Housing Anxiety, Office 'Animal Spirits': What Was On CRE's Mind At REBNY's 129th Gala

As the biggest names in New York City commercial real estate gathered for the 129th annual Real Estate Board of New York banquet, the night was filled with optimism for the year ahead — save for unanimous concern about the state of the city's housing market.

Many of the guests walking the red carpet at the gala told Bisnow that the momentum they had felt in the city’s office market in the latter half of 2024 gave them confidence for 2025.

But some also criticized state-level housing incentives introduced last year, voicing doubt that the policies will allow developers to build at the volumes demanded by the city’s housing shortage. With rents again on the rise and a historically shallow construction pipeline, industry leaders expressed concern for the city's future economic prospects.

“There's no appetite to do very much more on housing this year,” said Jed Walentas, principal of Two Trees Management and chairman of REBNY. “The need for further work on housing is overwhelming. The gap between good public policy and where the politics [are] is very wide.”

The gala, which has long served as REBNY’s biggest yearly fundraiser, is the biggest night of the year for NYC’s real estate industry — and often a chance for hobnobbing between senior industry figures and elected officials over cocktails. This year's event again took place in The Glasshouse overlooking the Hudson River. 

Mayor Eric Adams did not take the stage, as he did the past two years. But he was spotted at the event, socializing with real estate’s high and mighty during the cocktail hour.

Adams has long courted the real estate industry and counted on their campaign donations, but he is currently under scrutiny for multiple real estate deals that the city has entered into on his watch. He is also facing a federal trial on corruption charges in April following investigations into campaign donations from well-connected real estate figures. 

REBNY did not respond to Bisnow’s questions about whether the mayor was invited to speak this year or who paid for his ticket. A spokesperson for the mayor's office confirmed to Bisnow on Friday afternoon that Adams attended as a guest of REBNY and will follow the NYC Conflicts of Interest Board's disclosure guidelines.

The mayor didn't speak, his spokesperson said, due to his plans to fly down to Mar-A-Lago to meet with President-elect Donald Trump on Friday.

The Adams administration spearheaded the City of Yes rezoning, which was lauded by members of the real estate community in attendance on Thursday night who hope that the zoning changes will remove red tape for building housing. During his State of the City address last week, Adams promised to further build on that legislation this year and unlock more city-owned land for private development.

Shortly after Adams was seen mingling, Gov. Kathy Hochul took to REBNY’s stage. While her State of the State Address this week criticized corporate landlords and private equity’s presence in the housing market, Hochul used her address as a chance to take a victory lap on the housing legislation she shepherded through the state legislature last year.

“Literally one year ago, I stood here, and I had just been reading all the articles,” she said as the event’s roughly 1,000 attendees tucked into a grain salad topped with a hunk of soft cheese. “The press was already forecasting that Hochul would throw in the towel on a housing plan.”

Albany lawmakers, in their budget deal last year, passed new incentives for housing development that gave the industry glimmers of hope, including 485-x, a replacement for the 421-a tax abatement that lawmakers hoped would stimulate more housing production.

The package’s other measures included an increase to the floor area ratio cap, allowing for bigger buildings, and 476-m, a tax incentive to help with office-to-residential conversions that some of the city’s biggest office owners believe could convert millions of square feet to housing.

“As a result of a close relationship with REBNY and so many of your members weighing in, we finally delivered a housing package so we could turn the City of Yes into truly something that was happening,” Hochul said. 

However, attendees said they were unsure that the new tax abatement for rental housing development in place changes the math enough to turn around the city's construction slowdown, even with the citywide zoning amendment.

“I personally don't think that the state's 485-x is going to work,” said Gary Rosenberg, founding member and chairman of law firm Rosenberg & Estis. “City of Yes is a big plus, because it does give you more zoning. But now that more zoning, I think, is going to be an issue because it's not going to work for the programs we have.”

But others praised the efforts to pass housing legislation last year at a state and local level considering the stalemate that festered through 2023. Brian Steinwurtzel, co-CEO and principal of GFP Real Estate, championed the office-to-residential conversion incentive as a potential difference-maker for the city's undersupply of housing and oversupply of obsolete office buildings.

“What I learned in 2024 working with the legislative body was that we can create solutions like 467-m,” he said. “I am extremely hopeful that those kinds of dialogues continue and that we all are working together towards solutions to some of the big problems that we have for New York.”

Rudin co-Executive Chairman Bill Rudin said 467-m would lead to more activity for developers and owners in the coming year. His fourth-generation family business sold 80 Pine St. in the Financial District after 64 years of ownership to a developer planning a conversion to apartments.

“You're going to start seeing a lot more conversions happen,” Rudin said. “We have a huge housing shortage, so we need to continue to produce more and more housing.”

In the city's Class-A office market, RXR Realty CEO Scott Rechler told Bisnow momentum is back after it “hit the floor” last year.

“You have the leasing momentum, you have visibility,” he said. “A lot of the transactions that were paralyzed last year are now starting to come to market, both on the leasing side and on the capital markets side of the equation.”

While last year's top office leases were dominated by finance and law firms, Rudin said tech companies could finally emerge from their multi-year leasing slumber.

“We now have AI companies coming to New York,” Rudin said. “You're seeing technology companies back in the marketplace.”

The leasing momentum is translating into high office attendance, said Bruce Mosler, chairman of Cushman & Wakefield’s global brokerage, which bodes well for the office market as a whole.

“Last year, we saw a couple of million-square-foot commitments,” he said. “We've only had that happen four times in the last decade. I look for that to happen again in 2025 — there are big tenants in the marketplace.”

The level of demand won’t be without challenges as trophy and Class-A space flies off the market, JLL Chairman and President of the New York region Peter Riguardi said. 

“We've really begun to run out of new office space, and we've begun to run out of prime office space,” he said. “For brokers in a market like this, trying to make their clients feel like they have the right choice is becoming more and more challenging and requiring more and more creativity.”

Businesses’ desire to have a presence in NYC bodes well for other asset classes, too, Rechler said.

“When you talk to our clients, the animal spirits are roaring right now. People want to go out and grow their businesses,” Rechler said. “That speaks well for what our industry is going to do, both on the office side and the multifamily side.”

Even though the industry hasn't seen borrowing costs come down to the degree it had hoped, there is still more liquidity in the market today, said Leslie Himmel, co-founder and managing partner at Himmel + Meringoff Properties. That’s resulted in strong appetite for retail and multifamily properties.

Plus, she said, the success of best-in-class office buildings is now starting to trickle down into Class-B office stock.

“We think things are really going to take off towards the end of ‘25 and ‘26,” she said.

Jonathan Mechanic, chairman of Fried Frank's real estate department, was given REBNY’s Lifetime Achievement Award Thursday. On the red carpet, he said demand for commercial real estate lawyers is significant enough that his firm is speeding up hiring to cope with the volume of business it has been handling.

“We're being asked to do one side of the transaction. Sometimes we're asked to be the other side of the transaction, sometimes even a third part of the transaction,” he said. “On a go-forward basis, I think it's going to be busier.”

But even the office market’s success depends on a solution to the housing crisis, said Hal Fetner, president and CEO of affordable housing-focused Fetner Properties. People coming back to the office need somewhere to live, but the city’s high rents could hurt its current economic momentum, he said.

“We opened up a building in May last year. We're getting very high rents. My investors love me, but as New Yorkers, we should be upset about that,” he said. “We opened up a building in June in Long Island City. Same thing, we're getting rents higher than we are ever expected to get. It's not that we're that smart. It's that there's a lack of supply.” 

Sasha Jones contributed to this story.