By Gamal Hennessy
There are several new buildings going up in areas that were once very hospitable for nightlife. From the Lower East Side to the Meatpacking District to Grammercy Park to West Chelsea, new buildings are rising every month. Even though the prices for New York real estate are extreme, we’ve largely been spared from the effects of the national housing slump up to now. Some have tied the increase in luxury residences to increased conflict between residents and certain clubs. But the money for condos and co-ops is starting to dry up. Does this mean that there will be fewer calls for nightclub closures and more opportunity for nightlife real estate?
Background
The amount of residential real estate in New York has risen steadily since 2001 when commercial firms moved out of the city following the terrorist attacks. More demand led to increase desire for space. The weakening of the national housing market as a result of the sub prime crisis did little to decrease demand in New York, primarily because financial professionals and foreign buyers taking advantage of the weak dollar continued to buy. As real estate developers looked for more space to build, nightlife venues became attractive targets and the nightlife community became an obstacle to their growth. Some nightlife professionals have suggested that the influx of upscale residents has created an oppressive atmosphere for clubs.
The struggle between residents and nightlife wasn’t created by the housing boom. Clubs can contribute to traffic, noise and incidents requiring a police presence. Previous residents have been vocal about their needs in the past. The difference between the previous situation and the current one is that some luxury residents actively attempt to change the nature of the neighborhoods that they have paid so much to live in. Using the liquor licensing process as a tool, nightclubs and bars have been closed, forced to operate with reduced hours, or they haven’t been able to open at all.
New Situation
But the residential real estate market in New York might be following the rest of the country. Sales to foreign buyers, which recently accounted for up to 33% of new condo sales, is falling. Hedge fund managers and other financial professionals aren’t getting the bonuses that traditionally spurred purchasing. This means that many of the buildings going up today might not have a long list of buyers when they are finished.
What does this mean for New York nightlife? The results might not be immediately apparent. Clubs will still have to work with community boards and current residents who have moved into club neighborhoods. The rents that bars and clubs have to pay will continue to eat up a significant chunk of revenue, which means bottle service and other things we pay for will reflect those prices. But it could mean that there is less desire to convert club spaces into condos and an increased recognition of the continuing economic strength of clubs. Unlike most other types of commercial activity, New York nightlife attracts visitors and money from all over the world and will continue to do so even as the housing market dries up.
Have fun.
Gamal
There are several new buildings going up in areas that were once very hospitable for nightlife. From the Lower East Side to the Meatpacking District to Grammercy Park to West Chelsea, new buildings are rising every month. Even though the prices for New York real estate are extreme, we’ve largely been spared from the effects of the national housing slump up to now. Some have tied the increase in luxury residences to increased conflict between residents and certain clubs. But the money for condos and co-ops is starting to dry up. Does this mean that there will be fewer calls for nightclub closures and more opportunity for nightlife real estate?
Background
The amount of residential real estate in New York has risen steadily since 2001 when commercial firms moved out of the city following the terrorist attacks. More demand led to increase desire for space. The weakening of the national housing market as a result of the sub prime crisis did little to decrease demand in New York, primarily because financial professionals and foreign buyers taking advantage of the weak dollar continued to buy. As real estate developers looked for more space to build, nightlife venues became attractive targets and the nightlife community became an obstacle to their growth. Some nightlife professionals have suggested that the influx of upscale residents has created an oppressive atmosphere for clubs.
The struggle between residents and nightlife wasn’t created by the housing boom. Clubs can contribute to traffic, noise and incidents requiring a police presence. Previous residents have been vocal about their needs in the past. The difference between the previous situation and the current one is that some luxury residents actively attempt to change the nature of the neighborhoods that they have paid so much to live in. Using the liquor licensing process as a tool, nightclubs and bars have been closed, forced to operate with reduced hours, or they haven’t been able to open at all.
New Situation
But the residential real estate market in New York might be following the rest of the country. Sales to foreign buyers, which recently accounted for up to 33% of new condo sales, is falling. Hedge fund managers and other financial professionals aren’t getting the bonuses that traditionally spurred purchasing. This means that many of the buildings going up today might not have a long list of buyers when they are finished.
What does this mean for New York nightlife? The results might not be immediately apparent. Clubs will still have to work with community boards and current residents who have moved into club neighborhoods. The rents that bars and clubs have to pay will continue to eat up a significant chunk of revenue, which means bottle service and other things we pay for will reflect those prices. But it could mean that there is less desire to convert club spaces into condos and an increased recognition of the continuing economic strength of clubs. Unlike most other types of commercial activity, New York nightlife attracts visitors and money from all over the world and will continue to do so even as the housing market dries up.
Have fun.
Gamal
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