NEW YORK CITY—Illustrating why they've achieved such success—and longevity—in the industry, three top commercial real estate executives discussed not the past but the future of the city last week at NYU Schack Institute of Real Estate 48th annual conference on capital markets in real estate.
Paying particular attention to the issue of affordable housing, LeFrak chairman and CEO Richard LeFrak said, "We have to provide housing that can accommodate everybody."
But others were worried about the feasibility of such development. "We have to keep our costs down, construction costs are so high right now," declared Stephen Ross, chairman and founder, Related Cos. "At the same time, the proposed version of 421a [currently on the table] forces the industry to get unions to agree with them. But there's little movement on that and I think it has to be decided by year-end. If it gets killed, no rental housing will be built in the city."
On the office front, at least one space provider was looking beyond Manhattan. "We think we can compete at the Brooklyn Navy Yard with other markets in terms of creating office space and allowing companies to stay in the city," boasted William Rudin, vice chairman and CEO, Rudin Management Co.
The firm, in conjunction with Boston Properties, owns a development at the site, known as Dock 72, that is set to be anchored by the-big-of-tenants, WeWork. "Rents are an affordable $60 per square foot and we don't have real estate tax, sales or occupancy tax," he continued. "Look at what happened in Long Island City and Brooklyn. Neighborhoods can change overnight."
Adds LeFrak, "The same phenomenon that happened in Brooklyn is taking place in Queens, though slower, and there's no reason we won't see the same thing happen in the Bronx—at some point. But it's all reliant on good transportation connections."
He continued, "Money has to be spent on improving infrastructure and mobility. But the digital age is changing how people can move around. There's going to be driverless cars and everyone is uberized; it's going to change everything."
Still, the panelists agreed, much comes down to solving the affordable housing issue, and it's a challenge the industry would be wise to meet, asserted Ross. "We believe in building and preserving affordable housing. You can make enough money running a well managed affordable housing program—that's as important as building luxury buildings."
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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.
