New REBNY Chairman Douglas Durst Sees Opportunity for Change
REBNY’s new chairman, Douglas Durst, is staring down a challenging recovery in New York, a mayoral race, and the undoing of general economic chaos caused by COVID-19 — plus, a rebuilding of the organization’s influence within the city
“I like the sound of that: President Joe Biden,” Real Estate Board of New York Chairman Douglas Durst told Commercial Observer.
Durst, who’s also chairman of the 105-year-old Durst Organization, one of New York’s most storied commercial real estate developers and owners, took the helm at REBNY at the start of the year, following the departure of his predecessor, Bill Rudin.
He’s now overseeing an organization that, in the months leading up to the pandemic, had butted heads and somewhat fallen out of favor with local politicians in New York City. And, while the role is still very new for Durst, despite his 50-year history as a member of the organization, it’s come with a hefty helping of chaos.
Donald Trump’s eviction from the White House is a start and might alleviate some tension and uncertainty, from an economic and health care perspective, but there’s plenty to do in New York in a mayoral election year.
Since COVID-19 first hit the U.S., REBNY has been a vocal supporter of many of the policies that have come down from the state and city in support of pandemic relief, government spending and economic rejuvenation. In the several months leading up the pandemic, however, the organization’s relationship with elected officials was clouded by contentious encounters — most notably, before and after Albany’s passage of rent regulation reforms in the summer of 2019.
That led REBNY President James Whelan to express the need for the organization to take a more active, data-driven approach to educating elected officials on the pros and cons of passing legislation that affects commercial real estate.
While Durst didn’t seem eager to delve deeply into the many subjects that must litter REBNY’s agenda, he said that what’s top of mind for him is ensuring that “the city comes back to life as quickly as possible.” For him, a restructuring of the tax code to eliminate “punitive tax increases” to better favor the commercial property sector leads the docket.
“[Taxes have] always played a central role in the city’s economy, and I think it will even more now that the real estate industry generates more than half of the city’s annual tax revenue,” Durst said.
If it serves as any indication of REBNY’s history with NYC Mayor Bill de Blasio’s administration, when asked about his thoughts on de Blasio’s tenure, Durst quipped, “Oh, you’re breaking up, I didn’t hear that question … No, I can’t answer that. I’ll have to say, ‘No comment.’”
With de Blasio’s time in office waning and New York’s recovery at the top of its to-do list, REBNY has an opportunity to hit the reset button.
Commercial Observer: How has the pandemic stacked up for you in comparison to the many peaks and valleys and economic disruptions you’ve experienced as a member of REBNY and as an executive with The Durst Organization?
Douglas Durst: The difference now between the previous recessions or issues like 9/11 is that we know that this is going to end. People talking about things being different [after the pandemic], I disagree with that. New York is going to come back and people are going to be coming back to New York. That gives us some hope. But, on the other hand, the devastation, especially to retail, which was in bad straits to start with, is something that is going to have to be dealt with over the next couple years.
What role do you envision REBNY playing in contributing to New York’s economic recovery?
We see our role as working as a full partner with the government and local institutions to overcome some of these issues. REBNY, early on, had a voluntary eviction moratorium, and we had a program called “Parachute” that directly aided tenants who were facing financial hardship. We worked together with the city and the state on reopening guidelines — we were very involved in all those discussions. And, whenever the government asked for space or for help, we were right there, providing whatever was asked for.
When it comes to helping facilitate COVID-19 testing, following Gov. Cuomo’s call to use empty storefronts to make it happen, logistically, how do you put that together in terms of guidance for elected officials?
It’s really needed throughout the city. In residential districts, people should be able to get tested when they leave their apartments or houses, and they should also be able to get tested near their workplaces. So, we’re now surveying all our properties to see what’s suitable to create these testing sites.
Since Cuomo’s call to convert empty commercial properties into residential, REBNY has been vocal in support of that as a way to help bolster growth. Where does such a campaign start, what would be the timeline on it, and in what ways can REBNY help make this happen?
The most likely and immediate conversions would be hotels. Office buildings, there are a few, but not many vacant office buildings — but you’d need to get the building vacant and it needs to be convertible to residential. Many of the buildings that were built after 1970 really do not lend themselves well to it. Some will, but most with a center core will not; it’s too deep from the core to the windows. It can be done fairly quickly with hotels, and some commercial buildings will be suitable, but it will take quite a while to be converted.
Has REBNY come up with any guidance to establish what the cost would be for owners to redevelop or outfit these buildings to fit the mold of what was proposed?
We’re working on that information right now. That’s something that has been looked at previously.
REBNY has been fairly supportive of Cuomo’s plans for an economic recovery following his State of the State Address. But, from your perspective, what more needs to be done, or what was neglected in these most recent proposals?
The governor’s address was very bold, and the projects are very important to the city, and it will bring a lot of economic development to the city. A lot of the issues that need to be dealt with are things that the governor cannot address.
One of those is the city’s tax policy. What, specifically, will REBNY be pursuing or pushing for as it relates to tax policy in New York, given that the industry generates so much tax revenue for the city? Your organization was alarmed after the $2.5 billion property tax shortfall was reported.
We’re going to be pushing back more against punitive tax increases at a time when the economy is in such dire straits. The important thing is to get the city reopened and get people coming back to restore the vibrancy and life on the streets of New York.
The one issue that both the city and the state should be involved in and talk about is restructuring the real estate tax, which unfairly falls on residential multifamily buildings and is part of the reason housing is so expensive. One-third of all rental income goes to city taxes. People who own co-ops on Park Avenue pay very minimum tax, and people who own middle-class housing pay lower taxes than people in working-class neighborhoods. Everybody recognizes that the New York City real estate tax is regressive, and nobody wants to try and fix it. That’s something I, personally, believe needs to be addressed by the city and state.
And the city also needs to make itself more friendly to small businesses. The fines and inspections make it very difficult to open and operate businesses here.
REBNY President James Whelan had mentioned to CO in the past that the passage of New York’s rent laws in 2019 led to a tactical change within the organization, in terms of how it would approach its efforts and conversations with elected officials going forward. How does that play into lobbying for changes this year amid a recovery? And where does that fit in as you focus on rebuilding the city’s economy to ultimately benefit CRE?
We’re going to work to build coalitions to underline the importance of construction, as to what it adds to the city in terms of jobs, taxes and improved neighborhoods.
Residential construction is extremely important to the well-being of the city. Too many people simply say gentrification is bad, when most studies show it actually benefits the community where it takes place. We hope to build coalitions around the fact that you need to have new development, such as the Brooklyn Navy Yard, and others that have been stymied recently, and that’s really at the expense of the working people. It doesn’t benefit a vocal minority.
REBNY had developed a rather contentious relationship with state and local politicians in the lead-up to the pandemic. Whelan has talked about taking a more proactive approach to supply data and information in order to educate officials on the benefits or ramifications of their decisions. How would you describe REBNY’s position with elected officials now that you’re overseeing the organization?
It’s more time, now, to educate politicians in the costs of the policies they are implementing and how harmful they are to the city. That’s going to be our main goal — to make people aware that if you don’t have development, if you have people not paying rent, and with the population decline, you’re really harming the city with some of these past policies. There’s no question people are not doing well, but we’re going to drive down the entire tax structure of the city with some of the policies that have been suggested.
Seeing as most recent budget proposals have been released at the city and state levels, what other policies — spending or otherwise — do you believe need to be implemented to achieve some of REBNY’s goals, as more data has been released showcasing COVID-19’s impact on the city’s economy?
We need to get back to building housing — middle-income, affordable and luxury housing, not just one — and the city needs to be more aggressive in promoting those efforts. If you look at what just happened down by the Seaport, where the Landmarks Commission ruled against buildings they claimed were too tall, which are right next to buildings that are taller, that was going to be a financial boost to that area, and now, nothing’s going to happen.
What are your thoughts on the realm of public transportation in the city, a vital aspect that would support the recovery of the real estate sector? The Metropolitan Transportation Authority’s troubles are well documented, and even with monetary relief received due to COVID, it faces a very steep hill to climb. How might REBNY take a more active role in supporting it?
Congestion pricing would certainly help the MTA. The city seems to have a very strange approach to transit, such as the ferry system — it’s heavily subsidized, but carries very few people.
I’m not an expert in transportation, but the one area I have been involved in is congestion pricing, which I think is something that has to be instituted.
Former REBNY chairman Bill Rudin made big strides in trying to bring a greater level of diversity to the commercial property sector. How will you and the organization pick up that baton and continue to bolster that push?
It’s certainly a goal of REBNY, which Bill started, and we’re continuing to push very hard. We hope to expand it by opening up opportunities, not just for contractors, but also to be able to invest in real estate. There are very few opportunities for people of color to be entrepreneurs in the real estate business. We hope with mentoring and other possibilities, it’ll broaden it, not just for employees but also industry owners.
With de Blasio departing after the fall season and a new mayoral administration incoming amid a recovery, it seems like a good chance for a fresh start for REBNY on that front. Tell us about conversations the organization has had and will be having with candidates in the run-up and what messages will be pushed.
We’re going to meet with all the viable candidates, and maybe some that aren’t viable, and express our thoughts on the race and what we’d like to see happen in the next administration. But, we will not be backing any one candidate. There are some very good candidates who will do an excellent job, but we want to meet with everybody to give our thoughts on what’s going on with the city. We’ll hopefully have a more effective role in the next administration.