‘Still In Flux’: Windels Marx’s Joshua Oberman On The State Of NYC CRE At Bisnow’s Nov. 19 Event

As New York City’s commercial real estate market starts to regain its footing after a turbulent few years, industry leaders from across the Big Apple are convening at Bisnow’s New York State of the Market event to discuss development plans, policy updates and more.

Even as the market shows signs of improved activity, many CRE professionals are still approaching it with caution, particularly in the office and housing sectors, said Joshua Oberman, partner at Windels Marx, a New York-based, full-service law firm. 

“The vast amount of empty office space and the lack of affordable housing options are still big issues that the city has yet to effectively address,” Oberman said. “A lot of the incentives that have traditionally helped get affordable housing projects over the finish line are in flux. In this business, jobs without these incentives don't pencil.” 

Oberman will be speaking at Bisnow’s New York State of the Market event on Nov. 19, alongside other leading industry professionals. Oberman has 20-plus years of experience in all aspects of private and public construction, as well as negotiating, and when necessary, litigating access agreements under New York Real Property Law 881. Click here to register.

Bisnow spoke to Oberman to find out more about what CRE trends the city is seeing, the challenges it's facing and where he thinks the market is headed in the future.

Bisnow: At this event, you'll be speaking on the “Identifying Market Trends” panel. What key trends are shaping the development and construction scene in New York City?

Oberman: I would say there’s a couple of things trending in the market right now. No. 1, people are thinking about what we’re going to do with all this office space that’s not being used. Despite the statements of some C-suite executives, people are not in the office nearly as much as they used to be. Even if some people are back, they’re not in every day. 

If you think back to the start of the pandemic, everyone was saying that we could convert smaller office buildings into residential buildings, but large buildings were going to be extremely hard to convert. 

In the early 90s, offices on Wall Street started moving to Midtown. Developers converted those wall street office buildings to residential effortlessly because they were smaller. One of the laws in New York says you need windows in the bedrooms. The floor plates of these buildings were pretty small, so they could chop it up into apartments easily so everybody had a window in the bedroom. 

But now, take a newer, larger building like One Penn Plaza, for example. This building’s a block long. At the start of the pandemic, they were saying that a building that size is too hard to chop up into apartments. But four years into the pandemic, that’s exactly what they’re doing. I’ve heard of massive office buildings being converted to residential. They’re selling “studios,” with a windowless office, that many tenants or buyers are happy to use as one-bedroom apartments. 

Construction in general is getting harder. I would say access agreements are more contentious than ever. They used to be very easy, but now they're not. It’s a big negotiation every time, and a lot of people look at it as a money grab. 

Bisnow: What challenges are facing New York City's commercial real estate industry this year, and how is the industry equipped to handle these challenges?

Oberman: Office, in general, and the lack of affordable housing are issues for NYC. With affordable housing projects, and even middle-income housing, the tax incentives that developers are using to get these over the finish line are in flux. 

In this business, a lot of these jobs without these incentives don't pencil. If the numbers don't work, no one wants to do them. 

I think many people don’t have confidence in the city’s leadership right now. If they cleaned up the city, it would help a lot of these issues. It’s better now than in the past few years, but it’s not what it was before Covid. Maybe a new administration would take on some of those quality-of-life concerns people have. 

Bisnow: How do you see the development landscape in New York City evolving over the next five to 10 years, and what trends do you think will dominate the market? 

Oberman: We're going to see more and more office conversions. As for retail, I think it’s hard to say. 

When things stop making sense with regard to cost, we have a real problem because people aren't going to want to be here anymore.

I think “flagship” style retail stores will always be here, but I’m not sure about single location stores. A few years ago, Ben Benson’s Steakhouse was a restaurant that everybody loved. You’d walk in there and it was packed every night. They announced it was closing and no one understood why. The owner said it was because their rent kept going up. He was taking all this risk and doing all this work, but he said ultimately it was not worth it. His profits no longer justified the work he was putting in or the risk he was taking.  

The chain steakhouses didn’t have this problem. If you have ten stores, and you sell the same $70 steak at a 40% profit in Cleveland, Ohio, it doesn’t matter if you don’t make any money at your New York location. It’s worth it to have a “presence” in the city. The owner of Ben Benson’s didn’t have an empire. He needed to make money at his New York location. So, when the rent escalated, it stopped making sense for him to operate. I think we’re continuing to see stories like this across the city. 

Bisnow: What do you think event attendees will be most excited to hear about at this event?

Oberman: I think everyone would love to hear a solution and a timeline for what’s going to happen with all these offices. It’s been almost five years since the pandemic and the future of offices in NYC is still in flux.

This article was produced in collaboration between Windels Marx and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.