Rent regulations and other edicts from Albany that have impacted real estate, along with the ongoing attempt to diversify the industry, seemed to be on the minds of all who attended the most recent annual Real Estate Board of New York banquet. While as always, even the cheapest tickets to the dinner had a comma in the price, roughly 2,000 people still willingly jammed the Hilton Midtown for the only opportunity of the year to rub elbows with New York’s biggest landlords.
Guests and hosts who spoke with Real Estate Weekly talked about the year to come, the continued demand for Manhattan office space as tech booms and why the real estate industry, which brings in more than half of New York City’s tax revenue, needs to get political.
The mayor and the governor were both no-shows at the event, however, which suggests that trying to get a sympathetic ear at City Hall or in Albany will be an uphill battle.
“There’s no doubt that it’s a challenging political environment,” said Jim Whelan, president of REBNY, while adding the industry has already begun pleading its case in Albany about rolling back the new rent laws.
He added, “I must admit being an election year, it’s probably going to be a difficult conversation to have. This is probably going to be a longterm effort to bring more balance to the changes that were made in June.”
Whelan also said the industry will continue to push back against the proposed pied-a-terre tax, which was shot down in a previous form but is being revived. The tax, he said, would kill a market that generates over $400 million in tax revenue.
“I think folks need to keep in mind if you want a progressive city, you need a prosperous city.” Whelan said.
Bob Knakal, chairman of investment sales with JLL, said owners should stay on top of pending commercial rent control legislation.
“It’s something that’s been proposed in the past and it’s coming back in a slightly different form, but there are some questions about the constitutionality of commercial rent control,” Knakal said.
He added, “We’re hoping that the legislators realize they went a bit too far in the last session (with residential regulations) and they’ll go a little easier on commercial real estate in this session. It’s very, very impactful and a lot of those negative impacts are unintended consequences of legislation that may have some good over-arching objective, and yet the collateral damage that it causes is very harmful to the local market.”
While predicting 2020 would be another strong year for office leasing thanks to the TAMI explosion, Bruce Mosler, chairman of global brokerage at Cushman & Wakefield, also talked politics, hoping for policy that encourages businesses to keep setting up shop in New York.
“I think the economy continues to boom, but we should all, as New Yorkers, be mindful that the reason we’re the financial capital of the world at the end of the day is because of the millennial generation, the fact that companies want to be here because this is the center of the financial universe and now more importantly the center of the technology universe,” Mosler said. “So we should be mindful how hard we push the envelope to increase the cost of business, because business has choice. Let’s just look at it from the businesses’ perspective, from the consumer perspective and of course the folks who live here. We need balance.”
Bob Pollack and Joel Marcus, industry attorneys, warned owners to stay on top of property tax assessments, which had been released by the city a day earlier. The attorneys said owners shouldn’t ignore them when they arrive in the mail because they only have until March 1 to appeal assessments which are based on values from capitalization of income, not a future market sale price.
REBNY award-winner Jodi Pulice talked about the ongoing effort to diversify the industry and said it’s on companies to actively encourage young people of color and women to get on board.
“You have to have a mentor,” she said. “You need someone you can trust. We have to reach out to people that are graduating from college and as young as high school seniors and have them intern with us and show them that it’s a business that if you want a family, you can raise a family. It’s on your time.”
Mary Ann Tighe, CEO of tri-state region at CBRE, said while there was still work to be done in diversity, there is already some evidence of growing opportunities for women.
“I think we’ve made tremendous progress in gender diversity,” said Tighe. “Tonight we have two fantastic women being honored. It was rare to see a woman celebrated here. Now there is never a REBNY banquet that doesn’t have a woman of stature on the dais and being honored. So we’re beginning. You can see it very strongly because we’re watching women now at all levels of organizations and we’re watching many of the daughters of the old families like Helena Durst, like Samantha Rudin, coming into leadership in their family company, so that’s great. I think our racial and ethnic diversity is still lacking and that’s an area of focus for all of us. None of these things are solved in a single generation, but I think the intention is good. We’re on track.”
