How will a new president and administration affect the New York City Real Estate industry? So far, the Trump Administration’s proposals for tax reform and deregulation are getting praise from the community, with leaders predicting that if they are enacted into law, many in the industry and community will benefit.
That’s the verdict of a recent panel discussion held at the Real Deal’s annual New York City Real Estate Showcase, which brought together hundreds of real estate brokers, investors, and developers.
The panel, which focused on the new administration and its trickle down effects, included former New York Governor Eliot Spitzer, who now runs Spitzer Enterprises, John Catsimatidis of Red Apple Group, Toby Moskovits of Heritage Equity Partners, Don Peebles of The Peebles Corporation, and Ben Shaoul of Magnum Real Estate.
Much of the conversation centered on federal tax reform and deregulation. The Trump administration recently proposed lowering the tax rates for individuals and corporations as well as taxing partnership income. Panelists generally agreed that such tax reform should help spur activity in the real estate industry though they acknowledged that tax reform is complicated in terms of who it benefits and who it hurts – with some concerned that such aggressive cuts in taxes is not realistic.
Catsimatidis discussed the friendlier business environment under the Trump administration. With a non-politician in the White House, banks no longer consider Washington to be the enemy, he said. He predicted that the improved optimism in the economy and less regulation should allow banks to lend more freely, which will ultimately benefit the real estate industry.
At the local level, Spitzer and Moskovits said that they have great confidence in Brooklyn and will continue to invest in properties in the borough. Moskovits noted that many owners in Brooklyn live along the L line as they wish to be close to mass transit. In discussing her investing strategy, she criticized some landlords as being unrealistic about the demand for large office space. She feels tenants want smaller square footage and her team looks to fill that demand. Spitzer also shared his family’s investing philosophy which includes a belief in investing for the long term.
History has proven that businesses and intellectual capital meet in New York City, he said. Therefore, if it takes 6 to 9 months to rent up a property, he’s not worried about it. In the long run, the property will take on tenants and prove to be a worthwhile investment, he said.
Peebles stressed the need for more affordable housing as there is currently an imbalance of supply and demand. The lack of local, affordable housing results in lost productivity as workers must endure lengthy commutes using a poorly constructed transportation system, he said.
Catsimatidis added that safety and transportation are key factors to an improved quality of life in New York City. People must feel safe in order to live in certain areas and they must have access to reliable mass transit. With housing centered around subway stations people will be able to live closer to where they work. At the same time, Catsimatidis lamented the lack of affordability resulting from high taxes in the city. He wants teachers, firemen and policemen to be able to afford to live in the city in which they work.
The panelists also discussed the revitalized 421a program. The new 421a program, referred to as Affordable New York Housing, covers affordable housing developments which began January 1, 2016. Spitzer argued it is not a good program in terms of achieving its goal of providing affordable housing to New York City’s residents. He feels extending transit into more communities is what will ultimately help housing explode. Peebles argued that politicians and developers must sit down and work out a meaningful vision for the city which benefits everyone.
Looking into their crystal ball for the future, panelists agreed that areas such as Astoria and the Bronx will be the next regions of the city to see growth. And there was uniform agreement that despite the challenges, New York is still one of the best places to live and work.