Michael T. Cohen

Tell us about a deal that did NOT go through this year and why it didn’t happen?

Office tenants have been emboldened by the headlines and the expectations that the market will continue to soften. And yet we have seen an increase in activity and some stabilization of the NYC office market, conditions which have emboldened some property owners. This gap in expectations has led to some impasses. Negotiations are more protracted, and agreements are harder to reach in this environment.

Have you refinanced anything in 2022? How difficult/easy was it?

We are currently finishing two refinancings within our portfolio. Although the debt market is currently very unstable, we have been able to secure loans for these assets. As a borrower, Williams Equities tends to be low leverage with responsible reserves to protect against markets like this. We have lived through times like this before, but without strong, long-term relationships with lenders, completing a refinancing has become very difficult, especially in the second half of the year.

There’s a lot of Class B and C office in NYC. If you could lay your hands on them at a really great price, what would you do with them?

There are two choices. You either upgrade those properties to best-in-class status or ask yourself, “What’s the highest and best use for this location?” Given current market fundamentals and the shift to a more hybrid office model, many of the more neglected B and C properties would probably be more valuable converted to an alternate use than in their existing condition. Some locations may even warrant ground-up redevelopment. We believe that there are still great opportunities in NYC — so, should the right asset become available, we would be buyers.

What market outside of NYC do you like and why?

We stick to NYC.

There’s a midterm election this year. How closely are you following, and do you think the national political climate will have an effect in New York?

I’m keenly interested in the results of the midterm election and anything that will bring greater stability and collaboration to the political environment.

How many days per week are you in the office?

Two to three. Finding great efficiency when collaboration is required.

How many days per week are your tenants in the office?

We tend to see density on the days offices are occupied, with many returning to what has been referred to as three days-plus. The city has become more active week by week and our occupancy levels are reflective of that trend.

NYC apartment rents have reached never seen levels. How much further can it go? How does the housing squeeze play out?

We focus on office, with some retail. Residential isn’t our space.

ESG: fad or fixture?

Both. ESG is here to stay, but the concentration on it and where and how real estate professionals prioritize it will ebb and flow.

Class quote

These are challenging times for commercial real estate investors who relied on high leverage to acquire properties. And, while it’s something of an exaggeration, they remind me of the John Houseman quote from “The Paper Chase”: “Look to your left, look to your right — one of you won’t be here by the end of the year.” We are starting to see distress in the NYC office market. Blackstone’s giving 1740 Broadway back to their lender and the heavily discounted sale of 1330 Avenue of the Americas are the canaries in the proverbial coal mine.