Richard Kessler

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

There were a few deals that did not go through this year in retail, residential and office assets. I believe these deals did not happen because of uncertainty around a number of issues including the slow pace of recovery after the pandemic, hybrid work environments, the economy, inflation and interest rates.

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

Yes we did — and the biggest challenge was that interest rates were considerably higher this year. We negotiated three different financing transactions as we watched interest rates continue to rise. Despite the challenge of arranging financing deals in a rising-interest-rate environment we completed all three transactions, one on Long Island, one outside Boston and the other for a portfolio of three assets in Southern locations.

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?

I expect we might see a situation similar to the mid-1990s, when many office buildings were foreclosed on and converted. Tenants today are really focused on Class AAA properties. So, I do think that the Class B and Class C properties that have potential for residential conversion might undergo that.

What market outside of NYC do you like and why?

We love Bellevue, Wash. The state has been attractive to tech companies for a long time, especially Bellevue. It offers a great quality of life, a business-friendly environment, and is close to Silicon Valley. California has some of the highest local taxes, so many companies are relocating to Washington state. Seattle is suffering a bit from the staggering influx, but Bellevue is pristine and thriving. Amazon has grown to occupy more than 5 million square feet in the market, and Google and Meta are big players. Our joint venture project with Hines in Bellevue, HoM District, is poised for tremendous success.

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?

Yes, I am following the midterm elections and I do think they will have an impact on New York. Quality of life seems to be better in red states rather than blue states today. Major cities with challenges are more liberal, and they have problems getting things done. There is a loss of centrism across the board — red or blue. The country is extremely polarized and there’s no moving the needle with that cohort.

How many days per week are you in the office?

Four to five days per week.

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

Three to four days per week. Most tenants of ours in New York are retail tenants, so they are a full-time presence. Among our office tenants, it drops down to three to four days per week.

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

First, there are too many rules and regulations around new housing, so that puts more pressure on rents. Demand is steady, though, especially with the influx of young people who want to have the experience of living in New York City. So, if we can’t add housing stock, the pressure will keep going up. The other side of the coin is that if we have a full-blown recession, rents will not continue to rise. But that’s not a solution. There are three things working against the creation of new housing: high interest rates, high construction costs, and tremendous regulation. These present real challenges to the growth of our housing stock.

ESG: fad or fixture?

ESG is here to stay! It is harder for small companies to deal with the administration around ESG and the achievement of goals across all areas, but it’s important that we all have a social conscience and act on it. Benenson has a foundation that supports inner-city education and environmental initiatives, and as a firm we are trying to foster a diverse workforce.

Class quote

If you don’t make something happen, nothing happens.