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REBNY Panel: Tech, Retail, and Millennials Drive New York City's Real Estate Market
November 5, 2014
-- Michael Laginestra, David A. Falk, Joanne Podell, Diane M. Ramirez, and
Peter G. Riguardi discuss real estate market trends of today and tomorrow--
NEW YORK, NY – November 5, 2014 – The thriving tech sector, hot retail market, and influx of millennials were the main affair at the Real Estate Board of New York’s (REBNY) Members’ Luncheon on Tuesday at the Hilton New York, which featured a panel discussion titled, “New York Real Estate Forecast: Market Trends for Today & Tomorrow,” moderated by Michael Laginestra, Vice Chairman for CBRE. Panelists David A. Falk; President of the New York Tri-State Region for Newmark Grubb Knight Frank; Joanne Podell, Vice Chairman for Cushman & Wakefield; Diane M. Ramirez, Chief Executive Officer for Halstead Property; and Peter G. Riguardi, President of the New York Tri-State Region for Jones Lang LaSalle, discussed riveting topics driving the commercial and residential real estate markets in New York City.
Falk identified the explosion of the tech industry as the biggest driver of the commercial real estate market in the last five years, while the largest change has been seen Downtown where more than seven million square feet has been absorbed this year. He noted that tech tenants, which have largely flocked to Midtown South, are now heading to Midtown and Downtown for area play, while Brooklyn stands to be a good place for future tech outposts.
“We’re starting to see these buildings transformed. But it doesn’t mean today it feels that way,” said Falk. As tech companies continue to grow and expand, landlords are looking for ways to create the kind of spaces they desire in order to attract them.
Retail rose as the common thread throughout the discussion. Podell remarked that the retail market is so strong because of New York City’s 53 million visitors annually, which combined with support from the commercial and residential communities, has fueled the demand for ground-floor retail and the expansion of department stores like Nordstrom, Saks Fifth Avenue, and Neiman Marcus into the City. Other retailers like Lowe’s and Target are specifically transforming the way they do business in New York, while the growth of retailers like Amazon, Birchbox, and Apple are having a positive effect on the market.
Despite the popularity of online shopping and concerns over its impact on brick-and-mortar stores, Podell said, "Retailers are using the Internet to drive sales into stores and are getting a 104 percent return on sales.” She explained that customers are ordering products online for pick-up in stores. When they pick up their purchase, they often end up buying something else too.
Riguardi turned the conversation’s attention toward the millennial generation. “65-70 percent of the people who will work for us will be part of the millennial generation,” he said. “In order to make buildings attractive to millennials, we need to energize buildings by bringing great retail in.”
He explained that the city needs to rethink its focus on affordable housing, connectivity, and ways to retract and retain this workforce. Falk added that millennials are working longer hours and want outdoor spaces, more amenities, and great transportation to enhance their quality of life.
“The millennial wants to live in the city,” Podell said. “By 2020, 30 percent of retail sales will come from millennials. They are our future.”
Taking a deeper look at the residential market, Ramirez explained that the residential market has paused because of the 18 percent increase in average sales prices. “When they see this kind of increase, buyers think they’ve peaked, while sellers think the price [increases] will never end so they are overpricing,” she said. Ramirez later explained, “We are in such an efficient market for pricing that when a property is properly priced, you will have a bidding war.”
While pricing is leveling off, residential inventory is being driven by new developments, apartments coming online, and a little bit of hesitancy from buyers, said Ramirez.
About The Real Estate Board of New York
The Real Estate Board of New York is the city’s leading real estate trade association with more than 16,000 members. REBNY represents major commercial and residential property owners and builders, brokers and managers, banks, financial service companies, utilities, attorneys, architects, contractors and other individuals and institutions professionally interested in the city’s real estate. REBNY is involved in crucial municipal matters including tax policy, city planning and zoning, rental conditions, land use policy, building codes and legislation. In addition, REBNY publishes reports providing indicators of market prices for both the residential and commercial sectors. Please visit us online at www.REBNY.com.