‘Flyover country’ fights back

It’s sometimes surprising how little we write about the American heartland here at The Real Deal, and how little impact the rest of the country seems to have on the New York real estate market.

We are 99 times more likely to write a news story that involves China rather than Cleveland, or to cover a deal having to do with Israel instead of Ithaca.

I guess it’s called flyover country for a reason. For better or worse, these areas seem to be fading into the economic background as information and people move around the globe faster and the distance between “world cities” decreases. (The heartland might, however, not go gently into that good night. I’ll circle back to that momentarily.)

When it comes to real estate, a sophisticated investor can park money just as easily in London as he can in New York City or Hong Kong.

In our cover package this month, TRD looked at exactly how New York stacks up to the biggest global “gateway” cities when it comes to luxury residential purchases, trophy office properties, retail investments and taxes. Why would an investor choose New York over another major city for those sorts of deals? Knowing the answers to these questions, which you can find on page 42, is crucial to every serious real estate professional in New York, whether they’re working with foreign buyers here or putting money to work around the globe.

If you need more evidence of the interplay between the New York and global markets, just look at what’s happening in the Israeli bonds markets, which NYC developers are increasingly tapping for cash. You can read about the latest (and less successful) efforts on page 104.

Also don’t miss our coverage of The Real Deal’s massive forum and showcase in Shanghai, which drew more than 4,500 guests last month to view presentations on 75 new U.S. development projects, and to listen to more than 10 panels featuring 50 top real estate players from New York, Miami and Los Angeles. Nothing speaks to the interconnectedness of world markets than a gathering like that.

As I mentioned earlier, while we might not write about the rest of the country much, there seems to be a heartland backlash of sorts that could impact New York real estate.

Namely, the EB-5 program, which has been a boon to development in New York, is set to expire. The program, which allows foreigners to invest in real estate projects in exchange for visas, has largely benefited urban areas where foreigners actually want to invest. But in a bid to push more EB-5 investments toward rural areas and away from cities, Senator Charles Grassley from Iowa is seeking to tighten EB-5’s rules. While federal lawmakers postponed action last month, changing the rules could have a major impact here. See the latest on page 20.

Meanwhile, Donald Trump’s bizarre-though-possibly-increasingly-legitimate White House run is another manifestation of the heartland’s discontent. Trump’s anti-immigrant stance, ridiculous given he has made his real estate fortune in the most diverse city in the world, apparently appeals to poor white voters. While it won’t affect New York City real estate prices per se, the strange (and presumably disingenuous) posturing is another way the Tea Party mentality is seeping into the orbit of New York City real estate. House Speaker John Boehner’s departure could lead to even more radicalization in the Republican hinterlands, creating a sort of trickle-down effect. 

All this takes place against the backdrop of a New York real estate market that may have already plateaued, even if the post-Labor Day market has been relatively active (page 20). See our breakdown of the big-picture stats that economists are watching on page 56 and other market metrics in our new Scorecard section on page 124.

Also, be sure to read our package on the Supertalls, a term the Council on Tall Buildings and Urban Habitat reserves for towers of at least 984 feet. Billionaire Row skyscrapers like 432 Park and One57 aren’t the only ones. There are roughly a dozen other similarly tall residential towers on the drawing board. But will they actually get built this cycle? See the story by Rich Bockmann on page 56.

Last but not least, we are hosting another South Florida showcase and forum on October 15 in Miami, and releasing our first-ever book this month, “The Closing: Interviews with New York City’s Titans of Real Estate,” which is available here.

Enjoy the issue.