Party politics

Real estate's annual schmoozefest faces a chilly climate

Jan.January 02, 2020 10:00 AM

REBNY’s annual gala is traditionally a chance for industry players to network with elected officials, but tensions with Albany might make for some awkward moments this year.

The Real Estate Board of New York’s glitzy annual banquet has always been more than just the highlight of the industry’s social calendar. It’s also an important networking opportunity where industry honchos can rub shoulders with elected officials.

But attendees at the 124th “Liar’s Ball” may have to strain to put on a brave face as they press the flesh with the politicians who show up at the Jan. 16 confab, as it caps off a particularly fraught year for the industry group’s relationship with lawmakers.

Albany and City Hall delivered stinging defeats to REBNY in 2019, thanks to a dramatic shift leftward in both state and local politics. The coveted Amazon HQ2 deal went down in flames, Gov. Andrew Cuomo signed rent-law reforms that landlords called “devastating,” and the City Council passed a building-emissions law that could cost owners collectively as much as $4 billion in fines or retrofits.

What’s more, new state restrictions on how much developers can give candidates make the friendly face time of REBNY’s gala all the more important for building relationships with elected officials. But the same forces behind all those changes are also making it less fashionable for politicians to cozy up to developers over cocktails.

Last year, under pressure from the anti-Amazon warriors, both Cuomo and Mayor Bill de Blasio snubbed the event for the first time in recent memory. Whether the pair — who have each faced criticism for taking big donations from real estate interests — decide to keep their distance again this year remains to be seen.

But REBNY’s new president, James Whelan, shrugged off concerns that political tensions would affect the banquet, saying he is “not concerned at all” about whether certain politicians might not attend. He even disputed the significance some placed on the mayor and governor not showing up last year.

“Is it new? I don’t know if they’ve missed previous ones or if mayors or governors have missed previous ones,” Whelan said. “I know we don’t keep records of that.”

One broker who has attended the banquet for 36 years said it would be unfortunate if the chief executives of the state and city made a habit of skipping the gala over a fear of bad optics — which he feels is unfair.

“It was always nice to have the mayor and the governor attend,” said Bob Knakal of JLL. “But I think that it’s a shame that the real estate community is not viewed as positively as it should be. I think the real estate industry has specifically been targeted.”

The REBNY gala has traditionally been an opportunity for networking, deal-making and smoothing out relationships, so both industry insiders and plugged-in politicians doubt that there will be too many no-shows this year.

“I’m just hopeful that the elected officials who have been attending continue to attend, because you can’t govern without appreciating and understanding and then interpreting different views,” said Jay Neveloff, a real estate lawyer with Kramer Levin Naftalis & Frankel, who predicted the gala will go “as usual” despite some possible absences.

Manhattan Borough President Gale Brewer, who has a reputation for being pro-tenant and cool on development, said she plans to attend — as she does every year — and doesn’t expect the charged political climate to have much impact on attendance.

“I don’t think it’s going to diminish their numbers,” she said. “When I go, I’ve never seen so many people in one room.”

Brewer also dismissed the idea that showing up for “real estate prom” makes politicians look beholden to the industry.

“I think I’m as pro-tenant and as pro-preservation as you can get,” said Brewer. “However, I’m a big believer in communication. They know exactly where I’m coming from. I don’t owe anybody.”

Even lefty darling state Sen. Julia Salazar — who (spoiler alert!) doesn’t plan to attend — said she saw Cuomo and de Blasio’s absence last year as a one-off strategic move and doesn’t expect either of them, or many other politicians, to stay away this year.

“I think realistically, we’re seeing that the real estate industry has a profound role in state politics, so I’m unsurprised that that some electeds would choose to attend, even though I would discourage it,” the Brooklyn senator said.

Neveloff conceded that the political atmosphere is less chummy than in years past, and said the legislative session getting underway about a week before the gala will be a topic of some anxious cocktail conversation.

“It is contentious,” he said. “One of the things people are talking about is, ‘What’s gonna happen next?’ What are the ideologue politicians going to come up with next to change the landscape?”

Progressive activists are gearing up to push for even more tenant-friendly reforms and real estate taxes this session, aiming to wipe out the two main victories REBNY did achieve in Albany last year. Salazar and company plan a renewed push for the “good cause” eviction reform that was ultimately stripped from last session’s rent-law overhaul. State Sen. Brad Hoylman has vowed to push the pied-à-terre tax on pricey nonprimary homes that was defeated. And activists are looking to slash tax exemptions offered to developers to encourage affordable housing.

A land-use lawyer who has seen the issues from both sides said the rift between real estate and politicians is mainly a perception problem, and that it’s up to industry leaders to change the narrative.

“I think that the Albany situation and the political tone among the elected officials is of concern because a lot of the decision-making seems to be made on anecdote and not data,” said Ken Fisher, an attorney at Cozen O’Connor and a former City Council member, “and I think that everyone involved in real estate is going to have to up their game, and that includes REBNY.”

One developer, whose portfolio spans rentals and condo buildings, mostly in Brooklyn, said the real estate sector shares some of the blame for being blindsided by the populist backlash, citing a genuine affordability crisis in the city that industry leaders have been slow to address.

“The real estate industry missed the fact this was such a big issue, and the real estate industry has to be a part of the solution to this,” said the developer, who asked not to be named so he could speak frankly.

The ill political winds won’t be the only sobering thoughts on developers’ minds as they crowd the gala’s open bars, however.

This year’s banquet will posthumously honor two figures dear to the real estate community: Hector Figueroa, a longtime leader of 32BJ SEIU, and Jay Kriegel, an adviser to the Related Companies and a chief of staff to Mayor John Lindsay. Both died this year.

And with markets slumping in both the luxury condo and retail sectors, economic woes may actually weigh more heavily on the mood than any political tensions.

In fact, the Brooklyn resi developer speculated that the story of the night may not be about some politicians avoiding being seen with developers, but rather some developers avoiding being seen by their bankers.

“Some people probably don’t want to see their lenders and investors, if they’re in really terrible projects,” he said.

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.