NEW YORK CITY—A new survey by Sterling National Bank, the principal subsidiary of Sterling Bancorp, shows that New York-based real estate professionals are optimistic about the future of New York City's real estate market. Sterling's 2014 New York Real Estate Financing Survey revealed that 96% of respondents active in the real estate industry are either very optimistic or somewhat optimistic about the state of the market overall, thanks to its unique market conditions.
At the same time, half of the respondents said they are frustrated with their current options for raising capital. This highlights a gap that could impact the industry's growth potential, but also presents a significant opportunity for banks that can provide real estate expertise and underwriting services that include non-traditional financing methods.
"We see these responses as a reflection of today's low interest rate environment, a high degree of sales activity and flexibility of credit terms," says David S. Bagatelle, president of NY metro markets for Sterling National Bank. "New York City did not experience the same degree of upheaval as most parts of the country during the recent recession, so it remains an attractive market for both US and international investors. As an industry, we need to remain creative in the financing solutions we provide to keep this optimism going."
The survey asked respondents to identify trends, challenges and opportunities in securing financing and raising capital across the real estate sector in the greater New York City area. Of the respondents who work in the real estate industry, 48 percent indicated they are "somewhat frustrated" with their current options for raising capital and 2% are "very frustrated." However, 21% of respondents expressed no frustration.
The largest primary source for capital funding among all respondents is private equity (35%) closely followed by banks (25%) and "investment firms" (10%). Other financing sources include specialty lending (13%) and a blend of various options.
The two biggest financial challenges in the New York real estate market are "zoning issues/government" (44%) and "competition among developers" (27%). "Competition from other geographic markets" (10%) and "vacancy rates" (8%) were two of the least commonly cited challenges.
Survey respondents included developers, real estate management professionals, investors, service providers, government agencies, engineers, brokers, and real estate attorneys.
"In an environment of easy terms, credit-worthy clients need to consider the value of the relationship they have with their financial institution and their financial partners' real estate acumen," adds Vinny DeLucia, president of the Hudson Valley Market for Sterling National Bank. "As for zoning issues and other frustrations the survey uncovered, we feel strongly that banks need to support their clients' financing needs by taking a holistic approach to their ability to repay and offering a wider variety of specialty solutions. Sometimes financing a project means looking past a particular property and considering a client's global cash flow generating capabilities."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
