Douglas Elliman’s revenue numbers remained strong in the third quarter despite a slowdown in the luxury market, thanks to delayed closings in older new developments.
During the three months ending Sept. 30, the company reported $184.5 million in adjusted revenues, down just a sliver from the $185.5 million it reported during the same period in 2015, according to its parent company Vector Group’s quarterly earnings report.
But Elliman chairman Howard Lorber said the numbers don’t necessarily reflect the reality of a decline in the market, which he estimated is actually down by about 5 percent.
“The market obviously has slowed down,” he told analysts on a third quarter earnings call. “The prices did get overheated. On the regular side of the brokerage business, if you take out the new development I think you would see a slow down. I don’t think it’s a huge slow down, but it’s definitely a slow down.”
The fall off in the luxury market is particularly applicable to Florida, but is also true of New York, he said.
“In New York, a smaller slowdown; in Florida, bigger,” he said. “Florida had such a huge run up in a short period of time, but I think it’s also a combination of that and Zika. I think New York the slowdown has really been much more at the very top of the market, these units $4,000, $5,000 $6,000 $7,000 [per square foot.]”
At Ian Schrager’s 215 Chrystie Street, in which Vector subsidiary New Valley has an equity stake, Elliman recently closed three sales at $16 million, $19 million and $20 million. Those sales, while providing some evidence that the market hasn’t entirely stalled, closed at significantly below their original asking prices, Lorber said.
“Those are unbelievably great prices. On the other hand, it was probably 10 to 15 percent less than we talked about pricing them,” he said.
The slowdown has also led to a decline in the number of equity investments Lorber is making in new developments, he noted.
“We haven’t seen anything new to invest in a little while, but obviously if the market continues to slow down, there will be some troubles in the marketplace. And hopefully, having a lot of cash, we will be able to find some situations that would be very opportunistic for us.”
On Thursday, The Real Deal went behind the scenes to see how Douglas Elliman and the other top brokerages in the city are jostling to win new critical development contracts.