Sunday Summary: Changing of the Guard at REBNY

After three long years it’s back in January — the season where it always rightfully belonged.

This year the Real Estate Board of New York honored Fred Cerullo, Ellen Israel, Joel Picket, Michael Rudder, Elizabeth Ann Stribling-Kivlan, Wayne Taub and outgoing chairman Douglas Durst at the sleek Glasshouse on Manhattan’s far West Side, and the local politicos and real estate celebs came out to pay tribute.

Speaking of Durst, the real estate legend spoke to Commercial Observer in advance of the banquet to discuss what the last few years had been like for the organization, what he won’t miss, and his parting advice for the incoming chairman Jed Walentas. (“My biggest piece of advice for Jed is to continue to be Jed Walentas and not try to be anything else — he’s a great guy. He doesn’t really need my advice.”)

We also chatted with Walentas about housing, environmental legislation and other issues that he will have to contend with as REBNY chairman.

Because, yes, these are big issues and they were very front of mind for a lot of attendees.

For instance, this year landlords will have to start to comply with Local Law 97… how’s that been going? Some are saying that the fines are probably going to be less onerous than the cost of getting their buildings up to standards.

The rezonings promised by the Adams administration in its “City of Yes” proposals are another thing that REBNY will have to focus a lot on.

Oh, and did we mention that tax revenues from real estate (the biggest contributor to the city’s kitty) are expected to remain low for the next three years? That’s another issue on REBNY’s already overflowing plate.

But the biggest and thorniest issue is probably housing. The industry has been begging for some kind of replacement for 421a and so far has come up empty.

As part of her proposed budget released last Tuesday, Gov. Kathy Hochul pitched a four-year extension for completing projects that secured the incentive before its mid-2022 expiration. 

And, in a welcome piece of news, Mayor Adams’s Office Conversion Accelerator announced that it had 46 buildings enrolled in its office-to-residential program, which together could bring a not-insignificant 2,100 new units to market. Hey, we’ll take it!

However, all that aside, we expect housing will almost certainly remain the single most important issue as far as the industry is concerned going into 2024. (Incidentally, one would think that it would have been a lovefest between Adams and REBNY at Thursday’s banquet, but those who were there reported some tension in the air.)

Normally, too, a REBNY gala during a federal election year would’ve guaranteed some verbosity. It seems less so the case, though, in 2024, given the all-but-certain rematch between President Biden and former President Trump. Suddenly, issues like transportation, fiscal policy and housing have lost some of their salience for many in the industry.

Finally, in advance of the banquet, we got to meet some of this year’s class of REBNY fellows. These people are the future of the industry — and that’s always a healthy note to leave on!

(Although, for those gluttons out there who want a little extra REBNY gab, check out this week’s episode of “The Back Story” podcast.)

Leasing, leasing, leasing!!

If ever there was an example of “one step forward, one step back” in the urban office market, it unfolded this week in Jersey City and Washington, D.C.

We saw a massive, pop-the-champagne-corks lease in Jersey City at BGO’s Newport Tower where Bank of America (BAC) took 550,000 square feet for 15 years. (A 15-year lease is itself enough of a throwback to light many a smile.) It was another one of the heavies that closed out 2023 that should make everyone in CRE breathe a little easier about their professional prospects.

This was on top of another primo lease: The Archdiocese of New York signed a 30-year, 142,308-square-foot lease at the Feil Organization’s 488 Madison Avenue. Which is great!

But the news was not as good a couple of states to the south.

In Downtown Washington, Carr Properties put 720,000 square feet of office space on the market at D.C.’s Midtown Center that had been the home of Fannie Mae — and this was five years before the lending agency’s lease was set to expire. And this was not necessarily to move to something bigger or better, mind you. The agency told Bisnow it was largely about flex work and cutting costs.

At least Carr is nailing tenants like the white-shoe law firm Sullivan & Cromwell, which renewed and expanded at 1700 New York Avenue NW. (Sullivan & Cromwell wasn’t the only firm signing leases in the D.C. area; Duane Morris also took 10,000 square feet at Wills Wharf.)

And, hey, we also saw some interesting leases signed in South Florida. MSC Group, a Swiss cruise company, signed a 130,000-square-foot lease at Block 55 at Sawyer’s Walk, a mixed-use development at 249 Northwest Sixth Street in Miami. Louis Vuitton is opening a new store at 222 Worth Avenue in Palm Beach. Shōwa Hospitality signed a lease on Lincoln Road in Miami Beach, and it’s likely its hit eatery The Taco Stand will open a new outpost there.

Hirings, hirings, hirings!!

And we also saw some big personnel moves in the industry.

Marcus Alvarado left Safehold, where he was president and chief investment officer, to join Sixth Street Partners as partner and head of U.S. real estate.

L&L picked up Jonathan Tootell from SquareFoot to lead its leasing department.

And, in D.C., Ben Plaisted and Greg Scheipers are leaving their positions at Savills to join up with CBRE (CBRE)’s advisory and transaction services group.

Your Sunday read

Yes, we concede the office news is not great if you’re a landlord. But it’s a different story if you’re a tenant.

CO took a look at the cost of office now for tenants and landlords, which can make a nice, relaxing Sunday read. Or, you can always watch a Martin Scorsese movie.

See you next week!