NYC Sales Volume Experiences Precipitous Drop
The market is 12 months into a correction, asserts Cushman & Wakefield investment sales chair Bob Knakal, who keynoted this week's Business Manifestors Principals' Dinner, organized by EisnerAmper at Inside Park at St. Bart’s.
Sales volume is running 18% behind the pace of a stellar 2015. But even if this rate continues, 2016’s total would reach $66B.
“That would still be the second-best level ever,” he told the crowd of 150 principals, developers and investors who gathered to hear the latest expert perspectives on the economics and political science of commercial real estate. That number also includes deals inked in 2015 that didn’t close until this year.
There are five things we need to watch over the next year, he posits: interest rates, progress on tax reform, underlying fundamentals, the strength of the dollar and the mixture of “fear versus greed” motivating investors, who are struggling with concerns of overpaying versus the fear of missing out.
The keynote was followed by a panel led by partner-in-charge of EisnerAmper’s real estate services group Ken Weissenberg, which featured (right to left) former New York State governor David Paterson, The Witkoff Group CEO Steve Witkoff and HFZ Capital founder and chair Ziel Feldman.
One of the hottest topics on the panel was Airbnb, which Steve—behind assets like Park Lane Hotel and PUBLIC Hotel New York—called “the most pernicious force facing the city’s hotel business today,” noting its unfair competition, avoidance of regulations faced by the hospitality industry and burden on hotel owners and union members.
Ziel—who partnered with Witkoff and Ian Schrager on PUBLIC Hotel New York and owns Hotel on the Avenue, Hotel 57 and Hotel Thirty Thirty, among other hospitality assets—said while Airbnb “doesn’t really compete with the five-star market,” it surely affects other grades of hotels.
David Paterson said Gov. Andrew Cuomo should sign a pending bill barring the advertising of illegal short-term rentals on platforms like Airbnb, which would effectively cut into the company's operations here.
Among the other topics discussed included the $4B, public-private redevelopment of LaGuardia Airport, which the former governor said was a good example of “using the strength of the risk assumed by the private-sector partner to motivate action.” (In this instance, the two-thirds of private investment is responsible for the development and any overruns.)
He also put down the rumor of the Port Authority’s possible sale of One World Trade Center, saying it could perhaps happen a decade from now, but not today.
The dinner was organized by EisnerAmper managing director Harry Dublinsky.