Hearing echoes of 2008

Sep.September 01, 2015 07:00 AM
Stuart Elliott

Stuart Elliott

This month marks the seventh anniversary of 2008’s Wall Street meltdown, and of the dramatic days that saw the global financial system teetering on the brink.

Those were nerve-wracking times — I remember discussing with a friend what we would do if there were widespread bank runs and ATMs suddenly stopped dispensing money. That apocalypse didn’t happen, thanks to effective intervention by the federal government (an accomplishment that’s hard to dispute whatever your politics). But it led to widespread declines in the real estate market and the Great Recession. And it left a lingering specter of how bad things could get. 

Last month’s wild gyrations of the stock market, fueled by concerns about the Chinese economy, served as a reminder of all that.

That made us start thinking about “Who will be left holding the bag?” if the New York City real estate market sees another big decline.

It’s a complicated question that our reporter Konrad Putzier set out to answer in our cover story. As he writes, companies like SL Green Realty and RXR Realty may top the list of biggest direct investors, but determining where those firms get their money is a lot trickier — think about that grandmother in Iowa with her life savings tied up in a pension fund invested in NYC real estate.

Our 3,500-word analysis finds that the number of people with a financial interest in New York is arguably more diverse than ever before.

The arrival of Chinese investors and more sovereign wealth funds has produced millions of new stakeholders in the market. And there’s a case to be made that Chinese demand in NYC will increase further as wealthy citizens there hedge against instability at home. The Real Deal’s U.S. Real Estate Showcase & Forum in Shanghai this month — expected to draw a crowd of 5,000 homebuyers, investors and real estate professionals — will be a way to gauge demand. Check out our preview and stay tuned to TheRealDeal.com on September 10-12 for more coverage of the panel discussions featuring big names from the U.S. and China, including former New York Gov. Eliot Spitzer and top players from Chinese builders Greenland, Xinyuan, Kuafu and Cindat.

Another outgrowth of the 2008 crisis, in my mind, is Donald Trump and his over-the-top presidential candidacy. Dissatisfaction with Republican leadership in the face of the financial crisis led to the election of Barack Obama, in many ways fueling the extremist reaction of the Tea Party, whose outlandish positions made a candidate like Trump even seem reasonable.

We peek inside the Trump campaign, looking at both his inner circle and strategy. It’s bizarre, but it’s shaking up the status quo — which can’t be bad when it comes to the scripted world of presidential politics.

While Trump is talking about immigration and other federal policies, New York State just became the latest state to choose vendors to sell medical marijuana. So it’s going to be a little easier to get high (if you have a prescription that is) and watch the presidential race play out, if you don’t think it’s trippy enough already. So far only five licenses have been awarded, so NYC is not going to be like Los Angeles anytime soon, where the number of dispensaries exceeded the number of Starbucks locations at the height of the medical marijuana boom. We examine the real estate implications on page 30.

We also profile the behemoth Blackstone Group and take a close look at the head of its real estate division, Jonathan Gray, an anti-Trump figure if there ever was one. Gray, who has helped grow Blackstone into the world’s largest real estate investment manager, is seen as a “Steve Jobs-type” visionary, but largely avoids the spotlight. Now the question is whether the firm can continue growing.

Meanwhile, our ranking of top real estate law firms in New York also casts a light on players who remain mostly out of the spotlight. The top law firms have generally grown their ranks amid the strong market of the last several years, but a surprising number of out-of-town firms are behind the top deals.

Finally, don’t miss our exhaustive breakdown of development in the five boroughs.  We tally which developers are building the most in each borough, providing particular insight into the less-covered Bronx, Staten Island and Queens.

When it comes to Queens, is talk about condos selling for $2,000 a square foot a cause for concern about another meltdown? Maybe. In any event, this is the perfect fall primer to get you up to speed on citywide development as you return from the beach.        

Enjoy the issue.


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