The Real Deal New York

Could the NYPD-de Blasio rift discourage investment in NYC?

Observers say that perceived lack of safety could hurt real estate activity
By Tess Hofmann | January 16, 2015 09:39AM

When Mayor Bill de Blasio arrived at the funeral of slain New York Police Department officer Rafael Ramos last month, hundreds of officers turned their backs on him. Now, as the mayor struggles to heal the rift with the police department in the wake of mass protests over the Eric Garner verdict, concern about safety in the city is percolating. And that concern, observers said, could make skittish real estate investors turn their backs — on the city.

The extensive media coverage and lack of an impending resolution has some in the real estate industry ruminating on whether the situation could affect long-term real estate investment decisions here.

“People are aware of it and while it hasn’t created a tangible negative impact so far, the potential is there,” said Bob Knakal, now chair of New York City investment sales at Cushman & Wakefield. “I’m hoping that the two sides will figure out a way to work together. It’s extraordinarily important not only for the city itself but for the underlying fundamentals of commercial real estate.”

Sources noted that there is an historical relationship between real estate values and crime rates in New York.

“We’re seeing a dynamic now between a mayoral administration and the NYPD that we haven’t seen since the Dinkins administration, and that’s a real issue,” Knakal said.

Political strategist Hank Sheinkopf said that during a spike in crime at the end of Edward Koch’s mayoral administration and the beginning of David Dinkins’ administration, real estate values fell, while during Rudolph Giuliani’s administration, as crime fell, real estate values began to climb.

“There is a certain relationship between people feeling safe and real estate,” he said.

Both Knakal and Sheinkopf agreed that regardless of perceived tensions between the mayor and the NYPD, the most important factor to consider is actual crime rates — something that the department’s rebellious work stoppage might make difficult to determine.

“To the extent that crime is low and the city is perceived to be safe, folks will continue to want to live and work here. … When I say low crime, I mean actual low crime, not just unreported crime,” Knakal said.

As far as de Blasio’s prospects for completely mending things with the NYPD,  Sheinkopf was skeptical.

“It’s a clash of cultures and it has a lot of elements to it,” he said. “It’s less about money than it is about respect. They see the mayor as being an elitist. … It’s a very difficult position to resolve.”

But despite whispers that Police Commissioner Bill Bratton is losing control of the NYPD, confidence in the city’s top cop remained high.

“Bratton is one of the finest and one of the most historically significant police commanders in American history, and if he can’t fix the problem, it’s not like anyone else can,” Sheinkopf said.

Kathryn Wylde, CEO of the Partnership for NYC, said that Bratton was the key to a peaceful resolution. “The real estate and business community have a great deal of confidence in Bill Bratton’s ability to resolve these issues,” she said.

As far as New York real estate contending with safety issues goes, Sheinkopf said that “the clash between the mayor and the police department is nothing compared to what [Mayor Michael] Bloomberg walked into after 9/11.”

“We have the worst attack on American soil in history. What happens? Mike Bloomberg restores confidence to the business community and real estate values spike quickly and have continued to,” he said, throwing down the gauntlet for de Blasio to turn things around and keep business on track.

  • Crian Bashman

    It might hurt speculative investment in places like Bushwick, East New York and the South Bronx, but overall demographics trends trump all. Also, we must recognize that lots of money is flowing in from areas that are significantly less “safe” than NYC was in its worst years.

    • Char4Dew

      And I for one would feel better if we had more American than foreigner buy here and not live here. We have sold america to anyone with the highest price. SMART counties allow a foreigner to buy ONE property. We seem to sell our land as if there is more after it is gone, NO it is not like a perennial plant, it does not grow back. Gone is gone….

    • comment flagged

      Hasn’t seemed to slow down activity in Bushwick. I hope it does make sellers come to their senses, but there is no evidence anything will.

  • John

    Hes a one term mayor. Why would he hurt investment.

    • AnoNYC

      Way too early to make such a statement. Right now he has a positive approval rating overall among voters according to Quinipiac polling.

    • Char4Dew

      You don’t know this yet. Maybe and maybe not.

  • Its more likely that ongoing police brutality will create a more divisive atmosphere leading to more, larger, and more violent protests. The threat to investment in the city is not Bill de Blasio having a rift with the NYPD, its that Bill de Blasio hasn’t cracked down on the civil rights violations of the NYPD.

    • Char4Dew

      GREAT POST – thank you Ian MacAllen.

  • Jake

    The current mayor’s attitude and personality has great potential to slow down the flow of investment into the city. He spews his personal opinion far too often, without regard of what the impact or consequences may be. The city already seems less safe, less clean, and without a leader in control. The general perception is that no one respects so, his weak leadership is definitely going to impact investment flow.

  • no-permits

    deblasio is hurting real estate, but not because of his relationship with the nypd.

    deblasio is a bum

    • AnoNYC

      How is de Blasio hurting real estate? NYC is doing just fine.

      • no-permits

        because he’s an idiot.

        • Char4Dew

          And who are you to say that.
          I think Bloomberg was a self serving greed machine, but managed 3 terms. hmmmm.
          This guy is not half 1/10th as self serving

          • no-permits

            say what you want about bloomberg but the city prospered under him. bloomberg was s businessman, deblasio is just a politician over his head.

          • Char4Dew

            Seems that only the 1% interest you…OK than…
            I don’t vote because they are of my nationality, or will raise the market prices. I vote because they are for the people. Bloomberg is for the 1% I AM NOT!

          • no-permits

            i have an interested in anyone that contributes to society in a positive way. deblasio seems to be the opposite.

          • Char4Dew

            We do not know that at all yet…way to soon..

            But we do know who is kissing
            up the 1%

          • no-permits

            deblasio reminds us everyday who he “works” for.

          • Char4Dew

            Well, YES he works for the pople which incudes middle class.
            Bloomberg worked for 1% only. Yes it is very clear.

  • Tyrannosaurus Rex

    It’s Pat Lynch of the PBA spewing the hate. Perhaps REBNY should use its political muscle to get rid of this guy. He’s bad for the cops & he’s bad for NYC!

    • comment flagged

      I would agree, but a real estate industry group going after an elected union official might backfire in the court of public opinion.

  • AnoNYC

    In reality, crime is down and the city is very safe overall. Anyone that disagrees with that does not step outside.

    It’s true that there are pockets in this city with violent crime problems, but these areas have existed for decades and are disappearing. The reduction in violent crime was the result of collaborative efforts including gentrification, community initiatives and increased police activity.

  • Char4Dew

    Obviously Knakal did not vote for De Blasio. And as for the copes. they are much needed, and have a tough job. HOWEVER they do many things that you & I would be locked up if we do them.
    Something I saw in Central Park this past Spring was not fair…They handcuffed a teenager who had ONE JOINT. They miss-use power too often…
    This kid was a kid,no more then 15 years old. he needed a warning not a record.
    They needed another stripe…. I was happy the Mayor was willing to play FAIR. cops are not perfect and far from it. Yes we need and appreciate them. But NYC is not only about multimillion-dollar apartments. In fact the prices need to stop rising and let more people into the game of buying. WE DO NOT NEED A POLICE STATE, but we have one.