Brokers Anticipate Sales Boost As Wall Street Awaits Bonuses

Year-end Wall Street bonuses have accounted for 7.5% of the total of all wages earned in New York City in recent years, according to the state comptroller's office.

An injection of that cash will boost high-end residential sales in Manhattan, the suburbs, and in the second home market from the Hamptons to Miami, according to top brokers at the city's largest firms.

"Their bonuses are our bonuses," a broker for the Corcoran Group, Wilbur Gonzalez, said.

Speculation of a big bonus season is running high. The mayor's office projected that Wall Street profits for 2005 will be higher than those last year, and several banks reported record third quarters.

The state comptroller's projections of Wall Street bonuses, which can drive the real estate business into a frenzy, are expected in mid-December.

The president of the Corcoran Group, Pamela Liebman, said the impact of the Wall Street bonuses will be felt before they hit.

"Some sellers will want to wait until the bonuses hit," she said. "Brokers will encourage buyers to buy now before there is too much competition from the bonus money."

The president of the appraisal firm Miller Samuel, Jonathan Miller, said the bonuses would likely affect the upper end of the residential market, the segment that appeared to lag in some recent third-quarter reports.

"The money flows directly into the real estate economy," Mr. Miller said. "We can correlate a busy spring with a strong bonus year."

Mr. Miller cautioned that Wall Street bonuses might not immediately fuel a spike in sales.

"It will have some impact on the first quarter of '06 and a lot more impact on the second quarter," he said.

A broker for Douglas Elliman, Richard Ferrari, said a good bonus season will drive young bankers into their first apartments, usually in the $1 million to $2 million range.

"Right now, the word in the street is the banking bonuses are going to be big," Mr. Ferrari said. "The length of an apartment on the market is longer now than a year ago, but over the next six to eight weeks that could change in certain pockets of the market."

Mr. Ferrari said bonuses will set off a chain reaction with bankers "trading up" from a two-bedroom to a three-bedroom or from a three-bedroom to a nine-room apartment, costing in the range of $1 million to $15 million.

While the Wall Street bonus shopping spree used to be isolated to the Upper East and West sides, Mr. Ferrari said, bankers and their families are increasingly looking at the downtown loft market, particularly in co-op buildings.

"Most investment bankers are prime co-op material," he said.

Mr. Gonzalez said that he has fielded inquiries from bankers at Goldman Sachs, Deutsche Bank, Bank of America, and Merrill Lynch who are expecting record bonuses. He said interbank competition to recruit and retain talent is driving up bonuses for young bankers.

This time of year, Mr. Gonzalez sends marketing materials to bankers, personalizing his mailings for managing directors, vice presidents, and associates. He said managing directors with families will look at apartments for more than $3 million, vice presidents between $2.5 million and $3.5 million, and associates, who are usually single, for properties of $1 million to $2 million.

A compensation analyst, Alan Johnson, said the investment banking sector traditionally offers low base salaries and big bonuses that account for about 80% of annual income, which come in the form of a lump sum at the end of the year or stock payouts.

"If you are going to buy real estate, that is probably when you are going to buy it," Mr. Johnson said.

He predicted another year of growth for Wall Street bonuses but not a record year.

"I think a lot of people are not quite back to where they were in 2000," he said. "We are not at euphoria yet. ... I don't see the industry doing anything silly or getting back to where we were in 2000."