News
MULTIFAMILY MEMORY
January 31, 2011
| “It’s like Tommy Lee Jones in Men in Black shined a light in our eyes and everyone forgot what happened,” said Ackman-Ziff principal Pat Hanlon to the 600 of you who showed up Friday morning at ourMultifamily Summit at the Roosevelt Hotel for two illustrious panel discussions on financing, fundamentals, and market trends. |
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| Pat (right) joined Dewey & LeBoeuf partner Stuart Saft, Meridian Capital Group founding member Aaron Birnbaum, Abacus Capital Group CEO Benjamin Friedman, Prudential Real Estate Investors principal Chip Walters, Freddie Mac managing regional director Mike Edelman, and Massey Knakal partner James Nelson to talk capital markets. Chip says NY is on the top of investors’ wish lists. And Aaron believes Wall Street has returned, noting his firm’s $100M deal with Citibank in Q3. Some panelists revealed that recent months were some of the best ever: Mike says the GSE financed $3.5B in December. There’s a lot of new money coming into NY, particularly foreign buyers, James says. But even with contracts surging, we’re facing a lack of supply. Ben worries that the urgency to put capital out will form a bubble, pushing up prices in gateway cities. Willhistory repeat itself again? |
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| NY multifamily is “moving sideways,” says Prudential Douglas Elliman CEO Dottie Herman, who expects 2011 to be a transitional year to a more normal market. Joining Dottie for the NY discussion were WeiserMazars partner Ron Lagnado, Jonathan Rose Cos president Jonathan Rose, Related Cos EVP Bruce Beal, Brodsky Org senior partner Dan Brodsky, Dermot COO Steve Benjamin, and AvalonBay SVP Fred Harris. Dan says that a lease in ‘08 went for$54/SF, dropped to $46/SF in ’09, and is now back to $51/SF. Even the outer boroughs are looking stronger. “We’re feeling fortunate that it could have been tremendously different,” Steve notes. Fred says AvalonBay is seeing a high percentage of renewals—some without concessions. Dottie adds fewer people are moving to the suburbs, and Bruce says there’s “big demand” for larger apartments—Related has 0% vacancy in units three bedrooms and larger. |
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| The audience in rapt attention. NY is still dependent on job creation, and there’s still very little construction financing in the market. Bruce—who counts on one hand the number of construction lenders—reports that Related launched a construction fund to help, seizing financing opportunities requiring debt in the $20M to $50M range for residential, retail, and office. Jonathan thinks now's a good time to buy, as construction prices are firming up, a negative for the market. Stuart warned about the housing shortage—there are 9.5M people living in the city, with 3.1M housing units. A lack of permit issuance will impact building, especially affordable housing. We also need the421a tax exemption on the books, or there won’t be many rentals in the future, warned Steve, to applause. |
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| Fidelity National Title's Tim Oberweger. Seligson Properties’ Doug Adams, KW Commercial’s Sander Lefkowitz, John DiSpaltro, and KW Commercial’s Chuck Frankel. Sander, who’s been in the industry for 34 years (since building Lego towers in kindergarten, no doubt) says there’s renewed interest in multifamily, with larger developers “waking up and sniffing around.” (KW has 500 units in Delaware, another 500 in Centerville, Ga., and has land in the Hudson Valleyzoned for residential.) This is good news for Tim, from a title insurance perspective. He says 2011 is “brimming with optimismand flood gates are opening.” His enthusiasm also had a boost from the Knicks beating the Heat 93-88 the night before (and surely yesterday’s win against the Pistons). |
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| November was the best month ever for Horizon Land Services, and work is only picking up, reports the firm’s Grace Mills, here with GC Environmental’s Gregory Collins and PM Construction Services’Andrew Peck. Gregory just finished up mechanical and engineering consulting for Coney Island’s Luna Park (but there are no free rideson the Brooklyn Flyer or Balloon Expedition afterwards, much to our and his son’s dismay). Andrew notes an uptick in retail work, particularly in malls. |
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| Roux Associates’ Melanie Dolland and Michael Roux and Shearman & Sterling’s Gina Love and Joanne Lynch. Roux is doing environmental consulting on a type of project we haven’t heard in a while—ground-up development. That is, if the ground-up development isn’t buried by the snow. Gina braved the storm the day before and was one of only four or five people from her group who made it into the firm’s 599 Lexington offices that day. |
