NY Real Estate Execs Not Confident in de Blasio: Survey says; William H. Jennings Quoted

December 17, 2013

NYC Real Estate Execs Not Confident In De Blasio, Survey Says

By Zachary Zagger

December 17, 2013

New York City commercial real estate executives are bracing for the worst with incoming Mayor-elect Bill de Blasio with most saying they lack confidence the new mayor will support the interests of commercial real estate, according to a survey conducted this fall by accounting firm Marks Paneth LLP.

In the survey results released Tuesday, only 7 percent of New York City commercial real estate executives questioned responded that they are “very confident” that de Blasio will be a strong supporter of the interests of commercial real estate owners. This is a stark contrast from the 76 percent who were confident with outgoing Mayor Michael Bloomberg in a similar survey conducted at the end of last year.

A majority of those surveyed expressed downright little to no confidence that de Blasio would support commercial property interests with 21 percent saying they are “not at all confident” and 35 percent saying they are “not too confident.” Only 28 percent responded that they were “somewhat confident” in de Blasio.

The survey, conducted in November by the Marks Paneth Gotham Commercial Real Estate Monitor, questioned more than 100 top commercial real estate professionals across New York City, including brokers, agents, attorneys and accountants.

"The city's commercial property industry, based on the survey results, is clearly bracing for a mayoral administration far less friendly to real estate interests than the current one," William H. Jennings, partner in charge of the real estate group at Marks Paneth, said in a Tuesday statement. "Of course, the jury won't be in on actual policy for quite awhile."

Still, many of those surveyed were reluctant to form an opinion just yet with nine percent saying it was “too soon to know.”

Jennings told Law360 on Tuesday the “jury’s still out” on de Blasio and he suspects these opinions will be different in six months suggesting they may be the result of uncertainty simply because de Blasio is a new mayor.

The survey also indicated that real estate professional’s views of the impact of Superstorm Sandy on lower Manhattan real estate were more optimistic than earlier this year. A June survey showed that only 32 percent of those who responded thought real estate values would decrease next year because of the storm, compared to only 6 percent who said that in this more recent survey. Also in the new survey, 51 percent said they thought values would actually be higher in 2014 compared to 2013.

“New Yorkers have a short memory,” Jennings told Law360. “If New York would have had another hurricane in October, things may have been different. The fact that New York made it through a season without a hurricane has helped things calm down.”

However, half of those surveyed said they were “not confident” there will be a significant government effort to minimize future flooding in Lower Manhattan.

The New York City westside development Hudson Yards Project is also gaining more attention as 52 percent of those surveyed — up from 34 percent in the last survey — named it the project that would have the biggest long-term impact on commercial property values in its respective neighborhood. Those who responded that the new Second Avenue subway would have the most impact dropped 4 percentage points to 24 percent in this most recent survey.

Last week, the New York City Industrial Development Agency approved $76.5 million in property tax exemptions for the developer — a joint venture between Related Cos. and Oxford Properties Group — of a commercial and retail office tower planned at the Hudson Yards site.

In total, the Hudson Yards site — New York's largest development effort — will have more than 13 million square feet of space, 6 million of which will be earmarked for commercial tenants and 750,000 square feet in lower-level retail space. It also will include 5,000 residences, a new school and a luxury hotel.

In August, results of a prior Marks Paneth survey showed a majority of New York real estate executives said Manhattan commercial real estate was overvalued and has been influenced by foreign investment.

The majority of property executives surveyed — 54 percent — put Manhattan commercial real estate values in the overvalued category when compared to commercial property in other major global cities, according to the survey conducted in June and July.

This article appeared in Law360 on December 17, 2013.

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