Participants in a virtual forum on real estate this morning that was co-sponsored by the Fordham Real Estate Institute and the Business Council of Westchester were in virtual agreement that the post pandemic future for commercial real estate in Westchester and other suburban locations is bright.
One participant, Andrew Weisz, executive vice president of the RPW Group, said between June and October his company signed 10 leases for the full or partial relocation of New York City companies.
“Half of those were full relocations out of New York City,” Weisz said. “We had a company headquartered in Union Square whose lease was up and completely relocated out of New York which I had never seen before, very atypical. As it got closer to the holidays that quieted down and so we’ll have to see in ’21 what happens. There is no doubt activity. I’m also pleased to say that within the county local transactions are occurring.”
Weisz said that as employees have been moving to the suburbs, companies have taken a greater interest in the possibilities for setting up satellite offices or completely relocating.
“Longer term as a lot of the employees that companies are going to look to attract move to the area they are going to look more and more to create a more flexible option for those folks. It will take a little bit of time but I think within the next 24 to 36 months that hub and spoke model will play out,” Weisz said.
The forum was titled “The State of Real Estate: The Path Forward in a Post Pandemic World.” In addition to Weisz, participants included:
- Paul Adler, chief strategy officer for Rand Commercial;
- Bridget Gibbons, director of economic development for Westchester County;
- Eon Nichols, a partner at the law firm Cuddy & Feder LLP;
- Craig Ruoff, executive managing director of Westchester Brokerages at Colliers International; and
- Abe Schlisselfeld, partner-in-charge, real estate group, Marks Paneth LLP.
- The moderator was Chris O’Callaghan, managing director of RM Friedland and Marsha Gordon, president and CEO of the BCW, welcomed the estimated 500 viewers.
Ruoff said they definitely saw a residential exodus from New York City and noted that trends in residential and commercial real estate are somewhat synergistic.
“My assumption is that it’s easier and quicker for a residential tenant that’s renting to relocate as opposed to commercial tenants that have longer leases,” Ruoff said. “So there’s a longer time line, a longer cycle from commercial tenants and as you get into the midsize and larger companies they’re doing studies. Many of these companies are in the middle of the research portion and these studies take a long time to figure out what to do and they’re not complete yet.
“As these studies get completed and they figure out what’s best for them, is the redistribution of their employees to the suburban markets the best plan for them, we’re going to see more happening. So, even if we haven’t seen it yet, it’s entirely possible that we’re going to see more going forward and some of that ‘more’ could be on a pretty large scale.”
Gibbons said that her office has added economic recovery from the pandemic to its core task of promoting economic growth by attracting existing businesses to the county and helping new businesses get started. A consultant’s report finished in October identified three areas for her office to focus on. These were biosciences, advanced manufacturing, and financial services.
“We’re going to be establishing industry desks, a biosciences desk, a fintech desk and an advanced manufacturing desk,” Gibbons said. “What that means is that we will have resources to support businesses that want to relocate here or businesses that are here already in that sector and do everything we can to grow those sectors and connect them to each other and build the infrastructure.”
She pointed out that many people are attracted by the lower overall density and greater parks and open space found in Westchester as compared with New York City.
Adler said that over the nearly four decades that Rand Commercial has been active in the region it has seen a consistent pattern of commercial real estate activity following whatever is happening to residential real estate activity.
“Westchester has experienced the best year it has ever had in terms of residential home sales, single-family home sales and even residential has done better than Manhattan in terms of rentals because the highest rental point in Westchester County doesn’t even compare with even almost the lowest point in Manhattan,” Adler said. “You can still have the urban flair if you want it.”
Adler suggested that the change in political leadership in Mount Vernon’s government is likely to lead to increased real estate activity in that city.
Ruoff said he has been working on a number of lease restructurings and renewals. He said he’s hearing mixed signals, with some clients and prospective clients telling him that the vaccine is going to lead to a pickup in the economy by summertime.
“Unfortunately, on the more pessimistic side, I’m hearing from a lot of people that they think its going to be more likely 4thquarter of ’21, kind of like what we were hearing last year, where everyone was expecting things to pick up in the summer, then it was pushed off to the fall and the winter and here we are now,” Ruoff said. “A lot of it really hinges on how well the vaccines get out there and the impact we see with those vaccines.”
Nichols said his impression and that of some clients of his law firm is that there are a lot of opportunities in real estate, especially for people who have spent the last few months sitting on the sidelines and being cautious when it comes to holding onto their cash and looking at deals. He said he’s gotten calls in the past two weeks from smaller developers looking to branch out. He also noted that interest rates are at historically low levels.
“I think you’re going to see a lot of investment specially in the housing area. Housing and retail. I think you’re going to see a lot. With respect to the retail all across the state, the country, it’s I’m sure going to be repurposed just like office was repurposed several years ago,” Nichols said. “So, I’m sure there are a lot of people keeping their eyes on that, seeing what happens to that retail.”
Schlisselfeld said that in his view the real estate basic of “location, location, location” is even more true now than ever. He said there are some great buying opportunities due to properties that have lost value.
“The landlords are doing OK. Not great but doing OK,” Schlisselfeld said.
