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.