REAL ESTATE NEWS...Here’s what real estate experts are saying about Brexit

By Steve Cuozzo

Brexit sent British real estate markets reeling, but how it will impact New York is hard to predict.

A poll of leading power players found lots of high expectations, but with a few marked exceptions.

Douglas Elliman chairman Howard M. Lorber forecast, “New York City will move to the No. 1 global city in the world, a spot that London currently holds. In addition, because of Brexit, interest rates have dropped to 30-year lows, causing mortgages to also drop significantly, thus raising the value of both residential and commercial real estate.”

Developer Douglas Durst was most emphatically negative. He said, “The quick-buck types will extol the benefits of the flight of capital to New York, but as long-term players, we know that Brexit is bad for all.”

But Cushman & Wakefield dealmaking whiz Tara Stacom reflected ambivalence shared by many. On the one hand, she said, “New York may experience a bit more negative impact than the rest of the country due to the large concentration of European financial institutions here.”

Yet, she added, “The likelihood of sustained uncertainty in the UK and Europe will tend to push capital to the other markets and New York will definitely benefit.”

Here are edited versions of what some other big names had to say.

Developers and Landlords

Anthony Malkin, chairman and CEO, Empire State Realty Trust: “Brexit was likely good for England at large but very bad for London and the South which has become far more European in character and profited from Europe. London cannot be expected to remain the financial center of Europe outside the EU, and that probably speaks ill for London and well for Frankfurt, New York City, and Paris.”

Larry Silverstein, chairman, Silverstein Properties: “While uncertainty is never a good thing, many foreign buyers and investors are attracted by the stability and long-term potential of real estate in New York City.”

Eric Hadar, chairman, Allied Properties: “Global wealth has been transitioning to safe havens such as ultra-luxury New York real estate for the past 5-7 years. The more important question is the impact [the weakening pound] will have on tourism, a far more significant source of demand for the New York real estate market than flight capital.”

Gary Barnett, founder, Extell: “Brexit would only seem to make the US, and New York City in particular, even more stable and attractive to buyers and investors.”

Marc Holliday, CEO, SL Green: “It’s too soon to tell how the post-vote financial markets
reactions will play out over the longer term. Certainly, after the dust settles, London will still be London, but if a UK exit from the EU further strengthens New York’s already powerful world leadership position, we’ll be ready to take advantage of that.”

Rob Speyer, CEO, Tishman Speyer: “If there is a long-term effect, it will likely be highly positive for New York, as it will make the city even more attractive than it already is to commercial and residential investors. Our public and private sectors have consistently exhibited a determination to accommodate growth by investing to re-create such neighborhoods as the Far West Side, Long Island City and Downtown Brooklyn.”

William Rudin, CEO, Rudin Management: “Our competitive advantages consistently make real estate here an attractive investment. As the economic uncertainty surrounding Brexit grows, investors worldwide will continue to turn to New York as a safe haven. However, our economy is inextricably linked to the global economy, and in the long run, we benefit more from global stability than instability.”

Billy Macklowe, CEO, William Macklowe Co.: “New York has shown tremendous resiliency in the face of global volatility and continues to present itself as a safe-haven market. Given the issues around Brexit, additional inflows of capital and investor interest should increase.”

Investment Sale Specialists

Doug Harmon, Eastdil Secured: “A less competitive London does boost Wall Street and New York real estate, allowing NY to gain a larger share of the investor spotlight, which it has shared with London over the last decade.”

Ron Cohen, JLL Capital Markets: “Equity will keep flowing into the US to seek safety. New York City will further enhance its position as the world’s financial capital despite a potential recession and short-term corrections in the commercial and residential sectors.”

Leasing Brokers

Stephen B. Siegel, CBRE: “When there is significant uncertainty for the direction of capital, capital seeks a stable investment market and the US and New York in particular represent that stability. The same can be said for corporate expansions. Those considering the UK will focus elsewhere. New York will benefit by the increased investment and absorption resulting in increased values.”

Peter Riguardi, JLL: “Like many events over the last 20 years, the market seemed to make their adjustment [to Brexit] and rebound. Long-term, I think the NY/London markets will see little effect.”

Mary Ann Tighe, CBRE: “In uncertain times the fundamentals always reassert themselves. Capital needs to move, and in a global, low-interest rate environment, capital will move toward safety. I think that a combo of stable currency, barriers to entry, rule of law, and big money deals galore will be the post-Brexit cocktail of choice for deal makers. Sounds like a Manhattan to me.”

Hotel Specialists

Sean Hennessey, CEO, Lodging Advisors: “Brexit has caused a reduction in the value of the pound relative to the dollar and the pound is expected to get weaker still. This will discourage inbound visitation from Great Britain. Since the UK is one of the most important sources for tourist visitation to New York City, it’s a cause of concern.

Ian Schrager, partner in Edition by Marriott Hotels: “It’s too early to tell. There is an uncertainty. I believe it will help the residential market, but for the hotel market, it’s just too soon now and I’ve heard arguments both ways.”