By Sarah Trefethen
A star-studded panel of experts from across the real estate industry shared their predictions for the coming year at a Real Estate Board of New York luncheon in November.
MaryAnn Tighe, CEO of CBRE, posed questions to Woody Heller, an executive managing director at Studley, Robert K. Futterman of RKF; Neil Goldmacher, a vice chairman at Newmark Grubb Knight Frank, and Simon Ziff, president of the Ackman-Ziff Real Estate Group.
2013 has seen land in Manhattan trading at prices in “uncharted territory,” Tighe noted.
The prices — by one count they’ve doubled since 2007 — have been driven by high-end residential development, according to the panel.
“Land is the best indicator of what’s going on in the market,” Heller said, adding that “the highest and best use we’re seeing for land today is clearly residential.”
Developers who in recent years have avoided large condo development sites have been grabbing them up this year, so 2014 should see larger residential developments coming out of the ground.
In the office market, the panelists observed that tenants are more and more willing to look in neighborhoods outside those traditionally associated with their industry, a trend they predicted will continue in 2014.
When it comes to location for office tenants, Goldmacher said, “all bets are off.”
Not only are media and publishing tenants looking amongst the financial firms of Lower Manhattan, he said, but as the tech companies that got the New York start in Midtown South mature they are also more willing to look Downtown.
“It used to be, we want a great block of space as close to Google as possible,” he said.
Another office trend that Goldmacher predicted will continue into 2014 is the way tenants are reassessing their use of space.
“Everyone is looking at their workplace,” he said. “They’re looking at how to change it, they’re looking at density.”
Office leasing is still a tenants’ market, with concession packages remaining generous, Goldmacher said.
Third and Sixth Aveues have been slow to come back from the recession — Tighe called them “the orphans of this recovery” — but Goldmacher predicted that “tenants will come to see them as the bargains.”
Retail is another strong sector that is expected to continue next year.
“The nice thing in the retail business is new neighborhoods emerge,” Futterman said.
The Lower East Side of Manhattan is due for an uptick in retail activity in 2014, he predicted, after being somewhat passed over in favor of some Brooklyn neighborhoods. Increased activity in the LES would be a natural eastward expansion from Soho, Nolita, and through the Bowery, according to Futterman.
Futterman also predicted a strong year for 57th Street – East to West – as well as the area north of Madison Square Park.
The hot retail market will continue to make an impact on investment sales next year, panelists predicted. As an example, Heller described a four-store retail property on Broadway in Soho that he has sold three times in three years, with the price doubling in that time in spite of no tenant turnover.
“You have an incredible number of national retailers who want to come into this market,” he said. “The island can get taller, but it doesn’t get wider. So your supply is quite finite but the demand is quite strong.”