At National Realty Club Lunch, Cautious Pessimism About 2010
The Friars Club, famous for its raunchy comedians, is the last place you would expect a crowd of commercial real estate pros to venture lately. In the Great Depression, as property prices plummeted faster than a jokester can spit out one-liners, devoted Friars member Milton Berle took a famous shot at real estate: “It’s amazing,” he said, “how fast later comes when you buy now.”
But there were no tomatoes or rubber chickens on the menu for economist and Commercial Observer columnist Sam Chandan when he spoke to members of the National Realty Club in the Milton Berle Room on Wednesday. Mr. Chandan predicted modest growth in 2010, as the crowd nodded in relief – only a couple off to sleep.
Mr. Chandan had spoken to the owners, brokers, financial analysts and lawyers in the club at the Williams Club last year, when the forecast included job losses, contracting property fundamentals and poor mortgage performance. “We don’t want to recall what Sam had to say then,” NRC membership chairman Adam Marsh said in his introduction. Mr. Marsh couldn’t resist one jab in the venerable Friars tradition, as he handed Mr. Chandan a magic eight ball “in case he needs a hand.”
Speaking to a crowd of 50 this year, Mr. Chandan foretold fewer job losses, weaning of the economy from government support, and cheap investment opportunities for patient investors. He offered especially good news for the crowd. A “flight to quality,” he said, could mean more stable prices on prestigious midtown addresses.
Cradling his magic eight ball as he prepared for an exit, Mr. Chandan was even more blunt.
“It looks a helluva lot better than last year,” he said. But the fragile confidence could easily be shattered if the government mishandles Fannie and Freddie, oil prices fluctuate, or the unexpected occurs.
The 63-year-old National Realty Club kicked off the new decade by moving its bi-weekly events to an eccentric turn-of-the-century bachelor mansion filled with British mezzotints on the corner of 55th Street and Madison Avenue. The Friars Club, which took over the brownstone in 1957, is famous for members like Ed Sullivan and Barbara Streisand – as well as real estate legends Abe Hirschfeld and Donald Trump.
In addition to offering tennis ball-sized tartufo and potential Whoopi Goldberg sightings, the club hopes the move will help erase the memory of the Aughts.
“We want to bury the last decade,” said George Ellopoulos, of Commercial Capital, who joined the NRC around 2000.
He and three other members, including NRC president Tom Graf, sat in a semi-circle after the speech, and offered an even bleaker vision of ’10 than Mr. Chandan, the professional pessimist. “The market is on hold,” Mr. Graf, of Mill Pond Capital, said. “Most of my clients say, ‘Why buy today, if you can buy tomorrow cheaper?'”
This year can’t be any worse than last, the group agreed. But it could be the same.
“A lot of Sam’s contemporaries think commercial real estate is the next shoe to drop,” Alan Miller, of Eastern Consolidated, added. “I think it’s already dropped.”
The group originally met in 1947 to strike deals over crab cakes at the Roosevelt Hotel. Last year there were fewer deals, but the meetings are still a place to see familiar faces.
“You’re kissing a lot of frogs [lately],” said Mr. Marsh, a commercial agent at Empire Capital Partners. “At least here, you’re kissing friends.”