NYC Real Estate Sits Through Paralyzing Uncertainty As Nation Awaits Result
New York City real estate players are pinning their hopes on a swift end to uncertainty and picking over the results of state races, as general election vote counting continued in battleground states Wednesday.
Hopes for federal funding to help the city’s dire fiscal situation and less tumult to ease investors' concerns are all top of mind for the general election, industry players said in interviews. Most expect that former Vice President Joe Biden will ultimately end Donald Trump's presidency, though many said the absence of a result and ongoing fear of unrest in the city is holding up deals and slowing business.
Some said the state races are of greater importance than the White House, and others pointed to next year’s mayoral race as having more gravitas than any election of the last few years.
“When I woke up it was like Christmas morning, because I think there is a path for Joe Biden, I strongly suspect he will prevail,” said B6 Real Estate Advisors CEO Paul Massey, who ran for mayor of New York City as a Republican in 2017 before withdrawing from the race. He put his support behind Michael Bloomberg’s run in the Democratic primary race, but then switched his support to Biden when Bloomberg dropped out.
“I think the country wants to be unified," Massey said. "We want leadership.”
As of Wednesday afternoon, Biden has won 248 electoral votes, according to the Associated Press, needing only 22 more to win the presidency. Nevada and Michigan, where he is leading, would combine to seal the White House for the former vice president.
While final vote counts won't be available for days, Biden has a double-digit lead among New York voters and comfortably won the progressive-leaning state — although House seats representing parts of the city, including Southern Brooklyn, were flipped by Republicans.
Massey said while Biden’s policies are not necessarily real estate friendly or pro-business, the only way New York City can rebuild is if the coronavirus is brought under control and the country is less divided, he said, adding that Biden could get that done more effectively than Trump — and is more likely to direct funds to help the city with its looming budget crisis.
Democratic Gov. Andrew Cuomo has pointed to cuts to services and a jump in taxes unless federal funding comes through with billions to cover a revenue shortfall over the next two years. In New York City, the local government is preparing itself for a $13.5B shortfall through 2022.
“If Biden were to win, I think that means a bigger bailout package for New York,” said Joy Construction principal Eli Weiss, whose company owns multifamily properties in Manhattan, Brooklyn and the Bronx. “As somebody who is very active in affordable housing, we need to get a bailout. I have a bunch of land in the Bronx that I was hoping to build [affordable housing] on … The hope is this will get sorted out over the next week or two, and we move forward.”
Mayor Bill de Blasio said this week he believes Biden would help the city get back “on its feet” with a funding package “along the lines of the New Deal.”
Slate Property Group’s David Schwartz, another affordable housing developer, said bailout money will affect every aspect of real estate in the city. He hoped for an early landslide win for Biden last night, and still predicts Biden will be the next president — but has also been tracking the New York state Senate closely.
State Democrats hoped to expand their majority, and real estate had been preparing for an increasingly progressive legislature. But hopes for a super-majority did not yet eventuate from initial vote counts, The New York Times reports, and some Republicans reached a surprise lead in multiple House races.
“Despite a difficult night for many Democratic candidates throughout the state and nation, the Senate Democratic Conference comfortably retained our majority and will be welcoming a historic group of new upstate Democrats to the Senate,” Senate Majority Leader Andrea Stewart-Cousins said in a statement Wednesday.
“With the record high number of outstanding absentee ballots that are overwhelmingly Democratic, we will add even more victories to our majority as the vote counts continue.”
Shifts in Albany, the makeup of Congress and the occupant of the White House will set the table for the city’s mayoral elections next year, Schwartz said, a critical race for New York City real estate.
“Trump being president changed the dynamics of New York politics more than anyone else. If you have Biden in the White House, it will have a significant impact on local politics,” he said. “I think there will be more of an opening for the moderate voices in New York, because I think Biden is a liberal but more of a moderate liberal.”
This week, the city has been dealing with a tense mood and concerns about a resurgence of the same kind of civil unrest that hit the streets this summer amid peaceful protests against racial injustice.
Landlords and retailers began boarding up stores with plywood over the weekend, while rental buildings increased staff and security.
"Property insurers are holding back on issuing new coverage because of uncertainty because of potential risks because of unrest from the election. That prevents the flow of capital,” said Marc Landis, Phillips Nizer Real Estate Practice co-chair. "How do you transact an acquisition or a new lease if you can’t get insurance?"
Compass Vice Chairman Robin Abrams, who specializes in retail, said many of her clients have put deals on ice until there is a resolution. There were no incidents of violence or damage overnight to any of the businesses she represents, but no one will remove the protections to their stores until the election is settled.
“They are going to want to make sure there is nothing risky going on,” she said, adding that she believes that while many business people disagree with Trump’s approach, they voted “with their pocketbook.” Now, retailers and landlords will only proceed with caution.
“They are just waiting to see what happens, and I guess it’s from a policy point of view, and how it affects them economically and how it affects the mood of the country and as that relates to how people are behaving,” she said.
For Ariel Property Advisors Executive Vice President Victor Sozio the crucial matter is what happens in the legislature — both on a federal and state level — and he said he is “rolling with the punches” where necessary.
“I was hoping for some closure last night, one way or another, I wanted to start the healing process,” he said “But it doesn’t look like we are there just yet.”