THE 2014 COMMERCIAL OBSERVER OWNERS MAGAZINE New York’s Landlords Sound Off on Mayor de Blasio, Infrastructure and the Future of Commercial Real Estate
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‘Make your mark in New York, and you are a made man. With a New York endorsement you may travel the country over, without fear—but without it you are speculating upon a dangerous issue.’ —Mark Twain
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nd the marks being made are seemingly fearless. Commercial Observer’s annual Owners Magazine chronicles New York’s top landlords at a time when the city is flush with headline-grabbing developments, from the billionaire stacking blocks piercing the sky above 57th Street—and casting shadows over Central Park below—to the resurrection of the World Trade Center site after so many years as a posttraumatic hole in the ground to the imminent, unlikely realization of an unbroken skyline along the Queens and North Brooklyn waterfronts. Elsewhere in the outer boroughs, deals like Youngwoo & Associates’ acquisition of the Bronx General Post Office Building (P. 12) could mean things are on the up in the Boogie Down, which, as Danielle Schlanger writes, stands to absorb some heat from Brooklyn and Queens as prices in those once-overlooked precincts soar. The old-line commercial strongholds are undergoing their own metamorphoses. Condé Nast begins its much-ballyhooed move to 1
World Trade Center next month, a fitting occasion for Lauren Elkies Schram to capture the current state of a lower Manhattan in flux as a diffident financial industry makes room for less starchy tech and media young guns (P. 15). As Tobias Salinger reports (P. 7), even the Empire State Building, the grandest of New York’s grande dames, is reinventing itself as a start-up courting property. As tech tenants invade the city’s prime properties, they’ll likely ingratiate themselves with a defiantly analog real estate industry hungry for any edge in closing a deal—and who cares if it involves a phone app? In fact, several owners who responded to our questionnaire spoke of the incomparable business value of personal relationships and doubted the longevity of, say, real estate crowdfunding. But quibbles and some speculation aside, the owners profiled here would confidently agree with Mr. Twain and say they wouldn’t have wanted to “make it” anywhere else. —Billy Gray, editor-in-chief
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Table of Contents TOP ROW, FROM LEFT
Anthony E. Malkin, Rob Speyer, Larry Silverstein MIDDLE ROW, FROM LEFT
THE 2014 COMMERCIAL OBSERVER OWNERS MAGAZINE
! !
Ivanka Trump, Steven Roth BOTTOM ROW, FROM LEFT
Jeff Blau, Douglas Durst, Marc Holliday, Joseph Moinian COVER ILLUSTRATION BY CHRIS MORRIS
ESB2.0
Overseas real estate market with the greatest potential?
London
(by a long shot)
Spain Hong Kong China
Three Favorite Local Restaurants? CIPRIANI MILOS GRAMERCY TAVERN
6
3
A Bronx Boom In Retail Space
12 NYC’s Media Center
MOST RESPECTED OWNERS?
16
Larry Silverstein, Silverstein Properties Steve Ross, Related Properties
‘
Burton P. Resnick, Jack Resnick & Sons
for the 20 Looking Grand Bargain’ Getting Techy
24
Thoughts on Mayor de Blasio good 7 don't know 10 bad 2 mixed 3 unclear 4
Is Mayor de Blasio helping or hurting the New York City real estate industry?
Unclear: 4 Mixed Views: 3
Gary Barnett, Extell Development Rudin family’s Rudin Management
Helping: 7
Hurting: 2 Too soon to tell: 10
“Billions of people hope to reach America. Everyone dreams of being in New York City.� — David Greene “There is always going to be another bubble. When is the hard part.� — Jeffrey Gural “There is no such thing as overdevelopment in New York. If crowds bother you, this is not a good place to live.� — Jason Muss
Owners Q+As P. 29 Earle S. Altman Albert Behler Charles Bendit Nicholas Bienstock Jeff Blau Tommy Craig Neil Dolgin Douglas Durst Ziel Feldman Winston Fisher Ira Z. Fishman Dennis Friedrich Scott Galin Unclear Laurie Golub Jonathan Gray Mixed Francis Greenburger David Greene Bad Jeffrey Gural Don't LeslieKnow Wohlman Himmel Marc Holliday Good Morris Jerome Steven Kaufman Jared Kushner
P. 30 P. 32 P. 34 P. 36 P. 38 P. 40 P. 42 P. 44 P. 48 P. 50 P. 52 P. 54 P. 56 P. 58 P. 60 P. 62 P. 64 P. 66 P. 68 P. 70 P. 71 P. 72 P. 73
Robert Lapidus David Levinson Anthony E. Malkin Stephen Meringoff Martin Meyer Joseph Moinian Jason Muss Paul Pariser Michael Phillips Jason Pizer Eran Polack Scott Rechler Burton P. Resnick Steven Roth Bill Rudin Gregg Schencker Sam Schneider Larry Silverstein Rob Speyer Donald J. Trump Ivanka Trump James Wacht Mort Zuckerman
P. 74 P. 75 P. 76 P. 77 P. 78 P. 79 P. 80 P. 81 P. 82 P. 83 P. 84 P. 85 P. 86 P. 87 P. 88 P. 89 P. 90 P. 91 P. 92 P. 93 P. 94 P. 95 P. 96
2 š OWNERS MAGAZINE š 2014
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Empire State Realty Trust owns, manages, operates, acquires and repositions office and retail properties in Manhattan and the greater New York metropolitan area. Servicing tenants and brokers is our number one priority. We offer the widest range of space in the market today — from full floor to multi-floor and pre-builts. We are committed to energy efficiency innovation. Thank you for the opportunity to compete for your business.
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ESB 2.0 INSIDE THE WORLD’S MOST FAMOUS (REPOSITIONED) BUILDING BY TOBIAS SALINGER
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HEN DIGITAL IMAGERY LICENSER Shutterstock moved its global headquarters uptown from the Financial District to a two-floor, 85,000-squarefoot office in the Empire State Building earlier this year, the 11-year-old firm moved in the opposite direction of the city’s downtown tech trend. But the company’s terraced space that boasts employee game rooms themed around Super Mario Brothers and Alice in Wonderland is starting to represent the norm in a greened, amenity-laden landmark where social networking site LinkedIn occupies over 158,000 square feet and tenants
will soon start visiting a new 15,000-square-foot gym and a 100-table luxury restaurant. Before the famous building’s landlord, the Empire State Realty Trust, started renovations, 174 different tenants operated out of floors three through 25, company officials said. These days, only LinkedIn, Shutterstock and four other companies have filled those floors to capacity. And the $450 million renovation that’s scheduled to be completed by the now publicly traded company by the end of 2016 is nearing the finish line. Ryan Kass, ESRT’s director of leasing and marketing, took Commercial Observer for an exclusive tour from the subsurface
6 đ OWNERS MAGAZINE đ 2014
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With today’s technology, there are more ways than ever to manage energy consumption. And new incentives to use them. Con Edison is offering nearly $200 million in rebates for their Demand Management program. So it’s easier than ever for commercial and multifamily buildings to make energy efficiency improvements. Together with NYSERDA, we’re giving you new and creative ways to go green. While spending less of your own. Remember, these incentives won’t last forever, so be sure to take advantage of them while you can. Call 877-797-6347 or email us at DemandManagement@conEd.com.
THE INCENTIVES JUST WENT UP TO KEEP ENERGY CONSUMPTION DOWN.
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From left, a view, office space and the lobby at the Empire State Building.
facility where retrofitted water chillers cool the building, up through the nearly completed gym and restaurant and the familiar 86th floor observation deck where a steady line of tourists waited patiently for the view. The landlord, who will eventually move its own offices to the Art Deco 1931 structure, is ushering the 2.7-millionsquare-foot, 1,250-foot tall skyscraper into a new era with confidence that its upgrades and status afford it a special advantage over the competition. “In August of 2006, the average fully escalated rent per occupied square foot in the building was $26.50,” said ESRT CEO Anthony Malkin in a prepared statement. “There were over 750 individual suites, most of which had not been upgraded for several decades. Virtually every inch of the building has gotten or is nearing completion as part of our Empire State ReBuilding program to deliver one of the most advanced, 21st-century buildings in
“They’ve done a terrific job really upgrading it, bringing it into the 21st century. It’s a much different product than it was 10 years ago.”
the world with state-of-the-art systems, a full complement of exceptional and exclusive amenities, all housed in the architectural gem that is the world’s most recognizable office address.” With Mr. Malkin, the grandson of one of the 1961 purchasers of the building, now leading a company with net assets of almost $2.5 billion, the beloved structure has leased 86 percent of its space to command total annual office rents of $103.8 million at $45.21 per square foot and total yearly retail rents of $15.3 million at $115.06 per square foot, according to ESRT’s latest available quarterly report. (Asking rents now range from the high $50s to low $70s per square foot, company officials said.) But the building’s owners also benefitted from roughly $101.8 million in revenue from a record 4.3 million observatory visitors and around $20 million in revenues from broadcast licenses and antenna leases on the building’s 200-foot mooring mast spire in 2013. Officials at the REIT that went public in October 2013 welcome the challenges associated with being a publicly traded company, Mr. Malkin said. “Our lives have become far simpler since we went public,” said Mr. Malkin. “Our 23 predecessor entities included three public registrants, so we were already filing
“Our lives have become far simpler since we went public.”
Q’s and K’s. With our low-levered, centralized balance sheet and modern governance documents, everything is far more straightforward.” The company’s commitment to repurposing the Empire State Building, as well as its six other Manhattan office properties, plays a key role in attracting tenants and shareholders alike, Mr. Malkin wrote in the latest quarterly report. And the stunning lobby at the Empire State Building certainly sets the tone for the property. After the company finished a renovation in 2009 that took longer than the one year and 45 days it took a team led by former Governor Al Smith to build the entire original structure, the lobby’s shiny marble floors, maroon-uniformed staff and an astrological ceiling motif fashioned as industrial gears evoke a bygone era. New features like four new tenant-only entrances and 10 visitor-only entrances that allow the roughly 11,000 tenants and building staff to avoid the millions of tourist visitors and greening programs targeting a 38 percent emissions cut—have allowed ownership to attract “top flight” tenants like the Federal Deposit Insurance Corporation, Skanksa construction and beauty products manufacturer Coty, said Gregg Slotnick, a
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A 26,000-square-foot floorplan, left; The Empire State Building chilling plant.
vice president for commercial leasing at HelmsleySpear. “They’ve done a terrific job really upgrading it, bringing it into the 21st century,” said Mr. Slotnick, who hasn’t represented any tenants at the building where his company’s late founder, Harry Helmsley, used to be part owner. “It’s a much different product than it was 10 years ago.” New tenants like Shutterstock and a future occupant, the digital video advertising specialists BrightRoll, also note the new features. While BrightRoll won’t be moving into its 26,282-square-foot space on the 55th floor until the second quarter of next year, Shutterstock, with over 40 million separate pieces of available creative content, occupied its office in January. Its 350 onsite employees are
enjoying their space with a central staircase leading between the 21st and 20th floors, a “video wall” that runs a loop of the company’s videos and pictures and conference rooms named after global landmarks and historical innovators, said Vice President of People Strategy and Operations Tracy Kim. “It was a very cool modernization of a very iconic building,” said Ms. Kim. “They allowed us to do the build-out completely the way we wanted it.” Employees at the building will soon have new exercise and dining options onsite, as well. The Patina Group’s new upscale restaurant, State Bar and Grill, will open by the time this article is published, said Mr. Kass. The building already boasts five dining and food options with more to come in its total 142,000 square feet
Empire State Building’s tenant-only fitness center.
“The very exciting new amenities, the tenant-only fitness center, private executive gym, State Grill and Bar with private executive dining and event space, and tenant-only conference center, are done and open.”
of retail space on ground, lower and concourse floors, company officials said. The fitness center, which Mr. Kass said will be the largest tenant-only gym in New York City, features three private workout areas, a sleek locker room and a membership charge of only $35 per month. “The very exciting new amenities, the tenant-only fitness center, private executive gym, State Grill and Bar with private executive dining and event space, and tenant-only conference center, are done and open,” Mr. Malkin said. But most tourists who visit the building will never see the new facilities on the trip in one of the structure’s 70 elevators, the newest of which store and reuse kinetic energy. They also might walk around the still-breathtaking 360-degree view at the observatory without understanding how a window factory that ESRT operates for the building installed a film filled with krypton-argon gas, quadrupling the insulation ability of each of the structure’s 6,514 windows. Admiring the Empire State Building’s capacity to display 16 million colors in a Philips Color LED display represents the surface view of a sophisticated set-up in which building staff programs show in-house from a digital control panel while lighting designer Mark Brickman handles the complicated shows. Regardless, the building will continue to loom large to both those who work in it every day and are visiting for the first time. “I really liked the view, but I also really liked the building,” said London resident and video producer Caroline Roberts, 29, after she and her friend visited the famous observatory at the start of a fourcity American tour for their 30th birthdays. “Even though you just seem to go up and down, you do have an experience.”
10 OWNERS MAGAZINE 2014
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Young Woo of Youngwoo & Associates.
A Bronx Boom in Retail Space STRAPPED FOR SPACE ELSEWHERE AND SENSING OPPORTUNITY, BIG-NAME DEVELOPERS ARE TURNING TO THE BRONX BY DANIELLE SCHLANGER
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S NOVEL DEVELOPMENT SITES IN MANHATTAN, Brooklyn and pockets of Queens become scarce, real estate leaders are turning north to the Bronx, a borough largely seen as the final frontier of the city’s real estate landscape. “Private investment has for too long overlooked the Bronx, and the collective populations who call the Bronx home—including Latinos, African-Americans and Asians—in our opinion have long been underserved by developers,” said Adam Zucker, Youngwoo & Associates’ director of business development. “With an immense waterfront stretch offering city views, numerous access points to Manhattan, and strong public transportation and highway infrastructure, the fundamentals are ripe for development.” Youngwoo & Associates is one firm that has chosen to
capitalize on the dearth of quality shopping in the borough and is betting big on consumer spending by investing in retail space. Last month, the firm announced that it had purchased the Bronx General Post Office at 558 Grand Concourse between East 149th and East 150th Streets, its first development in the borough. Public records show the firm bought the historic building from the cash-strapped U.S. Postal Service for $19 million. “Several new malls have been developed in the Bronx and I think it’s a real vote of confidence in the market,” said Jonathan Bowles, the executive director of The Center for an Urban Future. “For years, the Bronx was under-retailed because most developers didn’t think they could make a buck in a place [about which people] … had so many negative perceptions.” At first glance, the Bronx appears to be far from the ideal location for substantial capital investments in retail. With a
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The recently sold Bronx General Post Office.
fashion tenants, which were lacking in the Bronx,” said Mr. Shalem, the chairman and CEO of Prestige Properties. “That was the main reason why we were able to attract tenants like Michael Kors, Gap, Express and H&M. Those tenants weren’t in the Bronx before.” Mr. Shalem expressed confidence in the future of the Bronx. “The Bronx is on a huge upswing,” he said. “There’s no question about it. You can see the quality of the building that we put up and the huge investment that we made. We are big believers and big investors in the Bronx.” Youngwoo & Associates plans to target the 13,000 students in the area due to the post office’s proximity to Hostos Community College, as well as the thousands of other professionals employed by nearby Lincoln Medical Center. The building sits on top of three subways— the station is the busiest daily stop in the borough—and the bus stops outside the building see over 20,000 riders a day. The firm doesn’t foresee the post office project being its last foray in the borough. “We hope this is the beginning of more projects to come,” Mr. Zucker said. The Bronx’s leadership has also taken proactive measures to promote growth. It has upzoned corridors like the lower Grand Concourse, the Harlem River waterfront and Webster Avenue from Fordham Road through the Woodlawn neighborhood. It is also pressing the governor to approve a measure financing MetroNorth stations in four areas lacking public transportation: Hunts Point, Parkchester, Morris Park and Co-op City. That will in turn increase the demand for amenities in these areas. If all goes according to plan, the state will finance these hubs by the end of this decade. Borough President Ruben Diaz, Jr. stressed that the Bronx has learned from the building booms in Brooklyn, Harlem and Long Island City, and has also taken note of those areas’ shortcomings in facilitating strategic growth. “The borough is upzoning and developing housing in pockets where there is currently no [strictures] to ensure no
“Several new malls have been developed in the Bronx and I think it’s a real vote of confidence in the market.”
The Mall at Bay Plaza.
one is being forced out,” Mr. Diaz said. (He was careful to avoid slapping the dreaded “gentrified” label on any part of his district.) Mr. Diaz added that where major development is occurring the borough president’s office and the Bronx Overall Economic Development Corporation (BOEDC) encourage subcontractors to work with other Bronx businesses by leveraging funds. Though notable in numbers, Bronx development is not limited to retail. A handful of high-profile sports complexes are under construction in the borough. Donald Trump’s Ferry Point Golf Course at the foot of the Whitestone Bridge is scheduled to open in 2015 and will host Barclays’ PGA Tour in 2017. Crotona Park will soon welcome the Cary Leeds Center for Tennis and Learning, which will include two exhibition tennis courts, 20 adjacent tennis courts and a 12,000-square-foot clubhouse. And the Kingsbridge National Ice Center (KNIC) will reconfigure the vacant Kingsbridge Armory into the world’s largest indoor ice center, featuring nine year-round indoor regulation size ice rinks. When asked if any neighborhood showed particular promise, Mr. Diaz said developers “need to start paying attention to Port Morris.” “If you look at Port Morris when you come over the Willis Avenue Bridge, it’s already a trendy neighborhood with art stores and boutiques, and a lot of great eateries. Many of the hipsters have moved into lofts,” he said. “This is the time for people to come in and invest.” Yet, the Bronx still cannot claim the same level of intrigue among many tenants as other swaths of the city. Although the amount of office space in the borough is growing—in 2011, there was roughly 8.7 million square feet—“it’s not like tech companies are turning to the South Bronx because of cheap real estate and convenience to Manhattan,” Mr. Bowles said. “We’re not quite there yet.” But with crime in the Bronx dropping precipitously, with 2013 recording the lowest murder rate in 50 years, more developers could be lured by the area’s untapped promise. “[The Bronx] has become safer, and as a result more inviting for outsiders and at the same time more welcoming for neighborhood residents,” Mr. Zucker said. “I think the future for the Bronx could be extremely bright,” Mr. Bowles concluded. Mr. Diaz thinks his borough has already bloomed. “Folks need to know that we’re not the Bronx of the ’70s, ’80s and early ’90s anymore,” Mr. Diaz said. “We are the new Bronx.”
ARMAN DZIDZOVIC/FOR COMMERCIAL OBSERVER
median household income of $34,300, well below the average statewide, it is the poorest of the five boroughs and has the highest unemployment rate of any county in New York. In 2011, close to a third of the Bronx’s workforce lacked a high school diploma and only 17 percent had earned a college or advanced degree. However, the Bronx is blessed with a sizable population of 1.4 million people and continues to grow. (If the Bronx were its own city, it would be the fifth most populous nationwide.) Between 1990 and 2011, it experienced the second-highest population growth of all five boroughs, at a rate of over 15 percent, according to New York City data. “There are a lot of people in the Bronx that may not be wealthy, but they are consumers,” Mr. Bowles emphasized. “They may not be the 1 percent, but they need to buy things and want some options for shopping.” The Bronx has been underserved by retailers for decades. Residents with cars often travel to Westchester or New Jersey to fulfill their shopping needs, while those without their own personal modes of transportation would rely on stores within walking distance, which were often bodegas and 99 cent shops. The trend to invest in retail space in the Bronx began in 2009 when Related Companies’ Bronx Terminal Market opened just south of Yankee Stadium and was heralded as the first national retail complex to serve borough residents. The $500 million project is one of the largest private investments ever in the Bronx, and created thousands of jobs. Today, the center, home to the borough’s first BJ’s Wholesale Club, Toys ‘R’ Us and Michael’s, is over 99 percent leased. “The development Bronx Terminal Market turned a deteriorating blight on the area and former brownfield site into a vibrant center for the community offering residents of the Bronx the same shopping opportunities that the suburbs and the other boroughs have enjoyed for years,” said Glenn Goldstein, the president of Related Retail and developer of the Bronx Terminal Market. “We are bullish on the Bronx and continue to explore opportunities throughout the borough,” Mr. Goldstein said. In August, the Mall at Bay Plaza, a property conveniently situated in Co-Op City opened at 200 Baychester Avenue by the intersection of the Hutchinson River Parkway and I-95, where an estimated 250,000 cars pass through daily. Sam Shalem’s Prestige Properties invested close to $300 million in construction costs on the shopping complex, which boasts over 100 stores and restaurants spread across 780,000 square feet. “I recognized a huge hunger for quality 14 OWNERS MAGAZINE 2014
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Brookfield Place, the future home of Time Inc.
Lower Manhattan has become the publishing industry’s go-to place for office space LAUREN ELKIES SCHRAM
NYC’s P Media Center
UBLISHING COMPANIES HAVE been departing for downtown from the more traditional Midtown and Midtown South submarkets and that trend seems to be picking up steam lately. In a dramatic move, Condé Nast is preparing to relocate to 1 World Trade Center from 4 Times Square. “They’re packing their stuff as we speak,” said Jeremy Moss, the director of World Trade Center leasing at Silverstein Properties. The publisher of Allure, Architectural Digest, Details, GQ, Lucky, The New Yorker, Vanity Fair and Vogue signed a deal with the Port Authority of New York & New Jersey and The Durst Organization in May 2011 for roughly 1 million square feet at the World Trade Center tower.
In lower Manhattan, major media deals negotiated as of the second quarter of this year include Time Inc., Macmillan Science and Education, Library Journal and Latina Magazine, according to the Alliance for Downtown New York, which included print and digital publications as well as entertainment and multimedia production companies in the media category. Media relocations have accounted for more than 55 percent of relocations by square foot as of second-quarter 2014, in part due to the large commitment made by Time Inc. Media companies as well as technology and advertising firms have been drawn to lower Manhattan’s relatively low rents. In addition, there is increasing inventory downtown due to vacancies and newly built space, as well as the excitement of
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leasing brand new amenity-laden space. Some media companies, like Condé Nast, wanted to move their offices to be closer to where their workforce resides. There have been a series of tax credits, waivers, reductions and abatements to incentivize companies to relocate downtown, although some brokers say the moves would be happening without them. “The rents are compelling without tax incentives. It just makes it that much sweeter,” said broker Brad Gerla of CBRE. He negotiated the New York Daily News and American Media leases in Edge Fund Advisors’ 4 New York Plaza, a 1.1-millionsquare-foot building at Water and Broad Streets. “Lower Manhattan has a great stock of Class A and B spaces, great transit access and culture, and has seen some rents at discounts to Midtown,” said Kyle Kimball, the president of the New York City Economic Development Corporation. “We are in the process of retooling our incentives to make sure they are incentivizing the right behavior in the right locations.” According to data from JLL, a full 5.5
million square feet of space has been leased to the media sector south of Canal Street, said John Wheeler, a managing director at JLL who runs the firm’s lower Manhattan office. Since 2010, over 56 percent of all new leases signed downtown are migrations to lower Manhattan. “I do think the trend is picking up and I think that there’s a confluence of factors that is driving it,” Mr. Wheeler said. Nature Publishing Group, a subsidiary of Macmillan Publishing Group, took a roughly 176,000-square-foot lease at Brookfield Properties’ 1 New York Plaza. It will move in June 2015. The parent company is rumored to be considering a move to more than 150,000 square feet in lower Manhattan. Nature Publishing wanted to consolidate its offices and create a campus, according to the company’s broker in the deal, Leon Manoff, a vice chairman at Colliers International. When the firm concluded the deal in May, asking rents were in the mid- to upper-$40s per foot. “Downtown offers the best value,” Mr. Manoff said. Besides, “there were other publishing companies that had already been pioneers.”
“Lower Manhattan has a great stock of Class A and B spaces, great transit access and culture, and has seen some rents at discounts to Midtown. We are in the process of retooling our incentives to make sure they are incentivizing the right behavior in the right locations.”
Mr. Manoff also represented American Lawyer Media in its deal for 90,000 square feet at Silverstein Properties’ 120 Broadway. They moved in about seven years ago, he said. The deal was driven by the price, the size of the floor plates and the quality of the landlord, Mr. Manoff said. “The biggest thing right now is the value, obviously,” said Jerry Larkin, the director of leasing at Brookfield Properties. He described lower Manhattan as “an evolving market.” Also, Mr. Larkin said, “Because of all of the money being spent on the transportation, it’s becoming more and more accessible. Compared to some of the Midtown buildings, tenants are seeing value.” As more companies snap up space, tenants have to transact quicker and prices have increased by double-digit increments in the last year, Mr. Larkin said. At Brookfield, the leasing team upped all of its asking rents by 10 percent over the last three months alone. Time Inc. will be relocating its headquarters to 225 Liberty Street at Brookfield Place in lower Manhattan from the Time & Life Building at 200 Park Avenue. The media conglomerate took a long-term
LAUREN DRAPER/COMMERCIAL OBSERVER; SPENCER PLATT/LIAISON
Time & Life Building at 200 Park Avenue.
1 World Trade Center.
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Condé Nast’s current headquarters in Times Square.
and $22 less than Midtown,” the report says. While some companies are drawn to older buildings that still have good systems and services in place, others want to take advantage of new construction with larger and more efficient floor plates. Perhaps the trend dates back to the move by Mansueto Ventures’ business media brands’ Fast Company and Inc. The publications became two of the first tenants at 7 World Trade Center when Mansueto announced the 15-year, 40,000-square-foot lease in July 2006. John Koten, the chief executive officer of Mansueto Ventures, said in a press release at the time that “Our selection of 7 World Trade Center … reflects our company ethos to see ‘beyond the box.’ ” Other publishing brands to make the downtown move include American Lawyer Media at 120 Broadway, HarperCollins Publishing, Thomson Reuters Markets and The Knot at L&L Holding Company’s 195 Broadway. “This is really more of a trend that we’ve seen unfolding over the last five years,” Mr. Moss said. “It’s now undisputed that lower Manhattan has become a media center.”
CREATIVE COMMONS
lease for roughly 700,000 square feet across six floors at the property and will move in late next year. Time Inc.’s deal was the largest lease announced in the second quarter of this year, and the largest downtown relocation since Condé Nast’s deal was revealed, according to the Downtown Alliance’s second-quarter report. “Time was a breakthrough, watershed type of deal in the same way that Condé was,” said Mr. Wheeler, who was not involved in the deal. With floor plates of over 100,000, Time Inc. is planning “for a modern, open workspace that will be designed to foster a greater sense of community and collaboration across the company,” said Joe Ripp, the chairman and chief executive of Time Inc. in a May statement announcing the deal. And, he noted, the deal “will deliver significant cost savings.” While average asking rents in Midtown South are $63 per square foot, lower Manhattan rents are below $50 per square foot despite continual quarterly growth, according to the Alliance for Downtown’s report. “Lower Manhattan retained its competitive pricing advantage, with an overall average asking rent $11 less than Midtown South
Anchin, Block & Anchin LLP Accountants and Advisors Robert Gilman, CPA robert.gilman@anchin.com Howard Krams, CPA howard.krams@anchin.com Marc Wieder, CPA marc.wieder@anchin.com 1375 Broadway, New York, NY 10018 Follow us @anchinrealest
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Looking for the ‘Grand Bargain’ THE DE BLASIO ADMINISTRATION AND REAL ESTATE LEADERS SEARCH FOR COMMON GROUND IN PUSUIT OF THE MAYOR’S HOUSING GOALS BY TOBIAS SALINGER
W
HEN DEPUTY MAYOR for Housing and Economic Development Alicia Glen outlined the de Blasio administration’s new requirement for affordable housing in all residential rezonings at last month’s Massey Knakal Realty Services Brooklyn summit, murmurs rippled through the audience of 700 real estate insiders. But Ms. Glen felt positive vibes, she told reporters after her appearance at the conference.
“Nobody stormed out, so that seems like a good thing,” she said. As Ms. Glen and Mayor Bill de Blasio move toward a new zoning policy in the administration’s quest to create or preserve 200,000 units of affordable housing over the next decade, the city’s top real estate leaders are watching to see whether the mandatory affordable units will entitle developers to build enough density to make large-scale projects economically feasible. Regardless of the complicated politics and some
“Nobody stormed out, so that seems like a good thing.”
key missing details at the moment, the administration is talking with all sides of a fraught debate in pursuit of guidelines that Ms. Glen predicts will be “game-changing” in a city with a housing shortage. “Mandatory inclusionary zoning means that you can’t build the building without meeting the requirements to provide affordable housing,” Ms. Glen said. “So it’s not like, ‘Oh, should I build affordable housing and get a bigger building?’ It’s, ‘If I want to build
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“They are definitely putting their money where their mouth is in terms of getting this production pipeline started quickly.”
“The elected officials can create as many affordable units as they want, provided that they provide the economic incentives to create that housing.”
Top, Deputy Mayor Alicia Glen; Mayor Bill de Blasio.
Sept. 19. (The City Planning Commission recommended approval of the proposal on Sept. 29 ahead of its appearance before the City Council.) But with some wondering whether subsidies, the more traditional approach to fostering affordable units, will boost the overall number or perhaps speculating how Astoria Cove might set a pattern for future rezoning, Ms. Glen didn’t rule out potential subsidies for more affordable units and cautioned that Astoria Cove won’t amount to the standard for an area like, say, East New York. “We’re studying all the various facets of what that will look like,” she told Commercial Observer in an interview about the mandatory affordable plan. “Each neighborhood is different, so
we’re trying to create an inclusionary zoning program where every neighborhood is not the same. We really need to calibrate this correctly.” Yet, in any potential future rezoning in any part of the city, the balance between the height of new towers and the number of required below-market units will represent the “grand bargain,” said Donald Capoccia, the managing principal of BFC Partners, a large developer of mixed-income projects. BFC is currently topping out a 250-unit tower at City Point in Downtown Brooklyn that will be 50 percent market-rate, 30 percent middle income and 20 percent lowincome and is closing on financing for its joint 50 percent affordable venture to build the 1,000-unit Essex Crossing complex at Seward Park on the Lower East Side. Developers like BFC will invest in new projects if the mayor’s team provides sufficient additional density to developers in exchange for the affordable units, said Mr. Capoccia. “We really want to see [the mayor] succeed,” Mr. Capoccia said. “We tried to provide as much support as we could to the housing plan, and we would like to see it executed. They are definitely putting their money where their mouth is in terms of getting this production pipeline started up quickly.” Officials at the Real Estate Board of New York echoed that sentiment, although REBNY President Steven Spinola said the organization “would need to see the details” of the required inclusionary zoning plan before commenting on it directly. “We share the administration’s goal to put in place an aggressive, practical development plan that will address the city’s housing needs; that’s why we are working closely with the administration to create and implement a plan that will result in new housing construction,” Mr. Spinola said in a prepared statement. The mayor’s office consulted with more than 200 stakeholders and 13 city agencies on its housing plan, according to its introduction. With real estate professionals watching closely and groups like an assemblage of housing advocates and construction unions called the Real Affordability for All Coalition pushing their own plan to require 50 percent affordable units in every development, the administration is attempting to find common ground. “Given the size and scope of our program, we need lots of people to participate,” Ms. Glen said. “We’re talking with everyone about how we can work together.”
TOP: ALEXA HOYER/PATRICKMCMULLAN GETTY IMAGES; BOTTOM: JOHN MOORE/GETTY IMAGES
a building, I have to provide affordable housing.’ ” The administration’s recent pronouncements on the issue reflect a key plank calling for mandatory affordable units in the 117-page housing plan Mr. de Blasio unveiled in May. The $41.4 billion “Housing New York” blueprint summarizes 50 initiatives aimed at reducing numbers like the nearly 55 percent of New Yorkers who spend more than 30 percent of their incomes on housing and the more than 30 percent of city residents who devote over half their incomes to housing. The city’s 3.1 percent rental vacancy rate falls far below the national average of 9 percent, according to the housing plan. But while real estate leaders say they too want to build more affordable housing, they are waiting on key indicators like the exact percentage of affordable units that will be required, the income levels of tenants served by the affordable units and, perhaps most critically, the amount of market-rate housing density the administration will trade for the lower-rent units. “The mayor has laid out a lot of things on a macro basis but has laid out few granular details,” said Massey Knakal founding partner and Chairman Robert Knakal, who said he’s made it clear to Mr. de Blasio in meetings with the mayor that an aggressive approach might exert pressure on land values and hinder the building of any affordable units at all. Mr. Knakal added, “The elected officials can create as many affordable units as they want, provided that they provide the economic incentives to create that housing.” In an initial test of balancing between density and affordability, the de Blasio administration won a commitment from a development team that includes Alma Realty to increase the number of affordable units in a rezoning on the Queens waterfront at the Astoria Cove site. The developers would build 34,103 square feet more residential space overall with 50 additional affordable units over its initial amount to net a total of 345 required affordable units, or 20 percent, of the 2.2-million-square-foot, 1,723-unit mixed-use development, under an outline of the agreement spelled out in the Final Environmental Impact Statement the Department of City Planning released
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Getting Techy ILLUSTRATION BY CHRIS MORRIS
NEW YORK CITY’S COMMERCIAL REAL ESTATE FIRMS ARE STARTING TO EMBRACE REVOLUTIONIZING TECHNOLOGY BY LAUREN ELKIES SCHRAM
I
N THE HIGH STAKES WORLD OF commercial real estate the industry’s leaders have historically been slow to adapt to technology. But there have been some companies and professionals who have embraced new options in technology. Prominent real estate companies like Time Equities, Cushman & Wakefield, Vornado Realty Trust and Sitt Asset Management are using Honest Buildings as a connection engine for real estate projects. Marty Burger and Tal Kerret, the chief executive officer and chief information officer of Silverstein Properties, Rockrose
President Justin Elghanayan and James Ratner, the chairman and CEO of Forest City Commercial Group, have invested in Fundrise, a real estate crowdfunding site. Meanwhile, Stephen Siegel of CBRE and David Falk of Newmark Grubb Knight Frank are customers of real-time data provider View the Space. The technology runs the gamut from 42Floors, PivotDesk and CompStak for brokerage; View the Space and Hightower for management; Floored for development and architecture; Fundrise for investment and finance; and KISI for services like security, video and/or design companies.
“It’s a laggard when it comes to technology.”
“My favorite tech plays in our space are PivotDesk and CompStak,” said broker Bert Rosenblatt, a principal at Vicus Partners. “I have not seen much action in Manhattan in crowdfunding but I love the idea of it and know that nationwide it is making an impact.” A lot of commercial real estate firms— from small to large and new to more established—keep their technology usage to a minimum. “It’s a laggard when it comes to technology,” said Michael Beckerman, the chief executive officer of The News Funnel, a customized newsfeed for real
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Silverstein Properties houses 30 tech developers including Fundrise in an incubator at 7 World Trade Center. The development company is providing the space and support services to the start-ups, Silverstein CIO Tal Kerret said.
Crowdfunding was used to acquire 125 Greenwich Street, 234 East 46th Street and 17 John Street (clockwise from top left).
estate professionals. “How many tools are they accessing? Not a lot. It’s not part of their DNA.” It may be nascent, but Mr. Beckerman finds New York to be the center of commercial real estate tech. “It’s still early but it’s rapidly accelerating,” Mr. Beckerman said of the number of new companies that are entering the real estate tech space and the amount of money being poured into it. New York-based Carlton Group, an international real estate investment banking firm, is focused on crowdfunding on a grand scale with deals ranging from $75 million to $250 million with a minimum investment of $1 million to $25 million per investor. The firm established its crowdfunding platform this year and
“Crowdfunding is interesting. It’s a great opportunity for non-institutional players to get in the game. It’ll be interesting to see where it goes in the next five years.”
at its helm is Navish Chawla, the firm’s chief investment officer of the Carlton Group, who started at the firm early this year. “No one does crowdfunding to the scope that Carlton does,” Mr. Chawla said. His firm is doing retail, hospitality and residential deals through crowdfunding, attracting domestic and international capital. Carlton raised $240 million for a series of developers to acquire 125 Greenwich Street in the Financial District through six investors across five countries. At Massey Knakal Realty Services, the firm uses LoopNet and CoStar locally and is looking to expand its offerings to listing sites in China, said James Nelson, a partner at Massey Knakal. Silverstein Properties wants to be at the forefront of technology, according to Mr. Kerret. Fundrise announced in May that it received more than $31 million in its first substantial capital raising, including the funds from the two Silverstein executives. “I invested in it because I think it is something that will take shape and grow,” Mr. Kerret said. “Will it be successful? It’s
a question mark. Time will tell.” Silverstein houses 30 tech developers including Fundrise in an incubator at 7 World Trade Center. The development company is providing the space and support services to the start-ups, Mr. Kerret said. “Crowdfunding gets a lot of attention because it has a lot of big numbers,” said Ashkan Zandieh, the founder of RE:Tech, a national real estate tech coalition which aims to bridge the gap between real estate and tech. “Crowdfunding is interesting. It’s a great opportunity for non-institutional players to get in the game. It’ll be interesting to see where it goes in the next five years.” New York-based real estate crowdfunding platform Prodigy Network’s founder Rodrigo Niño started crowdfunding after the president’s 2012 signing into law of the Jumpstart Our Business Startups Act, or JOBS Act. It broadly loosened the rules around raising capital by allowing for businesses to provide private offerings to small investors. In September, Prodigy Network completed its acquisition and planned redevelopment of 17 John Street in lower Manhattan with more than $25 million of crowdfunded equity, as Mortgage Observer previously reported. The same month, Prodigy raised $10 million through crowdfunding for AKA United Nations, an extended-stay hotel at 234 East 46th Street that the company bought for $68.5 million in a joint venture with Korman Communities. Crowdfunding helps “democratize commercial real estate,” said Mr. Niño, whose firm is creating a new website through which investors can buy commercial real estate in less than nine minutes. “I don’t understand why a smaller investor is excluded from the safety of commercial real estate in Manhattan.” Brooklyn Standard Properties, a Brooklyn development company founded in 2013, has used Fundrise in two of the three deals it has closed: it raised $250,000 for the $1.89 million purchase of 151 Dupont Street, an eight-unit rental building in Greenpoint, and raised another $250,000 for the $3.25 million purchase of 533 Bergen Street, an eight-unit rental building in Prospect Heights. David Manheimer, the co-founder of Brooklyn Standard Properties, said his firm is growing and crowdfunding is a great move for a new company like his to connect with individual investors as well as to generate buzz. But crowdfunding can still be a small firm’s game. “Right now the big firms don’t need it but they find it interesting,” Fundrise cofounder Dan Miller said. “It’s kinda like ecommerce in the early-’90s.”
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City’s Most Active Landlords Talk Shop in Third Owners Magazine WRITTEN BY DAMIAN GHIGLIOTTY, BILLY GRAY, TOBIAS SALINGER, DANIELLE SCHLANGER, LAUREN ELKIES SCHRAM AND GUELDA VOIEN ILLUSTRATIONS BY JOHN JAY CABUAY
I
F ONE THING WAS EVIDENT IN CULLING through the responses from dozens of New York City’s most active real estate owners it was that the majority of landlords are not yet convinced that technology like space apps and listing sites will replace brokers even for smaller deals. As Robert Lapidus of L&L Holding Company said, “Technology will continue to impact our industry. These sites will aid tenants and landlords, but will not replace brokers in New York City.” In the third annual Owners Magazine, a record number of owners responded to the questionnaires we sent out over the last several months. Heavy hitters like Douglas Durst of the Durst Organization and Jeff Blau of Related Companies answered wideranging questions about their real estate predictions for next year, the area of the city they think is most in need of infrastructure improvements, which fellow owner they admire most and their favorite local restaurant. While many of the city’s more prominent commercial real estate owners said it was too soon to tell how Mayor Bill de Blasio is faring as the city’s chief executive officer, others were a little blunter. “His rhetoric is divisive and it has many people who love New York and who are responsible for the creation of lots of jobs worried,” said Savanna’s Nicholas Bienstock. Ziel Feldman of HFZ Capital Group noted: “Thus far, there has been talk, but nothing that has modified the development climate.” When it comes to overseas real estate markets with the greatest potential, a number of the city’s most venerable commercial real estate owners are particularly drawn to London “because it has similar characteristics to Manhattan,” as David Levinson of L&L Holding Company said. Outside of the boardroom, where these owners are negotiating some of the city’s biggest deals, many real estate executives said they bond with fellow owners on the golf course. And many of them revere Larry Silverstein of Silverstein Properties. —Lauren Elkies Schram, deputy editor
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Earle S. Altman CHAIRMAN, NEWMARK GRUBB KNIGHT FRANK What’s your real estate prediction for 2015? Onward and upward for 2015 and beyond! New York City is the financial and artistic capital of the world and will be ever growing in the years ahead. Where in New York is there still untapped potential for real estate development? Every neighborhood in all five boroughs of New York City that can be up-zoned for quality real estate development. What area in New York is “overdeveloped”? None. All five boroughs present future development opportunity if zoned to encourage free enterprise [and] risk-appropriate reward to commercial and residential developers. Is the New York market reaching another bubble? Not in my opinion. So long as free enterprise prevails and the city engages and embraces businesses that attract young, smart and honest professionals.
Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Yes, yes, yes, so long as free enterprise prevails. Demand will be driven by residents and businesses seeking value-oriented rents. What about areas just outside the city like Jersey City or White Plains? Both cities could and likely will experience a surge in development so long as zoning is free-enterprise oriented, compensating developers for the risk they take. Demand in these areas will likely be driven by young, smart, creative individuals looking for value-proposition alternatives to the maturing or trendy markets. What are the odds of a refigured Midtown East rezoning being approved in the next year? 50-50 at best. Which area of the city is most in need of infrastructure improvements? New York City’s mass transit system is an incredible asset and advantage over other cities and countries and should be a priority for infrastructure improvements.
Which overseas real estate market do you think has the greatest potential? Wherever free enterprise prevails. What’s your favorite local restaurant? Lusardi’s. Which fellow owner do you admire most? Larry A. Silverstein, Burt Resnick, the Rose Family (Elihu and Dan) and the Fisher Family (Arnold, Kenny and Steven). Outside of the boardroom, what’s the best place to bond with fellow owners? At golf, beach, and tennis clubs. I belong to Beach Point Club in Mamaroneck, NY. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Not really, as a good, honest broker will win out in the end for tenants and owners alike. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. I honestly do not know.
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Albert Behler PRESIDENT AND CEO, PARAMOUNT GROUP ALBERT BEHLER, THE PRESIDENT AND CEO of Paramount Group since 1991, will lead the company into a new era when it completes an initial public offering experts say might turn it into the largest offering ever by a real estate investment trust. The company filed a request for an IPO with the U.S. Securities and Exchange Commission in late August, just weeks before news broke that the firm completed a $395 million purchase of 50 Beale Street in San Francisco. Mr. Behler’s company adds that building to an existing portfolio of 12 office properties in New York City, Washington, D.C. and San Francisco, with 10.4 million rentable square feet that 253 tenants have leased at a 90 percent overall rate, according to the company’s SEC filing. Mr. Behler’s tenure coincides with a broad repositioning of the business founded in 1978 by German clothing magnate and
professor Werner Otto. “Our portfolio reflects our strategy, which has been consistent for nearly 20 years, of concentrating on select submarkets within leading gateway cities in the U.S. that have high barriers to entry, are supply-constrained, exhibit strong economic characteristics and have a deep pool of prospective tenants in various industries with a strong demand for high-quality office space,” says an introduction to the SEC documents. While the company’s filings don’t indicate a price range for potential shares or the overall number of them that could be for sale should the SEC approve the IPO, sources close to the company told Bloomberg it’s planning to net $2.5 billion in the offering. Other unnamed sources estimated the offering could fetch up to $2.7 billion in a report by The Wall Street Journal. Either sum would eclipse a record
$1.6 billion offering by Douglas Emmett in 2006, according to the Journal. The company boasts office tenants like Allianz, Bank of America, Barclays, Showtime Networks and Deloitte & Touche and retail tenants such as the Gershwin Theatre at its 1633 Broadway property, which houses the firm’s headquarters and comprises, along with 1325 Avenue of the Americas, the Paramount Plaza. The San Francisco purchase marks the company’s second property in the City by the Bay. “This building, which is located in one of the most desirable neighborhoods in the heart of San Francisco undergoing immense redevelopment, is the type of iconic asset where we believe we can utilize our operational expertise to attract and retain a premium tenant base,” Mr. Behler told Bloomberg in a statement.—Tobias Salinger
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“An extremely talented real estate group with an impressively deep bench: the team is ideal for handling the most complex matters.” – Chambers USA
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Counsel to The Children’s Investment Fund in a US$640 million mortgage and mezzanine construction loan to Silverstein Properties and CalSTRS in connection with the Four Seasons Downtown Hotel and Residences. The 82-story hotel-and-condominium tower is slated to be the tallest residential building in Lower Manhattan.
Counsel to JPMorgan Chase Bank in the US$90 million refinancing of the Gramercy Park Hotel.
Counsel to Time Warner Inc. in connection with the US$1.3 billion sale of its office condo unit at Time Warner Center, and in the development and purchase of a new headquarters at 30 Hudson Yards.
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Coach Counsel to Coach Inc. in its acquisition of approximately 740,000 square feet in the first tower to be constructed by The Related Companies at Hudson Yards.
Counsel to Hiro Real Estate, LLC in the pending sale of its ground lease of 150 East 42nd Street (formerly known as the Mobil Building) to an investor group led by David Werner, and in a transaction for Mount Sinai Hospital (and its affiliates) to acquire approximately 500,000 square feet of space in the building.
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Counsel to TF Cornerstone in the zoning, environmental and other approvals for its approximately 1.2 millionsquare-foot mixed-use development at 606 West 57th Street. The Firm also represented the Durst Organization with the land use entitlements and environmental review process for its apartment tower at 625 West 57th Street.
Counsel to Legends Hospitality in its 15-year lease agreement with The Port Authority of New York and New Jersey to operate One World Trade Center’s observation deck, projected to open in 2015.
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Counsel to The Related Companies in connection with the development of the 26-acre Hudson Yards on the West Side, the largest private development in Manhattan since Rockefeller Center.
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Roosevelt Island Counsel to Cornell University in being selected by New York City for the development of a 2 million-square-foot Applied Sciences/Technology Campus on Roosevelt Island in Manhattan, including the execution of master project documents and the public review process.
388-390 Greenwich Street Counsel to Citigroup Inc. in its long-term lease of, and option to purchase, its 2.7-million-square-foot global headquarters at 388-390 Greenwich Street, one of the largest leases ever signed in Manhattan.
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What about areas just outside the city like Jersey City or White Plains? Jersey City in particular is having its “moment,” as they say, with developers investing in the area and building highend rental buildings. It’s attracting a young, upwardly mobile demographic to the area and demand is high. What are the odds of a refigured Midtown East rezoning being approved in the next year? That’s obviously a ways away from being resolved, but watching the process will be interesting, especially now that hearings to approve SL Green’s new project are already underway. I’m looking forward to seeing it play out. Which area of the city is most in need of infrastructure improvements? Red Hook would take off if it had better subway access. Greenpoint will most likely need infrastructure improvements as it gets built up since it is only served by the G train.
Charles Bendit CO-CEO, TACONIC INVESTMENT PARTNERS What’s your real estate prediction for 2015? We feel confident about the market in the coming year. The economy continues to recover, and demand for space in New York City remains high while supply remains constrained. Residential land prices are very high. It will be interesting to see how that plays out as every condominium developer seems to be targeting $3,000 per square foot as a sellout. Where in New York is there still untapped potential for real estate development? The Lower East Side has unbelievable potential, and we are thrilled to be a part of that neighborhood through our Essex Crossing project. Midtown West, where we are building a 450,000-squarefoot rental building, is another neighborhood with great potential. What area in New York is “overdeveloped”? In my opinion, “overdeveloped” is not a term that is relevant in New York City. Even in the most densely built areas, old buildings are being torn down and replaced with larger, taller buildings. Engineering advances have
made the 1,000-plus-foot skyscraper seemingly common these days. Is the New York market reaching another bubble? We were asked a few years ago whether people should expect a double dip, and we were cautiously optimistic as the national economy was still very early in its recovery. We are confident about the market and its underlying fundamentals but remain careful and selective in the deals we do, as we always have. Investors had way too much confidence in the market going into the subprime crisis and recession, which doesn’t seem to be the case today. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? I think Queens has the greatest potential to see a boom along the lines of Brooklyn. I think the Bronx has potential, but is less densely served by public transportation than Brooklyn or Queens, which hinders demand growth. Staten Island does not benefit from subway access, which puts it at a disadvantage relative to the other boroughs.
Which overseas real estate market do you think has the greatest potential? I was recently in Spain, and the economy there is starting to recover from its trough. There are distressed real estate opportunities available, and buying at what may be the bottom could be very lucrative. What’s your favorite local restaurant? The Musket Room in Nolita. Which fellow owner do you admire most? Related, a partner of ours. They have great vision and execution. Outside of the boardroom, what’s the best place to bond with fellow owners? The golf course, but only when I play well. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Apps and listing sites have certainly become an industry staple. We have seen first-hand how they help secure tenants and buyers. I do expect they will continue to make our industry more transparent and efficient. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. De Blasio has only been in office for nine months, so it is a little early to tell how his policies will affect the real estate industry. He has done a great job keeping the city safe, which helps our industry immensely. We support the mayor’s effort to increase affordable housing, which is essential to maintaining the diversity that is essential to the cultural fabric of New York City. He has assembled a great team to help him execute his plan.
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restaurants, retail and other desirable uses. Vernon Boulevard feels a lot like what Bedford Avenue felt like 10 years ago, but with more strollers and fewer hipsters. What about areas just outside the city like Jersey City or White Plains? When Manhattan sneezes, Jersey City and White Plains catch a cold. We are focusing on New York City. What are the odds of a refigured Midtown East rezoning being approved in the next year? Given the politics, I would not bet. But I hope it happens. The gravity of Manhattan is shifting west and without the rezoning. That will continue and Midtown East will be less and less competitive. Which area of the city is most in need of infrastructure improvements? Everyone will be grateful when the Second Avenue subway is done.
Nicholas Bienstock MANAGING PARTNER, SAVANNA What’s your real estate prediction for 2015? My prediction is that the “Londonization” of New York will continue and will accelerate. There are a small handful of cities around the globe (London, Hong Kong) that have been and will increasingly be the beneficiaries of huge offshore investment capital. We are fortunate to be near the top of this short list. Where in New York is there still untapped potential for real estate development? People forget that this city was fully built 100 years ago. So we are living in a city dominated by old and aging infrastructure. The average age of an office building in Manhattan is 70 years old. That is twice as old as our peer cities around the world. Tremendous opportunities exist to redevelop well-located, older properties installing new infrastructure that meets today’s tenants’ needs. Is the New York market reaching another bubble? I don’t think so. New York used to be a
one-trick town. It was all about finance. That is absolutely not the case today. New York is now where the most exciting, fastest growing technology and new media companies need to be. Those are the growth industries of tomorrow and the employment base they require wants to be in New York. In addition to TAMI tenants, we are signing leases across our portfolio with tenants in healthcare, tourism, advertising, engineering, architecture, professional services, education, small financial services and nonprofit—all the other legs of an increasingly diverse economy. Meanwhile, the large financial service firms have stabilized after the financial crisis. If they start to grow again, that will only add to the growth engine. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? We love Long Island City and think it is in the early stages of a boom. It has reached an inflection point with a critical mass of residential and office, which now drives
Which overseas real estate market do you think has the greatest potential? There is probably an argument that Europe is where the U.S. was three or four years ago. The banks in Europe are way behind their U.S. counterparts and subsidiaries in re-pricing and selling their problem assets. If they actually do that over the next few years, it will create opportunity for distress players and will lead to a recovery of the markets. But if they don’t, then they risk a “Japanlike” drift of many years without progress. What’s your favorite local restaurant? Casa Lever outside over the summer is great. Which fellow owner do you admire most? Our business is full of terrific people. We have been lucky to be partners with folks like Jeff Feil, Larry Gluck, David Werner and many others. Outside of the boardroom, what’s the best place to bond with fellow owners? I run into friends in the business at Sushiann all the time. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? One of the things I like most about the real estate business is that it is physical and personal. There is no substitute for a tenant entering a building, experiencing the lobby, going up the elevator and walking through their potential space. No matter how good a video you post online, you still need that physical experience. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. I don’t see damage yet. He has appointed good people. But his rhetoric is divisive and it has many people who love New York and who are responsible for the creation of lots of jobs worried.
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Jeff Blau CEO, RELATED COMPANIES What area in New York is “overdeveloped”? 57th Street. Is the New York market reaching another bubble? There will always be demand for housing in New York, as it has proven to be a place people really want to live and work. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Queens is showing signs of great potential, as are certain parts of the Bronx, especially as it relates to retail. What are the odds of a refigured Midtown East rezoning being approved in the next year? The
rezoning will happen. It all comes down to what form it takes. It is important for the longterm success of the city, and [the] city and private sector seemed focused on continuing to move the process forward. Which overseas real estate market do you think has the greatest potential? London, since North Dakota doesn’t count. Which fellow owner do you admire most? Outside of the boardroom, what’s the best place to bond with fellow owners? The industry is very philanthropic and we see a lot of our peers at board meetings and events. We are all looking for ways to make the city an even better place for all.
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110 East 59th Street, New York, New York 10022 212.421.1300 www.resnicknyc.com
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to benefit from lower Manhattan’s extraordinary recovery of vitality. What are the odds of a refigured Midtown East rezoning being approved in the next year? SL Green’s proposed building at One Vanderbilt is a terrific project to lead the way for a successful Midtown East rezoning version 2.0. Which area of the city is most in need of infrastructure improvements? Regrettably, we have failed to build on the extraordinary legacy of the infrastructure created in 19th century New York. Much remains to be done. On a positive note, there is the expansion of the subway system underway with the extension of the No. 7 line and the Second Avenue system. However, the airports, in particular, fail by comparison to other better airports around the world.
Tommy Craig SENIOR MANAGING DIRECTOR, HINES What’s your real estate prediction for 2015? There remains abundant productive capacity in the economy, and more solid economic growth is likely. The speed of the economic recovery (slow and steady) over the last few years will be inversely related to its length (more extended than the last cycle) and that seems to be evident in the positive job growth throughout much of 2014. There will be no single prevailing truth for real estate as an asset class, but instead we can expect different outcomes in different asset classes and local markets. Where in New York is there still untapped potential for real estate development? New York has had a perpetual shortage of housing for at least 30 years, since so much of the housing stock was abandoned in the late 1960s and 1970s. And, certainly this generation of buildings is making it clear that New York and many other cities will continue to find significant untapped potential in creating a more vertical city. What area in New York is “overdeveloped”? Our land-use approach needs to be rebalanced so that there is more opportunity to repurpose and reutilize the “overdeveloped” and
“underutilized” supply of buildings whose useful life has come to an end. Is the New York market reaching another bubble? The weight of history strongly favors New York as never before. The emergence of a global economy based on human capital favors a city whose very DNA has made it the escalator of opportunity for human talent and entrepreneurial capital for 350 years. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Multiplicity is a good starting point when considering New York City, and various parts of Queens, Staten Island and the Bronx are satisfying different segments of the population in a way that is necessary to accommodate the scale and diversity of our residents. Having said that, and from the vantage point of having been young a long time ago, I certainly do not mean to suggest any other place will achieve Brooklyn’s “hipster” status ... particularly if they aim to do so. What about areas just outside the city like Jersey City or White Plains? Jersey City’s proximity and relationship to the waterfront is well-positioned
Which overseas real estate market do you think has the greatest potential? There is secular stagnation throughout many parts of the first world but it is hard not to sense the optimism and aspiration for a better life throughout Asia: Singapore, Taiwan, Vietnam and large parts of China. What’s your favorite local restaurant? Pisticci. Because it is my oldest daughter’s favorite. Which fellow owner do you admire most? Those who we get a chance to work with, such as Marc Holliday, Aby Rosen, Frank McCourt and Dan Neidich; those who bounce back; and those who have continued to build and give to New York City across the generations. Outside of the boardroom, what’s the best place to bond with fellow owners? No better place than on a high hill, skiing with other developers, a very natural group for leaning forward. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Next question please. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. It is premature at this stage to say anything, but Mayor de Blasio’s support for Midtown East is an excellent first step. I would expect he fully appreciates that to achieve his housing goals, as something more than a political tool, he will have to leverage off the expertise and capital of the real estate community in some way that begins to close the gap in housing. Carl Weisbrod’s leadership experience in both the public and private sectors offers a real opportunity to move from political theory to successful execution, but in New York City you will never please everyone, so we are going to see a trade-off of greater density in exchange for more affordable housing with expected opposition from local neighborhood groups.
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boom—it’s the areas that have excellent transportation options that connect with other parts of the city. Areas that have less desirable transportation options are not seeing the same benefits as parts of Queens and Brooklyn. The Bronx has gone through an upside in certain parts, particularly around the courthouse, Arthur Avenue and the Grand Concourse, though the apartments being built are not yet attracting the same demographics as in Williamsburg and parts of Greenpoint and Long Island City. As for Staten Island, people may be looking at it as an area to be developed, but it’s more of a bedroom community than a hopping city environment. What about areas just outside the city like Jersey City or White Plains? White Plains has experienced a nice office rejuvenation. There has been lots of advancement there recently. There is very little industrial space remaining in White Plains and Jersey City.
Neil Dolgin CO-PRESIDENT, KALMON DOLGIN AFFILIATES What’s your real estate prediction for 2015? Overall, the market will be flat. We will see reductions in sale and rental prices due to the fact that prices have increased so quickly to a high point, and the affordability of these assets is eventually going to become an issue. Investors cannot afford the high price points and still retain a profit. Where in New York is there still untapped potential for real estate development? There is still room for advancement in eastern New York, Jamaica, parts of Brownsville and Bay Ridge, where the demand for more residential and other development types remain high. There are also ancillary demands for medical facilities, retail and schools. Secondary locations that have not participated in the recent gentrification of Brooklyn and Queens are seeing an influx of people, as the price per buildable square foot (residentially and commercially) is substantially less than some of the areas where the REITS and funds have purchased over the past five years. What area in New York is “overdeveloped”? I don’t think any particular area throughout the city is completely overdeveloped at the
moment. On the north side of Williamsburg and in Long Island City, for example, they are experiencing high demand and are still developing. There are not many properties left to build on, but developers are finding them. Is the New York market reaching another bubble? Yes! The current land prices are attracting the REITS, funds and money managers who pool their money together to buy property at these high prices in order to have a piece of the apple. However, they’re seeing minimal returns right now, so the bubble does exist. Even though we are in a different economy and have experienced low interest rates for a few years, it appears that the market conditions warrant a decrease, which demonstrates that we are in a bubble for the New York metropolitan area. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? I believe that Queens is currently experiencing its boom. Woodside, Astoria and Long Island City have already achieved, or are on their way to achieving, the status that Brooklyn has. It’s not all of Brooklyn or Queens that is expecting a
Which area of the city is most in need of infrastructure improvements? Parts of the South Bronx are still in need of infrastructure improvements. Perhaps the secondary locations in Queens and Brooklyn as well. The outer areas further away from the city are experiencing difficulty with the quality of their streets. Greenpoint, Long Island City and North Williamsburg roads and subways have been repaired and upgraded, and the area’s bridges are going through repairs and improvements to accommodate the large number of people who use these options. Which overseas real estate market do you think has the greatest potential? Maybe China. Its large population is coming into the 21st century and there are lots of real estate options there, as well as numerous other countries overseas. What’s your favorite local restaurant? All the restaurants on Williamsburg’s north side. I love the ability to experience all kinds of different cuisines in a relatively concentrated area. Which fellow owner do you admire most? Kal Dolgin! Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? I don’t think it will become the standard. Negotiation is a large part of all deals, and while some individuals tend to believe that they can save money by forgoing a broker, an owner or tenant will hire a broker for the purpose of being a buffer for the actual negotiation, for factors people don’t take into consideration. The transaction is quicker, and brokers are able to bring better terms and conditions up front with both parties.
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WHERE OTHERS SEE RISK, WE SEE REWARD.
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Douglas Durst CHAIRMAN, THE DURST ORGANIZATION What’s your real estate prediction for 2015? Steady but slow growth in commercial rents. The lack of supply of housing will continue to put significant pressure on residential rents.
better served by public transportation than Queens and has higher quality housing stock than the Bronx so it has a head start. Western Queens will soon be nipping at Brooklyn’s heels.
Which overseas real estate market do you think has the greatest potential? Queens.
Where in New York is there still untapped potential for real estate development? Astoria.
What about areas just outside the city like Jersey City or White Plains? We don’t speculate in foreign markets.
Which fellow owner do you admire most? Larry Silverstein.
What area in New York is “overdeveloped”? Condos. Is the New York market reaching another bubble? The commercial market is nowhere near where it was prior to 2008. The high-end condo market has to top out sometime. Just how many billionaires are there? Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Yes, eventually. Brooklyn is
What are the odds of a refigured Midtown East rezoning being approved in the next year? High. The church and the state both want it. Which area of the city is most in need of infrastructure improvements? Our waterfront is severely underutilized and with improvement it can be a recreational resource enjoyed by all New Yorkers.
What’s your Aureole.
favorite
local
restaurant?
Outside of the boardroom, what’s the best place to bond with fellow owners? Newark Airport. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Not if the brokers have anything to say about it. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. Helping. He wants and needs to build.
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Ziel Feldman FOUNDING PRINCIPAL, HFZ CAPITAL GROUP What’s your real estate prediction for 2015? The current inventory will be absorbed, including new inventory scheduled to be opened in 2015. I think pricing is at or near peak.
What about areas just outside the city like Jersey City or White Plains? Yes, because of their proximity to New York as an “urban-suburban” area, they should.
Where in New York is there still untapped potential for real estate development? The outer boroughs excluding Brooklyn.
What are the odds of a refigured Midtown East rezoning being approved in the next year? Probably good odds that the rezoning will be approved, as it will stimulate significant expansion and revitalization of the area.
What area in New York is “overdeveloped”? There is potential for over-build in the Financial District, Brooklyn and Hudson Yards.
Which area of the city is most in need of infrastructure improvements? The airports.
Is the New York market reaching another bubble? No, but pricing has gotten ahead of reality. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Potentially over time, provided affordability is the driver.
Which overseas real estate market do you think has the greatest potential? London. It was built horizontally and has the greatest potential for more affordable housing development if rezoning for greater height and density is ever permitted. What’s your favorite local restaurant? Milos. The best whole fish in the city.
Which fellow owner do you admire most? The new, young class of graduates—breaking their teeth and going out into the world looking to develop and buy property on their own. Outside of the boardroom, what’s the best place to bond with fellow owners? The golf course. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Possibly, although I would suggest that it is the smaller tenants that need strong brokers even more. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. Thus far, there has been talk, but nothing that has modified the development climate. He has selected a team of very smart people to focus on the opportunities that exist in the city.
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NEW YORK
BILL EDWARDS bill_edwards@equityoffice.com 1 212 520 8014 JESSICA KANFER jessica_kanfer@equityoffice.com 1 212 520 7999
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Winston Fisher PARTNER, FISHER BROTHERS What’s your real estate prediction for 2015? As the market stands today, I see New York continuing to do well. While I don’t foresee a catalyst for explosive growth in 2015, I see little in the way of imminent risk that would create market turmoil. I remain very optimistic about the rental market in Brooklyn and Manhattan. Where in New York is there still untapped potential for real estate development? There are ample opportunities for affordable and middle-income development. The waterfront in the Bronx is a perfect example.
already. At the same time, there’s no doubt that these areas will benefit from smart, forward-looking government policies, and ideally, the creation of public-private partnerships. What about areas just outside the city like Jersey City or White Plains? I recently met the mayor of Jersey City and was very impressed. He is a dynamic leader who is working hard to encourage and manage new development. I wouldn’t bet against him.
What area in New York is “overdeveloped”? That’s not a word I use.
What are the odds of a refigured Midtown East rezoning being approved in the next year? I really couldn’t say. As it was proposed before, it didn’t make sense.
Is the New York market reaching another bubble? Barring a sudden spike in interest rates, I don’t see a bubble. The dynamics for New York City real estate development are strong. A minor correction, while possible, would not be catastrophic by any means.
Which area of the city is most in need of infrastructure improvements? The poor condition of our airports is stifling economic growth. We are truly at capacity. It is also clear that our electrical and water systems are in desperate need of upgrades as well.
Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Many neighborhoods in these boroughs are thriving and growing
What’s your favorite local restaurant? Right now, my favorite places to eat are the Four Seasons, Sushi Yasuda and at home with my family.
Which fellow owner do you admire most? It would take too long to list the owners I admire individually. I can say that the people on the list all share a few key attributes—they are incredibly hardworking, demonstrate great grit and are unfailingly ethical in all their dealings. Outside of the boardroom, what’s the best place to bond with fellow owners? If someone wants to join me for a triathlon, I would be more than happy to bond with them. Will space apps and listing sites become the standard for smaller deals and create more direct-totenant deals? Real estate is a tangible asset that tenants want to feel and see, so I don’t see anyone renting 5,000 square feet without seeing the space. That said, technology has been a disruptive force in every industry, and it’s impossible to predict how it will change the way we all live and work over the long term. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. It’s still very early in the new administration. We are eagerly awaiting his proposed policy changes so that we can assess their potential impact on the market and how we operate our business.
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Ira Z. Fishman CEO, EVO REAL ESTATE GROUP What’s your real estate prediction for 2015? Continued strength in the leasing market and stabilized prices in the sales market. Where in New York is there still untapped potential for real estate development? I believe that most of the untapped potential will be in the new construction in the Hudson Yards and other scattered sites throughout the city. What area in New York is “overdeveloped”? The Grand Central and Plaza Districts are fully developed. Is the New York market reaching another bubble? I do not see a bubble, but I believe there will most likely be an adjustment in the next few years as a result of normal economic forces.
Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? I think Queens is already feeling it in Long Island City. What are the odds of a refigured Midtown East rezoning being approved in the next year? Not strong. With a new administration, it will take a few years. Which area of the city is most in need of infrastructure improvements? Downtown. What’s your Toledo.
favorite
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Outside of the boardroom, what’s the best place to bond with fellow owners? At REBNY functions. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? I have seen the younger brokers at EVO using these sites and having success with them. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. I have not felt any effect of Mayor de Blasio’s policies at this time. However, I do believe it is early in his term and the jury is still out.
Which fellow owner do you admire most? David Levinson.
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Dennis Friedrich CEO, BROOKFIELD OFFICE PROPERTIES What’s your real estate prediction for 2015? Significant lease-up of the office development projects within the World Trade Center redevelopment and the Hudson Yards submarket. Of course, including Brookfield’s Manhattan west project. The mid- to large-size office tenant base has become increasingly active after a number of years on the sidelines. I believe that activity will kick into a higher gear as we enter 2015, which bodes well for the attractive new office product. Where in New York is there still untapped potential for real estate development? The Far West Side of Manhattan. Although major projects are advancing across various property types, there is still untapped potential. There is increased competition for sites but also greater opportunity as the district matures. What area in New York is “overdeveloped”? I would say that no area of New York is overdeveloped. There is a need for additional residential and office stock given the growth prospects for the New York economy. New York could be considered underdeveloped as a real estate market relative to its global counterparts.
Is the New York market reaching another bubble? Potentially from a capital markets standpoint. Pricing achieved on recent sales of existing assets that carry challenges, whether locational or related to physical obsolescence, has been astounding. Although I’m bullish on New York property valuations longterm, a correction is probably in order for lesser quality assets in a higher interest rate environment. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? It is within the realm of possibility for parts of Queens or the Bronx. I don’t feel that Staten Island has the potential, particularly given location and lesser masstransit connectivity to Manhattan. What about areas just outside the city like Jersey City or White Plains? Similar dynamics are already taking hold in Jersey City. White Plains is not as strongly positioned to capture the spillover effort from Manhattan. What are the odds of a refigured Midtown East rezoning being approved in the next
year? A comprehensive Midtown East rezoning plan in 2015 is unlikely. Which area of the city is most in need of infrastructure improvements? Improvements to the Port Authority Bus Terminal and continued progress at the Penn Station transit hub are important. Which overseas real estate market do you think has the greatest potential? Of the developed markets, we see further potential in London. We like the projected office supplyand-demand dynamic for the next few years. We have been successful riding the officeleasing rebound since making a significant investment several years ago. We are launching two new office developments totaling 950,000 square feet in the city of London; one 100 percent pre-leased to Schroders, and the other with a 70 percent lease commitment from Amazon. Of the emerging markets, Brazil presents strong potential. Brazil is in a technical recession. Institutional capital is fleeing the economy, which breeds opportunity. We have a long history in that market.
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real estate markets worldwide with more interested parties than opportunities, so that organically drives investment, development and leasing to the other boroughs. What about areas just outside the city like Jersey City or White Plains? I’m bullish on Yonkers because it’s on the Hudson River with significant development there. Long Island City is also a tremendous market because of its proximity and density. What are the odds of a refigured Midtown East rezoning being approved in the next year? I don’t have a good read on it.
Scott Galin PRINCIPAL & CEO, HANDLER REAL ESTATE ORGANIZATION What’s your real estate prediction for 2015? I see continued enthusiasm in the market based on “macro developments” in New York, such as the continued renaissance of lower Manhattan, the progress in the Hudson Yards District, an incredible supply of capital and the emergence of the tech sector, which is proving more dominant than I think anyone could have envisioned. In addition, the retail sector has exploded, and we’re seeing this in various iterations, including the luxury corridors—major retailers such as Neiman Marcus and Nordstrom taking huge space on the West Side, and smaller retailers taking side street space. Where in New York is there still untapped potential for real estate development? There are untapped pockets throughout the boroughs. I’m curious to see how this plays out.
What area in New York is “overdeveloped”? New York has reached a healthy equilibrium, where new development overall seems to have reached a level that matches the demand for space. Is the New York market reaching another bubble? New York is a healthy real estate market because of several factors, including the growth of new industries (such as tech), Far West Side and lower Manhattan development, and a continued low interest rate environment. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? I don’t know if they will reach the same level as Brooklyn, but all of these boroughs will continue to see healthy gains. Manhattan is one of the most competitive
Which area of the city is most in need of infrastructure improvements? The Second Avenue subway line will be a major boon to the East Side, and the 7 line extension is a core component for making the Far West Side a reality. There is also incredible need for additional tunnels linking New Jersey and New York. The congestion and delays are a problem. Which overseas real estate market do you think has the greatest potential? I’m not expert enough to opine. What’s your favorite local restaurant? Wasabi Sushi & Bento at 561 Seventh Avenue. Which fellow owner do you admire most? Being a property owner is a difficult business. I admire any owner who takes on the responsibility and handles themselves well in doing so. Outside of the boardroom, what’s the best place to bond with fellow owners? Sporting events. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Not the standard, but they are additional tools. Brokers will continue to be an important part of the process, particularly in their ability to identify opportunities and add value. Apps can be useful, but they are inherently limited as to what they can provide. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. Too soon to tell.
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Laurie Golub GENERAL COUNSEL & COO, HFZ CAPITAL GROUP What’s your real estate prediction for 2015? Buildings will be built, apartments will be sold, the market will continue to go up in price and the rental market will flatten.
What about areas just outside the city like Jersey City or White Plains? They’ve seen significant expansion over the past 10 years and will continue to see more.
Which fellow owner do you admire most? Silverstein Properties. Larry continues to grow and push the company to the next level through very challenging times again and again.
Where in New York is there still untapped potential for real estate development? The outer boroughs that have greater land availability.
What are the odds of a refigured Midtown East rezoning being approved in the next year? The odds are favorable that it will be approved. It will trigger the rebirth of Midtown East and restore it to [an] appropriate place of prominence.
Outside of the boardroom, what’s the best place to bond with fellow owners? Lunch or dinner— an hour of concentrated alone time without distraction.
What area in New York is “overdeveloped”? Wall Street. Is the New York market reaching another bubble? No, because there is still significant foreign investment in the New York market that helps to maintain its stability, and on a relative basis, New York is still inexpensive compared to other international cities. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? I don’t think so. The lack of mass public transportation, which makes Brooklyn so ripe for density, makes development less likely in the other boroughs.
Which area of the city is most in need of infrastructure improvements? Because of the traffic levels, the city’s highways and bridges have suffered the most and are in need of improvement. Which overseas real estate market do you think has the greatest potential? London: English speaking, international city with a thriving business community and great cultural institutions. If vertical development is ever permitted, there is tremendous untapped capacity.
Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? It will probably create more direct-to-tenant interest because of the availability of information for smaller tenants who would not ordinarily have access to the same amount of information without broker involvement. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. So far, so good. His appointments have all been thoughtful, strategic and are encouraging to the industry.
What’s your favorite local restaurant? Nobu 57. Always great food; always a great scene.
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Jonathan Gray GLOBAL HEAD OF REAL ESTATE, BLACKSTONE THE HEAD OF REAL ESTATE FOR Blackstone Group, Jonathan Gray is thought to be in line to take over for the mega-firm’s Chief Executive Officer Stephen Schwarzman, or President and Chief Operating Officer Hamilton “Tony” James, despite his tender age: 43. Under his tenure, the share of Blackstone’s profits to come from real estate has soared to an estimated 60 percent of the firm’s revenue. And Mr. Gray—who has a reputation as a straight shooter, generous philanthropist and a “numbers guy”—is also a whiz kid. He made managing director by 30 and is thought to now be worth over $1 billion when Blackstone stock, bonuses and his salary are all considered
(Bloomberg News first broke news of his suspected billionaire status, in 2013). Mr. Gray made his name in a deal where Blackstone edged out Vornado to buy the Equity Office Properties portfolio all in cash in 2007. While observers wondered whether Blackstone was in over its head at the time, the private equity giant flipped many of the properties right away, and eventually exited the deal at a tremendous profit, reports show. Mr. Gray’s timing was proven stellar again when he launched a mezzanine lending platform in 2008, just as the market crashed and many borrowers had to tap mezz to fulfill capital needs. Blackstone’s real estate arm more recently pioneered the securitization of single-
family rentals, when it sold bonds backed by rents on homes it had bought up at a serious discount during the recession. Blackstone has also bought distressed real estate in Europe, though this ploy has proven somewhat fraught. Last month, reports surfaced that militant anarchists in Spain had made a point of squatting in homes owned by Blackstone to protest the fact that Spanish debt was nationalized and then sold off to the highest bidder— Blackstone. As of this printing, a moratorium on evictions in Spain was expected to be extended to May 2015, leaving Blackstone unable to collect rent on the occupied homes on which it owns the debt, The Wall Street Journal reported.—Guelda Voien
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and Long Island City as critical factors contributing to Queens’ residential and commercial emergence. The Bronx exhibits potential, but it is slower to rediscover itself, and I would venture to say that it really isn’t there yet. Staten Island seems to be a beloved borough by its residents, and as the neighborhood boasts a name to its own, I don’t expect the area to witness a similar evolution to Brooklyn and Queens.
Francis Greenburger FOUNDER & CEO, TIME EQUITIES What’s your real estate prediction for 2015? I believe the markets will continue to operate under the current momentum, but it’s consistently subject to a robust economy. However, there may be upcoming changes that affect overall enthusiasm in the real estate market. Specifically to New York, there are real estate tax policies in place that continue to take larger and larger shares of net revenue. In addition, a potential shift in Congress leadership may result in rent regulation transitioning from a state to a local issue, which could disturb the market. Where in New York is there still untapped potential for real estate development? New York City is continuously “re-discovering” many neighborhoods that were previously not seen as desirable. There are several neighborhoods throughout Brooklyn and Queens that provide livable and safe environments with a close proximity to Manhattan. Long Island City has finally achieved the vision many saw 20 years ago, while other areas such as Ridgewood, Queens and Bushwick, Brooklyn, are witnessing an influx of younger individuals now. These neighborhoods have a suitable environment with enough retail to anchor them and offer that certain desirability.
What area in New York is “overdeveloped”? I believe that Midtown East is overdeveloped and any future development plans to increase the area’s density may negatively effect its overall quality for those who live and work in the neighborhood. Is the New York market reaching another bubble? There are two arguments that could be made concerning a potential New York real estate bubble. First, clearly prices in the city are at a significantly high point. However, in comparison to cities across the globe like Paris and London, New York prices continue to stay at a competitive standard. Second, as the world is witnessing current instability, the confidence of the market may waver due to feelings of insecurity. An economy infused with a sense of safety and comfort directly correlates with strong domestic demand. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Queens has the ability to attract the younger, “hip” populations that are looking to reside in areas that have yet to witness a full “boom” such as Williamsburg. Most notably, I foresee Ridgewood, Astoria
What about areas just outside the city like Jersey City or White Plains? Time Equities has been in Jersey City for many years and it has witnessed many Williamsburg transients looking to set their sights on an alternative community that offers similar proximity to Manhattan, with that desired edge. Which area of the city is most in need of infrastructure improvements? As Midtown West is developing, the neighborhood is in need of more infrastructure to increase overall accessibility for those who are looking to reside and/or work in the area. At its current state, Midtown West operates like an island, and it will not be able to sustain this model with the increase of recent development. Which overseas real estate market do you think has the greatest potential? Currently, Time Equities Inc. is exploring the opportunity to invest in Spain, as the cycle there has been deep and hard. The country has been slow to confront the reality of bank valuations with regard to their loan portfolio. Their REOs are overvalued and their property should be in [the] hands of owners and developers, rather than the bank’s portfolio. What’s your favorite local restaurant? Gotham Bar and Grill. Which fellow owner do you admire most? Charles Benenson was my former mentor. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. I believe that Mayor de Blasio’s commitment to the quality of life in New York—like his initiatives geared toward children’s education—is a positive for the real estate community. However, I do not yet fully understand his fiscal agenda and how he will find the financial backing to support initiatives. I believe that a strong real estate market is a critical factor in strengthening and building a prosperous city. I hope that he understands how the support of our industry would directly support his long-term goals as well.
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Which area of the city is most in need of infrastructure improvements? Penn Station and the Hudson Yards. You cannot move 20 million new people through the Hudson Yards on one train line with limited stops. February can be a pretty cold month to be walking 15 minutes to your train. Adding another stop or two would be a big benefit for workers, residents and visitors. The pedestrian experience ultimately determines whether people want to be in a particular place or not.
David Greene PRESIDENT - BROKERAGE, MHP REAL ESTATE SERVICES What’s your real estate prediction for 2015? More of the same. Very busy! New York is seen around the world as a place for stability and prosperity. Where in New York is there still untapped potential for real estate development? The Far East Side of Manhattan with the eventual access to the Second Avenue subway line. This will make properties and activities east of Third Avenue easier to get to and prices will go up. The subway will run from Harlem all the way through Midtown, Gramercy Park, East Village, Lower East Side, Chinatown and lower Manhattan. A boon for all once completed and up and running. What area in New York is “overdeveloped”? No comment. Is the New York market reaching another bubble? No. Everyone wants to be here! Tech (thanks Google and Cornell Campus on Roosevelt Island), students, folks from foreign lands, people escaping conflict, people who want stability and opportunity. Billions of people hope to
Which overseas real estate market do you think has the greatest potential? No comment. What’s your favorite local restaurant? Snack EOS, Greek/Mediterranean on the corner of 39th and Ninth Avenue. Which fellow owner do you admire most? Larry Silverstein. Outside of the boardroom, what’s the best place to bond with fellow owners? At the annual REBNY ball in January.
What about areas just outside the city like Jersey City or White Plains? No comment.
Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Not a chance. They are helpful, but technology by itself does not a deal make. You must have the human element involved. Every tenant needs a buffer between him/herself and a landlord. Tenants need an effective broker who will successfully lobby for them and be sure to protect their best interests. Every transaction is different. It’s what keeps so many people interested in our business.
What are the odds of a refigured Midtown East rezoning being approved in the next year? 25-1. What is the rush? Paris was not built in a year. There are committees and politicians and thousands of interested parties who will all weigh in on this important area of Manhattan. We need to think widely. Everyone must benefit from the eventual transformation, especially the pedestrian experience, infrastructure, etc. I am not taking anything away from great developers with vision, but they cannot be the only ones to benefit.
Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. Mayor de Blasio is trying to balance his earlier statements with real estate reality, and he now understands just how important real estate is for our great city. According to NYC.gov, of the $42.4 billion dollars in taxes projected for 2013, $20.8 billion was related to real estate—fully 49 percent of all taxes coming into the city coffers. Without a strong real estate market, New York City would be a very different city.
reach America. Everyone dreams of being in New York City. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? With all of the recent activity in Queens and the Bronx, both boroughs are heading toward the boom Brooklyn has been experiencing.
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great potential as long as it is near the Path Stations. White Plains is basically flat with little or no real increase in demand.
Where in New York is there still untapped potential for real estate development? Any waterfront areas that have not seen development are likely to be rezoned into residential development.
What are the odds of a refigured Midtown East rezoning being approved in the next year? Probably small as the focus will be on affordable housing, which is probably a good thing.
What area in New York is “overdeveloped”? None come to mind. Is the New York market reaching another bubble? There is always going to be another bubble. When is the hard part. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? I do not think the Bronx or Staten Island will, but Long Island City and the waterfront in Queens can boom as Brooklyn becomes too expensive.
Which area of the city is most in need of infrastructure improvements? Almost every area has aging, underground utilities that can cause problems, as we saw with the gas explosion. I am not sure how we can prevent these old pipes from eventually breaking, but it is a problem. Which overseas real estate market do you think has the greatest potential? Not my area of expertise. What’s your favorite local restaurant? My son opened a great place for lunch in Tribeca called Arcade Bakery. Great stuff.
Which fellow owner do you admire most? Douglas Durst and Burt Resnick. Outside of the boardroom, what’s the best place to bond with fellow owners? Nonprofit boards. Will space apps and listing sites become the standard for smaller deals and create more directto-tenant deals? I don’t think they will have an impact in the short term mostly because the small tenants will look to short-term leases in the office suite/space sharing market. I’m sure brokers are canvassing more smaller growthfocused companies hoping to find a big deal down the road. Hence, these companies won’t have to look for representation because representation will find them first. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. I think the jury is still out, but I support most of his ideas. Hopefully his affordable housing plans will work.
What about areas just outside the city like Jersey City or White Plains? Jersey City has
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Leslie Wohlman Himmel PARTNER, HIMMEL + MERINGOFF PROPERTIES What’s your real estate prediction for 2015? Real estate will continue to be a “hot” asset class. Where in New York is there still untapped potential for real estate development? In the boroughs. In addition, the Upper East Side, and Midtown are ripe for redevelopment. What area in New York is “overdeveloped”? High-end residential condos—in the event the international demand subsides. Is the New York market reaching another bubble? Yes, the market feels bubble-like with record-low cap rates and record-high prices. This is, in part, being fueled by aggressive government monetary policies, as well as by foreign capital seeking a safe haven in New York City real estate. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Yes.
What about areas just outside the city like Jersey City or White Plains? I grew up in White Plains and graduated from White Plains High School. It has been a long time since I’ve been “in the know.” What are the odds of a refigured Midtown East rezoning being approved in the next year? Hopefully, but more likely in 24 months. Which area of the city is most in need of infrastructure improvements? Bridges. Which overseas real estate market do you think has the greatest potential? Despite reports of bubble fears in China, economists forecast the markets will remain strong in Asia. What’s your favorite local restaurant? I Trulli near my office and Boulud Sud near my apartment.
Which fellow owner do you admire most? Stephen Meringoff. Outside of the boardroom, what’s the best place to bond with fellow owners? Real estate events: ULI, REBNY, charity dinners. It’s a social whirlwind. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Yes. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. Mayor de Blasio should be more business-friendly and should take some ideas from the Texas politicians who have successfully attracted many new businesses.
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Marc Holliday CHIEF EXECUTIVE, SL GREEN REALTY AS CHIEF EXECUTIVE OF THE CITY’S LARGEST landlord, Marc Holliday has unsurprisingly planted SL Green at the forefront of the Midtown East rezoning melodrama with the firm’s planned 1,395-square-foot tower at 1 Vanderbilt Street across from Grand Central Terminal. Reaching that height—double the size allowed under current limits—hinges on a rezoning planned by Mayor Bill de Blasio and on SL Green pouring $210 million into renovations and infrastructure improvements at the already mobbed Grand Central. It’s also led to inevitable controversy that recently culminated in Grand Central owner and investor Andrew S. Penson’s likely quixotic $400 million bid to take the Midtown block off SL Green’s hands and (with his company, Argent Ventures) assume responsibility for the property that
would dwarf the nearby Chrysler Building. An SL Green spokesperson denounced Mr. Penson’s offer as a “publicity stunt.” But even if heated arguments over local air rights—and SL Green, in essence, not having to pay for them— do lead to a threatened $1 billion lawsuit, Mr. Holliday can take solace in SL Green’s other recent accomplishments. Just last month, the REIT picked up 319,000 square feet of office space over 13 floors in Extell [Development Company’s] ballyhooed International Gem Tower for $275 million. In April, it announced 17 recent deals totaling 86,000 square feet at 420 Lexington Avenue (a.k.a. the Graybar Building), bolstering its Grand Central District prominence even as the 1 Vanderbilt Street controversy heated up. Streaks like that should help SL Green meet its
aggressive goal of leasing out 500,000 square feet per quarter this year. And then there was last December’s 2.6-million-square-foot Citigroup relocation from Boston Properties’ 399 Park Avenue to 388390 Greenwich Street, where SL Green subsequently acquired for $783 million Ivanhoe Cambridge’s stake in the finance giant’s headquarters. Mr. Holliday described the Citigroup deal as SL Green’s “crowning achievement” of the fourth quarter of 2013 and has so far made good on his word to play offense in its wake this year. The 1 Vanderbilt dust-up will require tenacity, but SL Green has confidently stated that existing buildings on the site will be demolished in second-quarter 2016 and that tenants will move in by January 2020.—Billy Gray
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Morris Jerome PRINCIPAL, JEMB REALTY What’s your real estate prediction for 2015? Significant growth in the Class B office buildings in the Financial District .
What about areas just outside the city like Jersey City or White Plains? No.
Which fellow owner do you admire most? Larry Silverstein.
What area in New York is “overdeveloped”? Midtown.
What are the odds of a refigured Midtown East rezoning being approved in the next year? Likely.
Outside of the boardroom, what’s the best place to bond with fellow owners? Lunch.
Is the New York market reaching another bubble? No.
Which area of the city is most in need of infrastructure improvements? Bowery.
Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? No.
What’s your Cipriani.
favorite
local
restaurant?
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Steven Kaufman PRESIDENT, KAUFMAN ORGANIZATION
What’s your real estate prediction for 2015? The commercial office market in Manhattan will continue strong and low interest rates will further encourage business expansion. Where in New York is there still untapped potential for real estate development? Although we have historically been a Manhattan company, Queens is an area that the Kaufman Organization has been looking toward. The firm has been recently looking at redeveloping commercial real estate properties in areas like Long Island City and Astoria. What area in New York is “overdeveloped”? Given its history, there’s always room for development in New York City.
Is the New York market reaching another bubble? I hope not! Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Sections of Queens, like Long Island City and Astoria, appear to be heading in that direction. What about areas just outside the city like Jersey City or White Plains? The Kaufman Organization’s focus is on New York City, so I can’t really speak to that. What are the odds of a refigured Midtown East rezoning being approved in the next year? I believe that the odds are pretty good and I’m in favor of it.
What’s your favorite local restaurant? Esca. Which fellow owner do you admire most? Marty Meyer of Colliers. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? There’s always going to be a place for brokers. However, listing sites and apps can be helpful to facilitate smaller deals. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. So far, so good. His push to build affordable housing could benefit the real estate industry.
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Jared Kushner CEO, KUSHNER COMPANIES IS KUSHNER COMPANIES MAKING A PUSH into up-and-coming neighborhoods because they’re cool? Or are neighborhoods like Dumbo and the East Village cool because Kushner Companies is making a push? As chief executive officer of Kushner Companies for the last seven years, Jared Kushner has been leading the company’s diversification, including inroads into several promising neighborhoods. In a watershed deal for Dumbo, online retailer Etsy signed a 200,000-square-foot lease in May to be the anchor tenant at a 1.2-million-square-foot office complex that Kushner and RFR Realty are developing in conjunction with LIVWRK. A couple of months prior, Kushner and Extell Development made a sizable profit on an Upper West Side building. They had purchased a 220,000-square-foot building at 80
West End Avenue in the summer of 2013 for $83 million and in March of this year sold it for $195 million. Kushner Companies is also developing five single-family townhouses in Brooklyn Heights, formerly residences for Brooklyn Law School. Two of the homes were put on the market last month for $11 million and $13 million. And last month, Kushner Companies and KABR Group secured $140 million for the second tower of Trump Plaza, Trump Bay Street, a 447-unit rental apartment building that broke ground in Jersey City in May. Since Mr. Kushner became CEO, the private investment firm has closed more than $10 billion in real estate transactions. Kushner Companies has a portfolio of more than 20,000 multifamily apartments and over 11 million square feet of office, industrial and retail space across the country. It also owns
close to 100 buildings in New York City. In his first year with the company, Mr. Kushner (also chairman of Observer Media, the parent company of Commercial Observer) oversaw the firm’s $1.8 billion purchase of the iconic 1.55-million-square-foot office tower, 666 Fifth Avenue, then achieving a record for the largest single asset transaction in the country. Mr. Kushner has also been an early adapter on the technology front, investing in, advising and sitting on the boards of start-ups including Urban Compass, Honest Buildings and 42 Floors. Mr. Kushner worked with former Mayor Michael Bloomberg’s administration on WiredNYC, renamed WiredScore. It is a “LEED for broadband” certification that evaluates the broadband connectivity and infrastructure of office buildings.—Lauren Elkies Schram
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Robert Lapidus PRESIDENT & COO, L&L HOLDING COMPANY What’s your real estate prediction for 2015? Continued growth. Increased foreign capital into New York City. Midtown makes relative comeback. Where in New York is there still untapped potential for real estate development? A rezoning plan that would induce owners to redevelop would be the most impactful in Midtown. What area in New York is “overdeveloped”? None. Is the New York market reaching another bubble? No. Although the market is always cyclical, New York is in a relatively strong position globally, and there is no sign of reduction in foreign capital coming to New York . Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Parts of these areas will experience similar booms over time, especially
those near transportation or on the water. What about areas just outside the city like Jersey City or White Plains? Jersey City will benefit from improving fundamentals in downtown New York City. White Plains, not so much. What are the odds of a refigured Midtown East rezoning being approved in the next year? Hopefully good. Which area of the city is most in need of infrastructure improvements? Citywide. Which overseas real estate market do you think has the greatest potential? In the short-term, parts of Europe that were hit hardest by [the] latest downturn, such as Spain and parts of Eastern Europe. In the long-term, 24/7 global gateway cities like London and Hong Kong.
Which fellow owner do you admire most? Jonathan Gray. Outside of the boardroom, what’s the best place to bond with fellow owners? The Hamptons during the summer when you have more time to bond on a personal level. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Technology will continue to impact our industry. These sites will aid tenants and landlords, but will not replace brokers in New York City. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. Too early to tell.
What’s your favorite local restaurant? Milos and Eleven Madison Park.
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David Levinson CHAIRMAN & CEO, L&L HOLDING COMPANY, LLC What’s your real estate prediction for 2015? Increasing valuations and rents. Where in New York is there still untapped potential for real estate development? Throughout the city, reimagining existing buildings into sustainable 21st century buildings is the greatest untapped potential. What area in New York is “overdeveloped”? I don’t believe any area is overdeveloped. Is the New York market reaching another bubble? It’s not reaching another bubble at this time. The demand for New York City real estate continues to increase because it is a safe haven for investment with a high degree of liquidity. However, like all markets, there are cycles.
different, and they each will experience their own unique growth patterns. Brooklyn has its own special dynamics that drive its current growth.
Which overseas real estate market do you think has the greatest potential? London–because it has similar characteristics to Manhattan. What’s your favorite local restaurant? Milos.
What about areas just outside the city like Jersey City or White Plains? There is an urbanization trend moving back into cities. Jersey City is more likely to experience growth than White Plains. What are the odds of a refigured Midtown East rezoning being approved in the next year? Midtown East rezoning is necessary, but I think it will take longer than a year. Which area of the city is most in need of infrastructure improvements? Infrastructure improvements are needed citywide.
Which fellow owner do you admire most? Steve Ross. Outside of the boardroom, what’s the best place to bond with fellow owners? At the beach or at a Yankees game. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? I have no idea, however, technology is changing everything we do in unexpected ways.
Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Each of the boroughs is very
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Anthony E. Malkin CHAIRMAN, PRESIDENT & CEO, EMPIRE STATE REALTY TRUST What’s your real estate prediction for 2015? Absent surprises, continued steady strength in leasing as tenants gravitate to new installations, reflecting new business processes and practices in technologically advanced and well-located buildings. Greater tenant awareness of energy efficiency and sustainability, as contributors to cost control and employee attraction and retention. Continued attraction of capital to New York City as it and London remain the world leaders in quality of life, transparency, rule of law, open markets, culture and creative minds. What could be a surprise? By definition a surprise is something which is not expected! Where in New York is there still untapped potential for real estate development? The breadth of New York City submarket attractiveness to investors is truly staggering. In prior cycles, prices came near today’s peaks,
but the breadth of the submarkets in which peak pricing was achieved was narrow. Today is very different, and that is driven by a perception from decades of driving down crime, and not just development, but redevelopment of New York City’s entire neighborhoods. That trend continues, so long as the de Blasio administration keeps streets safe, including beating back disturbing new developments from squeegee men, to rabid cartoon characters and tour ticket hawkers who assault our visitors, workers and citizens. Is the New York market reaching another bubble? Pricing is as high or higher as it has ever been across a much more broad range of submarkets. That being said, an awful lot of that is the “Londonization” of New York City; New York City has become an international destination favorite for capital, workers and visitors.
Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Hard to see Staten Island with the same prospect for a boom, but certainly Queens and the Bronx are already resurgent. What about areas just outside the city like Jersey City or White Plains? There is an interesting phenomenon: the delay of young professionals to marry or partner. There has literally been a decade shift back. As these young professionals go through this decade, partner or marry, and have children, they will be confronted by the same needs, and one should expect they will move to [the] suburbs and offices will follow. What are the odds of a refigured Midtown East rezoning being approved in the next year? High.
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Stephen Meringoff PARTNER, HIMMEL + MERINGOFF PROPERTIES What’s your real estate prediction for 2015? Level commercial rents in general, with some areas like Times Square retail seeing record rent attainment. Residential will continue to rise due to generally constrained supply. Where in New York is there still untapped potential for real estate development? Queens. What area in New York is “overdeveloped”? Midtown West. Is the New York market reaching another bubble? Not a bubble in rents, but recent sales prices have outrun the fundamentals. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? “Ever” is a long time.
Queens will likely benefit greatly from the Randall’s Island Technion/Cornell NYC Tech development. What about areas just outside the city like Jersey City or White Plains? In general, I am not a believer in the suburban office. What are the odds of a refigured Midtown East rezoning being approved in the next year? High. Which overseas real estate market do you think has the greatest potential? Asia.
Outside of the boardroom, what’s the best place to bond with fellow owners? Closing dinners. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? We continue to rely on leasing brokers for all of our leases. They are indispensable. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. Neutral. Some beneficial decisions, some not. We are still waiting to see his real estate tax policy.
What’s your favorite local restaurant? The East Pole. Which fellow owner do you admire most? Gary Barnett.
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Martin Meyer VICE CHAIRMAN, COLLIERS INTERNATIONAL Where in New York is there still untapped potential for real estate development? [The market is] very active and pricing [is] going up [in] all areas of the city. What area in New York is “overdeveloped”? Not really anywhere. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Yes, but it will take time. What about areas just outside the city like Jersey City or White Plains? Not as active. Totally based on government credits.
What are the odds of a refigured Midtown East rezoning being approved in the next year? I don’t think this is going to happen next year. Which area of the city is most in need of infrastructure improvements? Soho. Which overseas real estate market do you think has the greatest potential? Europe. What’s your Hatsuhana.
favorite
local
Outside of the boardroom, what’s the best place to bond with fellow owners? Lunches. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Maybe on small space. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. Hurting.
restaurant?
Which fellow owner do you admire most? [Larry] Silverstein.
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generally improving U.S. economy, will help avoid another bubble. However, it is always possible that outside forces beyond our control will cause market disruption and lead to a down market. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? My focus is on Manhattan, particularly emerging areas, such as downtown and the Far West Side. What about the areas just outside the city like Jersey City or White Plains? Those areas are lovely and an important part of the New York metro area, but from an economic and real estate point of view, the county is divided into two sections—New York City and everywhere else. Manhattan in particular attracts the various different foreign banks and sovereignties.
Joseph Moinian FOUNDER & CEO, THE MOINIAN GROUP What’s your real estate prediction for 2015? The low-interest environment, coupled with better foreign policy and increased activity of foreign investment from overseas, will contribute to continued development, leasing, lending and investment activity throughout the five boroughs of New York City. Activity will extend across all real estate asset types, including land. Where in New York is there still untapped potential for real estate development? Our early investment in less-developed areas like lower Manhattan and the Far West Side are finally coming to fruition. We are excited about the successes of our projects downtown, including 180 Maiden Lane, as well as The Residences at the W New York Downtown. And our properties along 11th Avenue, including Atelier, 605 West 42nd Street, 3 Hudson Boulevard and our 1.8 million-square-foot tower in the middle of the
Hudson Yards district are at the forefront of the movement along the Far West Side. The new Hudson Park and Boulevard, and the new 7 line subway extension, will play key roles in introducing what will ultimately be one of the greatest master development projects in the world. What area in New York is “overdeveloped” Upper East Side. Is the New York market reaching another bubble? New York City is still very much in growth mode, thanks to good discipline in financing, be it lending or borrowing, as well as foreign investment, the expanding technology sector, numerous start-up and media firms, and a global desire to live, work and visit here. Although real estate and the cost of living is high, New York City is still well priced on a global basis. The symbiotic relationship between these forces, as well as a
What are the odds of a refigured Midtown East rezoning being approved in the next year? Not likely, with exception to some specialized, isolated and beneficial projects. Which overseas real estate market do you think has the greatest potential? I am particularly drawn to Hong Kong, London and Tel Aviv. What’s your favorite restaurant? Cipriani on 59th Street. Which fellow owner do you admire most? When it comes to historical achievement and role models, I most admire my close friend, Larry Silverstein. Outside of the boardroom, what’s the best place to bond with fellow owners? Over a great meal. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Our business community is constantly evolving at the hands of technology. These applications will drastically simplify the process, allow for the collection of big data and aid developers to properly target initiatives with precision. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. As with all mayors, Mayor de Blasio has a particular vision for New York City. He is a strong proponent of affordable housing and understands that the real estate industry will build this new product. The entire real estate industry is looking forward to the release of his program to help accomplish this goal. The mayor is also working with the real estate market at large to remain business-friendly. I am encouraged with his progress thus far.
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What about areas just outside the city like Jersey City or White Plains? No opinion! We stick to New York City. What are the odds of a refigured Midtown East rezoning being approved in the next year? I have not been following this closely, but it seems like a very good idea.
Jason Muss PRINCIPAL, MUSS DEVELOPMENT What’s your real estate prediction for 2015? Land will continue to rise in price as condo sales continue, albeit at a slightly slower pace. Retail rents will continue to strengthen as new retail concepts are introduced—especially in the upscale food market under 5,000 square feet. Office rents will continue to strengthen and fewer landlord concessions will be offered as tenants try to lock in space for the long term, recognizing that the supply-demand balance won’t change very much any time soon. Where in New York is there still untapped potential for real estate development? Downtown Brooklyn/ Fort Greene, east of Flatbush Avenue. East Harlem—especially along Park Avenue and Third Avenue between 106th and 125th Streets for residential construction. Many of those blocks are ripe for an increase in FAR, and will make for a good trade for owners/developers to produce affordable housing in exchange for higher density. Central Brooklyn, from Prospect Heights all the way to Sheepshead Bay, where access to jobs in north Brooklyn and Manhattan is strong and new waves of people keep moving in.
What area in New York is “overdeveloped”? There is no such thing as overdevelopment in New York. If crowds bother you, this is not a good place to live. Is the New York market reaching another bubble? It would certainly be prudent to assume we are entering a period where values might deflate a bit. But the term “bubble” is highly charged and I would not use it. Worldwide interest rates are really what has driven this run-up in values and that is out of our control. Stick to the $2550 black jack table and keep your ATM card at home, but enjoy the game you are playing. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? It is already happening in St. George, Staten Island and many areas of Queens, notably Astoria and Long Island City. Queens is a megacity by itself and would be considered one of the hottest cities in the country if it were independent. Occupancy in Queens is extremely high, at historic levels, and development will continue. Whatever is built there will just be a very small addition percentage-wise to what exists.
Which area of the city is most in need of infrastructure improvements? All bridges and tunnels and the subway infrastructure. Without continuing to reinvest in these things, any specific neighborhood infrastructure improvements will be irrelevant. We need to keep tourists coming, which is crucial to so many parts of our local economy. Which fellow owner do you admire most? [Joel] Picket, [David] Walentas and [Tishman] Speyer—all for different reasons, but all three epitomize New York City real estate. Outside of the boardroom, what’s the best place to bond with fellow owners? I find AIPAC Policy Conference and AIPAC real estate events to be a great opportunity to talk to many different owners. Also the annual ICSC convention in Las Vegas, as well as the annual REBNY dinner and various REBNY sponsored events. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? No to the first question. More than there are now? Perhaps. Commercial real estate really needs the personal touch. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. I think we should, as an industry, continue to make our concerns known to politicians on all levels of government. As long as the mayor continues to keep the city safe, clean and welcoming to our tenants, most of whom are small corporations or locally owned retailers, and hotel guests feel safe coming we will be fine. In the long term, we have to make sure we can afford all of the pension obligations the city has moving forward.
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What are the odds of a refigured Midtown East rezoning being approved in the next year? I don’t think anyone expects the rezoning to be fully approved in the next year, although I think it will advance toward approval. I’m looking forward to seeing how de Blasio’s plan for rezoning the Grand Central corridor plays out, it is such an important part of the city. Which area of the city is most in need of infrastructure improvements? It would be great if we could improve Penn Station and our airports. They collectively serve as the gateway to New York City (along with Grand Central Terminal, which is beautiful) and don’t represent who we are as a city.
Paul Pariser CO-CEO, TACONIC INVESTMENT PARTNERS What’s your real estate prediction for 2015? In Manhattan, land prices are at an all-time high and space is very tight. Developers are forced to be more creative with their projects in order to achieve the rents or prices they need to make their project economically feasible. Tall towers, high design and incredible amenities seem to be standard these days. I think we will see some spectacular buildings being built in the coming years. It will also be interesting to see how the strong foreign demand for New York real estate investments drives the market next year. Where in New York is there still untapped potential for real estate development? We love the Lower East Side, although land is very constrained there, which limits development. Parts of Brooklyn, like Gowanus and Bushwick, have great potential. What area in New York is “overdeveloped”? The 57th Street corridor is a great example of increasing density by building taller buildings. I don’t think it is “overdeveloped,” but I think it is the best example of how New York developers build vertical when they can no longer build horizontal.
Is the New York market reaching another bubble? Overall, we are optimistic about the market right now. The economy continues to improve and New York City is where everyone wants to be. However, we can’t forget that the real estate market is cyclical in nature, and we will eventually see a down cycle. We are very selective in the investments we make and very strategic in targeting areas of the city we believe will attract buyers and tenants in difficult years. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? The Long Island City waterfront has changed dramatically over the past decade, and I expect we will see significant development in other neighborhoods in Queens that have great subway access. I don’t think we will see a boom in the Bronx or Staten Island in the near term. What about areas just outside the city like Jersey City or White Plains? Jersey City and Hoboken are doing very well, as they are more affordable alternatives to Manhattan and Brooklyn, but also offer great access to Manhattan.
Which overseas real estate market do you think has the greatest potential? Any of the truly global cities, such as London, Hong Kong and, of course, New York, have great potential as the world’s population and demand for connectivity increases. Continued globalization will benefit the magnet cities tremendously. What’s your favorite local restaurant? I miss Pastis and really hope they return to the Meatpacking District. Which fellow owner do you admire most? Related, a partner of ours at the Caledonia in Chelsea and Tishman Speyer come to mind. Outside of the boardroom, what’s the best place to bond with fellow owners? Hiking in the mountains in Colorado. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Yes, technology will continue to change the way we do business and the way we market our properties. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. We are thrilled to be working with the city on a number of projects including 525 West 52nd Street, an 80/20 building, and Essex Crossing on the Lower East Side, which is 50 percent affordable. Mr. De Blasio has a great vision for the city, and has the right team to help him execute it in a way that benefits the city, the public and developers.
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Michael Phillips PRESIDENT, JAMESTOWN What’s your real estate prediction for 2015? We will see continued movement into Midtown South, as well as a focused interest in the boroughs and Midtown. Where in New York is there still untapped potential for real estate development? I think any area in the outer boroughs with good access to transit has great potential for development. What area in New York is “overdeveloped”? The Williamsburg waterfront. Is the New York market reaching another bubble? I would say pricing is full, but the fundamentals of New York City endure.
Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Certainly we’re seeing a growth in Long Island City that is gaining momentum to Brooklyn with increased residential and office developments.
Which overseas real estate market do you think has the greatest potential? I’m greatly inspired by the markets in Bogota and Lima.
What about areas just outside the city like Jersey City or White Plains? Jersey City continues to grow because of its close proximity to downtown and provides easy access for those working in the city.
Outside of the boardroom, what’s the best place to bond with fellow owners? I’ve met a lot of my fellow owners around important charitable organizations and events in New York.
Which area of the city is most in need of infrastructure improvements? Definitely the outer borough waterfront areas hit by Sandy are in need of long-term infrastructure improvements.
What’s your favorite Rotisserie Georgette.
local
restaurant?
Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? I think we will see a lot of growth in this area, and technology will play an exponentially more important role in the real estate space.
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Jason Pizer PRESIDENT, TRINITY REAL ESTATE What’s your real estate prediction for 2015? We live in unsettled times, but I’m confident in the city and Hudson Square will continue to thrive. Where in New York is there still untapped potential for real estate development? There is no undiscovered neighborhood. But given the city’s dynamics, New York is re-discoverable. There will always be spots with untapped potential. You simply have to find them, come early to the game and take the risks that your instincts and timing are right.
Island City, St. George [and the] South Bronx. What about areas just outside the city like Jersey City, White Plains? I am a big fan of White Plains. Easy access to Metro North as well as Bronx River Parkway, 287 and 684. Walkable and good mix of retail and commercial space.
What area in New York is overdeveloped? New York’s strength is density. The engine is mass transit. Maintain and improve the infrastructure, a crucial and costly imperative, and no area is overdeveloped.
What are the odds of a reconfigured Midtown East rezoning being approved in the next year? Unlikely, but highly likely in 2016. It would be surprising if the accommodation between funding infrastructure improvements and allowing greater density is struck and approved in 2015. Additional bellwether projects could still advance. Hedging the bet: if anyone can pull it off, Carl [Weisbrod, director of the city’s Department of City Planning] would be the one.
Is the New York area reaching another bubble? The pressures of an over-heated market are a fact of life in a highly-competitive and restive, global economy. Is New York in imminent danger? No.
Which area of the city is most in need of infrastructure improvement? The city, all cities, underspend. We need a federal infrastructure bank—a mechanism like the interstate Highway Trust Fund to catch up.
Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Check out Astoria/Long
What’s your favorite local restaurant? Pepolino.
Which fellow owner do you admire most? There are so many New Yorkers that I admire, not limited to the real estate industry. Outside of the boardroom, what’s the best place to bond with fellow owners? A ski mountain. A restaurant. Rarely an event. Never a boardroom. The best place? Where friends and colleagues are. What space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? I’m not familiar with these. I’ve enjoyed real estate because you can touch it, and I still think that is the only way to judge property. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? He’s articulated his agenda and wants the private sector to do more to carry out public policy in return for rezoning. In essence, that’s a targeted pro development posture because if you make the burden too great, nothing will get built. He has an experienced professional team in place with the capacity to negotiate with the industry and get the balance right.
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Eran Polack CEO, HAP INVESTMENTS What’s your real estate prediction for 2015? I think the market will continue to remain strong. Where in New York is there still untapped potential for real estate development? Harlem and Washington Heights. What area in New York is “overdeveloped”? 57th Street and West Chelsea will be. Is the New York market reaching another bubble? Not for another five to seven years. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Queens maybe. But, nothing compares to Brooklyn’s diverse culture.
What about areas just outside the city like Jersey City or White Plains? I am very bullish on Jersey City. We are developing a 42-story, mixed-use tower in Journal Square. What are the odds of a refigured Midtown east rezoning being approved in the next year? I don’t know. Which area of the city is most in need of infrastructure improvements? I don’t know.
Which fellow owner do you admire most? Michael Stern of JDS. Outside of the boardroom, what’s the best place to bond with fellow owners? I like going to sports events. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. I don’t think we can tell yet. Let’s see if his proposed policies take effect.
Which overseas real estate market do you think has the greatest potential? Africa. What’s your favorite Gramercy Tavern.
local
restaurant?
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Scott Rechler CHAIRMAN & CEO, RXR REALTY
RXR REALTY CHAIRMAN AND CHIEF Executive Officer Scott Rechler relinquished another impressive title this spring when John Degnan succeeded him as chair of the Port Authority of New York & New Jersey. But Mr. Rechler remains as vice chairman and spoke to Commercial Observer about his ongoing commitment to root out corruption at the embattled agency. “As acting chairman,” he said, “the best thing was starting to change the culture where we made the Port’s board more transparent and made the dialogue of the commissioners more robust publicly. There was a period where the board would go into the backroom and rubber stamp deals behind closed doors. I made it a point to hold the debate in public and
encouraged constructive discourse between the commissioners.” On that note, Mr. Rechler described as “healthy” the heated public dialogue over the Port Authority’s (some say excessively) generous financing of Mr. Silverstein’s 80-story tower at 3 World Trade Center. In June, the bistate agency declined Silverstein’s request for a $1.2 billion subsidy—Mr. Rechler had supported it—but voted to approve a $159 million reserve fund going toward the project. Elsewhere in lower Manhattan, RXR in May closed on a $330 million acquisition of 61 Broadway, marking the firm’s first foray into the Financial District. Mr. Rechler said that the building would target tenants from the TAMI sector as they continue to flock south toward the area.
More recently, RXR last month announced plans to bring 200,000 to 300,000 square feet of office space to Pier 57 on the Hudson River near Chelsea Piers. It entered the reportedly $350 million project in a joint venture with Youngwoo & Associates. A bigger gamble commenced in August when RXR’s 99-year lease on 75 Rockefeller began. Critics wonder whether a complete renovation of that 630,000-sqaure-foot tower will be enough to charge rents of $80 per square foot that would justify that deal’s $420 million price tag. Yet RXR’s ability to attract tenants on the upswing like Spotify—in January the music streaming site expanded to 123,000 square feet in RXR’s 620 Avenue of the Americas—auger well for future leasing campaigns.—Billy Gray
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Burton P. Resnick CHAIRMAN & CEO, JACK RESNICK & SONS What’s your real estate prediction for 2015? Very bullish as long as interest rates remain low. Where in New York is there still untapped potential for real estate development? All five boroughs. What area in New York is “overdeveloped”? None. Is the New York market reaching another bubble? We don’t think so as long as [the] economy stays healthy. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Not for a while.
What about areas just outside the city like Jersey City or White Plains? Jersey City—yes. White Plains is over-built and over-priced.
Which fellow owner do you admire most? The Rudins and the Roses and Fishers and Silverstein.
What are the odds of a refigured Midtown East rezoning being approved in the next year? Hopefully [it will], but [I’m] doubtful.
Outside of the boardroom, what’s the best place to bond with fellow owners? The Real Estate Board of New York.
Which area of the city is most in need of infrastructure improvements? The entire city: roads and bridges and airports are awful. Underground is a calamity waiting to happen.
Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. Too early to decide.
Which overseas real estate market do you think has the greatest potential? China, India. wwWhat’s your favorite local restaurant? Sette Mezzo.
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Steven Roth CHAIRMAN AND CEO, VORNADO VORNADO REALTY TRUST’S CHAIRMAN AND chief executive Steven Roth has spent this year restructuring the public REIT’s portfolio, separating its core office and retail properties, while selectively mapping out luxury condominium and hotel projects. Vornado in April announced that it would spin off 81 U.S. shopping centers into a separate publicly traded REIT known as SpinCo. The move serves as a way to “de-conglomerate two very different businesses,” Mr. Roth, 72, told shareholders at the time. Vornado began shedding some of its nonNew York retail assets last year with the sale of more than a dozen properties, including the
$34 million sale of The Shops on Lake Avenue in Pasadena, Calif. At the same time, Mr. Roth’s company partnered with Crown Acquisitions this July in the $700 million acquisition of retail condominium space at the St. Regis New York hotel located at 2 East 55th Street. The recently purchased space totals 24,700 square feet in addition to air rights at the St. Regis and a neighboring townhouse. On the New York residential front, the commercial real estate behemoth received a $600 million loan from Bank of China in the beginning of the year to help finance its long-delayed luxury condominium at 220 Central Park South. The REIT also has plans
for a “seven-star hotel” at the site of the nowclosed Rizzoli Bookstore at 31 West 57th Street, as The Wall Street Journal reported last month. Meanwhile, Vornado has kept a noticeable focus on its high-end office towers in New York and Washington, D.C., including One Penn Plaza; 888 Seventh Avenue, the company’s executive headquarters; and the Universal Buildings in D.C., which Vorando refinanced with a $185 million loan in August. Mr. Roth, who joined Vornado in 1980 when its only asset was the now-defunct Two Guys discount retail chain, has since grown the company’s real estate holdings to more than 100 million square feet.—Damian Ghigliotty
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Bill Rudin VICE CHAIRMAN & CEO, RUDIN MANAGEMENT BILL RUDIN HELMS ONE OF NEW YORK City’s most storied—and successful—real estate families. As other outlets have pointed out, not only is the Rudin family, which began acquiring buildings in 1905, one of the largest owners of real estate in Gotham, it has held that post for perhaps the longest amount of time. In fact, in recent years the Rudins have almost entirely stopped developing properties, instead simply maintaining their vast portfolio, which is estimated to include around 14 million square feet of space. Among the buildings owned by the Rudin family are office buildings 345 Park Avenue, 3 Times Square and 80 Pine Street. Descended from Louis Rudinsky, a Polish
immigrant who bought a Fifth Avenue property more than 100 years ago, current Rudin family members staff most top posts in the extremely successful development company. The secret to their continued dominance? They get along. This trait has allowed them to avoid costly intrafamilial feuds. “With our fathers, whoever screamed the loudest ended up winning an argument,” Rudin Management President Eric Rudin told The Wall Street Journal earlier this year. “But we are able to talk things out.” The one development project the firm has undertaken in recent years proved daunting, at least from a public relations perspective.
Greenwich Lane, a residential condominium and townhome development, which rose in the space previously occupied by St. Vincent’s Hospital, has received staggering interest—prices top $3,500 a square foot— even as it has come to emblematize, for some, the increasingly exclusionary tenor of housing being built in New York City (often at the expense of other development). While many protested the closing of the hospital, Mr. Rudin did grant many concessions to the city in exchange for the right to build on the plot. The firm will build a school, donate to local arts organizations and also voluntarily scaled down the project.—Guelda Voien
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What about areas just outside the city like Jersey City or White Plains? They are two very different markets. Jersey City is an excellent location for reasonably priced housing for young professionals—in some cases with two incomes— and/or families. On the commercial side, there remains opportunity for office development as a result of more reasonable land values, when compared to Manhattan. White Plains at the moment represents excellent value in both commercial and residential space, and we are beginning to see the repurposing of properties in that market. I believe the Westchester office market will begin to recover in 2015 as supply diminishes and demand starts to increase.
Gregg Schenker PRESIDENT, CO-MANAGING PARTNER, ABS PARTNERS REAL ESTATE What’s your real estate prediction for 2015? Emerging markets will continue to improve, particularly those with access to mass transit such as east Williamsburg, Bushwick and areas seeing new development—especially the west side of Manhattan with Hudson Yards. Midtown South will start to see a leveling off of value based upon investor expectations and enormous past year-over-year growth. Interest rates will be watched closely by investors, as the potential to affect value is material at this time, given the significant cap rate compression seen over the past few years. Where in New York is there still untapped potential for real estate development? There is significant potential along the waterfronts facing Manhattan in Brooklyn and Queens. Long Island City, Greenpoint and Astoria will experience new development, in addition to East Williamsburg and Bushwick. The entire west side of Manhattan, from 23rd Street all the way up to Dyckman Street, is prime for growth.
What area in New York is “overdeveloped”? I am not aware of any at this time. Is the New York market reaching another bubble? No. New York is one of the most important cities in the world, it continues to remain safe, and among other things, serves as a placeholder for capital. That trend will continue, and values are expected to remain stable. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Queens has significant potential as its diverse neighborhoods continue to evolve, along with the influx of young, well-educated professionals who are taking up residence. There is a significant rezoning effort underway in Queens, which includes neighborhoods like Astoria. The density created as a result of the rezoning will dramatically and positively change these neighborhoods. Staten Island has geographic constraints and limited access to mass transit. A subway to Staten Island would change the dynamic dramatically.
What are the odds of a refigured Midtown East rezoning being approved in the next year? The rezoning is trapped in a political quagmire and is unlikely to be resolved next year. I have great hope for eventual approval, as the rezoning is fundamentally sound and important for the future of New York City. Once approved, the rezoning will spur development and create modern, technologically-advanced office buildings that are sorely needed in the area. Which overseas real estate market do you think has the greatest potential? London. It is the best alternative outside of New York for a stable economic and political environment. It is adjacent to Europe at large and is a relatively short flight to a number of major population and economic centers. Moreover, the currency is not directly tied to the complications presented by the Euro. What’s your favorite local restaurant? Gramercy Tavern and ABC Kitchen. Which fellow owner do you admire most? The Rudin family. Their decades-long commitment to improving the quality of life and business in New York is incredible. A remarkable effort and wonderful family. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. I support our mayor. I believe the administration could benefit from hiring additional sophisticated, experienced business people from the private sector to serve in the public sector and to seek out highly regarded intellects with policy-making experience to help create and shape public policy. Winston Churchill once said, “Democracy is the worst form of government, except for all those others that have been tried.”
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Sam Schneider CO-FOUNDER & MANAGING PARTNER, IMPERIUM CAPITAL What’s your real estate prediction for 2015? I believe real estate cap rates and fundamentals will hold relatively steady in the coming year. Where in New York is there still untapped potential for real estate development? Brooklyn is still an untapped market. I do not believe it has reached its full potential in terms of market growth. What area in New York is “overdeveloped”? There is so much demand it is hard to say anywhere in New York City is overdeveloped. The eastern part of the Upper East Side may come closest to being an overdeveloped or oversupplied neighborhood. Is the New York market reaching another bubble? So many properties are being purchased with large amounts of equity. The debt is not becoming overly aggressive in terms of LTV [or loan-to-value]. I do not see a bubble happening anytime soon.
Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? They have a chance to see a fair amount of growth, but I do not think they will experience the boom that Brooklyn has experienced. Brooklyn has become an international brand. What about areas just outside the city like Jersey City or White Plains? I believe they do have a chance to see growth, but not at the same rate as Brooklyn. What are the odds of a refigured Midtown East rezoning being approved in the next year? I don’t think any of us know when or if that will take place. Which area of the city is most in need of infrastructure improvements? North of Hudson Yards on the West Side, as development continues in that area.
What’s your favorite local restaurant? ZZ’s Clam Bar in Greenwich Village. Which fellow owner do you admire most? Stephen Ross of Related. Outside of the boardroom, what’s the best place to bond with fellow owners? Dinner and drinks at a local New York restaurant. Will space apps and listing sites become the standard for smaller deals and create more directto-tenant deals? I believe so much of what we do in real estate is based on relationships, and face-to-face time will remain important. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. Mayor de Blasio has done a good job since beginning his term. I believe he truly wants to see positive change for the city in all forms.
Which overseas real estate market do you think has the greatest potential? We don’t invest overseas and can’t comment.
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Larry Silverstein CHAIRMAN, SILVERSTEIN PROPERTIES KNOWN BEST FOR HIS WORK ON 7, 3 AND 4 World Trade Center, Larry Silverstein’s company, Silverstein Properties, actually has ongoing projects across the globe in China, Israel and, of course, in New York. Born in Brooklyn, Mr. Silverstein attended the public high school then known as Music & Art and studied music. He began buying commercial properties in the 1970s, nabbing 44 Wall Street, and by 1986 had completed 7 World Trade Center. Silverstein Properties has since steadily acquired and developed many facets of the New York City skyline. By 1989, the firm owned 10 million square feet of space, according to reports. His portfolio still includes a variety of
commercial and residential space, such as office buildings 1177 Avenue of the Americas and 120 Broadway and the luxury residential tower River Place. While his commercial projects—and their attendant controversies— have gobbled up much of the coverage about Mr. Silverstein and his projects, he also developed the hulking residential buildings Silver Towers, a 1.2-million-square-foot Far West Side behemoth, in 2010. While questions about his insurance on 7 World Trade Center clouded his dealings for a few years following the 9/11 tragedy, the talk did not slow Mr. Silverstein down. In recent years the firm has broken ground on a hotel/residential project at 30 Park Place, which should become lower Manhattan’s
largest residential tower, and bought up some of the last undeveloped space in Manhattan, at 1 West End Avenue, for $160 million (actually, a steal!) last year. But last year also brought fresh controversy, when Silverstein Properties was again all over the news after the 30 Park Place project received a 421a tax abatement despite not providing affordable housing. Nevertheless, his firm has forged ahead this year. Silverstein Properties is progressing with the residential project on which it is partnering with Mercedes Benz on Manhattan’s burgeoning Far West Side. And recently the company won a bid to build a massive bullet train project in Shenzhen, China—one of the world’s fastest growing cities.—Guelda Voien
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Rob Speyer PRESIDENT AND CO-CEO, TISHMAN SPEYER THIS MONTH MARKS THE REOPENING OF the historic Rainbow Room restaurant and event space atop 30 Rockefeller Plaza. Tishman Speyer operates Rockefeller Center and oversaw the landmarked space’s renovations. Tishman Speyer also controls another New York institution, the Chrysler Building, a gold LEED-certified building. Since 2008, Rob Speyer has served as the president and, with his father Jerry, co-chief executive officer of Tishman Speyer. The younger Speyer joined the firm in 1995 following a brief period as a journalist and has helped catapult the firm into the city’s largest family-run landlord. Tishman Speyer took a major hit during the real estate bust when it lost Stuyvesant Town and Peter Cooper Village to creditors. But the
firm appears to be going strong. The firm achieved a coup earlier this year when it bought three Far West Side properties—507 West 34th Street, 510-28 West 35th Street and 435 10th Avenue—for $438 million. Tishman Speyer is planning to erect a $3.2 billion, 2.85-million-square-foot office tower at the Hudson Yards development. In partnership with H&R Real Estate Investment Trust, Tishman Speyer is building a residential rental building with 1,600 apartments and 30,000 square feet of retail space in Long Island City. And in August, the firm paid nearly $59 million to a partnership between WeWork and real estate investor AEW Capital Management for a long-term leasehold at 175 Varick Street. As a global development and operating company, Tishman Speyer has projects all
over the world including The Springs, which will be the firm’s signature project in China. As of late last year, the firm had acquired, developed and/or managed a portfolio of approximately 129 million square feet with a total value of about $66.2 billion since its founding in 1978. Mr. Speyer, a Columbia University graduate, is also the chairman of the 13,000-member Real Estate Board of New York, a position for which he was tapped in January 2013. Mr. Speyer, who turns 45 this month, was the youngest chairman in the association’s century-long history. He is heading up a committee to find a replacement for longtime REBNY President Steven Spinola, who is stepping down at the end of 2015.—Lauren Elkies Schram
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Which area of the city is most in need of infrastructure improvements? I think the whole city could use improvements. The airports are in tough shape—very tired. Visitors coming in for the first time must be appalled.
Donald J. Trump CHAIRMAN & PRESIDENT, TRUMP ORGANIZATION What is your real estate prediction for 2015? New York is doing well and will continue to do well. The city is expanding and in a healthy way—it has been slow but sure, and that will accelerate in 2015. The Trump Organization has seen growth and our properties are thriving, doing better than ever. Where in New York is there still untapped potential for real estate development? Everywhere. The market is strong in all the boroughs, but Manhattan will always be the center of it all. The potential here never seems to subside. What area in New York is “overdeveloped”? No area is overdeveloped, in my opinion. Just when we think there’s no more room, someone finds more room to build a building that enhances the neighborhood or the cityscape. This city has a potential that will not disappoint.
Is the New York market reaching another bubble? That is certainly possible; it’s always out there! Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? That could happen but it might take longer. The boom has been wonderful for Brooklyn and New York as a whole. Let’s hope it happens. Trump Golf Links at Ferry Point, right by the Whitestone Bridge on the water, is helping the Bronx big time—a real winner! What about areas just outside the city like Jersey City or White Plains? I would be surprised if they didn’t thrive—they are doing very well. What are the odds of a refigured Midtown East rezoning being approved in the next year? It probably will happen, but if it happens within the year I’d be surprised. Rezoning isn’t a fast game in New York City.
Which overseas real estate market do you think has the greatest potential? Dubai is a hot market and so is India, likewise China. Europe is great. I visited recently and while I know there are other viable markets, I’m the most familiar with these. What’s your favorite local restaurant? Jean Georges at Trump International Hotel & Tower on Central Park West. Which fellow owner do you admire most? Arthur Zeckendorf of Zeckendorf Realty has done a great job with condos. His buildings are thoughtfully done. Steve Roth, Steve Ross, Gary Barnett, Lenny Litwin, Larry Silverstein—and so many others have done such a fantastic job. Outside of the boardroom, what’s the best place to bond with fellow owners? The golf course is the best venue for that. I’ve done some of my best deals on the golf course. It’s relaxing, enjoyable, and you can learn a lot about people while playing golf with them. Great friendships can be made. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? It seems that is happening already, so I would think it would continue to flourish. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. Mayor de Blasio is working very hard and will, in my opinion, do a great job. He loves the city and does not want to do anything that will jeopardize its long-term success or appeal. [Note: Mr. Trump is the father-in-law of Jared Kushner, the owner of Observer Media.]
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What are the odds of a refigured Midtown East rezoning being approved in the next year? I think politicians understand what it takes to make our city competitive globally and accommodating to modern business. We need to modernize Midtown, or other global cities will surpass New York as the premier international center of commerce. This is a real issue for the continued success of New York, and the city’s leaders need to recognize the critical importance of it. Which area of the city is most in need of infrastructure improvements? I don’t think it’s a geographic area—every corner of this city is constantly changing and being revitalized. It’s the city’s connective tissue—the transportation network—that is in need of a huge infrastructure investment. Our bridges, subways, and roads are ancient, and rapidly deteriorating. Millions of people use the subways to commute to and from work every day. Without it, commerce will suffer.
Ivanka Trump EXECUTIVE VICE PRESIDENT OF DEVELOPMENT & ACQUISITIONS, TRUMP ORGANIZATION Where in New York is there still untapped potential for real estate development? It’s amazing to see the transformation that has occurred in New York over the past decade. Neighborhoods that were once considered abandoned or off-limits have been revitalized by newcomers looking to live, work and play in New York, bringing with them new restaurants, shops and boutiques. What area in New York is “overdeveloped”? I’m not convinced any particular area is overdeveloped because there’s still such high demand to be in New York. There may be lags in demand in certain pockets but over time we will see all areas of the city continue to strengthen. Is the New York market reaching another bubble? I don’t believe we are approaching another bubble. The inherent value of being in New York increases every day and therefor there is a lot of untapped value still left in the market.
There is certainly a lot of global demand to invest in New York City but in most cases, moderate leverage is being used. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? We’re bullish about the entire city. My grandfather, Fred Trump, began his career developing real estate in Queens and the outer boroughs. In the next five years I think Queens will see the most growth as Long Island City and Astoria both become more popular destinations. What about areas just outside the city like Jersey City or White Plains? We have experienced great success with developments in Stamford, White Plains and one of our premier golf courses, Trump National Golf Club, Bedminster, which is located in New Jersey. The city is amazing, but the space these more suburban edge communities can provide is unparalleled.
Which overseas real estate market do you think has the greatest potential? We are incredibly focused on global gateway cities and have projects in markets ranging from Mumbai and Pune to Manila. We also have super luxury hotels and residences under construction in Vancouver, Rio and Dubai and recently purchased properties in Ireland (Doonbeg) and Scotland (Trump Turnberry). What’s your favorite local restaurant? I love Antica Pesa in Brooklyn, Koi at Trump Soho and Jean Georges at Trump International . Which fellow owner do you admire most? All bias aside, Jared and everyone at Kushner Companies are doing some truly incredible deals. They are great innovators and are pursuing opportunities that partner real estate and technology in a way that is very unique. Outside of the boardroom, what’s the best place to bond with fellow owners? I love to play golf. It’s a great way to spend four hours with someone and really understand their thought process and who they are as a person. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? I think that is definitely a trend that will continue to grow with smaller properties, but nothing can replace the knowledge and security that come with working with a well-connected, intelligent agent. There is always something to be said for personalized service and brokers are no exception. However, a lot of brokerages don’t want to spend time on the smaller spaces and the leasing process is very burdensome for smaller tenants so I do think we will see a shift in the next few years in how smaller office space is leased. [Note: Ms. Trump is the wife of Jared Kushner, the owner of Observer Media.]
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is seeing significant growth. The Bronx also has significant potential for growth, but probably not at the level seen in Brooklyn. Can’t really comment on Staten Island. What about areas just outside the city like Jersey City or White Plains? Definitely not. They don’t have the same “hipster” vibe. What are the odds of a refigured Midtown East rezoning being approved in the next year? Very likely it will be approved within the next two years. I think everyone involved understands the need for this to happen. It’s a function of working out some of the more collateral issues, such as infrastructure improvements, and the cost to developers will have to pay for the additional zoning bonuses.
James Wacht PRESIDENT, LEE & ASSOCIATES, SIERRA REAL ESTATE What’s your real estate prediction for 2015? A strong office-leasing market throughout the city and not just Midtown South. A continuing influx of foreign money seeking safety in New York, which will continue to drive the investment sales market and luxury condominium sales. Local investors will begin to pull back as cap rates continue to get compressed. My boldest prediction: $1,500 per buildable square foot for prime residential development sites in Manhattan. Where in New York is there still untapped potential for real estate development? If by New York you mean “Manhattan” then Harlem and upper Manhattan. Also, the Upper East Side, east of Lexington Avenue. If you’re including the outer boroughs, then many areas of the Bronx and some of the less discovered neighborhoods of Brooklyn, so long as they have good transportation access. What area in New York is “overdeveloped”? If you mean by “overdevelopment” too high of a concentration of buildings, then no area of New York is currently overdeveloped. I’m a big believer in the benefits of density.
Is the New York market reaching another bubble? The condominium sales market makes me nervous. Land prices for choice and even secondary residential parcels in both Manhattan and Brooklyn are hitting the stratosphere. The high amount of current development activity creates the potential of a glut of supply hitting the market over the next two years. And, if interest rates begin to creep up and if foreigners stop buying in New York, the luxury condominium sales market could burst. The multifamily market has become very pricey with buyers willing to purchase properties at sub-4 percent rates. Again, an uptick in interest rates could profoundly affect this market. In addition, with the prospect of material changes being made to the rent laws next year to benefit tenants, the buyers of these properties must have very deep pockets and a longterm view for these deals to make any sense. Will Queens, Staten Island or the Bronx ever experience the sort of boom Brooklyn has recently enjoyed? Certain neighborhoods in Queens have the potential of experiencing significant growth. Long Island City is a pretty good example of a Queens neighborhood that
Which area of the city is most in need of infrastructure improvements? All of it. What’s your favorite local restaurant? My kitchen. I love to cook. Which fellow owner do you admire most? There are way too many for me to name. If I had to choose a criteria by which to judge, it would be based upon boldness of vision, benefits to the city and ability to execute. Outside of the boardroom, what’s the best place to bond with fellow owners? Rumor has it, the golf course. Will space apps and listing sites become the standard for smaller deals and create more direct-to-tenant deals? Yes, but I fear for any tenant attempting to navigate the New York City real estate landscape without professional advice. It’s just way too complicated. Something as simple as determining the square footage of space being rented is incredibly complicated in New York. Just imagine what the rest of the issues are like! This partly explains the phenomenon of the space sharing arrangements that have been cropping up. It’s easy, and space can be found and occupied within one day. Is Mayor de Blasio helping or hurting the New York real estate industry at this point in his tenure? Please explain why. At this point in his tenure he’s having very little measurable effect on our industry primarily because we are in a very strong market right now. Once economic growth begins to slow, then his impact on our business will really begin to be felt.
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Mort Zuckerman EXECUTIVE CHAIRMAN, BOSTON PROPERTIES
ALTHOUGH HE NAMED OWEN THOMAS AS his successor to Boston Properties’ chief executive office, executive chairman Mort Zuckerman remains all but synonymous with the company. And the “bluest of blue chip REITs” has sustained its recent strategy of prioritizing investment in new developments over existing properties in its four core markets of Boston, New York, Washington D.C. and San Francisco. Boston Properties closed out 2013 with a nearly 100,000-square-foot lease signed by George Soros’ Soros Fund Management at the landlord’s 250 West 55th Street. The billionaire’s
investment firm will pay rents in excess of $100, a benchmark figure in this part of town. In May, the expanding Al Jazeera news channel inked for 86,000 square feet—lower than earlier reports that it was eyeing a 200,000-squarefoot space—on the property’s second floor. Over at the GM Building, which Boston Properties retains a 60 percent stake in, Baron Funds in March expanded by 25,000 square feet and will pay rents just below $200 per square foot at the marquee tower. And just last month, Boston Properties sold its 45 percent stake in 601 Lexington Avenue to Norges Bank Investment Management as
that arm of Norway’s central bank continues to become a New York real estate player. That deal moved the company toward its goal of shedding $1 billion in assets this year, an amount in line with last year’s dispositions. Outside of real estate, Mr. Zuckerman, who owns the New York Daily News and U.S. News & World Report, continued to condemn President Obama. He said on The McLaughlin Group this summer that Mr. Obama had “lost the confidence of the business community” for underutilizing infrastructure investment as a means of stimulating the economy.—Billy Gray
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