Real Estate New York spoke with Cardinale about the climate in which the new venture is operating.
RENY: You've been around the block a number of times, particularly with the downturns of the 1980s and 1990s. What are some of the lessons you learned then that you're bringing to this new venture?
Cardinale: As construction people, obviously we're affected by what developers bring to the table. We just respond after something's approved, then go on and build it. But as a developer, I think the most important thing we learned in the '80s and '90s was leveraging properties. If you can carry the land through this time, there's always going to be someone who needs a home. There's always someone who's going to need an office. The question is, can you come in competitively enough to be able to market it and sell it at the right price?
In the '80s and '90s, a lot of the developers were very leveraged. The market was insane. Everybody felt they could buy anything and nothing could go wrong. I think what we learned is that something could go wrong. Those who had good vision said, 'This is what the property is worth; there's going to be a time when it's needed. If I can hold on through this storm, I can be ready when the market is turning.' You can't just react when things are good. You'll never catch the cycles. You need to be lean and mean and marketable when times are bad, and that will make you ready when times are right.
RENY: Having the dual perspective of development and construction helps you identify when the times are right.Cardinale: No doubt. As a developer, I'm looking at more properties than I ever have. It's as though you're an eagle—circling and looking for opportunities. I'm not going to swoop down and take advantage of a situation, but somebody out there wants to sell. They're going to have to understand that the market is not as strong as it was three years ago. But I'm looking, and I'm sure good developers are out there looking, too.RENY: As you look for opportunities as a developer, are you focusing on any one property class, or is it more a question of location and then identifying what would be the best use of the site?Cardinale: I'm not saying anything new when I say, "location, location, location." But it's a fact, and in times like these, it's very important, because there's always a buyer on the very high end and on the very low end. It's the middle that always gets affected. If the price is very low, it's an opportunity for somebody who thought they could only rent to possibly buy. On the high end, with skyline views, there's always somebody out there. Fortunately and unfortunately, a lot of it is European money. They're coming in here and they think they're getting a discount.RENY: Right now Choice Construction is building two condominium projects in Park Slope and a 40,000-sf hotel in Astoria. Do either of these areas represent what you'd like to focus on next?Cardinale: The condo market in Park Slope is kind of an anomaly; it's not affected by so much of what's going on. If you go across the river, you're in a market where people are paying more than $1,000 per sf. In Park Slope, which is two subway stops from Manhattan, you're paying $700 per sf. The condo market in Park Slope is very strong; just drive down Fourth Avenue and you'll see it. When I was growing up, Fourth Avenue was light industrial, car washes, taxi garages—totally different from what's happening there now. In 10 years, when people walk down that street, they're going to be shocked. It's going to be a baby Jersey City.
One thing I wish people would do is stop panicking about the market. The panic is out of control, and the more we panic, the more we feed into it. Fear is not how we built New York City. We built this great city with no fear.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
