Home Construction Demographics, the economy and lifestyles figure in real estate’s forecast

Demographics, the economy and lifestyles figure in real estate’s forecast


“We only do towns, trains or water. If it’s not one of those, don’t do it around here,” was the advice Clayton H. Fowler, founding partner, chairman and CEO of Spinnaker Real Estate Partners, offered to an audience of about 200 at the C.V. Rich Mansion in White Plains on April 30.
He was one of six panelists appearing at Westfair Communications’ Commercial & Residential Real Estate Forecast event focusing on Westchester, Fairfield and New York City.


The event was presented by Westfair Communications, publisher of The Westchester County Business Journal, The Fairfield County Business Journal and WAG magazine. Sponsors and supporters included: the Cappelli Organization, including LRC Construction  LLC and Fuller Development Co. Inc.; GS&S Awnings; McCullough Goldberger & Staudt LLP; Rakow Commercial Realty Group; Jones Lang LaSalle; Houlihan Lawrence; Aditum Internet Management Service; and Atlantic Westchester.

Fowler has more than 35 years of experience in the acquisition, development, construction and management of residential and commercial projects. Among his projects have been 1,600 housing units in Westchester and Fairfield.

“We’ve never been busier,” he said. “Fairfield County is doing fine, but it’s at the edge of the precipice. You have to choose your spots.”

The other panelists were:
Louise Phillips Forbes, a leading broker in New York City through The Louise Forbes Team who has been in real estate for more than three decades and sold more than $3.5 billion in properties;
Michael Glynn, vice president of National Development, a developer of senior housing in the Northeast;
Chris Halliburton, real estate broker with The Halliburton Team/Compus, who has worked on the development of more than 300,000 square feet of new residential construction in New York City;
John S. Traynor, executive vice president and chief investment officer of People’s United Wealth Management, who led off with a presentation on the state of the economy.


Traynor said that although data show that the economy is slowing, that’s a good thing because if the economy had been doing what President Donald Trump had been claiming he would produce, “I guarantee you the (Federal Reserve Bank) would have both feet on the brakes, interest rates would be going through the roof and all of our businesses would be very different right now.”
He warned that wage inflation could pose a problem and if volatility in the stock market during 2018 made people nervous, “get used to it. Volatility will increase. It probably actually will get a little bit worse.”

Traynor said that a developer working in Connecticut is seeing a different environment than in the neighboring states of New York and Massachusetts, in part, because Connecticut peaked in worker employment back in 1989 and has been slow to recover jobs lost in the 2008 recession. “Massachusetts has regained 350% of the jobs they lost. New York has regained over 200% of the jobs. Connecticut has regained about 90% of the jobs.” Traynor did point out that Fairfield County is growing even though the rest of the state may be struggling.


Halliburton said, “At this moment, two sort of polar opposite populations are dominating the world.” He said they are millennials who represent 30% or 31% and the baby boomers who represent 15% to 16%. “I think that’s the driver in residential real estate.”

He said those two groups, although differing in age, are like-minded in some ways. “They don’t want to travel 20 miles to go to a restaurant. They want to live in a community. They don’t want necessarily the responsibilities of taking care of a 2-acre yard or anything like that and they want to be close to transportation so they don’t have to depend on their cars.”


Forbes said many of her buyers are taking a long-term view of the market and taking advantage of today’s low interest rates while they last. “Over the last 40 years the average interest rate is 9%. I came into the business when it was 12.4%. I’m bullish on the market today, but as a buyer you need to shut the noise out and know what’s right for you as an individual.”

Glynn said his firm’s focus on senior housing, including developing assisted living facilities, provides some protection from economic uncertainty. “It’s a specialized skill to be able to operate these, so just any developer can’t really get in and do a great job. You need to be partnered with a terrific operator. So, yes, while the economic cycle definitely affects us, we’re a bit protected in other ways so we’re not terribly scared.”


Glynn talked about a project National Development is doing on Bloomingdale Road in White Plains called Waterstone Westchester. “It’s independent living for 75-plus-year-olds.” He said the market area is defined as being within a seven-mile radius from the site. “The population in five years is expected to grow about 2%. The 65- to 74-year-old cohort is expected to grow 20% to 22%. The 85- to 87-year-old a little less, about 6% to 7%, so we’re benefiting from that trend.”

Fowler said millennials and downsizing seniors want a maintenance-free lifestyle and don’t want to be tied to a mortgage. “We built around 3,000 condos in Portland, Oregon. We can’t give away a condo right now. We’re stuck at two-thirds sold. Why? People want mobility. I’m a little bit concerned at that. They don’t want to own.”

Forbes pointed out that in New York City there are people who want to own and that only 38% of residential properties can be bought.

“The reason our housing recovered the way that it did was with the interest rates being so suppressed. I just read an article last night saying it was cheaper to own in 40 states than it was to rent.”

“New York is an anomaly,” Halliburton said. “The bar to enter into owning in Manhattan is a million bucks to get something other than a studio.”

Fowler pointed to the softness in the luxury end of the single-family market in Westchester and Fairfield. “I think you have to be really careful to say everything around here is going to sell, because there are a lot of people having problems selling houses.”

Regarding development, Fowler said, “Generally speaking, real estate’s fundamentals continue to go on. Why? America does keep growing. We keep making more kids. I think there’s a natural cycle that we’re perpetuating with an ebb and flow of financing rates. Sometimes it’s a little bit better, sometimes a little bit worse. There’s no home run. It’s a hard knocks business.”

The softness in the high end of the residential market caused by federal tax changes limiting deductibility of state and local taxes (SALT), especially real estate taxes, was brought up. “I noticed in paging through the Business Journal just before I got here that the impact of SALT…seems to have influenced home values by downward 3.7%. I think that’s the tip of the iceberg, to tell you the truth,” Fowler said. “We all know what that tax law did. It put a lot more money in the pockets of the rich, pretended to put money in middle class pockets, and maybe did $100 more in the pockets of poor people. It was a bamboozle, point blank.”

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