Fiscal cliff is a “kick in the gut” for NYC’s commercial real estate

New York /
Nov.November 01, 2012 02:00 PM

A slew of federal policies are set to take effect in January that will radically cut federal spending and end some of the Bush-era tax cuts. But the so-called fiscal cliff will have radically different effects on commercial real estate values across the country, CoStar reported.

In New York City, “the real estate sector is about to take a big kick in the gut,” David A. Kessler, a commercial real estate specialist at public accounting firm CohnReznick, told CoStar. Kessler predicted that every commercial real estate sector will seem some decline, but the hardest hit will be office and industrial, hurt by declining government and consumer spending.

The lack of federal funds will cause increasing office vacancies and delinquent rents, and a higher proportion of Class B and Class C space will be affected, he said.

“Large users of space, which have been on the decline over the past 3 years, will continue to decline as companies cut back the amount of space needed with smaller work areas, and work from home arrangements that are becoming more common,” Kessler said.

Meanwhile, in Brooklyn, the main issue is determining where to invest capital to generate a “predictable” return and safeguard value, Minnette Le Blanc, president and CEO of real estate investment firm the Le Blanc Organization, told CoStar.

“Tax advantage should be a side benefit of an otherwise sound deal,” Le Blanc said. “And an investor selling assets based on tax rate assumptions would still be faced with the question of where to invest the liquidated capital.” [CoStar]—Leigh Kamping-Carder

 

Related Articles

arrow_forward_ios
270 W Montauk Hwy, Hampton Bays, NY (Loopnet)
Legendary Hampton Bays bar up for sale
Legendary Hampton Bays bar up for sale
Prologis Chairman and CEO Hamid Moghadam (Getty, Prologis)
Industrial space “effectively sold out” amid leasing frenzy, Prologis says
Industrial space “effectively sold out” amid leasing frenzy, Prologis says
Starwood raises $10B for distressed real estate plays
Starwood raises $10B for distressed real estate plays
Starwood raises $10B for distressed real estate plays
Aulder Capital CEO Jonah Bamberger and 162-164 East 82nd Street (Rosewood Realty Group, Slate Property Group)
Two Upper East Side apartment buildings head to foreclosure sale
Two Upper East Side apartment buildings head to foreclosure sale
Stripes founder Ken Fox and a rendering of 40 10th Avenue (Stripes, Neoscape)
Private equity firm carves out 14K sf at Aurora’s Solar Carve building
Private equity firm carves out 14K sf at Aurora’s Solar Carve building
Resurrection! Work resumes on stalled Clinton Hill residential project
Resurrection! Work resumes on stalled Clinton Hill residential project
Resurrection! Work resumes on stalled Clinton Hill residential project
CRE held up through the pandemic far better than most expected (iStock)
How commercial real estate survived the pandemic
How commercial real estate survived the pandemic
Harbor Group grabs $558M in financing for Black Rock purchase
Harbor Group grabs $558M in financing for Black Rock purchase
Harbor Group grabs $558M in financing for Black Rock purchase
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...