Market not bottomed out, panelists say

By Adam Pincus | September 11, 2008 01:01PM

A panel of real estate experts agrees that the real estate market will remain weak until the financial industry returns to surer footing.

“I don’t think we are near the bottom. First the financial institutions need to stabilize,” said Robert Knakal, chairman of Massey Knakal Realty, at last night’s fourth annual Real Deal new development forum at Avery Fisher Hall at Lincoln Center.

Fellow panel member, R. Donahue Peebles, chairman and CEO of the Peebles Corporation, predicted that the market would improve in about a year.

“The headline a year from now is that we have bottomed out and there will be a shortage of supply,” he said. Other panelists included Charles Kushner, chairman of Kushner Companies; Larry Silverstein, president and CEO of Silverstein Properties; Steven Witkoff, chairman and CEO of the Witkoff Group; Barbara Corcoran, author and founder of the Corcoran Group. The event, attended by nearly 3,000 people, was moderated by Brian Sullivan, a Fox Business Network anchor.

Silverstein said he expects land prices to continue to fall in the city, and tighter lending requirements — which demand more equity — to drive prices down further.

“They will decline because of this and we will pay less for properties than we did before as a result of this,” he said. “But transactions will occur and certainly for people who have the capacity to buy for cash there will be significant discount opportunities available out there in the market place.”

On the upside, Silverstein said he expects prices for residential real estate to be up in a year, and remains bullish long term, citing the low delivery of office space in recent years.

The $20 billion invested in the redevelopment of the World Trade Center site will spur demand in a city where delivery of office space in recent years is a fraction of what was a created in the 1970s and 1980s, he said.

“I think the rise in value will be unprecedented” in Lower Manhattan, the developer said.

The rising dollar will hurt residential sales in New York, Corcoran said, as foreign buyers see the relative strength of their currency erode.