Nicholas Bienstock

Are you going to buy in `25? If so, what asset class?

Savanna expects to close imminently on the purchase of a brand-new, occupied, 170,000-square-foot, trophy-quality New York City office building built in 2022 in a lender-controlled sale for in excess of a 40 percent discount off peak value and for over $100 million less than the cost of construction two years ago.

What real estate or tax policy would you like to see from the second Trump administration? 

Post-9/11, Liberty Bonds and other federal programs helped Lower Manhattan recover. Post-COVID, there is an argument both in New York City and across the United States that a good portion of the older office stock in secondary locations is functionally obsolete and needs to be converted to other uses. But converting an office building to residential is a complex and expensive process, and most deals don’t pencil out economically without some form of subsidy. A federal program that helped finance those types of conversions could help solve the crisis in the industry of what to do with that obsolete real estate, and such a program could incorporate a partial affordable/workforce housing requirement that would advance the pressing need for affordable housing across the United States.

Let’s talk about office. Is the worst over?

While the timing and pace of the recovery varies from city to city, in New York City the data is pretty clear that, from an office leasing fundamentals perspective, the market hit bottom and is on a path to recovery for better buildings in better locations.

Nothing new is being added to the office supply, while a number of obsolete buildings are being converted to residential and removed from the competitive office stock. In fact, many of the brokerage firms are starting to project rent spikes for better buildings in better locations in 2025 and beyond. That being said, lenders are facing a wall of maturities on loans that can’t be repaid, and those loans have gone or will go into default. The lenders will need to either sell their loans at a market-clearing price, foreclose on those assets, or complete workouts with their borrowers.

During this period, it’s a great time to buy the right assets. But, as with every prior cycle, normalization of capital markets will follow the fundamental recovery and supply-demand dynamics of the business.

Which market (outside of NYC) do you like best? 

Savanna has built a big footprint over the past five years in West Palm Beach, Fla. We have started construction on the Olara, a 1.6 million-square-foot, 275-unit, waterfront, ground-up condominium project on the Intracoastal Waterway. And we have two more large-scale development projects totaling over 2 million square feet in West Palm Beach in the pipeline. We expect to continue to expand our business in South Florida in the years to come.

What’s going to be your biggest expense in 2025?

Capital expenditures are always the largest, as we invest in and improve our buildings.

What are your predictions for the mayor’s City of Yes, especially given the controversies within the Adams administration?

It’s good public policy and it will pass. But the politics of the legislature will probably make some changes to the plan before it passes, making it less effective than it could be to advance much-needed affordable and market-rate housing.

Do you still like Eric Adams? (Did you ever like him?)

Eric Adams has tried to govern to the center, which is good for New York. But he has been fighting headwinds in the state legislature and a difficult time with the migrant crisis. New York City needs a centrist mayor who does not view successful people or profitable businesses as the enemy. They are the key to a thriving city economy, which in turn produces tremendous tax revenue which can then be used to fund parks, schools and other well-intentioned progressive goals.

Lightning Round:

Your social media of choice?
I still read the Wall Street Journal, The Economist, NPR, The New York Post, The New York Times, CNN, MSNBC and the BBC. I guess I’m old school.

AI: Helpful in CRE or a fad?
Helpful. It takes half the time to put together an investment or financing memo.

Last movie you saw in a theater?
“Widow Clicquot.”  Good, but not great.

You’re going on a six-month expedition into the Amazon. What’s your last meal before you get on the plane?
Omakase at Sushi of Gari.

Tesla or BMW?
BMW has more soul.  (Though my next car may be electric.)

Will interest rates be below or above 4 percent on July 1, 2025?
Above.

If you could partner with one person in the business on a property, who would it be?
Recently, we have done more business with family offices. They are often run by super-smart entrepreneurs able to evaluate risk/reward and make decisions — even counter-cyclical decisions — efficiently and quickly.

What are you tired of talking about?
Politics. Let’s move on.