K. Thomas Elghanayan, TF Cornerstone
CCC Citizens’ Committee for Children, the city
Real estate prediction for 2014?
High-end residential condo prices will take a step backward due to oversupply at the very high end. The rental market will remain strong primarily because there’s very little production of new rental housing as land prices are so high. We’re one of the few companies left doing rental developments, because everyone else is still cashing in on high-end condos. The supply side is squeezed, and future left-leaning political shifts could add more rent regulation and further squeeze down the supply. Office market rents will go up particularly in Midtown South, and even Midtown, where they’ve escalated quite a bit due to lack of supply and with new product on the Far West Side still a ways off.
Where in New York is there still untapped potential for real estate development?
There are very few untapped areas. In Manhattan, everything is high. Harlem, Far West Side, Chelsea, even industrial areas—all are really hot. Everyone’s scrambling to find new areas of development, but a lot of this will depend on rezoning. Bloomberg has been bullish on rezoning, but we don’t know about the next administration. Areas with potential for future development include Midtown in the high 20s, low 30s, for example 27th to 38th Streets to First, Second and Third Avenues. Also, the Bronx where prices are depressed and there is good subway transportation. And in Queens in Long island City, Astoria and Queens Boulevard along the subway line.
What real estate policy should New York’s next mayor make a priority?
It all comes down to taxes. The next mayor cannot raise income taxes and real estate taxes. Real estate taxes have gone up tremendously. We’re so heavily taxed that at a certain point it gets too expensive for the wealthy to live here when they can easily migrate to other areas, taking their tax revenue and spending power elsewhere. It’s an important fiscal issue that the city must address. Another priority on the policy side is to make adjustments to the Hudson Yards zoning that reflect changes in the current office market. No one wants a big 40,000-square-foot trading floor anymore, so the zoning should make it possible to build the types of space tenants are looking for today.
What qualities do you look for in an agent representing your buildings?
Most of our buildings are leased and managed in-house, but, when we do work with agents, we’re looking for knowledge of both the general market and submarket conditions, a strong track record, reliability and ability to provide excellent customer service. The most important quality for any agent we work with is integrity.
What is one aspect of your business you wish you had more time for?
Spending time with my top managers, visiting buildings more frequently and visiting other developers.
Political regression in New York City to an administration that makes cuts in the wrong places and raises taxes. NYC is already the second highest taxed city, and we won’t be able to compete with other major cities with any further increases.
In the film version of your life, which actor would portray you?
Frank Langella, a stage and screen actor. People stop me on the street occasionally to ask me if I am Langella even though he is 6 inches taller than me.
Foreign real estate market you’d most like to invest in:
Jersey City. We’re not looking to develop abroad, so New Jersey might be the most foreign market we’d consider doing a project. But, if conditions were right and we decided to look at foreign markets, I’d likely look toward Western Europe, industrialized and advanced countries like England, Monaco and other locations that are already established, but not France, where taxes are too high. Also perhaps places for resort development like the Caribbean.
What New York City building should be torn down?
Madison Square Garden, the Macy’s Parking Garage on the Fulton Street Mall in Brooklyn.