Texas is known for its limited regulations, low taxes and low costs, a strategy that has helped its economy become the ninth largest in the world. But that prosperity is in jeopardy, and there is one glaring problem: The state is fast becoming one of the country’s most unaffordable to live in.
In a series of articles, Bisnow Texas reporters Olivia Lueckemeyer and Maddy McCarty are exploring the “Texas Miracle” and what might be threatening it. On this episode of Bisnow Reports, the reporters talk over their findings and we hear from the longtime Texas Gov. and former Secretary of Energy Rick Perry, who is credited as the architect of the Texas Miracle.
He stressed that he doesn’t believe the government should intervene in the housing crisis, however.
“Government should do a few things, do those few things really well, then get the hell out of the way and let the private sector do what the private sector does best,” Perry said. “If you become so popular that the market is able to raise the cost of where people can’t afford it, at some time in the future there will be a self-correction.”
The summer of 2022 was defined by “revenge travel,” and this year is shaping up to be even bigger, as consumers continue with a “live for now” mentality.
CBRE last week once again lifted its forecast for hotel performance, thanks to demand being stronger than expected.
“At the height of the pandemic, we saw a massive loss of life … a lot of folks throughout the country, their priorities have shifted to realize just how fragile today is,” Donohoe Hospitality President Thomas Penny said on the Bisnow Reports podcast this week. “You have folks who will pay a premium to make certain they will make the most of the day.”
CBRE increased its forecast for average revenue per available room, the hotel industry’s leading performance metric, to nearly $98 a night nationally, a 6% jump from its previous prediction.
On the podcast, Penny talks about adapting the business to make the most of so-called “bleisure travel,” recruitment and retention amid the labor crisis and his concern about the debt ceiling.
“While we do not see anything to remotely suggest a recession in our future bookings, what I will say is we are really concerned about what is happening on the Hill in terms of the debt ceiling discussion,” he said. “We have a chance to create another crisis, just as a result of folks not being able to get their work done and their job done.”
On this episode, we hear from Trepp Senior Managing Director Manus Clancy, a commercial real estate debt expert, about the tens of billions of dollars in loans maturing on both office and multifamily buildings this year, the state of lending amid the banking crisis and how much distress he sees in the office market.
"This is a period which is not unlike the mall space five years ago. In many ways, I think the outcomes will be quite similar,” Clancy said on the show. "The level of defaults will be significant, there will be properties valued at half today than they were 10 years ago, losses will be felt not only in the equity side, and the one part of the equation that has yet to be really told yet is in 2018 to 2022, mall owners really dug in and fought to keep their properties. We don't know what the behavior of the office owner will be yet. That part of the story remains very fluid."
On this episode, we’re talking about the impact of yet another major financial institution's collapse, which was followed by another hike in interest rates from the Federal Reserve.
“There's just a lot of uncertainty out there, and this doesn't help at all,” Ron Zeff, the CEO of Carmel Partners, said on the show.
Zeff said while Carmel didn't have any loans with First Republic Bank, he did have personal deposits at the institution, which he reduced before its failure to below $250K.
He and Dekel Capital Managing Principal Shlomi Ronen talked over their views on where will be safe to acquire and develop and their approach to doing deals in the current climate. They had differing views of what markets are the most appealing to invest in, but both agreed that it will continue to be difficult to finance deals in the short term.
This episode was presented by LendingOne.
On this episode of Bisnow Reports, we hear from Jordan Kavana, the CEO and founder of Ark Homes for Rent, which is has raised billions to acquire single-family homes for rent in the Sun Belt markets and Texas.
Ark works with homebuilders to acquire properties as they're delivered, and offers its residents a slate of personal health and wellness services. Kavana discusses building his business in the wake of the Global Financial Crisis, the growth of the single-family rental market and how domestic migration is affecting his business, as well as his views on SFR's reputation as the destroyer of the American dream: homeownership.
"I’m very comforted by the fact that, on both sides of the aisle there is clearly an understanding and a big push for affordable housing," he said. "I believe the single family for rent space is becoming — I don’t think it is there yet — but it is becoming part of this affordable housing strategy, because frankly, most of the major MSAs (metropolitan statistical areas) that we are investing in happen to be the same areas where there is a huge housing issue."
The Real Estate Board of New York’s annual gala is the No. 1 social event on the city’s real estate industry calendar.
The honors and the speeches are almost secondary to the power networking — where relationships are cemented, deals are done and information is traded. This episode of Bisnow Reports was recorded at the 127th edition of the gala on Thursday, where attendees said it is far from smooth sailing in real estate.
Soaring interest rates, a slow return to the office and politics are dominating the industry. And the complexities in the market, the uncertainty and the politics were top of mind that evening.
“I think there is great happiness about getting back together again. It's been such a challenging time,” CBRE New York Tri-State Region CEO Mary Ann Tighe said. “If you said, 'What is the tone of the market throughout?' I would say 'nervous' is a very good characterization.”
Politics also took center stage, with Mayor Eric Adams delivering a fiery speech, asking the members of the audience to get more politically involved while discussions for a new slate of housing policies died in Albany.
On this episode of Bisnow Reports, we hear from two of New York's most prolific brokers to talk over what has been a tumultuous start to 2023 for investment sales and commercial real estate market amid ongoing rate hikes, a banking crisis that closed down a major multifamily lender in New York and growing questions about the values of buildings.
“The reality is that in our commercial real estate market and in all markets, it is always a battle between fear and greed. When greed is winning, there are certain market conditions, and when fear is winning there are certain market conditions,” Bob Knakal, a senior managing director at JLL who leads the New York Private Capital Group, said on the show. “Fear is winning today, and it’s said ‘Be greedy when most are fearful.' Some people are taking advantage of that, but not many.”
Walker & Dunlop's Aaron Appel, who heads up the New York Capital Markets team, said the “can kicking” from lenders is now coming to an end, which will lead to more defaults, workouts and forced sales this year.
“We’re starting to see some breaks in the market with assets either going back or sponsors unable to market debt service payments," Appel said. "Typically when that happens, credit providers will either look to move the position or they will look to find an alternative solution.”
Bisnow's audio series, Bisnow Reports, examines every facet of the international commercial real estate industry — from the murky future of retail and office to real estate’s reckoning with diversity to the effects of climate change on the built world, and so much more. You can subscribe on iTunes, Spotify and Amazon Music, or scroll down to listen in your browser.
Bisnow’s investigation into the decarbonization strategies of the world’s 75 largest real estate owners and managers took six months to complete, a painstaking process designed to hold real estate to account for its claims to have embraced the green agenda.
On this bonus episode of Bisnow Reports, we hear from the project's reporting team of Mike Phillips, Ciara Long and Jacob Wallace to discuss the reporting process, which involved collating hundreds of data points from public records and interviews with companies, many of which were unwilling to engage in a process that would spotlight what they were doing to cut carbon emissions — and what they weren’t.
On this episode, we hear from Alicia Glen, who was the deputy mayor for housing and economic development under former Mayor Bill De Blasio and now runs MSquared, a real estate development and investment platform.
Glen sat down to talk about the simmering debate over housing policy in the New York legislature right now, including Gov. Kathy Hochul's push to force suburban municipalities to encourage new, dense development near transit stations.
“I cannot say enough about how strong a person Kathy Hochul is to even begin to take on what I call the 'suburban no-development, over-my-dead-body military-industrial complex,'” she said. “That's really tough for a first-term Democrat in parts of the state where those people aren't even pretending that they would embrace any sort of growth.”
She also discussed the proposed so-called Good Cause Eviction legislation, which has stoked deep fear in the real estate industry but become a policy focus for progressives in the legislature.
“It doesn't strike me as crazy that people who are in good standing in the United States of America and work hard, should be able to stay in their apartment if they've been good tenants,” she said. "It also doesn't strike me as unreasonable that you could limit to some extent, how much money they would be asked to pay to stay."
On this episode of Bisnow Reports, we sit down with Kevin Fagan, the head of CRE economic analysis at Moody’s Analytics, to hear his thoughts on the Federal Reserve’s approach to interest rates going forward, the outlook for the commercial mortgage-backed securities market, how much exposure real estate has to regional banks and the former Signature Bank's $11B in multifamily loans that have yet to find a buyer.
Although he said the real estate market will experience some pain and distress, he stressed it is worth remembering the credit conditions are far better than they have been in previous downturns.
“It’s a boom-bust sector,” he said on the episode. “It’s very pro-cyclical, and it moves with the economy. It’s the physical manifestation of the economy, and as the economy goes, so does commercial real estate. Let’s say we had the exact same thing [that] happened in 2008 happen now: There was contagion all over the place, all the levers of liquidity stopped being available, and in CMBS, we had a 10% default rate. … You could very much argue it would be better this time around if we had the exact same contagion happen now because you just have better metrics.”
On this episode of Bisnow Reports, we hear from Sonny Kalsi, a co-CEO of Bentall GreenOak, to help make sense of the banking crisis that has already led to two U.S. bank failures and the takeover of Swiss banking giant Credit Suisse, and to assess what it means for commercial real estate.
The closure of Signature Bank, one of the most active lenders to New York property owners, was a particular shock to the heart of the industry. Kalsi said BGO was one of the many firms that moved deposits out of Signature on Friday as Silicon Valley Bank was being taken over by the federal government.
"Our CFO and team had already been working on 'who's next,' and top of the list were Signature and First Republic, and they actually got almost all of our money out on Friday of both, which was remarkable in hindsight," Kalsi said. "It was definitely harrowing, for sure."
Kalsi remarked on the difference between the collapses — the second- and third-biggest in U.S. history — and the largest, Washington Mutual in 2008, which took two weeks and saw a much smaller run on deposits than Signature and SVB.
n this episode, we hear from Michael Beckerman, the CEO of CREtech, which bills itself as the largest global conference, media and consulting company devoted to tech innovation in the built world.
Beckerman said most industries invest 5% of their revenues into research and development, while commercial real estate reinvests less than 1%.
"So when I get asked the question on what's happening in the proptech ecosystem, my first reaction is, ’Well, adoption is still a big challenge,'" he said. "It's not a mature market. It's a very immature, fragile market."
That fragility is made more precarious by the business model of many players in the space — raising capital from investors, rather than generating revenue, to grow the business.
He said the current "pain" in the market is likely to drive a healthier ecosystem for adoption: Large property owners want fewer companies offering a wider variety of options, rather than the current market, which has smaller players operating in silos.
The present moment is a big one for alternative lenders, as banks and other financial institutions have slowed their commercial real estate activity dramatically.
Josh Zegen, the co-founder and managing principal of Madison Realty Capital, sees this also as a big opportunity to lend to other lenders, stepping in on projects that need some extra capital to cross the finish line.
"The biggest challenge amongst the alternative lending universe was a lot were very levered," Zegen said on this week's episode of Bisnow Reports. "They were levered through credit lines, they were levered through repo facilities, and one of the challenges right now, given the change in the markets, lenders are being asked to buy back loans that may be in default … or de-lever their portfolio."
Since the beginning of 2022, the firm has originated roughly $3B in loans. On the show, he talks about the financing markets right now, his sense of the relationship between the lenders and borrowers, and Madison Realty Capital's perspective on taking back properties from borrowers who can't pay off their debt.
On this episode of Bisnow Reports, we speak with Bruce Teitelbaum, a developer who is proposing a two-tower mixed-income housing development at 145th Street and Lenox Avenue.
His proposals have been staunchly opposed by local City Council Member Kristin Richardson Jordan. Teitelbaum withdrew the zoning application for the project in May and is now operating a truck depot on the site, which has drawn ire from local politicians, as well as the threat of a lawsuit from the New York attorney general.
The proposed development, which Teitelbaum now calls One45 Harlem for All, would bring more than 900 units to the area, with a little more than half set aside as affordable housing. Richardson Jordan has called for 100% deeply affordable units.
Teitelbaum has begun the zoning process once more, and on the show, he talks about his decision to open a truck depot, his hopes for getting a resolution and why he thinks his proposal has played a part in reshaping the conversation on housing approvals in New York.
“A lot of folks have called me and said, ‘You, unfortunately, were the sacrificial lamb. You went through this first, but it opened a lot of people’s eyes about what is happening in the city,'” he said. “These are all things people are thinking about now that I think perhaps a year ago they may not have been.”
On this episode of Bisnow Reports, Samir Tejpaul, managing director at Square Mile Capital, talks about whether or not there’s a wave of distress coming for the New York City office market and how lenders will view modifications when loans come due.
“My gut tells me we will find more time — borrowers will find more time and lenders will find more time, because real estate is a timing business, and we recognize that," he said on the podcast. "Right now what people need is more runway to execute their business plan, potentially find more capital to invest or deploy."
He also discusses how the location of office assets will play into financing decisions in a greater way than their age.
“Many of the older product, office assets on Park Avenue, whether it's north or south of Grand Central, have intrinsic quality that you cannot replace," he said. "If you are someone who lives in the suburbs of Long Island, being proximate to Grand Central is extraordinarily important."
For Meredith Marshall, the managing partner of BRP Cos., the answer to the housing crisis comes down to three main things: supply, supply and supply.
In the Bronx, his company is co-developing 1,000 workforce units at a project known as La Central. Last year, the firm delivered 500 housing units at the Crossing in Jamaica, and is already underway with 600 more units in the same part of Queens.
Marshall is also no stranger to the myriad of problems that slows housing: He’s still working on trying to pull together the second phase of a project that was approved under the Bloomberg administration. He said not nearly enough money is being put toward the solution, and the number of steps developers must take to get a building out of the ground needs to be reduced.
"We need to get people around the table. We don’t all have to agree, but we have to agree about common facts. We lost 20% of our black children in New York between 2010 and 2020 … largely middle class people moving down south,” Marshall said on this week's episode of Bisnow Reports. “Neighborhoods they lived in have become more competitive, largely because of supply pressures."
Office buildings are not known for generating brand identity or customer loyalty, certainly not in the way that hotels, gyms and airlines aim to. But that may have to change, according to Industrious CEO Jamie Hodari.
“The fact that historically people have not felt an affiliation or associate anything with a workplace brand does not mean that can’t be true in the future,” Hodari said on this week’s episode of Bisnow Reports. “Workplaces are at the beginning of their journey on that front.”
Industrious just launched a partnership with Nuveen to create a national tenant network, which will have Industrious running the shared spaces like lobbies, conference rooms and event areas, in all 64 of Nuveen’s office properties in 13 states.
On the podcast, Hodari talks about the company’s growth strategy, downturn preparations — and landlords who are keeping their head in the sand about how the way people work has changed.
“It’s not really credible for most people that they spend the next seven years not leaving their living room, so the question is, ‘OK, well if that’s not quite going to work then what is going to work? And what does this new version of things look like?’” he said on the show. “That recognition that the workplace has to be somewhere that people want to go to, that they enjoy, that they feel engaged at is No. 1.”
Two factors seem to dominate New York real estate right now: soaring rents, thanks to a lack of housing supply, and millions of square feet of unused office space. On this episode of Bisnow Reports, we sit down with two women tasked with coming up with possible solutions to the complex challenges unique to office-to-residential conversions.
Real Estate Board of New York Senior Vice President of Planning Basha Gerhards and CBRE Director of Research and Analysis Nicole LaRusso sit on the city’s Office Adaptive Reuse Task Force, which released a report this month with 11 concrete recommendations to make changes to state laws and city zoning requirements to open up more space that is eligible for conversion. The task force also lays out a case for incentives for developers to take on these projects.
“Conversions are not quick money,” Gerhards said on the podcast. "These are not easy. You're dealing with an individual building with its individual quirks and characteristics.”
The task force projects if the recommended changes are implemented, it would open up an additional 136M SF eligible for conversion.
"Only 10% of our housing production has happened in the last decade," Gerhards said. "We also haven't been producing enough housing, so if one way we can solve that is taking these obsolete office buildings and converting them to residential, then conceptually, yes, we should all be in a good place to agree and be able to move forward."
We also speak to Moody's Analytics senior economist Thomas LaSalvia about the economics underlying these projects.
On this year's final episode of Bisnow Reports, we hear from journalists across Bisnow's global newsroom about what has shaped the commercial real estate industry over the past year and what is top of mind for the industry heading into 2023.
UK Editor Mike Phillips, Los Angeles reporter Bianca Barragán and Dallas-Fort Worth reporter Olivia Lueckemeyer discuss the effects of rising interest rates and inflation, the push toward sustainability, the push against ESG investing and the contentious conversations happening in communities around all kinds of development.
“If you take a step back, last year, inflation was a huge topic of conversation, but I think there was the expectation amongst economists that inflation would be a bit more transitory,” Phillips said on the podcast. “Everyone kind of knew it was untenable for rates to stay at zero forever, but 0% interest rates are absolutely brilliant for commercial real estate. … People had been factoring in that rise in rates, but not as sharply and as quickly as it actually came through.”
On this episode of Bisnow Reports, we hear from Arpit Gupta, an associate professor of finance at New York University's Stern School of Business and one of the co-authors of a research paper called "Work From Home and the Office Real Estate Apocalypse."
The report, released over the summer and updated in the last two weeks, makes several predictions about the future of the workplace and what it may do to the value of office buildings.
“We consider two cases, one in which remote work is here to stay,” Gupta said on the podcast. “In that world, we project that the value of New York City office buildings might decline by as much as 60% by 2029. In our base-case scenario, we account for the possibility that we might see that dire outcome or we might actually see people return back to the office.”
Considering both a negative and positive forecast, the report estimates offices will see a 39% decline in value by 2029. In all, the report's authors estimate about $49B will get wiped out in New York City alone, and roughly $450B of value could be lost nationwide.
On the show, Gupta discusses how the report and its predictions have been received in the real estate and investing communities.
“It's certainly a matter of debate what's going to happen, there are many people on the investing side who seem to agree with our conclusions,” he said. “But there are others who are taking the other side of that trade and are hoping that there is going to be a brighter future ahead for the office.”
On this episode, we hear from Amber Schiada, who leads JLL's Americas Work Dynamics and Industry Research platform and is focused on the challenges and opportunities that are impacting companies’ real estate decision-making.
Schiada researches and advises on hybrid work arrangements and has seen how some managers’ views on the office are out of step with their employees'.
“Managers miss the office more than nonmanagers do, by a pretty differential,” she said on the podcast. “Seventy-one percent of managers said they miss working in the office, and only 29% of nonmanagers said that.”
Still, younger workers are more likely to be at their desks every day than their managers because they might have more challenging home office environments or have a greater need for mentorship and connection, she said. Schiada also discussed how a tougher economic climate may — or may not — drive workers back to the office in greater numbers.
“We already saw a drop in remote-only postings," she said. "… There was a spike in remote-only office jobs in terms of posting data over the summer that has started to decline pretty steadily through the last few months. Even employers are not offering that kind of working opportunity as much as they had been.”
On this episode, we hear Silverstein Properties CEO Larry Silverstein in conversation with Mary Ann Tighe, the Tri-State CEO at CBRE.
In the discussion, recorded live at Bisnow’s 2022 New York City Economic Forecast event last week, Silverstein shares what he has learned in the nearly 70 years he has been working in New York City real estate, developing the World Trade Center — before and after 9/11 and how he’s made it through multiple downturns.
“The general sense is towards the end of ‘23 we're going to start coming out of the downturn, and back into an upturn – ‘24 should be a much better year than ‘23 and ‘25 better still. So [for] many this is the time to say ‘stay alive to 25,’” he said.
He also discussed the work-from-home phenomenon, politics in the city and the issues the company is facing in trying to build the $2B Innovation QNS project in Astoria without the current support of the local city council member.
“It’s shown me building residential in New York has become more difficult than ever," Silverstein said. "The more we need housing, the more impossible it has become.”
On this episode, we speak with MWPVL founder and President Marc Wulfraat, a logistics consultant who tracks Amazon's industrial footprint.
Wulfraat cataloged Amazon's exponential growth that took off when the pandemic hit the United States and has been following its retraction this year as it has closed, subleased or canceled warehouses it planned to occupy. Wulfraat said the company is still having "a spectacular year," but it overshot the mark on its network expansion.
“They started opening up buildings at almost an irrational pace in 2020 and 2021, especially in the United States,” Wulfraat said. "In some cases when we were updating the database, we were looking at the map and saying, 'Well, some of this just makes no sense.' Putting a delivery station, brand new, right up beside another one they already operate."
We also hear from reporter Jarred Schenke, who discusses the impact the company's moves have had on the broader industrial market and what the landscape looks like amid broader economic uncertainty.
On this episode of Bisnow Reports, we sit down with Lauren Hochfelder, the co-CEO and head of Americas for Morgan Stanley Real Estate Investing, the private real estate investing arm of the banking giant.
Hochfelder began as an analyst at Morgan Stanley in 2000, working her way through MSREI until she was named head of the Americas division in 2016 and appointed to the co-CEO role in February.
On the episode, she speaks about the macroeconomic environment, the shifts in Morgan Stanley’s real estate portfolio since the Global Financial Crisis and how the real estate industry as a whole may have to change the way it makes money.
"The industry overall has seen the greatest share of value appreciation from cap rate compression [in recent years]," she said. “We certainly cannot rely on that going forward — and in fact, the complete opposite.”
On this episode of Bisnow Reports, we sit down with Ed Cross, a longtime commercial broker, investor and developer based in San Antonio.
His developments include creating a 97-acre master-planned community in San Antonio and now working with the McCombs family — which has owned the San Antonio Spurs and the Minnesota Vikings — to turn a 1929 office building there called the Tower Life Building into hundreds of mixed-income apartments.
He spoke with Bisnow about the history of downturns in commercial real estate, converting office buildings to residential, mentoring young people in the industry and the precipice on which the entire development industry sits.
“We’ve had 40 years of declining interest rates, and so the real estate business became one of merchant building — 95% of the real estate community builds to sell the building,” he said. “Well, once interest rates turn over and cap rates turn up, that model breaks.”
When it comes to women in the world of commercial real estate, the barriers have been real and hard to overcome — and that was before the pandemic took its toll. A Commercial Real Estate Women Network survey last year found nearly 40% of women said the pandemic stalled their career progress, with less access to mentors and more responsibility for childcare and schooling.
This episode of Bisnow Reports is coming to you from our New York City Women Leading Real Estate Cocktail & Awards event. This year Bisnow honored 48 female leaders, whose expertise and experience span the industry.
“One of the great lessons of the last couple of years has been a commitment to adaptability,” said EB Kelly, a managing director at Tishman Speyer and the head of Rockefeller Center. “Recognizing that we need to be more flexible, we can embrace more flexibility. And I think certainly working women have shown that in lots of different ways.”
In this episode of Bisnow Reports, Barings U.S. Head of Real Estate Research and Strategy Dags Chen talks through the rapidly diminishing probability of a soft landing for the economy.
After the Federal Reserve raised rates by 75 basis points again last week — and signaled more hikes are coming — Chen said inflation is the key metric to watch for real estate players hoping to prepare their portfolios for a downturn.
He also broke down the impact on values, as well as similarities and dissimilarities between the current climate and the Great Financial Crisis in 2008.
“It’s clear that monetary tightening is working, what the Fed is doing is working,” he said. “What we don’t know is what breaks in the meantime. Certainly, I do recognize, and I would even say the firm in general would recognize, that there is a need to establish price stability right now, and pain now is worth hopefully the result that would come about it.”
The United Kingdom is observing an official mourning period ahead of Queen Elizabeth II's funeral Monday, Sept. 19. The Queen’s death brings about a new reigning monarch, King Charles III, and a change in who controls what wealth in the family.
On this episode of Bisnow Reports, we're speaking with Bisnow UK Editor Mike Phillips and reporter David Thame about the real estate holdings of the Crown Estate, how the queen's death and the ascension of the new king affect the monarchy's property empire, and how real estate plays a role in the wealth and power of the British royal family.
“It really is a property company, like no other in the world,” Phillips said. “It traces some of its portfolio back to Edward the Confessor. So that's the seventh, eighth century. The majority of its portfolio, the ownership by the British Crown, dates back to around 1066, the time of William the Conqueror.”
Now that Labor Day has passed and fall is around the corner, office cheerleaders predict we will actually see a shift in the American working environment — marked by a robust return of the nation’s office workers to their desks.
While proponents of in-person work say it is impossible to achieve the same productivity without a significant amount of office work, there is a groundswell of support for flexible working arrangements.
That coalition is apparently grating against a new narrative of bosses who will no longer give their workers a long leash when it comes to where and when they work.
“It's not a five-day workweek anymore … [but] people need to be in offices, people need this interaction,” Silverstein Properties CEO Marty Burger said on Bisnow’s podcast.
Several companies, like Goldman Sachs and Apple, have moved to put formal return to work mandates in place. But according to Brian Kropp, the chief of research in the HR department at Gartner, just 25% of workers who have the capacity to work remotely are back in the office full time. The concept of forced returns, he said, is being driven by CEOs who are “overshooting the target” and pushing for greater returns than necessary.
“What we find is that when employees are never together, that their relationships do weaken, their culture does suffer. But the solution is not to be together all of the time,” he said.
The country is short millions of homes, and as interest rates keep would-be homeowners as tenants, rents are climbing to new highs. The median apartment rent in Manhattan hit $4,150 in July, for example, the sixth-straight month a new record high has been set in the city.
On this episode of Bisnow Reports, Redfin Chief Economist Daryl Fairweather talks about the ongoing national housing crisis, the Federal Reserve's measures to bring down inflation and why some homeowners push so hard against zoning changes that would allow for the development of more affordable housing at a wide scale.
“A lot of homeowners, when they buy a home, they are not just buying the home, they are buying the neighborhood, and they feel the neighborhood should be identical to the way it was when they bought it forever,” Fairweather said on the podcast. “I think that is just a misplaced entitlement. It’s unfortunate that homeowners can band together to make it a lot harder for other people to have access to the housing that they had access to.”
The lingering presence of remote work and economic uncertainty are destabilizing the outlook for the office sector, but according to Moody’s Analytics Head of Commercial Real Estate Economics Victor Calanog, it is remote work's impact on career trajectories that is really going to show us how the workplace will look long-term.
“I wonder three, five years from now if it’s going to be an issue, ‘Hey, I chose hybrid, hey I chose to work three or five days a week,’” he said on this episode of Bisnow Reports. “Let’s take a look at where the careers are, and if there will be a centrifugal force pulling people back to the office.”
On this episode, he talks about the predictions that office vacancy will break records set in the savings and loans crisis of the early 1990s, his belief that it will be a rocky 18 to 24 months, and why he doesn’t trust employer surveys on return-to-work views.
“When they ask you what you feel, there are all sorts of things that convince you to select A or B — like, ‘Will my manager see this? Is this truly anonymous? How will this affect me, and I think my boss wants me to say I want to go back to the office,’” he said. “But then there’s revealed behavior, there’s what you actually do.”
Last week, the threat of a U.S. recession came into sharper focus, as new data showed the country's gross domestic product had shrunk for the second quarter in a row, and the Federal Reserve once again hiked interest rates to curb inflation.
On this episode of Bisnow Reports, we are talking about the real estate fallout of what may be a recession — or may not, depending on who you ask — but what is certainly a shift in economic conditions that is having real consequences in the market. Bisnow UK Editor Mike Phillips discusses how international real estate investors are behaving amid global uncertainty, where deals have been put on ice or stalled as a result of the market, and what it may take for the standoff between buyers and sellers to end.
“There will be a point, if you own a property in a fund that is coming to the end of its life, at some point you will have to sell and give money back to investors,” Phillips said. "There will be issues with refinancing.”
On this episode, MaryAnne Gilmartin, the founder and CEO of MAG Partners, sits down with Bisnow.
Her company is just over 2 years old, but Gilmartin has been a fixture on the New York City real estate scene for decades. Once the president and CEO of Forest City Ratner, her developments include Barclays Center and the New York Times Building on Eighth Avenue.
MAG Partners now has a roughly $1B development pipeline, including three residential projects spanning 1,000 units and a ground-up office development in Manhattan. Last month, the company announced it is taking over the Port Covington megaproject in South Baltimore, along with San Francisco's MacFarlane Partners. The firms are joining the plan to build a mini-city launched by Sagamore Ventures, the development firm founded by Under Armour founder Kevin Plank.
On the podcast, she spoke about about running her new firm, leading Mack-Cali as interim CEO, taking on the ambitious project in Baltimore — her first outside of New York City — and her concerns about political dysfunction and division in New York.
“There’s no way to do anything big and bold without expecting some friction,” she says on the podcast. “It’s just getting harder and harder. There’s really more divisiveness in the country and city than I’ve ever seen … Maybe when gridlock occurs and nothing's happening and the city is falling apart and people still want to be here and they love our city, then something will give, because something has to give.”
On this episode, Bisnow sits down with the founder and chairman of Value Retail, Scott Malkin. His company operates Bicester Village Collection, a group of designer shopping centers in the UK, Europe and Asia.
The 12th and latest village in the collection — Belmont Park Village in Long Island, next to UBS Arena, where the National Hockey League's New York Islanders play and which Harry Styles opened with a concert last year — will be Malkin’s first retail operation in the United States since the early 1990s. He said it will provide the kind of shopping experience that doesn't exist anywhere in the country.
Malkin, who is a part owner of the Islanders and the brother of Empire State Realty Trust CEO Anthony Malkin, spoke on the podcast about the thesis behind marrying sport, entertainment and retail, as well as why fashion will never be controlled by algorithms or e-commerce giants.
"If you think about the future of retail, the war is over. Amazon won, Alibaba won — the future of retail is digital, but the future of brands is physical," he said. "And as tech and AI accelerate, which they are doing, and as they go towards ever-more-effective philosophy ... experience has to raise the bar as well.”
This episode is brought to you by AREP, American Real Estate Partners.
Last week, the Biden administration released its Housing Action Plan, a collection of policies and initiatives aimed at closing the country's housing supply shortfall in half a decade.
As part of the plan, President Joe Biden is trying to encourage local governments to reduce single-family zoning, which has been cited as a restriction on housing supply and a key cause of the affordability crisis.
On this episode, we hear from Community Preservation Corp. CEO Rafael Cestero and Monadnock Development President Kirk Goodrich, who are friends and business partners and co-host a podcast called The Housing Problem, which is aimed at improving the tenor around housing in New York City.
"I think it's important for the president to take a leadership position. He has a bully pulpit, I think. Affordable housing is a priority, and to have somebody in leadership not only indicate it's a priority but actually have the beginnings of the right prescriptions to deal with, we have to have that, and I think that's important,” Goodrich said. “I think the problem is the trickle-down and the politics of agreeing on different elements of it, and the volume of commitments and priorities is where things grind to a halt.”
This episode is brought to you by AREP, American Real Estate Partners.
Peebles Corp. CEO Don Peebles sat down with Bisnow to talk about his vision for Affirmation Tower, his plan to develop the first supertall in New York City largely built by women and minorities.
The project, which is slated for a state-owned lot across from the Jacob Javits Convention Center on Manhattan's West Side, is a long-held dream for Peebles. His team’s current plan is to build a nearly 2M SF building with hotel, office and retail and could be home to the Museum of Civil Rights, a concept championed by the Rev. Al Sharpton, whom Peebles has known for years.
But it is far from a done deal. Last year, Gov. Kathy Hochul’s office canceled the request for proposals for the site, but Peebles remains certain his team’s proposal is the best use for the land and is confident they will be awarded the project.
“This would have been very helpful to the governor politically, she is going to be in a tougher primary than she thought. And she's going to be in a general election, it's going to be tough, too,” he said. “Affirmation Tower, I think, would have been something that [Hochul] could have pointed to and said, ‘Here's a message of what we're going to do going forward, this is how development is going to be under my watch.’”
This episode is brought to you by AREP, American Real Estate Partners.
On this episode of Bisnow Reports, we sit down in SoHo with Amish Tolia, the co-founder of Leap. The 4-year-old company leases retail stores on long-term deals with landlords and then subleases them to retailers on flexible terms.
Many of Leap’s brands are online outfits that haven't had a physical location before, and the firm amalgamates shopping patterns, like e-commerce sales, foot traffic and local demographics, and uses that data to inform which brands go where.
On the podcast, Tolia discusses why physical locations are of increasing importance to retailers, working with the real estate community and changes Apple has made that rendered a company like Leap even more necessary.
This episode is brought to you by AREP, American Real Estate Partners.
On this episode of Bisnow Reports, we sit down with Nathalie Palladitcheff, the CEO and president of Ivanhoé Cambridge, the real estate giant that is a subsidiary of Caisse de dépôt et placement du Québec, an institutional investor that manages the pension plans and insurance programs of Québec.
Palladitcheff is the first female CEO of Ivanhoé Cambridge, and her appointment in 2019 made the company the only major pension fund in Canada with a woman in the top job. Last week, she spoke at Bisnow's inaugural Rise Initiative event, which recognized commercial real estate companies making real progress with their DEI initiatives.
On the podcast, Palladitcheff spoke about diversity in hiring, how real estate is responding to the climate crisis, balancing a $60B portfolio and how the pension funds view real estate in an environment of inflation.
“If you look backward, inflation has always been in favor of real estate in terms of asset allocation, because doing bonds current is quite tricky, stock exchange is very volatile, the geopolitical risk is really rising from day to day so going to tangible assets, illiquid assets could make sense,” she said. “So I think it’s very good for infrastructure and real estate as soon as you are able to pass on the inflation to the tenant.”
This episode is brought to you by AREP, American Real Estate Partners.
On this episode of Bisnow Reports, Ric Clark, the managing partner of WatermanClark and former chairman of Brookfield Properties, speaks about making bets on office as hybrid work throws doubt on its value.
Clark was at Brookfield in New York for more than 30 years, overseeing its rise to becoming the biggest office owner in the city. He stepped back from the chairman’s role at Brookfield in February 2020 and in November of that year announced the formation of WatermanClark, which is a joint venture with Todd Waterman.
Now, the firm is marking its first big undertaking with the revamp of Lever House, a joint project with Brookfield. The building was the headquarters for the soap company Lever Brothers, but today it sits vacant, and Brookfield and WatermanClark are spending $100M to upgrade it.
“I think one of the important fundamentals of successful real estate investing is to be able to separate temporary anomalies, or fads, from trends," he said on the podcast. “Covid hasn't stopped the world's population from growing or the world from urbanizing.”
This episode is brought to you by AREP, American Real Estate Partners.
On this episode of the podcast, we're examining the office leasing market in New York City and how lenders view office assets. More questions have been raised around the office sector in recent weeks, as investment giant Blackstone handed back the keys to the building at 1740 Broadway and as the office vacancy rate has remained stubbornly high in Manhattan.
“This utilization of office has really delayed the interest of lenders to lend on office, particularly in the major CBDs,” Michael Gigliotti, the co-head of the New York office at JLL Capital Markets, said on the podcast.
CBRE Executive Vice President Lauren Crowley Corrinet and CBRE First Vice President Alice Fair also share their insights regarding New York City's office market on the podcast.
New York landlords have worried for years about the so-called Good Cause eviction bill.
The proposed legislation would give free-market tenants the right to renewals and would prevent landlords from making “unreasonable” rent increases — defined as the higher of 3% a year or one and a half times the annual percentage change in the Consumer Price Index — except in the case of a major repair.
In this year's legislative session, momentum is building to pass the bill after multiple previous attempts have come up short. On Bisnow Reports this week, we speak with attorneys on both sides of the issue to find out why the real estate industry and progressive advocacy groups are clashing so bitterly over the bill.
For most of the past two years, a large part of the American workforce has been in a state of flux about the return to the office.
Through it all, Kastle Systems, which records the swipes of building access cards, has become the main supplier of data on the rate of workplace return across the country. Every week, it puts out its Back to Work Barometer, which measures keycard entries into offices in 10 of the largest cities in the U.S. Its most recent data shows a weekly average occupancy of 39.5% — down slightly from the previous week — with some big differences between cities. Austin is at over 50%, while San Francisco is at roughly 30%.
On this episode, we’re speaking with Kastle Systems CEO Haniel Lynn about his thoughts on the return to the office and his predictions about what is coming next.
“It’s probably going to be a little bit steeper from what we have seen before,” he said. “Now people are sitting, hopefully, the other side of omicron, people I think would start to accelerate their back-to-work plans. My guess is it would be steeper, but it still won’t erupt from 40% to 80% inside of a month.”
In the last few weeks, the world has watched as Russia has led an unrelenting attack on Ukraine.
Western governments have rushed to put sanctions on Russia itself, and global companies have withdrawn from the country in retaliation. There has also been a renewed focus on where wealthy Russians with connections to President Vladimir Putin have been parking cash, particularly in places like the U.S. and UK property markets.
On this episode of Bisnow Reports, we’re hearing from Mark Hollingsworth, an author who specializes in Russia and Russian oligarchs, who wrote the book Londongrad: From Russia with Cash. He speaks about what impact new rules will have on property markets, why it has taken a war to make these changes a priority — and where oligarchs may be looking to buy property next.
On this episode, we sit down with Warren de Haan, the co-CEO of ACORE Capital — one of the biggest nonbank lenders in the country, having originated $7B in commercial real estate debt last year.
He discussed where he sees opportunities this year, and where he sees potential pitfalls, especially in life sciences, with tenants that come with higher risks and developers potentially out of their depth. He talked about the kinds of assets that may be at risk of foreclosure and shared his views on which kinds of office properties he is interested in lending on — and those he wants to avoid.
On this episode, we hear from Jonathan Goldstein, the CEO of Cain International, a privately held investment firm with almost $11B under management.
On the show, Goldstein discusses making acquisitions during the pandemic, why he believes in the future of offices — and how businesses need to accept their role in dealing with major social problems like the housing crisis and homelessness.
“We as business leaders need to take a lead in saying we can do more, we are prepared to do more, we're prepared to pay more. Taxation is not a bad word, if you understand what your money is being used for, and it's being used to solve some of society's problems,” he said. “Governments need to understand that they simply are incapable of solving these problems, and they need to delegate and work in collaboration with the business leaders, because I have yet to be in a room with leading property developers around this world who don't care about this issue.”
There is no denying that the single-family rental market is having a serious moment.
Last December in the United States, rents for single-family homes jumped 12%, the biggest year-over-year increase in almost two decades. The sector is getting massive interest from investors: About 18% of all U.S. homes are sold to investors, up from 8% 13 years ago.
On this episode of Bisnow Reports, we’re hearing from Samatha Kempe, the co-founder and chief investment officer of IMMO Capital, a company that buys homes on behalf of large, professional investors and runs them.
"We realize that if we can use technology, we can unlock this asset class for institutions and create a better housing product for consumers," she says on the podcast. "More and more people are choosing to rent, a lot of it driven by affordability. If I'm honest, there are a lot of people who can't afford to buy homes anymore. But there is also an increasing number of people who choose to rent, not because they can't afford to buy but because ... they want to have that flexibility."
The nation’s office owners are engaged in a serious courtship right now, hoping to woo the most important people in their life: their tenants.
This Valentine's Day on Bisnow Reports, we are talking about the diminished allure of the office and how landlords are working to rekindle the spark to encourage workers to come back to their desks.
“The romance of the office is really no different than any other romance in life. It's about making connections that create an emotional response,” said Lindsay Ornstein, the co-founder of OPEN Impact Real Estate.
In the last few months, the rapid rise of rent has been back in the headline as cities around the country experience yearly increases of as much as 40%.
Nationwide rents for listed apartments were up 14% in December, according to Redfin. The residential brokerage’s chief economist, Daryl Fairweather, said on this episode of Bisnow Reports that the money flowing through the economy — from stimulus funds and extra savings people put away during the pandemic — mixed with widespread interest in better and bigger homes are pushing up demand for all types of housing.
“Before, I think it was something that the middle class could kind of ignore; it wasn't their problem that there wasn't affordable housing for lower income people,” she says on the podcast. "But now, middle-class people can't buy a home because they're being competed against by people coming with all-cash offers, multiple offers on a home selling for $50K above asking. It's just getting so intense that I think people are starting to understand the severity of the problem.”
South Florida has been a beneficiary of a major influx of people and companies in recent years, a process that was accelerated by the coronavirus pandemic. And that has one of the largest developers in the U.S. licking its lips at the prospect of building residential and mixed-use schemes to house this growing number of highly paid workers.
Bisnow sat down with Related Group Chairman and CEO Jorge Pérez and President Jon Paul Pérez to talk South Florida real estate, the region's changing demographics and how the company is dealing with the twin challenges of climate change and skyrocketing construction costs. Related has built more than 100,000 luxury and affordable residential units since Jorge Pérez founded the company in 1979 alongside Stephen Ross, and sold $50B of real estate.
“We have taken advantage of that huge demand coming from everywhere into South Florida; we're seeing an immense influx not only of people, but of businesses relocating, particularly from the Northeast, and even from California,” Jorge Pérez said. “They’re taking advantage of the open air. People who are afraid of the pandemic and want places that are more open, more sunny, where you can breathe more freely.”
On this episode, Bisnow sat down with Gilda Perez-Alvarado, the global CEO of JLL hotels and hospitality, by the pool at the National Association of Real Estate Editors conference last week in Miami.
Perez-Alvarado was appointed to this role in February, which made her the highest-ranking Latina at JLL, leading a team of more than 300 people in 48 offices. On the podcast, she spoke about which hotels are recovering and the growing pressure in the hotel industry to meet ESG mandates.
“Hotels that are catering to domestic leisure clientele are doing absolutely fine … Along the Mediterranean, here in the Sun Belt and the 'Smile States,' those cities and hotels markets are doing fine, in fact some are doing better now than they did in 2019,” she said. “Those cities that depend on international travel and corporate demand are not doing as well.”
In this episode, Small Change CEO Eve Picker sits down with Bisnow to speak about the real estate crowdfunding platform she founded and changing perceptions about who should be developing and investing in real estate.
Small Change pairs investors with developers who are creating projects that are doing something to improve cities or the world; it has developed its own “change index” to measure the impact of the proposals.
“I noticed this happening in the last 18 months, the pandemic has been a horrible thing, but it’s had some upsides to it, and the Black Lives Matter campaign had a pretty major impact on developers who are working in neighborhoods that have had to stop and think for a moment, ‘OK, what am I doing here and how am I going to include the community?'" Picker said on the podcast.
“In cities like New York, government agencies are insisting on better engagement … I think that as crowdfunding becomes older, those larger developers are hearing about it, and it’s going to move from being a crazy pioneering to being a serious way to raise money."
On this episode, Avison Young CEO Mark Rose sits down with Bisnow to discuss the diversity at the top levels of the commercial real estate industry.
On the podcast, Rose — long a vocal champion of inclusion — talks about changing behaviors, attitudes and hiring practices at the commercial real estate services firm. While Avison Young is pushing for greater diversity in its ranks at all levels, Rose said are the best way to push for greater diversity in the traditionally White male-dominated field, rather than hiring quotas, which he said put the focus in the wrong place for building an inclusive company.
"I think quotas are the path to failure," he said. "The fear is that if you don't build and train, educate and then develop your new talent to understand a sustainable path to a diverse collection of opinions — which we define as the proper way to build a company — you're never going to get there. And it's not numbers. It's your culture and your belief system."
Nadir Settles, the managing director and New York regional head at Nuveen, sits down with Bisnow at his company's office at 730 Third Ave. to talk through the kinds of properties the investment manager is interested in buying, having just closed a $260M fund with Taconic Partners focused on buying in New York City.
Alison Novak runs Sidewalk Labs Urban Development, a commercial development advisory business that is part of Sidewalk Labs, a subsidiary of Google’s parent company, Alphabet. She sits down with Bisnow this week to talk about the way her company is working with developers across the country to create more sustainable and equitable projects.
Chris Schlank, the founder of private equity firm Savanna — best known for its New York City office investments — sits down to talk with Bisnow about the uncertain terrain facing owners of urban office buildings.