Celebrities love New York City residential real estate, and singer Taylor Swift is no exception. Over the past six years, she has invested $47.7 million across several properties in Manhattan. At 155 Franklin Street, she bought an apartment for $9.75 million recently and the top-floor penthouses for $19.95 million in 2014. She also bought the neighboring townhouse for $18 million in 2017. All of these homes are located on one city block in Tribeca, a lower Manhattan neighborhood known to be chic, family-friendly and tucked away from the crowds enough for celebrities.
Tribeca’s housing stock consists almost entirely of converted turn-of-the-century warehouse and office buildings with large, loft-style apartments with high ceilings alongside a sprinkling of new high-rise towers and townhomes. In a word, Tribeca living stands for all that is glamorous about Manhattan: beautiful, wealthy people; large, artsy-feeling apartments with memorably historic architectural details; charming cobblestone streets; and some of the city’s best restaurants. So, it’s no wonder that Tribeca has become a magnet for celebrities.
Did Taylor Swift make good real estate investments?
If you ask me, Swift has very good real estate instincts.
Over the past 20 years, Tribeca has become one of Manhattan’s most desirable neighborhoods, eclipsing even the most posh neighborhoods on Park and Madison Avenues. It attracts scads of wealthy residents and has become the wealthiest neighborhood in New York City, with an average annual household income of $879,000. The Tribeca submarket has outperformed the rest of Manhattan with a median contract price year-over-year increase of 25%, compared to the broader Manhattan market's 12% climb.
Even though prices there seem expensive, with the average two-bedroom Tribeca apartment costing nearly $3 million — 10 times the median home price in America — I think there is still more upward potential, and Swift can expect to earn a healthy return on her investment.
As the city’s residential epicenter continues its shift toward downtown where the city’s affluent seem to prefer to rear their families, Tribeca will continue to see rising prices and new developments. Long-term, I believe that the Tribeca market will continue to outperform the broader Manhattan market. I think Taylor has made some very shrewd investments, and if I had her means I suspect I might make similar choices.
What I appreciate even more is that she’s not trying to time or outsmart the market, but rather is averaging in by investing about $10 million a year over several years. That’s probably because she knows that long-term, Manhattan real estate is one of the most sound and strongest performing asset classes.
My recommendation is not to off-handedly dismiss the most “expensive” parts of Manhattan as overpriced. Manhattan real estate has always seemed expensive relative to other parts of New York City and certainly the rest of the United States, and probably always will. But as long as the country’s wealthiest people see the merits, there is always room for price growth. It pays to follow the tastemakers who are insensitive to price, and Taylor Swift is a perfect example. She could live or invest literally anywhere in the world, and she has chosen to do so in Tribeca.
Unfortunately, today only the world’s wealthiest people can invest in Manhattan real estate the way she has. There are some interesting substitutes, but none provides targeted exposure to Manhattan in a pure-play vehicle. For example, there are publicly-listed REITs which own assets in Lower Manhattan, companies like Equity Residential (EQR) and Avalon Bay Properties (AVB), but in both cases these assets represent a tiny portion of the company’s portfolio. There are closed-end funds available to accredited investors which provide more targeted exposure, but these funds tend to lock up investments for seven to 10 years, and may not be suitable for smaller check investors. Until there is a suitable alternative for mainstream investors, the most fun we can have is watching Taylor and cheering on her investment on the sidelines.
You can say many things about Taylor Swift, but in my estimation, she’s one of the savviest celebrity real estate investors around. Manhattan real estate? It's a love story, baby, just say yes.