From the White House all the way down to your house (or condo or co-op or townhouse), who knows what the new year will bring?
Here’s what we do know at the start the year, and it’s not that rosy: The market has been slowing, if one takes a look at the investment sales and luxury residential markets of 2016 (page 74), the record level of rental concessions (page 104) and a decline in office leasing (page 106).
And the chatter of the real estate holiday party circuit this past year seemed to be focused on where things are heading (page 78). Ominously, Alan Miller of Aldo Advisors told us, “People are partying like it’s 1999, [but] some people are getting crushed. You’re not seeing it now, because the banks aren’t selling the debt yet. But they will, watch.”
The effect of the imminent Trump presidency is of course one of the big wild cards — will there be a Trump bump or a Trump slump?
Some office brokers predict a Trump bump when it comes to office leasing despite the slowdown in activity this past year, for example. Banks and other financial services firms are being spurred to look for more space in anticipation of looser regulatory standards during the Trump era (see page 30).
The shifting market is changing the relationship between brokers and their firms, too. Top-tier agents have particular leverage right now because they are more valuable in a weaker market when it’s tougher to move units, even if the bottom of the market is doing better than the top (page 24). And expect to see more poaching between firms in this coming year — more brokers may switch companies if they think it can jump-start their business (page 66).
Meanwhile, check out our cover story on gender and racial diversity (or lack thereof) in New York City real estate. Senior issue editor Elizabeth Kim and reporters Kathryn Brenzel and Rich Bockmann produced one of the best and most nuanced stories The Real Deal has run over the last year. As developer Don Peebles points out, it’s not about actively excluding people, but rather that “discrimination is not intentional. It’s just culturally embedded in the industry.” While there are exceptions, including the powerful presence of women in residential real estate, the numbers are telling: At the senior level, only about 22 percent of NYC’s real estate industry is female, and nearly 86 percent is white. Check out the story on page 42.
We’ve also got another great longform story in the issue, in which TRD partnered with ProPublica, the investigative journalism outfit, to write a piece for the first time. The story focuses on the industry’s outsize role in contributing to state politicians as a means to control legislative outcomes, particularly the 421a tax abatement and rent regulation. It’s as good a “follow the money” story as we’ve done when it comes to politics and real estate. See page 36.
Finally, it’s an opportune time to take a look back at the most-read feature stories of 2016. Our top story of the year took a look at the powerful but under-the-radar group of Hasidic real estate investors who control huge amounts of real estate in Brooklyn, a borough that has obviously seen property values rise dramatically in recent years. Our second most popular story was the first-ever ranking of the 20 largest rental landlords in the city, a tougher feat than one might imagine given the difficulty of locating owners behind anonymous LLCs. Below is the full list:
1. “Learning and earning: Hasidic Brooklyn’s real estate machers,” by Mark Maurer (Aug. 22 online)
2. “Rentopoly: Who owns New York?,” by Will Parker (July issue)
3. “An insider’s guide to evicting rent-stabilized tenants,” by Will Parker (June 2 online)
4. “Raphael Toledano’s fast and rocky ride,” by Mark Maurer (June issue)
5. “The next Big Short?,” by Konrad Putzier (October issue)
6. “Inside the title insurance cartel,” by E.B. Solomont (March 24 online)
7. “What are WeWorth?,” by Konrad Putzier (July 6 online)
8. “Millennial City,” by E.B. Solomont and Katherine Clarke (June issue)
10. “Is NYC’s retail bubble about to pop?,” by Konrad Putzier (July issue)
Here’s to 2017.
Enjoy the issue and the new year!