

Real Estate Development

The paper discusses factors that drive commercial property development in Central Manhattan for the last six years.... They can also obtain cheap labor, which helps to reduce operation Financing bodies in the central Manhattan promotes real estate development because they provide support to the investors.... Capital is an important factor in real estate development because it supports various activities.... An essential factor drives the development of commercial property in central Manhattan....
11 Pages (2750 words) Coursework

Development of Manhattan Co

The paper 'development of Manhattan Co' presents a Pharmaceutical firm that has decreasing sales.... Training and development of employees is an essential part of such a performance and firms resort to innovative training to develop their human resources.... nbsp;manhattan Co....
16 Pages (4000 words) Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us