R. D. GERONIMO LTD. " Where are we Heading"? - Current CRE Trends and Market Indices
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“ Where are we Heading”?
R. D. GERONIMO LTD.
Current CRE Trends and Market Indices
Richard J. DiGeronimo
MAI,SRPA,AI-GRS,CRA,CVC
RJD@rdgeronimo.com
www.rdgeronimo.com
“Well done is better than well said.”
--Benjamin Franklin
R. D.rewarding
“The most GERONIMO LTD.
things you do in life are often
the ones that look like they cannot be done.”
--Arnold Palmer
Economic Climate
Big assets, big cities, big capital, and big competition.
The U.S. is more in favor than the rest of the world right now.
Under the new President- elect Trump’s Administration, the
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commercial real estate performance and fundamentals are expected
to strengthen with tax cuts and infrastructure spending.
Interest rates are expected to rise and the anti-globalization would
impede domestic consumer spending and foreign investments but it
might increase the use of manufacturing spaces and balance out the
storage and warehouse use.
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Unemployment
The labor market continued
its steady improvement in
the new year.
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235,000 new jobs at Feb 2017
238,000 new jobs at Jan 2017
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Interest rates
U.S. mortgage rate rose, sending
costs for 30-year home loans to
the highest level this year.
The average rate for a 30-year
fixed mortgage was 4.21% up
from 4.1% last week.
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The average 15-year rate
climbed to 3.42% from 3.32%.
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Sources : 2016 www.FedPrimeRate.com
Americas Investor Intentions 2017
-- Survey conducted by CBRE
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CRE Trends in NYC
Investor: Interest rates, technology’s impact, homeownership
trends and more.
Rent-controlled building may have been subsidized by
regulation, the price is already below market the demand for it
will stay strong.
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The Bronx is Building. Market forces, naturally, are
driving the shift. Bronx has potential as next Manhattan and
Brooklyn. Effective Rent per Unit by Borough
13Key Trends in Long Island
The Long Island’s industrial real estate market continue to
post positive momentum with low vacancies and record-high
rental rates.
Demand is fierce as vacancy rates for office and industrial
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space reach historic lows
14Long Island Condos & Single Family Market R. D. GERONIMO LTD. 15
Long Island Multifamily Market R. D. GERONIMO LTD. 16
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Sources : IBO http://ibo.nyc.ny.us/cgi-park2/R. D. GERONIMO LTD.
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Sources : IBO http://ibo.nyc.ny.us/cgi-park2/R. D. GERONIMO LTD.
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Sources : IBO http://ibo.nyc.ny.us/cgi-park2/Multifamily Market Trends in NYC R. D. GERONIMO LTD. 20 Source :Ariel Multifamily Month in Review, Jan 2017
This ain’t 2015: Insiders say new 421a program will take time to impact market
Market fundamentals, ability to finance projects are much different than when tax abatement expired
By Rich Bockmann | April 13, 2017 07:30AM
When 421a expired in January 2016, the city’s investment-sales market had just wrapped up a banner year: $77
billion worth of commercial property traded hands – nearly 24 percent higher than the last market peak in 2007.
Sure, buyers were groaning that the price of land was getting out of hand and it was harder to make multifamily
projects pencil out. But the city’s uber-luxury condo market – while showing cracks – hadn’t yet become unglued,
and the rental market was still on the cusp of recognizing a glut of new supply. To boot, construction financing in
late 2015 was plentiful.
Then the program expired, and like flipping off a switch it immediately had a chilling effect on the sales market.
The lucrative tax break’s replacement – now christened “Affordable New York” – is officially back, but developers
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will be facing an investment-sales market that hardly resembles the good ol’ days of 2015. Industry observers are
skeptical that the reinstatement of the program will move the needle alone, at least in the near future.
“Most of the investors that we’ve spoken with think [421a] is a positive development, just not necessarily one that’s
going to have an immediate and dramatic effect on land pricing or the volume of development deals,” said Marion
Jones, managing director in the investment-sales group at Ackman-Ziff.
One clear impact of the new law is that developers can press reset on projects they mothballed when the program
expired.
Slate Property Group’s David Schwartz said the firm has several developments that were put on hold when 421a
expired, and he’s just now starting to have conversations with lenders about construction financing.
“We were so relieved when it came back because there were so many times that it was coming back, and then it
didn’t,” he said. “There was no way to gauge if it would come back or not. There was some uncertainty up until the
very end.”
Schwartz added that he thinks developers will begin cautiously dipping their toes back in the land-sales market, but
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that it will be at least three years until the backlog of sidelined projects will be delivered.
Source :https://therealdeal.com/2017/04/13/this-aint-2015-observers-say-new-421a-program-will-take-time-to-impact-market/“I think the silver lining is that the lack of 421a really stymied supply significantly,” he said.
“You’re not going to see any new 421a units until the end of 2020 [or early] 2021.”
The Durst Organization, too, is getting back on track with plans to develop the remaining
buildings at its $1.5 billion Hallets Point project that was iced early last year.
Durst broke ground in January 2016 on the first building at its 2,000-plus unit megaproject,
but says it couldn’t get financing for any of the remaining phases without the abatement in
place.
“[T]he passing of ‘Affordable New York’ unleashes approximately 4,000 units of rental
housing for The Durst Organization, including about 1,000 affordable units,” a spokesperson
for the company said.
What remains less clear is how the new 421a will impact the city’s slumping land-sales
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market. The market limped through the first three months of the year with just a little more
than $7.1 billion worth of transactions in the first quarter, down more than 50 percent from
the same time last year. And while the number of properties trading hands is way down,
pricing is still going up, a clear sign that the market is in transition and there’s still a
disconnect between buyers and sellers.
Still, some took the news on the new abatement program as a sign to test the market.
Alma Realty, for example, recently put the development site for its 2.2 million-square-foot
Astoria Cove megaproject in Queens on the market only after the owners became
convinced that 421a would be back.
Cushman & Wakefield’s Bob Knakal, who is listing the property, said many of the potential
buyers who would purchase a large site where the tax break is essential to making it pencil
out, have already started underwriting 421a into their calculations. “Based upon what we’re
seeing, we expect to see a decent increase [in sales activity] in the second half of the year,” he
said.
22 Source :https://therealdeal.com/2017/04/13/this-aint-2015-observers-say-new-421a-program-will-take-time-to-impact-market/R. D. GERONIMO LTD. 23
R. D. GERONIMO LTD. 24 Source :http://www.mns.com/renters_guide
R. D. GERONIMO LTD. 25 Source :http://www.mns.com/renters_guide
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Source :http://www.mns.com/renters_guideR. D. GERONIMO LTD. 27
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Market Trends:
Industrial Properties Keep Filling Up
The boost in industrial demand and activity
can be accredited to larger market trends,
such as the ever-growing e-commerce
sector and an upsurge in imports.
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According to US Industrial Investment Outlook
for Q3 2016, industrial supply increased by 214
million sf, or 1.8% throughout 2016. Based on
the occupancy trends reflected in the data,
demand remains elevated.
29Long Island Industrial Market R. D. GERONIMO LTD. 30
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Source :Greiner-Maltz Co. of Long Island, LLCR. D. GERONIMO LTD.
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Source :Greiner-Maltz Co. of Long Island, LLC• The long Island leasing activity slowed and was down to
530,351 sf in Q4 with a total of 303 million sf YTD.
• Warehouses outperformed with over 3 million sf
recorded in leasing activity.
• Lacking inventory has been the key issue which steers the
market trend.
• The sales transaction volume for the Long Island industrial
market totaled $257.2 million YTD, 11.5% from 2015.
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33Long Island Retail Market Nassau R. D. GERONIMO LTD. Suffolk 34
Long Island Office Market R. D. GERONIMO LTD. 35
The overall vacancy rate on Long Island
closed the year 2016 at 13.8%.
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36Manhattan Office Market R. D. GERONIMO LTD. 37
Long Island’s future
Economic Outlook in 2017: Cloudy
Employment
Brightest; Unemployment rate was 4.2 % in July 2016, the lowest for July
since 2007
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Business Conditions
Less Positive; The outlook for small business is important.
Consumer Spending
More positive; Spending plans are higher than a year ago
Real Estate Sector
Building more rentals, co-ops, condos and other multifamily homes than it
has in past decades.
Long Island has over 100 downtowns. Some are flourishing as more and
more people discover their advantages.
38Regional CRE Movements
Healthy competition for office space. Hospitals and healthcare
centers expand throughout Long Island as elderly population
grows.
Setting up shop in the
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suburbs
Long Island makes room for new hotels
Occupancy rates in the area are high
39 New infrastructure investment may bolster development.
Cuomo finds funds to update Long Island’s Transit and utilities
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Getting to yes in the ‘land of no’
After years of planning, resistance and
expensive site clean-ups, developers and
locals are finally feeling optimistic about
the future of multifamily projects on
Long Island
40Company Spotlight
Nassau
Downtown Revitalization Plan
Healthy downtowns
The Village of Westbury
Westbury’s Vision and Key Projects
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LIRR Improvement Program: Floral Park
– Hicksville Expansion
Glen Cove
Winthrop University Hospital in Hempstead
Incubator Kitchen
Nassau Coliseum
Cerro Wire Syosset
Hofstra University Expansion
RXR Hempstead Downtown Redevelopment
41Suffolk
Stony Brook Preclinical Screening Center
Southampton Cancer Center
Federal Inspection Station at MacArthur Airport
Ronkonkoma Hub
Ronkonkoma Hub Parking Structure
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East Farmingdale Downtown Center
Wincoram Commons
Peconic Crossing, Riverhead
Meadows at Yaphank
Patchogue Village
Wyandanch
Tri Tech Building Co – Port Jefferson
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Executive Summary
Walkable urban places contain the majority of real estate
assets and produce most of the economic GRP for the
region.
Tri-state region has substantial pent-up demand for walkable
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urbanism
No trade-off between social equity and economic
performance
Many walkable urban places are at risk of becoming too
expensive for low and moderate-income households.
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Sources : GW business. The Walkup New York. By Christopher B. LeinbergerR. D. GERONIMO LTD.
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Sources : GW business. The Walkup New York. By Christopher B. LeinbergerR. D. GERONIMO LTD.
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Sources : GW business. The Walkup New York. By Christopher B. LeinbergerR. D. GERONIMO LTD.
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Sources : GW business. The Walkup New York. By Christopher B. LeinbergerR. D. GERONIMO LTD.
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Sources : GW business. The Walkup New York. By Christopher B. Leinberger2017 State of the Appraisal Industry survey
Facts Snapshot
1127 respondents : Independent Business Owners, Residential
Appraisals
R.Highlight
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Source : http://elevatedappraiser.comR. D. GERONIMO LTD. 55
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