Good morning, Mr. Chair.
Good morning members of Parliament, and thank you for the invitation to participate in this hearing this morning.
My name is Thomas Aabo, and I'm a real estate agent with Douglas Elliman, a U.S.-based real estate firm. We were founded in 1917. Along with my team, the Erin Boisson Aries team, I support a diverse group of clients in real estate transactions in New York and elsewhere. It's our job to source and dispose of real property based on client needs and criteria. In this role, we provide expert guidance and market analysis, as well as marketing, purchasing and sales advisory.
We frequently participate in solicitations and RFPs. In April 2024, we were awarded a contract and started work to support Global Affairs Canada's initiative to secure a new official residence in New York for the Government of Canada. As you may be aware, New York City is one of the most dynamic and highest-value real estate markets in the world. Midtown, a central part of Manhattan, is considered the business and diplomatic centre of New York City, exemplified by an above-average concentration of international residents and organizations and anchored by the UN headquarters on the East River.
Midtown receives heavy investment from foreign governments. The traffic and logistics of a metropolis necessitates that organizations seeking active participation in trade must be located in or near the area. To mention a few recent transactions, they include the British government investing $16 million, the French investing $14 million and the Qataris investing $45 million, while the governments of New Zealand and Denmark both invested between $8 million and $10 million. I'll supply all of these numbers in Canadian dollars as well at the end.
To our knowledge, there is no major foreign government, and certainly none in the G20, that doesn't have meaningful real property investments for public representation in Midtown within 15 minutes of the UN. The 57th Street corridor in Midtown, which has been talked about a fair bit at these hearings, is colloquially referred to as Billionaires' Row because the area is home to rarified residences overlooking Central Park in supertall skyscrapers built within the last decade. They include penthouses with selling prices from $40 million to well over $100 million.
Of course, like all of New York City, the 57th Street area is also a diverse real estate ecosystem. The neighbourhood includes studio apartments that sell for under $1 million. The average price per square foot in this area, which is a common measure of value in New York real estate, is $1,749.
To support OGGO's efforts here today, I thought it would be helpful to detail the process we undertook with Global Affairs to secure the new official residence. As you can imagine, researching and evaluating properties is a deliberate process tailored to every client's needs. In this case, our client provided very specific criteria. They included a minimum of three bedrooms plus den, accessibility compliance, proximity to both the Canadian mission and the UN, detailed security specifications, a location that is not in a co-op, a price point below $9 million, and separation between living quarters and where public duties take place. Furthermore, the location and building had to be attractive for these public functions to be well attended, and building management had to be accommodating for such duties to be performed frequently.
Given these parameters, we presented 39 properties for consideration. The initial list was narrowed down to 21 properties in seven neighbourhoods for in-person visitation. After three days of property visits, a final list of four properties remained and two were nominated for further consideration. One of these finalists did not pass a second security and design review, leaving, by process of elimination, the unit in the landmark portion of 111 West 57th Street, a building that will celebrate its 100th year next year, having been completed in 1925. The entire process was overseen by Global Affairs Canada visiting New York City from Ottawa.
With the selection process completed, negotiations with the seller to achieve the best possible price were supported by the unit being the last available residence in this landmark section of the building—a choice location, but looking out on 57th Street and not over Central Park. The residence was purchased at a 40% discount against the original asking price and 10% off the last asking price, and came to $1,750 per square foot after concessions. This is by far the lowest price in the building. It is 70% less than peer buildings in the neighbourhood, which sell at well over $5,000 per square foot.
Despite the property's desirable location for foreign governments, the price per square foot was also far below the $2,600-per-square-foot average spent by the other foreign governments I mentioned earlier. In fact, the Government of Canada paid just below the average for a standard New York condo, which is currently at $1,764 for the second quarter of 2024, per Jonathan Miller and his company, Miller Samuel.
In conclusion, it is our professional opinion that the Government of Canada, based on the criteria presented and the quality and final purchase price of its new official residence, has secured an asset that will serve the country of Canada for years to come, both fiscally and functionally. It is a savvy investment procured in a well-run process by a diligent team in Ottawa. We present our gratitude for the chance to participate in the process and to bear witness here today.
Thank you.
