It’s crystal ball time: REBNY panelists predict 2014 market

What do “funky debt,” Lower East Side retail and office densification have in common? They’re all expected to define the New York City real estate market in 2014.

Real estate luminaries gathered today at the Real Estate Board of New York’s members’ luncheon at the Roosevelt Hotel at 45 East 45th Street, where they offered their thoughts on what the new year will offer for the industry.

Panelists included Woody Heller, executive managing director at commercial brokerage Studley; Simon Ziff, president at real estate consultants Ackman-Ziff; Neil Goldmacher of Newmark Grubb Knight Frank; and Robert K. Futterman of the retail brokerage that bears his initials. Mary Ann Tighe, tri-state region CEO of CBRE Group, moderated.

Read on for what the panelists expect to see in 2014.

Futterman: On the retail side, the Lower East Side will receive renewed attention. “You’re going to see a lot more money and development there,” he said, as investors and developers realize they’ve overlooked that last sliver of Manhattan between Downtown and Williamsburg — where retailers from J. Crew to Duane Reade have sought space in recent years.

Goldmacher: In terms of office leasing, the word of the year will be “densification,” the commercial real estate community’s nice word for getting more people into a smaller space. “Everyone is looking to do more with less,” he said. Additionally, a “melting away of barriers between markets” will continue, with tenants like technology firms maturing and looking for Midtown space, pushing out some traditional tenants who will look at Downtown for the first time.

Heller: Institutional investors will continue to look at Williamsburg as a “box they have to check” in their portfolio, he said, referencing the sale he arranged last year of 111 Kent Avenue, a Williamsburg rental building, for a record price-per-unit to an institutional investor and New York City newcomer.

Ziff: “Funky debt” is on the rise — but that’s not necessarily a good thing. With so much equity in the market, leverage is high in some deals – a trend that hearkens back to the pre-Lehman market. “Three or four people are in the capital stack” in every deal, he said. “I have not seen this since ’06, ’07.”