Ben Shaoul: 'We Have Dodged The Recession Bullet With This Presidency'
Despite an eventful first week in office that sent his public approval ratings to historic lows, President Donald Trump has the backing, and confidence, of his colleagues in New York City's commercial real estate industry. And while he wanted to keep his personal politics aside, Magnum Real Estate Group CEO Ben Shaoul, who controls a $3B real estate portfolio, is bullish about Trump and the future of the NYC real estate market.
"We have dodged the recession bullet with this presidency," Shaoul said in a telephone interview Thursday evening.
Asked if Trump has done anything to shift the investing fundamentals of commercial real estate, Shaoul was just as direct.
"The fundamentals have changed," he said. "People believed that there was going to be a bubble in real estate and a potential recession. There are no more conversations like that. The only complaint I’m hearing about is 'lending is tight.' We are about to move into a new cycle of growth."
Shaoul was excited about the pace of sales in his condo developments — he's selling units in the under-construction 196 Orchard, a $200M project on the Lower East Side, and six other projects — and his firm said sales are up 20% since November.
"I cannot tell you how busy it's been," Shaoul said. "We have been on fire, we are exceeding our expectations on sales and all of our projects right now."
Shaoul's comments about the mid-tier condo market — his projects target the $1M to $5M price range — have been echoed around the city, and he feels the market is undersupplied, despite the amount of press ink being spilled about the slowdown in the ultra-luxe condo sales market.
While Shaoul doesn't dispute there are too many condos targeting buyers in the $10M range, he's grown frustrated with regulations handcuffing banks and preventing them from giving construction loans to any for-sale product, regardless of price range.
"It’s super important to take the handcuffs off. I’m not saying lend money freely, but the current feeling as a borrower is almost non-democratic," he said.
The regulations imposed upon banks, Shaoul said, are putting them in the position of devoting more resources to fending off regulation than to trying to lend money, and it's having an effect on their negotiations with potential borrowers.
"It feels like we’re constantly defending ourselves in any loan position," he said. "The banks ask us what I think are, for the most part, silly questions, questions that have no bearing on the value of our collateral and what’s happening with our assets."
Construction lending appears to be on a small upswing in NYC as the year begins. Dock 72 in Brooklyn just got $250M from J.P. Morgan Chase, M&T Bank and U.S. Bank, and Hidrock Properties landed $100M for a Midtown project. But Shaoul said Trump could be the key to making sure NYC real estate doesn't experience the drop in 2018 many are predicting.