Pinsky taking RXR on sojourn out of town

With prices in Manhattan nearing record levels, RXR had already began to look for alternative markets with interesting growth potential. A year ago, Pinsky reached out to chief executive Scott Rechler with an idea to invest in mixed-use projects along the East River. “Scott’s response was that he’d actually been thinking along similar lines, but he also said I should think more broadly,” Pinsky recalled.

This dialogue culminated in RXR’s new metropolitan strategy. Its basic premise is simple: invest in markets that have high potential for population and business growth. “We are really looking at all of the transit nodes in the tri-state area,” he said. “These were the hearts of communities. In the 60s and 70s, when lifestyles changed and malls grew, they were abandoned in many cases. But the core infrastructure is still around, and trends are coming back.”

Pinsky argues that rising rents and house prices will price out more and more people from Manhattan and Brooklyn. Many baby boomers who want to live in an urban setting but are priced out of Manhattan and Brownstone Brooklyn may find themselves drawn to those parts of the tri-state with good transportation access and an urban infrastructure.

Pinsky wouldn’t disclose how much RXR plans to invest in its metropolitan strategy, but he said the company has “very ambitious goals”.

This spring, RXR formed a joint venture with Renaissance Development to redevelop parts of downtown Hempstead. The venture seeks to create mixed-use developments including 3,500 residential units and 600,000 s/f of retail space.

Pinsky insisted that the Metropolitan Strategy does not mark a shift away from Manhattan, where RXR has recently bought several office towers. Earlier this year, it took over a 99-year lease of 75 Rockefeller Center and announced its intention to buy 237 Park Avenue, following investments in Manhattan office buildings worth billions of dollars between 2010 and 2012.

“We at RXR are real believers in the underlying fundamentals of the New York City market. There have been incredible investments, the quality of life has reached new levels, and the city has really become a magnet for people from all over the world,” he said. “We believe that trend will continue. But one of the symptoms of that success is that there is so much demand that costs have spiked. We continue to believe that dynamic will continue to drive success, but it will also lead to an increasing search for marketplaces outside of that core.”