3 Top Execs Tell Us What's In Their Crystal Balls For 2016
From a maturing real estate tech industry to the brave new world of (slightly) higher interest rates, 2016 promises to be an interesting year across commercial real estate in NYC. We caught up with top execs in three key areas of the industry to get their sense of what we should expect in the new year. Here's what you need to know.
Reonomy CEO Richard Sarkis On Real Estate Tech
I’m excited to see the fast pace of growth for CRE tech companies continue throughout 2016, if not accelerate. We’re witnessing a rapid increase in the adoption of tech services offered at all stages of the CRE value chain. The results experienced by the earliest adopters, including cost savings, top-line growth and risk mitigation, are serving as the proof points necessary for the next wave of users to incorporate the value of CRE tech into their workflows.
That said, in 2016, I also expect to see an increased level of “rationalization” in the CRE tech space. If you look at the large number of companies that have launched across the CRE tech ecosystem in the last two to three years, what stands out to me beyond the clear value that they are bringing to the industry is that many of these companies have seemingly similar offerings and are developing related technologies, and yet essentially operate in silos.
I see this playing out in a couple of ways. On the one hand, the “rationalization” could take the form of partnerships, mergers and even acquisitions among related CRE tech players. On the other hand, I think a number of companies will find funding harder to come by and competition more difficult to overcome, which could lead to some companies not surviving.
GFI Realty President Michael Weiser On Investment Sales
Despite the Fed’s rate hike, in 2016 we will see New York City real estate draw great demand from investors—from experienced local players to international investors seeking better yields than most global cities can provide. Buyers will seek to acquire stable assets with down side protection as well as properties and development sites that give them the opportunity to add significant value.
While Manhattan’s core will always see significant activity, we anticipate a great deal of investment in areas around the city. Upper Manhattan locations like Washington Heights and Inwood are being revitalized and provide very attractive investment opportunities, as do Astoria, Crown Heights and other outer borough neighborhoods, especially those well-served by mass transit.
Mission Capital Advisors Managing Director Ari Hirt On Capital Markets
2016 will be another strong year for New York real estate. There is a tremendous amount of capital available to invest, and New York is still viewed as one of the most attractive and safest markets in the world due to high barriers to entry, the stable and growing population, increased tourism, and its position as the financial capital of the US.
On the other hand, we can also expect to see some conservatism on the part of banks and other lenders for ground-up construction due to supply concerns. However, newer non-bank lenders entering the market could fill that gap. Limited availability of ground-up construction financing will keep supply in check.
New York City should see an increase in the number of refinances of 2006 vintage CMBS deals. Interest rates and loan spreads have widened due to recent FOMC actions and anticipated actions later in 2016; however, rates are still relatively low historically. Deals that were on the cusp for refinance could be stressed with the uptick in rates. However, the plethora of mezz/sub-debt capital out there should bridge the gap for most deals.
