The end of the year is a good time to look back — way back. I’m talking about the history of real estate itself. We can only understand the present, and this month’s issue, by dissecting the past.
Lets start with the Big Bang.
The entirety of the universe was contained in a single kernel smaller than a speck of dust. Then it exploded, with the universe expanding out in all directions. It was a supply glut of epic proportions. And for the creator, there were no tenants to fill it. (This was similar to the Manhattan condo market post-Lehman, but not quite as bad.)
Fast forward to Adam and Eve. They reportedly appeared after the molten surface of the Earth had cooled, landmasses had formed and trees had grown, and the whole neighborhood had gotten a lot nicer — a paradise, really. They were the original gentrifiers, in a sense. But talk about bad tenants. They completely disobeyed the ground rules (to stay away from that tree) and were summarily evicted. This was before the existence of housing court and didn’t happen in New York City. Otherwise, they might still be living in the Garden of Eden today.
Instead, they were cast out into the wilderness, and their descendants roamed the land, eventually forming nomadic tribes. These tribesmen eventually settled into rock caves, which were a little drafty but rent-free, so they were a pretty good deal. And there were no landlords breathing down their necks and complaining when they drew stick figures on the walls.
Finally, people started to farm and stay put, and real estate as we know it was born: buildings! Places with a ton more amenities than caves — walls and doors were the bells and whistles for these first homeowners. A lot of other types of properties were created too, and demand soared. For example, the hotel market in Galilee was so tight at this time of year around 2,000 years ago that young couples were sometimes forced to spend the night in a barn instead.
Of course, with all this building, someone had to be the big dog and build the 432 Park or One57 of his or her day. You had coliseums in Roman times and castles during the Dark Ages and churches throughout the Renaissance. You had kings like Louis XIV, the Donald Trump of his day, building the most “yuge” palaces, like Versailles. (And you had philosophers during the Enlightenment telling them they were full of hot air.)
The focus then shifted to the New World, where the Native Americans, working without a broker, agreed to sell Manhattan for $24 to a group of European entrepreneurs, when they should have insisted on some sort of ground lease. (Today, $24 will buy you 1/70th of a square foot of Manhattan real estate.)
Soon enough, industrialization took root, leading to the crowded city and the cramped apartments we know today. Then the digital age happened, and people didn’t mind the cramped apartments as much because they were on the internet all the time anyway.
And because of the internet (and trains, planes and automobiles prior), people and information soon could move around the world faster, and so could money. If you were one of those entrepreneurs who had a lot of money, you could buy property anywhere in the world, really easily.
Maybe too easily. Those big guys — the kings and ruling parties at home — didn’t always like that. There was a little too much freedom going on. And that, finally, brings us to the cover story in this issue, which is about the backlash that some major foreign investors are seeing when it comes to putting their money in New York City real estate.
By examining recent events, from political crackdowns to the Paradise Papers, we take a close look at the real estate moguls with the most at risk in an age of geopolitical turmoil. Check out the extensive story by reporters E.B. Solomont and Will Parker.
Elsewhere in the issue, we have pieces on the war over commercial real estate data; a ranking of top retail brokerages; and what Mayor de Blasio’s reelection is going to mean for the industry. Plus, there’s a profile of the mysterious Brooklyn real estate figure who was WeWork’s first investor and much more.
Enjoy the issue, the holiday season and the start of another year as our cosmic real estate saga continues to unfold.