NYC Owners: Sure, We’ll Talk About Jerome Powell
Turns out, the Federal Reserve chairman has some fans among the city's biggest commercial real estate owners
As 2008 was winding down and the financial markets were reeling, the chairman of the Federal Reserve (Ben Bernanke at the time) cut interest rates to zero.
It was an incredibly bold and incredibly necessary thing to do, helping to preserve the world economy at a moment when the entire financial system had essentially shut down. Within a few years, America crawled out of its worst economic calamity since the Great Depression, healthier than anyone expected.
But interest rates remained anemic from then until about 18 months ago.
It’s not that there had been no rate hikes whatsoever, but they had been small in size and rare in occurrence. However, in 2022, upon seeing post-COVID inflation spikes not recorded since the 1980s, the current Fed chair, Jerome Powell, began an aggressive regimen of hikes.
This largely worked in tamping down inflation in the economy as a whole (while unemployment has remained happily low), but for real estate — an industry that had been built for a decade and a half on a certain interest rate model — this proved disastrous. (There were other factors, too, but the rate hikes didn’t help.)
Ever since then, the real estate community has largely met every progressive hike with grumbling.
When we posed the question — Are you a fan or a critic of the chairman? — we weren’t sure whether to expect the same level of honesty CO staff have enjoyed in off-the-record (sometimes on-the-record) rants since 2022.
Turns out, real estate owners are very honest both ways.
“Pretty hard to be a fan in real estate when SOFR is above 5 percent,” noted MaryAnne Gilmartin, referring to the secured overnight financing rate, a key borrowing benchmark.
“I am a fan who turned into a critic when the 10-year Treasury went above 4 percent,” said Kushner’s Laurent Morali.
“We have a housing/homeless/affordability crisis, and development no longer pencils because Powell has manufactured the highest rates in over two decades,” said Wildflower’s Adam Gordon. “Overly narrow and aggressive reaction to inflationary pressures is not productive once larger forces are examined.”
“I will keep my opinion to myself and suggest the same for Jerome Powell regarding interest rates and the economy,” said Durst Organization head Douglas Durst.
“He’s killing us,” David Kramer of Hudson stated simply.
In total, we counted 10 fans, 16 critics and five answers that we dubbed neutral. (Brookfield’s Ben Brown, for instance, is a self-described “Critical fan.”) Which means that, yes, Powell has his admirers in the business.
“I don’t like what he has had to do,” said Hines’ Jason Alderman.
“He is in a tough spot,” said Tredway’s Will Blodget. “Doing the best that he can with the tools he has.”
Max Gross can be reached at mgross@commercialobserver.com.
