Wall Street woes close to home in Greenwich
Sylwester Lemanski was this close to selling a $400,000 Lamborghini to a Wall Street investment banker.
The customer had been eyeing the car for months at the dealership Lemanski manages. He had decided on the model and color -- a titanium Murcielago -- and needed only to sign on the bottom line.
Then, as financial markets teetered in March and layoffs mounted on Wall Street, the customer started getting cold feet. Lemanski could feel the deal slipping away.
“After a little bit you just have to ask someone the question: ‘Are we, or are we not?’ ” Lemanski recalled. “He said, ‘Sorry, not.’ He said what’s going on with all the investment banks was stopping him from making the purchase.”
Times are definitely tough when Greenwich is feeling the sting.
The ritzy enclave north of New York City, home to dozens of hedge funds and scores of investment bankers, stands out from other upper-crust communities around the suburbs of New York, even Scarsdale and Chappaqua. Greenwich is the only one, for example, that has white-gloved police officers directing traffic along its lightly traveled main street.
But like so much of the rest of the country, the town’s once red-hot residential and commercial real estate markets have cooled from a boil to a simmer. Some of the shopkeepers that line fashionable Greenwich Avenue are complaining of slow sales, dwindling foot traffic and suddenly price-conscious consumers.
Everything is relative, of course. The average home here sells for more than $2.8 million and lease rates on commercial properties tower above those of neighboring communities -- sometimes even outstripping Manhattan. The median household income in Greenwich last year was $115,644, compared with $49,314 for the U.S. as a whole.
“Most of us would like to have the problems that Greenwich has,” said Edward Deak, an economics professor at nearby Fairfield University. “But Greenwich is not immune from the larger economic problems that we’re facing, both on Wall Street and on Main Street.”
The pain is felt at PetitPatapon, a children’s clothing store where a baby’s cotton sundress goes for $79. Business is slow, said co-manager Nancy Harper, and customers demand bargains.
“Half the time we’re just standing around bored, just wanting people to come in,” Harper said.
“I go into some of the other shops. They’re all having a hard time. People are just not coming in and buying.”
Even merchants that are doing as well as or better than last year notice a difference in shoppers’ attitudes.
“Every customer that comes in, the conversation eventually gets around to ‘I was just at the gas station. It cost me $80 to fill up my SUV,’ ” said John Ehrlich, owner of the Federalist, a store that sells handmade reproductions of 18th century furniture and accessories. “They’re really very, very sensitive to that.”
Ehrlich, who has lived in Greenwich for 14 years, said he couldn’t remember when the mood has been so negative.
A big reason, he said, is Wall Street’s travails.
Hedge-fund titans still have plenty of money. But pain is acute among rank-and-file investment bankers and traders -- those earning only $2 million or so a year -- who are worried about their jobs.
Investment banking giant UBS, with a big presence in nearby Stamford, Conn., said recently that it would slash 5,500 jobs worldwide because of the financial-market turmoil.
“I have many customers who work on Wall Street, and they talk about friends of theirs who have lost their jobs, friends of theirs who haven’t gotten bonuses, friends of theirs who are leaving Greenwich because they really suddenly are having a hard time or they’ve lost their job,” Ehrlich said.
The fallout is having an effect on Greenwich’s once-buoyant real estate market.
Sales of single-family homes slipped 37% in the first quarter, and the median price fell 3%, according to John Cooke, a broker at Prudential Connecticut Realty. Prices of homes over $2 million jumped 20%, but lesser-priced houses fell 10%.
Though Greenwich still has very low vacancy rates and the highest commercial rents in the area, that market also has throttled back a bit, according to brokers.
Demand from outside hedge funds to set up shop in town has eased, and some funds that expanded their offices during the go-go days have given up the extra space.
The commercial market in Greenwich remains “pretty darn healthy,” but “there might be a slight bloom off the rose,” said Jim Fagan, a senior managing director at real estate firm Cushman & Wakefield.
Still, despite the Lamborghini shopper who got away, Lemanski and other high-end car sellers have plenty of customers. He said the Audi dealership, which his company also owns, hasn’t seen a drop-off at all. “That’s an everyday car,” he said.
Porsche sales have dipped only a bit, he added. “Porsche is also an everyday car in Greenwich.”