ULI: 2014 Holds Great Deal Of Promise
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NEW YORK CITY-Discussing everything from economic trends and affordable housing to new trends in retail and fundamental shifts in the office sector, the local CRE industry elite gathered in Midtown Thursday for the Urban Land Institute’s annual Real Estate Outlook conference.
“The recovery was slow at the beginning but, as we moved into 2013, there were changes,” declared Randy Anderson, Americas’ head of research, CBRE. “Housing prices are back, consumer trends are strong, and the business sector’s profit margins are double their average so companies’ confidence is back. That’s a precursor to economic growth that will mean improved fundamentals, more real estate transactions and higher prices.”
What areas will come on strong? Predicted Robert Knakal, chairman and founding partner, Massey Knakal Realty Services, “areas that are around transportation hubs in the outer boroughs. Most of the growth for the next 10 to 20 years will be predicated on transportation.”
Of course, much of the development in those areas will be of apartments, with construction of units in urban centers likely leading the way, said MaryAnne Gilmartin, president and CEO, Forest City Ratner Cos. “Multifamily continues to be the darling of the development industry, and that will continue through 2014.
“Urban is in,” she continued, “and cities will continue to draw human capital, including both Generation Y and Baby Boomers. In New York, we see both strong rental and condominium markets. In rentals, the center of gravity has moved outside of Manhattan because of land costs.”
Gilmartin pointed up Brooklyn’s strength and said Queens “may be the next frontier.” Of the condo market, she added “it will drive Manhattan and it’s still under $1,000 a foot in the boroughs but I see that changing.”
New pockets of interest are emerging in the boroughs too, added Ron Moelis,CEO and chairman, L+M Development Partners. “In the boroughs, places like Williamsburg and Long Island City are priced pretty close to Manhattan levels, while places like Ridgewood and Bed-Stuy are moving to levels we wouldn’t have thought even a year ago.”
The apartment champions weren’t entirely vexed by Mayor Bill de Blasio’s emphasis on affordable housing. “The city has a great infrastructure for affordable units, both in terms of support services within the administration and in the development world. There is institutional money that wants to participate; our hope is that the mayor will put a lot of resources behind this. I don’t even think a mandatory inclusion program is a bad idea but it’s probably not going to make a big dent in the Mayor’s 200,000 units goal.”
Gilmartin spoke about the need for changes to developer incentives to build affordable housing. “Subsidy programs are based on the number of units and not the size of units. The land and development costs are going to force developers to build condos, so that needs to be figured out.”
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