GARDEN CITY, NEW YORK – Following the results of the Presidential election, real estate developers and executives are bullish on the future of New York real estate. According to a new survey from accounting and business advisory firm Margolin, Winer & Evens LLP (MWE), 84 percent of surveyed New York real estate executives said that they believe President-elect Donald Trump will be a boon for the local real estate market.
When asked to select from a list of four policies from the next administration that would stimulate real estate investments the most, more than half (53 percent) of respondents stated that lowering the income tax rate would have the greatest impact. Thirty-one percent named continuing favorable tax treatment of carried interest as the most important initiative. A small amount (9 and 7 percent, respectively) cited repealing FIRPTA and eliminating the death and estate tax as the top policy to stimulate investments.
“Along with the obvious benefits that reduced income tax rates would bring, developers are keeping an especially close eye on carried interest incentives. These incentives allow active developers and dealmakers to increase their ownership interest and get more deals done,” said MWE partner John Schmuck,. “As the new administration takes office, there are a host of proposals on the table that could have an enormous impact on developers, including the potential easing of Dodd-Frank regulations, interest rate swings, and locally, the reinstitution of 421-a.”
MWE’s survey was conducted at the “Building the Future: The Next Generation of New York Real Estate” event that took place on November 17 at Club 101, which featured a panel discussion on issues affecting the New York real estate industry.
Commercial and Industrial Development Headed Uptown
Survey respondents were asked where they believe commercial and industrial development is most likely to occur, following the residential boom in Brooklyn and Queens. Forty-eight percent of respondents named the Bronx as the most likely location, with 19 percent choosing Long Island and another 19 percent stating New Jersey. Just 8 percent picked Staten Island and only 6 percent selected non-NY-metro area.
“Particularly in the industrial market, the Bronx is attractive for development due to location and infrastructure, which allows businesses to easily access the Northeast,” said Schmuck. “Aside from this, developers are simply getting priced out of Brooklyn and Queens and are forced to look elsewhere. Long Island is also bursting with opportunity, with vacancy rates for industrial properties currently at about 1 percent.”
Additional Survey Findings
When it comes to financing new projects, 85 percent of real estate professionals expect themselves and their clients to use private equity as an alternative source of financing in the next 12 months. Twenty percent expect to use EB-5, 14 percent anticipate using Israeli bonds and only 8 percent said they would use crowd funding.
Adapting to the needs of millennial buyers is top of mind in the rapidly-evolving face of New York real estate. However, developers and executives are split on if development should focus on design or amenities. With regard to amenities, incorporating technology and fitness centers/gyms were named as focal points by 57 and 37 percent of respondents, respectively. However, developers also signaled the importance of designing spaces to suit the needs of millennials, with 44 percent pegging modern/open floor plans as a top emphasis and 30 percent noting that developing cheaper micro spaces was a focal point as well.
About this Survey
MWE’s survey was conducted on November 17 at the company’s “Building the Future: The Next Generation of New York Real Estate” event, an invitation-only thought leadership event dedicated to discussing and examining issues and trends in the real estate sector, including outlook, investments, technology, and taxation. Survey responses were collected from 67 attendees at the event, representing local brokers, consultants, owners, and developers. The event featured panelists including Jonathan Minkoff, Founder and CFO of ASH NYC, Arthur Rosenberg, Co-founder and CEO of Azure Partners LLC and David Schwartz, Co-founder and Principal of Slate Property Group. Brad Thomas, author and editor of Forbes Real Estate Investor, moderated the discussion.
About Margolin, Winer & Evens LLP
Margolin, Winer & Evens LLP is widely recognized as one of the most respected business advisory firms in the Northeast and is consistently ranked among the top accounting firms nationwide. MWE has developed a portfolio of distinct practice groups in response to its clients’ changing needs and growth objectives and is committed to help clients meet the challenges of today’s technology-driven, global business environment. Our firm focuses on serving privately-owned, mid-sized and large businesses. Our partners have expertise in real estate and construction, hedge funds, manufacturing/distribution, healthcare, retail, technology, estate planning and all tax and accounting matters.