Columbia College and Herrick Present: Trends in Real Estate

Herrick and the Columbia College Fund Development Council hosted a panel discussion on trends in real estate on October 28th. The Columbia College Fund raises unrestricted funds to support undergraduate students in the areas of financial aid, student services, the Core Curriculum, and internship stipends.

Columbia grad and Chief Investment Officer of Pip Alliance, Ted Schweitzer, welcomed everyone to the event. Panelists discussed rising rents in the city, real estate opportunities outside of Manhattan and the effects of affordable housing on the market. Christina Ying, a partner at Herrick, moderated the panel.

Panelists included:

  • Richard Froehlich CC’85, Chief Operating Officer, EVP and General Counsel, New York Housing Development Corporation
  • Eric Wolf CC’86 , Principal and Chief Operating Officer, DW Capital
  • Raymond H. Yu CC’89, SEAS’90, President, Yuco Real Estate Company, Inc.

Christina Ying asked panelists whether they believed that rents would level off or continue to rise in 2016.  “Generally speaking, the market is in a state of transition. The market peaked in the first quarter of 2015. I really believe we reached the top,” said Raymond Yu, “Williamsburg is overpriced. Renters are fleeing to Bushwick and Sunset Park. The increase in rental is starting to level down.”

“I agree with Raymond. It depends on where you are. We have seen strong rental growth in the last 12 months,” answered Eric Wolf, “just look at Sam Zell’s sale to Starwood this week. I think this sale is very telling of the market.” Richard Froehlich added: “We are seeing a lot of supply. There is also lots of demand. People want to get in to lock in rates. Pricing is incredibly high in affordable housing as well. We are back at levels rivaling 2005, 2006 and 2007. How will this play out? All I can say is there are interesting times ahead. We are optimistic about affordable housing.”

On the question about real estate opportunities outside of Queens, Brooklyn and Manhattan, Mr. Wolf said, “We have 3 projects in Yonkers. There is high disposable income in the area but even these individuals cannot afford to live in Queens, Brooklyn or Manhattan. Their median income is around $116K. These are people in their 20s and 30s with no kids who can live in studios or 1-bedrooms. The pressure of the city is pushing people to Jersey and Westchester which presents a new opportunity. In Westchester, there are apartments close to the Metro North for people who work in the city. Rents began to fall in 2009 but from 2010 to 2013 we have seen strong growth.”

Mr. Yu commented, “We are seeing so much diversity in these areas now […] a big creative community is moving toward the Bronx and we have large players looking at the opportunities along the waterfront.”

”New York is growing dramatically. The Bronx is still the poorest borough out of the 5 but there is a frenzy out there right now in respect to land prices and the value of properties. Homelessness is a challenging topic because people are getting evicted. The market is so hot and buyers are aggressive in wanting a part of it. The administration is working hard in response to the eviction and homelessness issue coming from this activity.” said Mr. Froehlich.

Ms. Ying then delved a bit deeper into affordable housing and asked about the effects on the city, especially considering the recent Stuy Town deal. “The housing plan is addressing the rent burden. As the city becomes a better place, people become fearful about displacement. We are enormously proud of the basic agreement we reached with purchasers on Stuy Town. People are currently protected so they don’t face a rapid rent increase. The sale includes a regulatory agreement with De Blasio’s administration that ensures a block of 5,000 apartments would remain affordable for the next 20 years. If you think about it, Stuy Town was built in the late 1940s so this would ensure rents on an affordable level for almost 100 years once this plays out!” said Mr. Froehlich.

Creating Sports-Oriented Districts – Successes and Long-term viability

Creating Sports-Oriented Districts – Successes and Long-Term Viability

 On Friday, September 25, Herrick hosted the Urban Land Institute of New York (ULI) for a discussion on Sports-Oriented Districts. Speakers included:

  • Richard Browne, Managing Partner, Sterling Equities
  • Jim Lester, Senior Vice President of Commercial and Residential Development, Forest City Ratner Companies
  • Brad Mayne, President and CEO, Metlife Stadium

The panel was moderated by Bill Johnson, Designing Principal at HOK Sports, Recreation and Entertainment and the introduction to the panel was given by Mitch Korbey, Partner and Chair of Herrick’s Land Use & Zoning Group.

The panel focused on the concept of New York is as a home to the greatest concentration of professional sports teams in the country. These sports-districts’ successes and long-term viability are dependent on getting the right mix of uses, critical mass and the most valuable connection to the communities surrounding them.

Bill Johnson stressed the importance of establishing a vision but also of ensuring that a critical mass, correct mix and community connection was present when venturing into the planning and development of these districts.

Richard Browne spoke about the successes and challenges he has faced in the development of Citifield and the surrounding area.  As they continue to develop the area to serve the community beyond the stadium, Richard said, “It is important to create critical mass outside of baseball season.” Developers are now focused on building a one-million square-foot shopping mall near Citifield.

Jim Lester commented on the development of Barclays Center in Brooklyn, saying: “Four residential buildings are going up around Barclays, one of which is entirely affordable housing,” This serves the community well because of the $75 million transit hub that opens right by Barclays.” With the Islanders coming to Brooklyn and Nassau Coliseum being completely revamped, opportunities to grow and develop these communities are becoming more commonplace. Nassau Coliseum will be an entertainment hub for the community, focusing the venue on family entertainment, concerts, boxing and even an indoor skydiving arena.

Brad Mayne spoke about a $38 million cleanup of industrial sites to develop areas in Victory Park, Dallas around the American Airlines Center. These massive cleanup efforts for development are what help to foster and build communities around these sports districts.  “Never stop searching for new opportunities.” said Mayne, who talked about the upcoming American Dream mall at the Meadowlands. The mall is projected to have an indoor water park, an ice rink and concert hall and amusement rides, and with tenants like Hermes signed on, this development will definitely draw new interest to this district.

The Next 50

Next Thursday, the New York City Zoning Resolution turns 50 years old. As zoning nerds the world over take a minute to acknowledge this milestone, we must not forget to turn our attention to the next 50 years and start considering specific actions that will encourage the progress of this great city and preserve its competitive advantage. It is time to think big…literally.

While planning (and zoning, for that matter) doesn’t happen in a vacuum, as we look at the next 50 years, architects of the City’s planning and zoning policies should take three words into consideration – no, not location location location. Urban planning technocrats, elected officials, neighborhood groups, and all other stakeholders should be guided by the following three words: Continue reading

421-a Program: What Does the Future Hold?

421aCrystal Ball

Picture it: City and State lawmakers racing against the sunsetting of the 421-a law to modify and extend the program.

While it may seem like only yesterday, this scene actually played out three long years ago; and is likely to reenact itself in a few short months.

At the end of 2007, the market was still trending upwards (the fall of Lehman in October 2008 was months away) and the overall tenor of the debate was not if the program’s benefits should be limited, but by how much.  In the end, the program was extended for three years, the exclusion zone was expanded, negotiable certificates were essentially eliminated, and benefits were capped based on assessed value. Continue reading

New York High Court Rules in Stuy Town Case

In the closely watched Stuyvesant Town case, New York’s highest court ruled today that buildings enrolled in the J-51 tax abatement program are not subject to the rent stabilization law’s luxury decontrol provisions.  Thousands of buildings throughout New York City are enrolled in the J-51 program, which grants property tax benefits in return for the performance of capital improvements to an existing multiple dwelling or the conversion of a non-residential building to a multiple dwelling.

The ruling upsets a decade-old assumption, supported by a 1996 advisory opinion issued by DHCR, the state agency charged with administering rent stabilization, that enrollment in the J-51 program does not preclude deregulation.  There are myriad implications of the decision — which raises as many questions as it answers.

We will be watching this closely and hope to update you soon on the fallout from this significant decision.