News
MULTIFAMILY TUESDAY; GRUBB GOES TO BGC
February 21, 2012
| Pop quiz: In a period of low economic growth and low interest rates, where do you get returns (besides Macy's)? Answer:multifamily. No wonder that over 400 readers joined us at The Roosevelt on Friday for Bisnow's New York Multifamily Summit. |
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| There’s plenty of capital chasing debt and equity, despite fewer distressed opportunities, says The Praedium Group principal Mason Sleeper, who spoke on the capital markets panel. In fact, we should have massive building right now, but something is getting in the way, he says. Equity is now looking at construction sites and taking risks, but construction financing isn’t readily available without low leverage and recourse. |
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| In a normal, stable year (not ’07—think ’04 or ’05), we average about 4,500 sales in New York City, with 800 of those in Manhattan, says Massey Knakal CEO Paul Massey. Last year, we saw 625 sales in Manhattan. So we’re coming back, we’re healthy, and core product is doing well. (Perhaps the Knicks will be too, with the combo of Lin, Amar'e, and 'Melo back on his feet.) |
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| So we’ll be in the same boat as last year, but better in many respects, the panelists say. Other positives: both liquidity and regulations are loosening up, says Rockwood partner David Streicher. (The only man willing to brave this crowd sans necktie.) |
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| Last year was particularly healthy for multifamily transactions $30M and up, with 10 over $100M, says CBRE EVP of investment properties Paul Leibowitz. We’ll continue to see a good amount of supply, but it will be more difficult to do high-end transactions. However, there’s opportunity for development site and value-add deals. Since 1997, there were around 3,200 units delivered per year; in 2011, there were 2,300, and 1,000 are projected for this year and 1,400 for next. “A historically low level of supply is being delivered to the market, which is favorable for the sales market.” |
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| As New York City becomes more popular, we’ll see more equity and buyers from pension funds and European companies, says Meridian Capital Group CEO Ralph Herzka. (Make sure they remember the No. 1 tourist rule: don’t stop abruptly in the middle of the sidewalk.) 2012 will continue to be a good year for sales, and expect more generational real estate to trade, as families are coming out of the woodwork to divest of properties. We also see institutional investors leaving rent-regulated product, but private buyers will fill that void, Mason adds. |
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| Brooklyn is one particular market that will stand out, according to the panelists (with moderator David Dubrow, a partner at sponsor Arent Fox). “It will boom beyond what we’ve realized,” says Paul Massey. Developers will be resourceful and creative, looking into adaptive reuse. Ralph says he’s gotten calls from major developers that will be building phased developments over the next five years. There are also smart families who’ve snatched up land, leading to new projects coming out of the ground. |
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| Thanks to all of our readers who joined us! Check back Thursday to hear more for our developers and owners panel. |
