“Million-Dollar Parking Spots” – Peak Stupidity has Arrived in Manhattan

Hundreds of men in starched robes descend on an opulent hotel here to vie for the most distinguished digits. Earlier this year, Abu Dhabi businessman Saeed Khouri made headlines and the Guinness Book of World Records when he paid $14 million for the tag simply sporting a “1.” His cousin, stockbroker Talal Khouri, paid $9 million for “5” — the second-largest sum ever paid for a license plate.

– From the July 1, 2008 Wall Street Journal titled: Read My License Plate: It Cost Me a Fortune

I vividly remember reading the above article in the Wall Street Journal over six years ago and shaking my head in disbelief. Although the U.S. equity market had already peaked in October of 2007, in early July 2008 the oil market was hitting new record highs almost every single day. I remember going on an endless stream of client visits with my former employer, partly due to the novelty of me being one of the few sell-side guys out there yelling that we were in the midst of a massive commodity bubble. Within days of that WSJ Journal article, the oil bubble popped and the price crashed from a high of $147 per barrel to $32 by December, or a nearly 80% plunge in five months.

I will never forget that article because it was the perfect indicator that too much money was sloshing around that particular market. It’s one thing to pay too much for a home or even a car, but license plates? To me that was the definition of madness.

Fast forward six years, and due to Central Bank policies that provide free money to the oligarchs residing in the world’s financial capitals, places like New York City and London are awash in billions upon billions of dollars. As is always the case, these fortunate bailout recipients are more than happy to throw it around in the most absurd of manners. It appears the latest craze in my hometown of NYC revolves around parking spaces, which in one new luxury building in SoHo are selling for $1 million each.

The New York Times reports:

What will $1 million buy in New York City? A diamond-encrusted Cartier men’s watch. A small fleet of 2014 Bentley Continentals. Or maybe your very own parking spot in SoHo.

A new development, 42 Crosby Street, is pushing the limits of New York City real estate to new heights with 10 underground parking spots that will cost more per square foot than the apartments being sold upstairs.

The million-dollar parking spots will be offered on a first-come-first-served basis to buyers at the 10-unit luxury apartment building being developed by Atlas Capital Group at Broome and Crosby Streets, itself the former site of a parking lot. At $250,000 a tire, the parking spaces in the underground garage cost more than four times the national median sales price for a home, which is $217,800, according to Zillow.

“Most ultrahigh-net-worth individuals have car collections as well as service vehicles for their staff,” Mr. Hannah said. “Parking is in serious demand and has proven an excellent investment with no sign of a decline.”

Meanwhile, let’s not forget the fact that many apartment units being sold for astronomical sums in Manhattan aren’t even being occupied, something I highlighted in the piece, Introducing Ghost Skyscrapers – NYC Real Estate Goes Full Retard:

“The Census Bureau estimates that 30 percent of all apartments in the quadrant from 49th to 70th Streets between Fifth and Park are vacant at least ten months a year.”

You’ve gotta hand it to the folks at the Federal Reserve. They have succeeded in destroying the American middle class while simultaneously creating a vibrant market for oligarchs to flip million dollar parking spaces in less than six years. That is truly a historic achievement in societal destruction.

Ultimately, we’ll know it’s all over when Goldman securitizes parking spaces and successfully unloads the paper onto the New York State pension:

In Liberty,
Michael Krieger

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