Turns Out, We're Not Due for a Correction

NEW YORK CITY—For roughly the past 18 months, the commercial real estate industry here collectively has been waiting for the other shoe to drop. Continued growth—albeit slow—and low interest rates can't go on forever, right? Or can such conditions prevail for the foreseeable future?

Avison Young principal and tri-state president Arthur Mirante thinks so. A scheduled speaker at RealShare New York Wednesday, the veteran executive is incredibly bullish, he tells GlobeSt.com in this EXCLUSIVE story. But fellow panelist Rob Cord, president, CBC Advisors, has a different take.

“New York is among the two or three healthiest markets in the world and certainly the US, Mirante declares. “In this slow growth economy, our recovery is being stretched out and we've avoided a boom cycle over the past seven or eight years, so I don't see any reason to characterize the city as being in the eighth or ninth inning. We could keep going for the next five years. Nothing goes up forever but I'm not sure we're due for a correction.”

However, Cord is seeing some cracks in leasing. “There's a vacancy increase in high street retail, like in the Plaza district and Soho. Property owners—in retail and office—are holding out for high prices while tenants are pushing back.  Whenever I see this, an adjustment usually follows.”

In fact, some investors already have begun cooling their heels, he continues. “My clients, major insurance companies, high net worth individuals and funds are pulling out of the market and not buying because the price per pound, or per square foot, is too high compared to what a tenant is willing to pay in rent.”

Investment sales activity this year likely will come in lower than 2015, Mirante acknowledges, with good reason. “There's a great gap between bid and ask, and there's a little caution. Whoever gets elected to be President will take some necessary action to make a statement early on and they will effectuate a change. So whatever they do, they're going to make people nervous.”

But the industry is primed for the shift, he states. “The New York market is extraordinarily well balanced and healthy. I think it will continue to be so no matter what we have to deal with—short of a major financial collapse or serious global terrorist event.”

Disrupt or be disrupted. The industry is evolving into a new era that is forcing players to rethink their strategies, from brokerage to building and everything in between. Join us at RealShare New York on October 5th for impactful information from the leaders in New York CRE. Learn more.

NEW YORK CITY—For roughly the past 18 months, the commercial real estate industry here collectively has been waiting for the other shoe to drop. Continued growth—albeit slow—and low interest rates can't go on forever, right? Or can such conditions prevail for the foreseeable future?

Avison Young principal and tri-state president Arthur Mirante thinks so. A scheduled speaker at RealShare New York Wednesday, the veteran executive is incredibly bullish, he tells GlobeSt.com in this EXCLUSIVE story. But fellow panelist Rob Cord, president, CBC Advisors, has a different take.

“New York is among the two or three healthiest markets in the world and certainly the US, Mirante declares. “In this slow growth economy, our recovery is being stretched out and we've avoided a boom cycle over the past seven or eight years, so I don't see any reason to characterize the city as being in the eighth or ninth inning. We could keep going for the next five years. Nothing goes up forever but I'm not sure we're due for a correction.”

However, Cord is seeing some cracks in leasing. “There's a vacancy increase in high street retail, like in the Plaza district and Soho. Property owners—in retail and office—are holding out for high prices while tenants are pushing back.  Whenever I see this, an adjustment usually follows.”

In fact, some investors already have begun cooling their heels, he continues. “My clients, major insurance companies, high net worth individuals and funds are pulling out of the market and not buying because the price per pound, or per square foot, is too high compared to what a tenant is willing to pay in rent.”

Investment sales activity this year likely will come in lower than 2015, Mirante acknowledges, with good reason. “There's a great gap between bid and ask, and there's a little caution. Whoever gets elected to be President will take some necessary action to make a statement early on and they will effectuate a change. So whatever they do, they're going to make people nervous.”

But the industry is primed for the shift, he states. “The New York market is extraordinarily well balanced and healthy. I think it will continue to be so no matter what we have to deal with—short of a major financial collapse or serious global terrorist event.”

Disrupt or be disrupted. The industry is evolving into a new era that is forcing players to rethink their strategies, from brokerage to building and everything in between. Join us at RealShare New York on October 5th for impactful information from the leaders in New York CRE. Learn more.