Despite rising political and economic headwinds, the city’s leading developers remain high on the outlook for real estate in New York City. This optimism, tempered with a new dose of realism, was on display again and again at The Real Deal’s 12th annual New York Showcase and Forum on Wednesday.
In the first panel of the day, Larry Silverstein told TRD publisher Amir Korangy that he was still prepared to move ahead with 2 World Trade Center. When asked if he’d proceed without an anchor tenant, he simply said, “Watch the news.”
In a nod to the recent opening of Hudson Yards, Silverstein noted that New York has a unique capacity to absorb massive amounts new space.
“What other city in the world could accommodate 20 million square feet of new office space simultaneously?” he asked. “It’s an amazing thing.”
Some of the city’s top developers and brokers, as well as representatives of a new wave of innovation and technology in real estate, joined thousands of fellow industry professionals at the Metropolitan Pavilion in Chelsea for a day of panels and networking.
Amazon’s recent abandonment of plans to come to Long Island City was on everyone’s minds. In conversation with CBRE Tri-State CEO Mary Ann Tighe, RXR Realty boss Scott Rechler said he had “never seen a more challenging political environment,” pointing to the Amazon pullout and proposed prevailing-wage legislation as two major examples of the political shift.
Tighe responded that the industry would have to adapt to this new reality, and become more involved in local politics. “The difference in having one person on [a] community board who understands real estate — it’s night and day,” she said.
The topic of Amazon came up yet again in the following panel, with L&L MAG’s MaryAnne Gilmartin noting that Queens still has plenty of upside despite the reversal.
“I was 100 percent in, with or without Amazon,” she said of large mixed-use project her firm is developing on the LIC waterfront at 44-02 Vernon Boulevard. Her firm finalized the deal on Feb. 14, the very day that Amazon backed out of its headquarters plans.
Fellow panelist Vishaan Chakrabarti noted that economic realities made it difficult to meet the needs of lower- and middle-income New Yorkers. And he took a shot at criticisms of Billionaires’ Row, asking: “What are you gentrifying? Central Park South?”
Next up, TRD reporter David Jeans sat down with heads of flexible-space and traditional real estate firms to discuss the future of co-working and co-living, and their ability to withstand a downturn.
“My suspicion is that a recession would be painful for us,” Jamie Hodari, CEO of flexible-office firm Industrious said. However, he also noted that “a lot of clients say the recession will be when they double down on their outsourcing needs.”
Once again, long-term optimism shone through. “This space is going to grow because it’s what corporates have wanted for a long time,” said Bruce Mosler, chairman of global brokerage at Cushman & Wakefield.
Another sector likely to bear the brunt of shifting political winds is affordable housing. Two developers in that space, Ron Moelis of L&M and David Schwartz of Slate, sat down with TRD‘s Jill Noonan to discuss their outlook. The two agreed that while the barriers to entry in the affordable housing business may be higher, the risks are ultimately much lower. “There’s no risk that you’re not going to rent an $800 a month apartment,” Schwartz said.
Meanwhile, Moelis recommended a stint in politics as a good way to overcome the learning curve.
“I tell people — take a few years, work for the government, the housing agency, city planning or City Hall,” he said. “Get a feel for the political process and the complexity of the programs. A background in that really helps.”
The day wrapped up with a one-on-one conversation between TRD senior reporter E.B. Solomont and MetaProp’s Zach Aarons, who shared his thoughts on the collision between venture-capital culture and New York real estate.
“The kind of tough talk that a New York real estate person brings is a lot of fresh air for these entrepreneurs,” he said, noting how a fake-it-until-you-make-it mentality pervades the VC world.
In any case, proptech remains a young industry with plenty of room for growth.
“People ask me all the time, “What inning are we in in the proptech evolution?” he continued. “There are some sectors we look at in proptech where forget inning; we’re not even in the stadium.”
“We’re like tailgating outside the stadium right now.”