It’s not hard to spot a mullet in the lobby cafe of the WSA building.
One man sporting a blonde mini-mullet bounces past another — dark-haired half-mullet — leaning back in his chair, sporting AirPods and a red puffer jacket, facing the rack of artfully arrayed fashion and design magazines.

These people, Vanessa Low Mendelson says, pointing around to those milling about the cafe, are evidence of the resurgent and hip FiDi. Mendelson, the sales director at 77 Greenwich Street, has a vested interest in the attractiveness of the neighborhood. In certain respects, the area is thriving.

Large office-to-residential conversions have filled up quickly, spurring more development and even more conversions. The area’s population has nearly tripled this decade. There’s a new Whole Foods!

It is no longer the dominion of suit-and-tie-wearing financiers that flee the scene once they punch their timecard.

“This neighborhood is cool,” Mendelson exclaimed at one point during a walk-through of the 89-unit building.

But cool — of the mullet-sporting, canvas bag-toting variety — may not be synonymous with six-figure downpayments that brokers like Mendelson need to fill their buildings.

FiDi has for years counted the most new development inventory of any neighborhood in the city. An analysis of public records by The Real Deal found the area’s unsold buildings account for over 20 percent of Manhattan’s unsold units and over 10 percent of New York City’s unsold units. That excludes buildings that haven’t begun closings, like the long-awaited 272-unit tower
overlooking the site of the former World Trade Center.

The disparity has only grown in recent years. As of the end of 2024, FiDi had more unsold new condos than the rest of all of Manhattan below 34th Street combined — the first time that has happened since 2012, according to data from Corcoran Sunshine Marketing Group.

The explanations are, as often is the case in New York real estate, myriad. The 654-foot-tall elephant in the room, Harry Macklowe’s One Wall Street, contributes an outsize portion of the unsold units.

But conversions like LCOR’s Broad Exchange and shiny developments like Trinity Place Holdings’ 77 Greenwich Street still have a sizable chunk of places to move, and even well-regarded projects like Lightstone Group’s 130 William Street are not completely sold out.

Then there are the projects that have languished, like Fortis Development’s 161 Maiden Lane, or until recently, the Rafael Viñoly-designed tower at 125 Greenwich Street.

The FiDi construction boom came as sales were already spiking in the mid-2010’s, and the resulting projects that launched have been the core of the city’s already anemic condo inventory. But as hundreds of units in the area continue to wither on the vine and the city’s pipeline looks dry for years to come, the pressure is on for these closely watched addresses and the answers they hold for the next wave of new development.

A neighborhood with promise
For most of the 21st Century, the Financial District, with its cornucopia of Art Deco buildings and relatively cheap land, has proven irresistible to developers.

Large conversions at 15 Broad Street and 20 Pine Street showed circa 2008 that condos in the area could sell as a value proposition. Following the financial crisis, construction slowed across the city and it was not until the mid 2010s condo boom that sizable projects returned to the area. And once they started, they didn’t stop.

Towers Time Equities’ luxury tower at 50 West Street and the Beekman Residences by GFI Development Company and GB Lodging brought around 250 units to the market as the first
wave of successful larger new developments.

“There was a bit of a divergence in thinking where some developers saw the neighborhood trending up and tried to push pricing, while others met the market where it was at.”Corcoran Sunshine Marketing Group’s Ryan Schleis

The two buildings scooped up contracts on over 50 percent of their units by 2015, but by 2017, the 191-unit 50 West landed a fresh loan secured by its 46 unsold condos, which ended up being used as rentals for the time being (many of those units still have not been sold, according to public records and recent StreetEasy listings).

For most of the 21st Century, the Financial District, with its cornucopia of Art Deco buildings and relatively cheap land, has proven irresistible to developers.

Large conversions at 15 Broad Street and 20 Pine Street showed circa 2008 that condos in the area could sell as a value proposition. Following the financial crisis, construction slowed across the city and it was not until the mid 2010s condo boom that sizable projects returned to the area. And once they started, they didn’t stop.

Towers Time Equities’ luxury tower at 50 West Street and the Beekman Residences by GFI Development Company and GB Lodging brought around 250 units to the market as the first
wave of successful larger new developments.

“There was a bit of a divergence in thinking where some developers saw the neighborhood trending up and tried to push pricing, while others met the market where it was at.”Corcoran Sunshine Marketing Group’s Ryan Schleis

The two buildings scooped up contracts on over 50 percent of their units by 2015, but by 2017, the 191-unit 50 West landed a fresh loan secured by its 46 unsold condos, which ended up being used as rentals for the time being (many of those units still have not been sold, according to public records and recent StreetEasy listings).

Wrong price, wrong time

The screws on many of these projects were still turning when the condo market began to sour. After three straight years of growth, Manhattan condo sales dropped 20 percent in 2018, before falling off a pandemic-induced cliff in 2020, according to data from Miller Samuel. In the Financial District, 2016 saw 385 closed sales at an average price per square foot of $1,888 — numbers that fell precipitously the following year.

“When they penciled and wrote those checks, it was pre-pandemic and the world and the city looked a little different back then,” said Compass’ Vicky Barron, who at one point worked on sales at 100 Barclay Street. “Then there’s so much that came to market.”
While developers trying to catch a wave launched buildings around the city through the mid- to late-2010s, the density and scale of the projects in FiDi is relatively unrivaled for that time period.

But the frenzy to develop Lower Manhattan has led to self-cannibalization — the returns and prices developers thought they could get may not have accounted for the amount of supply building up at the same time in the same place.

“There’s more development sites, more opportunity — but absorption rates are challenged by the fact that there’s this constant supply of new product entering the market,” Miller said.
Even then, developers may have overestimated how far they could push prices in an area that has been claiming to be “revitalized” for almost two decades. Barron said one developer previously likened Park Place to the uptown enclave of a similar name.

“It’s not Park Avenue,” she said.
“There was a bit of a divergence in thinking,” said Corcoran Sunshine Marketing Group’s Ryan Schleis, where some developers saw the neighborhood trending up and tried to push pricing, while others met the moment in the market.

One Wall, Harry Macklowe’s hulking obelisk at the epicenter of Wall Street, stands out as a poster child of what has turned out to be wishful thinking. The 566-unit office-to-residential conversion hit the market asking on average over $2,400 per square foot, with many units pushing $3,000.

It remains unclear how much leeway Macklowe has on pricing after sinking at least $2.6 billion into the project, but the units that have moved have been more in line with area norms — around $1,900 per square foot, according to Marketproof.

Of the 130 units sold or in contract, 103 are studios or one-bedrooms, and One Wall has moved nearly half of its studio stock while two-bedrooms are 13 percent sold and three-bedrooms just 5 percent sold. The building hasn’t sold a single unit above the 34th floor, where the price per square foot is generally higher.

At 77 Greenwich, no studios are still on offer, and the property has sold or put into contract around 60 percent of its 89 units for an average price per square foot of around $1,800. “Demand in the neighborhood is not as deep for three and four bedrooms as it is in Tribeca or the Upper East Side,” Schleis said.

Projects considered to be selling at a better clip, like the 242-unit tower at 130 William Street and the 110-unit conversion at 25 Park Row, benefitted from having fewer units to move and launching before 2020, despite both seeking over $2,000 per square foot.

“Developments in the Financial District have been very aggressive with their pricing, and that’s why they’re not selling,” said Platinum Properties’ Khashy Eyn.

Shlomi Reuveni, who took over sales at 77 Greenwich Street last year, said that even if the price per square foot is reasonable, condo conversions can end up with massive apartments because of their deep floor plans. “Even at the same price per square foot, your price point is very high,” he said.

Renters, for now
Just around the corner from One Wall, 25 Broad Street has flipped rentals to condos at a humble $1,200 per square foot and sold nearly two-thirds of the 308-unit building. “Those boxes are checked for a certain demographic, looking for either studios, one-bedrooms or small two-bedrooms,” said Reuveni, who also took over sales at the LCOR development in 2023.

“All you have to do is take a walk down Broad Street at 12 or 1 o’clock in the afternoon, and you’re not seeing the same suit-and-tie wearing professionals,” Reuveni said.

For those laser-focused on the Lower Manhattan condo market, the half-filled towers dotting the area might spell doom and gloom, but the success of the area’s rental projects shows people do want to live there, even if they don’t yet want to take out a mortgage.

Vanbarton Group’s 160 Water Street, which was just completed this year, has 99 percent of its 588 units leased, according to NY Yimby. Metro Loft’s conversions at 20 Broad Street and 180 Water Street both have occupancy rates above 95 percent across their more than 1,000 units.

Rental units likely appeal more to the 18- to 35-year old cohort, which makes up a third of Lower Manhattan’s total population, according to Downtown Alliance president Jessica Lappin.

Developers have taken note, according to Lappin, and the current pipeline has reversed the 2010s condo craze — 70 percent of the 8,000 planned units in the area are now rentals.

While the turn to rentals might seem foreboding for the developers sitting with empty condos, the population influx should only help over time.

“The rental market sometimes gets hotter first, because people move down there, they rent for a year or two, and then they buy,” Pappas said. “The slowness is just part of the way that the city develops as these different areas become more of the ‘residential hotspots.’”

In the meantime, some buildings are taking part in the time-honored tradition of renting out vacant units. One Wall has a number of apartments listed on StreetEasy, including two recently rented three-bedrooms.

At 77 Greenwich, the tide is already starting to turn. All four of the building’s four-bedrooms have sold, according to Reuveni, and the team is now looking to combine units to meet the uptick in demand for larger spaces. (It likely has not hurt that since taking over the project, Reuveni has dropped the price on several units by as much as 30 percent from the original offering plan, according to StreetEasy.)

Even the closely-watched One Wall has started selling over two units in each of the last six months, according to Marketproof. (That pace still places sellout in 2040).

But perhaps the most important factor is that the market is starting to turn. Last year, new development contracts beat the city’s 10-year average, and Miller said there’s “probably more optimism” now than in recent years.

That is all lenders need to give projects in the area a little more time: Macklowe secured a $665 million refinancing at One Wall and Trinity Place Holdings extended its debt on 77 Greenwich earlier this year.

The latest Downtown litmus test is the long-stalled, now-restarted luxury supertall at 125 Greenwich Street, which just announced the completion of its top-floor amenities suite. At a party celebrating the reveal of the city’s highest gym and pool, Douglas Elliman’s Stacy Spielman said the 272-unit building was on track to begin closings this spring.

In the meantime, the development team is looking to refinance its existing $313 million construction loan, a bid on the sense of renewed optimism in the FiDi condo market.

“You don’t want to be caught coming to market in a three-year stretch where it wasn’t the best,” Pappas said of lenders’ willingness to work with developers. “At the end of the day you missed the next cycle of velocity, which I think we’re about to hit.”

https://therealdeal.com/new-york/2025/03/13/fidi-condo-development-boom-sales-nyc-supply/

After nearly half a decade of COVID stagnation, morale will be boosted as fresh, high-tech developments that will reshape NYC’s skyline are closer to reality. They’re adding sorely needed housing and new trophy commercial office space.

“The sense of stability by having a new president helps the market and it helps that the next president, Donald Trump, is in real estate,” said Adelaide Polsinelli, a commercial broker with Compass. “It has infused a lot of confidence in what’s to come in 2025.”

Look out for 942-new apartments to be built within 5 Times Square — many of which will have a bird’s-eye view of the Ball Drop Building and the tourist-filled Bow Tie.

It’s a complex project being undertaken by architect Dan Shannon’s firm MdeAS, which is also converting buildings like the landmarked 140 W. 57th St. It will transform from boutique offices into condominiums for the Feil Organization — something considered since Feil bought it in 2016.

“It is a major financial investment to convert in this market,” said Shannon. “We’ve probably looked at easily 15 and I don’t think there is an owner that hasn’t looked. Some pencil out, and some don’t.”

Once artist studios before becoming offices, construction on the project near Carnegie Hall will start during the first quarter of this year with sales to begin in the second half of 2026.

“There’s a need to address the buildings that are becoming competitively obsolete, to repurpose them for other uses and to ensure that we have vibrancy in each of our CBD submarkets,” said Scott Rechler of RXR.

“We are looking forward to delivering 47 new residential units along the famed Billionaires’ Row corridor,” said Brian Feil. “As the need for housing continues to rise, we are confident residential is the best use for this building.”

In another potential conversion, embattled developer Charles Cohen wants to create 172 units within the 27 upper floors at 623 Fifth Ave., which rises above and is connected to Saks Fifth Avenue. Cohen’s family-owned firm is also planning to demolish a squat, nine-story office building at 3-15 E. 54th St. and likely rebuild as condominiums.

Over at 830 Third Ave., 188 residential apartments will replace office space, while Quantum has teamed up with Metro Loft Management to convert 767 Third. Rudin is also eyeing a conversion for 845 Third. And finally, SL Green is expecting to spend $805 million on 750 Third to convert it to 639 apartments with 25% affordable units under the new 467-m abatement program.

“There’s a need to address the buildings that are becoming competitively obsolete, to repurpose them for other uses and to ensure that we have vibrancy in each of our CBD submarkets,” said Scott Rechler of RXR.

With the new “City of Yes” rezoning, investors and converters are focused on Midtown South where many are empty and no longer attract office users.

“I get calls every three days about office-to-residential conversions,” said Shaun Pappas, a partner attorney with Starr Associates. “It’s such a hot topic.”

There are other, even larger projects on the horizon.

Sedesco is gearing up to build a 1,100-foot-tall luxury skyscraper on Billionaires’ Row at 41 W. 57th St. with Related planning another, reaching 1,200 feet at 625 Madison. Work will be starting on the ramps for a redesigned Port Authority Bus Terminal on West 42nd Street that a decade from now could be topped by two office towers.

The state has tapped Boston Properties (now BXP), along with BRP Cos., the Moinian Group and Urbane Development to build a new $1.35 billion, 28-story Hilton conference center at 418 Eleventh Ave. across from the Javits Center that will include a 72-story building with 1,400 apartments, of which 404 will be affordable.

To also service the convention center, Marx Development is already completing a 51-story, 379 room Marriott hotel at 450 Eleventh Ave. that will reflect light from its Rubik’s Cube-like façade.

A city proposal to develop a 600-foot-tall, mixed-income apartment tower with expansion space for the Whitney Museum and offices for Friends of the High Line in the Meatpacking District. It will have sweeping views of the Hudson River, but it’s already getting backlash from NIMBYs in
this YIMBY economy.

Further downtown, Brookfield and Silverstein Properties will also develop a new 5 World Trade Center mixed-use building with housing. And if his prayers are answered, Larry Silverstein could start on the office building at 2 World Trade Center with American Express as its anchor tenant.

And, of course, there’s also a new soccer stadium and surrounding buildings coming to Queens courtesy of Related and Sterling Equities. Etihad Park is being built for the New York City Football Club on a 23-acre site at Willets Point that will include a new 650-seat public school, 2,500 units of all-affordable housing, a new hotel, retail and lots of green space.

“Since the election we are all feeling a blanket of confidence has been thrown on everyone — even the Democrats,” said residential broker Vickey Barron of Compass.

https://nypost.com/2025/01/16/real-estate/a-look-at-the-latest-crop-of-towers-rising-in-nyc/

As the managing partner at the New York real estate law firm Starr Associates LLP, Samantha Sheeber is well-informed about the city’s current housing market and has a perspective on its trajectory in the years ahead.

Sheeber specializes in structuring commercial, residential and mixed-use condominium projects and advises several of New York’s most prominent developers and investors on acquiring and financing their projects. She has been tasked as the lawyer on prestigious condominium developments such as One Wall Street, 520 Fifth Avenue, 111 West 57th Street and 15 Central Park West.

Sheeber, 56, recently spoke to Mansion Global about the city’s residential projects with the most traction, advice for buyers in new developments and how the recent elections may impact the city’s housing industry.

Mansion Global: The new development market in New York City has slowed down. What types of projects are moving ahead?

Samantha Sheeber: While the numbers may say otherwise, we have seen an uptick in sales for luxury development rehabilitation projects [historic building conversions, for example] over the past six months. In 2023, our firm closed approximately 750 new development rehabilitation projects, and it looks like we will surpass that number by year-end. Some larger rehab projects, such as One Wall and 111 West 57th Street, have seen significant activity over the past few months. New developments, including 520 Fifth Avenue and the Surrey, have also seen tremendous success.

How are developers getting creative in carving out amenity spaces within these conversions?

A popular trend among developers, as well as restaurateurs throughout the city, is to structure their amenity spaces as a social/member club by creating a separate nonresidential condominium unit to house some or all of the condominium’s amenities.

How do you assess a developer’s ability to deliver a quality product?

A successful track record is key. This assessment includes looking at the number and success of past projects, the description of the finishes and appliance brands to be delivered as part of the building’s construction (this can be ascertained via the offering plan, which contains details regarding the building’s construction), and the developer’s reputation among industry
professionals.

What new changes affecting the New York market should luxury buyers be aware of?

A change luxury buyers should be aware of is the City of Yes initiative, which may result in greater development opportunities. This broad initiative plans to reform and modernize the city’s zoning laws to support small businesses, create affordable housing, and promote sustainability. The City Planning Commission recently approved a City of Yes proposal known as the Housing Opportunity, which is pending a final vote.

What neighborhoods are hotbeds for residential conversions, and does proximity to Class A office space impact the locations developers choose for sites?

In terms of office-to-residential conversion, the locations that developers choose vary, depending on various factors. Neighborhood is certainly one and helps developers determine the price per square foot that can be achieved, but unfortunately, so much of the current site selection for these conversions is dictated by the ability to comply with zoning requirements (such as light and air requirements for residential dwellings)

Where are the wealthiest buying New York real estate right now?

Some of the wealthiest buyers can be found vying for the latest and biggest new development on Billionaires’ Row. However, we have also found that some of the wealthiest prefer a more boutique or individualized experience and seek buildings that contain fewer units but the same high-end amenities found in the larger new developments.

How does the Brooklyn market compare to Manhattan regarding quality and price?

The Brooklyn market has historically been seen as a more affordable alternative to the Manhattan market, and while this remains true today, that distinction is rapidly blurring as luxury condominium development in Brooklyn is on the rise. The biggest talking point for Brooklyn right now is inventory. Pricing in Brooklyn keeps going up, as we have seen in our Brooklyn projects,
which have been filing price-change amendments with increased pricing.

How will the recent U.S. election impact the city’s real estate market?

Some of [President-elect Donald] Trump’s policy proposals that may impact the market are deportations, regulation cuts, and federal land regarding the luxury real estate market. Others speculate that Trump’s pro-business agenda and fewer regulatory hurdles will result in a more favorable perception of the market from the perspective of buyers and investors and create a supportive landscape that may encourage new development.

https://www.mansionglobal.com/luxury-real-estate-news/the-insiders

On December 5, 2024, the New York City Council adopted an amendment to New York’s zoning laws known as City of Yes: Zoning for Housing Opportunity (“COYHO”). This landmark update overhauls the 1961 zoning regulations, which have long been criticized for contributing to housing shortages, inflating housing prices, and both creating oversaturated neighborhoods while stunting development in underutilized areas. The stated goal of COYHO is to enable the creation of over 80,000 new homes by 2040, supported by a $5 billion commitment from the New York City Council. COYHO aims to achieve these ambitious objectives through various measures including incentivizing affordable housing construction, loosening restrictions on what qualifies as legal dwelling spaces, and reducing barriers like outdated parking mandates. Details of the various components of COYHO, including an illustrated guide and other informational materials, can be found by accessing New York City Department of Planning’s website (available here).

The adoption of COYHO signals a promising future for condominium, co-operative, and HOA development in New York City. The initiatives encouraging office-to-residential conversions would potentially open up entire neighborhoods for conversions to residential condominiums and co-ops. “Mixed use” condominiums may also see a significant increase in inventory due to COYHO’s incentives for constructing residential units above commercial spaces, especially in areas near transit lines that may be highly marketable to commuters. The elimination of parking mandates and the broader definition of legal dwelling spaces introduce much-needed flexibility that could redefine how new developments are designed.

Our team at Starr Associates is encouraged to see city officials promoting creativity and adaptability in their approach to our ever-expanding and changing city. COYHO represents a shift towards a more inclusive and forward-thinking vision for urban growth, emphasizing innovation to meet New York City’s evolving housing needs.

On December 5, 2024, the New York City Council adopted an amendment to New York’s zoning laws known as City of Yes: Zoning for Housing Opportunity (“COYHO”). This landmark update overhauls the 1961 zoning regulations, which have long been criticized for contributing to housing shortages, inflating housing prices, and both creating oversaturated neighborhoods while stunting development in underutilized areas. The stated goal of COYHO is to enable the creation of over 80,000 new homes by 2040, supported by a $5 billion commitment from the New York City Council. COYHO aims to achieve these ambitious objectives through various measures, including incentivizing affordable housing construction, loosening restrictions on what qualifies as legal dwelling spaces, and reducing barriers like outdated parking mandates. Details of regarding the various components of COYHO, including an illustrated guide and other informational materials, can be found by accessing New York City Department of Planning’s website.

The adoption of COYHO signals a promising future for condominium, co-operative, and HOA development in New York City. The initiatives encouraging office-to-residential conversions would potentially open up entire neighborhoods for conversions to residential condominiums and co-ops. “Mixed use” condominiums may also see a significant increase in inventory due to COYHO’s incentives for constructing residential units above commercial spaces, especially in areas near transit lines that may be highly marketable to commuters. The elimination of parking mandates and the broader definition of legal dwelling spaces introduce much-needed flexibility that could redefine how new developments are designed.

Our team at Starr Associates is encouraged to see city officials promoting creativity and adaptability in their approach to our ever-expanding and changing city. COYHO represents a shift towards a more inclusive and forward-thinking vision for urban growth, emphasizing innovation to meet New York City’s evolving housing needs.

The board of our NYC co-op building was served with a lawsuit. I informed our insurance company, property manager, and attorney, but does our board need to tell shareholders as well?

Answer: There are a few circumstances where shareholders need to be informed about a lawsuit filed against board members, but there’s a limit to how much information your board may want to share.

Typically, a lawsuit would need to be noted in the annual financial statements of a condo or co-op, said Samantha Sheeber, managing partner at law firm Starr Associates. That disclosure could lead to questions from shareholders, so it might be wise to have your building’s attorney briefly explain that lawsuit during your annual meeting.

There’s an added benefit to addressing a pending lawsuit, even briefly. Court documents are accessible online, and there’s little to stop a shareholder—or enterprising journalist—from taking a look if it’s a juicy case. By making a statement, your attorney can put the kibosh on building gossip.

“When a litigation is filed it becomes public record,” said Andrew Freedland, a partner at law firm Herrick Feinstein. “Somebody is going to find out about it and that’s when I find there’s a rumor mill in co-ops and condos. People start chattering.”

Freedland said that he commonly tells shareholders and owners that there is litigation at the annual meeting, and adds that he can’t disclose much more than that during an ongoing case. That tends to shut down the rumor mill, he said.

Residents could also uncover pending litigation by looking through board minutes—and so can prospective buyers. A buyer’s attorney will likely be scouring through your building’s minutes to see if there are any lawsuits that could lead to an assessment down the line, and your property manager would need to disclose that information when asked on a buyer’s questionnaire, Sheeber added.

For more serious and money matters

Speaking of assessments, your board should absolutely inform shareholders if it plans to institute an assessment to pay for ongoing litigation, Sheeber said. Lawsuits that could result in an assessment, or threaten residents’ ability to occupy their units, should be disclosed, she added.

For example, if your insurance company says it won’t cover the cost of litigation for whatever reason, “then the board is most definitely going to have to notify the unit owners that there is this action pending, it’s being defended, and the costs may have to be borne by the unit owners,” Sheeber said.

“It will probably be in the best interest for the board to notify in that instance, because they don’t want for it to be determined that they withheld information that was necessary,” she added.

Ultimately, your board should lean on your attorney to ensure that you’re meeting your obligations to your shareholders or owners, Sheeber said. (So you’ve done the right thing by telling your attorney about the lawsuit, and your property manager and insurance company as well.)

“The board has to determine, mostly with their counsel, what’s in the best interest of the unit owners, and have I met my fiduciary obligations in terms of disclosures,” Sheeber said. “It is not black and white. You want to make sure you are adhering to your fiduciary duties.”

https://www.brickunderground.com/buy/does-nyc-co-op-board-need-to-tell-sharehoders-getting-sued

A wave of scandals did little to slow former President Donald Trump’s momentum on Tuesday night, making the Republican the presumptive president-elect once more.

While analysts and social commentators try to reverse-engineer how the Democrats and Kamala Harris’s efforts for the White House fell so far short of their goals — handing Trump both the electoral college and the popular vote in preliminary estimates — leaders in commercial real estate are seeing potential.

This boded well for the real estate market, especially with the Federal Reserve expected to cut interest rates another 25 basis points on Thursday.

“With the election results settled, the real estate market will benefit from the reduction in uncertainty,” Adelaide Polsinelli, vice chair of Compass, said in an email. “Lower capital gains taxes, which Trump has previously supported, could encourage more frequent buying and selling, potentially increasing transaction volume across residential and commercial real estate.”

If successful, Trump’s proposal to raise import tariffs by 10 to 20 percent is seen as a sign that industrial real estate could have another wave of success in the industrial market as companies seek to reduce the increased cost of overseas manufacturing.

“Trump’s long-standing advocacy for bringing manufacturing back to the U.S. suggests a likely boost in demand for industrial spaces like logistics hubs, warehouses and manufacturing facilities, as companies may need more space to accommodate domestic production and distribution needs,” Polsinelli added.

The stock market already reacted with enthusiasm to Trump with share prices spiking and the Dow Jones Industrial Average gaining 1,508 points, amounting to a 3.57 percent one-day increase.

Briggs Elwell, CEO and co-founder of RLTYco, which provides financial and tax services to real estate clients, sees the stock and bond markets’ spike as a temporary bump, and the real cash is expected to flow later on in more sustainable ways.

“At the end of the day, when you take out all the emotion and you exclusively look at the financial components of the election, the markets are saying that this is a positive for real estate,” Elwell told CO. “Knee-jerk reactions happen, but the reality is that the frontrunner that’s driving the market surge are the banks, and they’re banking on the fact that under a Trump administration you have a trend towards lower rates, and you’re going to have less regulation at
the end of the day.”

Wednesday morning saw Trump with a 5 million vote lead in the national tally, which would be the first time since 2004 a Republican won the popular vote. And Democrats lost control of the U.S. Senate and may have lost their chance at the majority in the House of Representatives, creating a scenario reminiscent of Trump’s victory in 2016.

Leland Collins of FTI Consulting sees the first year of Trump’s new administration dealing with tax matters, mostly related to the Tax Cuts and Jobs Act (TCJA), also known as the “Trump tax cuts,” which were enacted in 2018 but are set to expire in 2025.

“Real estate’s in a really precarious spot here,” Collins said in an interview. “I will caveat everything by saying that we don’t know the House right now, and the House really will propel how much of his policy that we’ve been hearing from Trump actually gets enacted. What I’ve been hearing from my D.C. colleagues is that 2025 will be all about tax.”

Collins’s colleagues and clients were concerned about tax increases, such as carried interest from capital gains rather than a simpler and lower income tax, if Harris won the election.

“There was a lot of discussion from Democrats about increasing, or rather limiting, how much carried interest could be classified as long-term capital gains,” Collins said. “And, in fact, there was discussion about changing that to always being ordinary income, without any kind of reference to a holding period like it currently is. Now that obviously would impact private equity
and asset managers quite a bit.”

Now, those changes may no longer be on the table. Trump has not made any tax proposals, and Collins is still waiting for the 100-day plan that usually is released by a president-elect closer to inauguration.

“I will say that the corporate tax rate increases that were being discussed are really probably off the table at this point,” Collins said. “So, for tax rate increases, those are things that I don’t expect clients to have to worry about going forward. … It should spur investment into U.S. real estate and other types of private equity funds, because tax rates are lower.

“I do see this as being positive, and not to mention it takes a lot of restructuring off the table that clients would have had to consider,” Collins added.

Tali Berzak, a broker also with Compass, foresees investors eventually taking money out of the stock market and deploying it into something more stable, like real estate.

“I can tell you that almost all the people that I work for were hopeful for [a Trump] administration, and I think some of that has to do with their perspective on how that will help the buyer and investor pool,” Berzak said. “There’s something about a Trump administration where you’re not
exactly sure what his policies are, and they’re not always overarching concepts. Sometimes they’re more haphazard. Because of that, the stock market can yo-yo a bit, and so investors might make a decision to park their money in an asset versus keeping everything in the market.”

By midmorning, however, real estate stocks were not flourishing with the rest of the market. For instance, CBRE was down 2.6 percent, Cushman & Wakefield dipped slightly by 0.1 percent, Newmark fell 2.4 percent and JLL dropped 5.4 percent, SeekingAlpha reported.

Residential brokerages saw the steepest drop with Redfin dropping by 3.5 percent, Zillow by 5.5 percent, Compass by 7.1 percent and Opendoor Technologies by 4.4 percent.

However, the stock drop might not be hurting some in the industry who are expected to benefit from a Trump presidency.

Alexander Goldfarb of investment bank Piper Sandler argued to Crain’s New York Business that real estate could get a “lighter regulatory touch” under a Trump administration, and it could be especially helpful for Newmark CEO Barry Gosin.

Howard Lutnick, the executive chairman of Newmark, is the co-chair of Trump’s transition team. Lutnick taking a more full-time job with the future administration could give Gosin a freer hand in running Newmark.

“Barry and Howard have a wonderful relationship and built a great firm,” Goldfarb said to Crain’s. “But the time might be right for a change.”

Shaun Pappas, an attorney from Starr Associates who represents developers like Harry Macklowe, Michael Stern of JDS Development Group and Taconic, believes that many investors have been holding back on making big decisions until the election was over. Regardless of how the chips fell, commercial real estate investors will be acting with a sense of stability.

“There’s a perception of Trump being good for real estate — obviously, it’s where he came from — and I think that people have been hesitant to jump back into the market over the last six months based on the election,” Pappas said. “I think now we’re at a point where we know what we’re in for, and, whether you like it or not, or whatever your political leanings are, at least you
have a foundation of stability and knowing who’s going to be in charge.”

And it’s kind of like the “devil you know,” since Trump already served in the White House.

Adam Henick of Current Real Estate Advisors believes, like Pappas, that the market would have seen a post-election rebound no matter which “devil” the Electoral College selected.

“I think that with everyone’s political views aside, having the election in the background and behind us is a very healthy step for all markets here — not only commercial real estate leasing markets, but financial markets as well,” Henick said. “Markets like certainty, and I think that’s the news we got on election night as the results rolled in.”

Commercial Real Estate Has High Hopes for President Trump, Part II

After years of saving for a down payment, Hamza Sheikh was ready in 2022 to buy his first home—a one-bedroom apartment in Manhattan.

Sheikh, who is in his early 30s and works in technology, was “dead set” on paying less than $1 million, according to his real-estate agent, Phillip Salem of Compass. That’s because New York charges a so-called mansion tax for properties of $1 million or more, meaning he would have to pay an additional 1%, or at least $10,000, in cash at closing.

“It wouldn’t have been a total deal breaker,” says Sheikh, who likely would have borrowed the extra cash from his family. But avoiding the tax “made the whole process a lot more feasible.”

They focused on apartments priced around $1.1 million, seeking sellers who might be willing to go below $1 million, Salem said. Eventually, they found a Chelsea condo asking $1 million; Salem negotiated the price down to $995,000, and they made a deal.

Mansion taxes—shorthand for taxes on high-end real-estate sales, usually in the form of a one-time payment at closing—are becoming more common as cash-strapped local governments look for new funding sources. In New York, buyers typically pay the mansion tax; in other markets, like Los Angeles and San Francisco, sellers are usually on the hook to pay such fees. Often popular with voters, these taxes face vehement opposition from the real-estate industry and business groups, who say such measures will cripple the residential real-estate market.

The impact is often much more nuanced.

The data show that new mansion taxes tend to have a significant but short-term impact on the number of home sales, creating a rush of deals before the tax goes into effect and suppressing transactions for several months afterward. Then, the market begins to normalize.

Take Los Angeles, for instance. Since its new mansion tax, called Measure ULA, went into effect in April 2023 to raise money for affordable housing and homelessness prevention, the controversial law has been widely blamed for tanking the city’s high-end housing market. ULA required the sellers of residential and commercial properties above $5 million to pay a 4% tax,
while the sellers of properties of $10 million and up paid 5.5%. (The thresholds are adjusted for inflation each year.)

“In L.A., the luxury home market hit a wall,” said California spec-home developer Simon James. “A lot of it had to do with ULA.”

The first month the law was in effect, the number of L.A. property sales over $5 million plummeted to four from 90 the previous month, according to data compiled by real-estate appraiser Jonathan Miller. What happened, he said, is that sellers rushed to close deals before ULA took effect. “There was a heightened frenzy in the buildup to that tax being implemented,” he said.

The number of high-end sales stayed low for several months as many owners delayed putting their homes on the market in hopes that ULA would be repealed or altered, local agents said.

That was the case for entrepreneur David Alexanderian, who completed a six-bedroom spec house in L.A.’s Bird Streets in 2023. “I waited for six or seven months” to put it on the market, he said. Eventually he gave up on the law being repealed and listed the home for $24.5 million.

When the roughly 11,000-square-foot house, which has a massage room and putting green, sold in August for $21 million, Alexanderian had to pay a total of about $1.25 million for the mansion tax and transfer tax, significantly cutting into his profit, he said. “This is a very unfair tax,” he said, vowing not to do any future projects in L.A.

Gradually, the number of high-end sales in L.A. has crept back up. In July 2024, the city saw 25 home sales over $5 million, more than double the number in July 2023 and down slightly from July 2022.

“Initially, people didn’t know what to do—it was so jarring,” L.A. Compass real-estate agent Tomer Fridman said of ULA. These days, the tax is more likely to play a role in negotiations, with buyers and sellers sometimes splitting the tax. “Now, it’s a conversation to be had.”

L.A.’s high-end market is still contending with high interest rates, spiraling fire-insurance costs and a general slowdown in housing sales across the country.

The lasting impact of mansion taxes tends to be with deals right around the price thresholds for when the taxes kick in. Some buyers, like Sheikh in New York, take pains to minimize or avoid paying such fees. In New York, that means plenty of $995,000 or $998,000 price tags, said real-estate agent Leslie Hirsch of Christie’s International Real Estate Group.

Mansion taxes—some of which also apply to commercial transactions—have been present in some areas for years: New York state in 1989 started requiring buyers to pay a flat 1% tax on any home purchase of $1 million or more. That has remained the starting point for the mansion tax since then, leading New Yorkers to complain that the name is deceptive, given that $1 million buys only a small apartment in Manhattan. “Someone from another country, when you
tell them about mansion taxes, they fall off their chair and say, ‘Have you seen a mansion?’ ” said longtime New York real-estate agent Leonard Steinberg.

Recently, more mansion taxes have been proposed or expanded as cities seek new sources of funding amid falling commercial property values and a significant decline in state funding since the 1970s, often coupled with state laws restricting other types of taxes.

“Local leaders are going to be put under immense pressure with few options,” said Richard Auxier, a state and local tax-policy expert at the Urban-Brookings Tax Policy Center. “You’re out of money—what else are you going to do?”

In 2019, New York City added a supplemental mansion tax for buyers of homes of $2 million or more, with increases at different price levels, up to 3.9% for homes of $25 million and up. In San Francisco, voters have approved four increases in transfer-tax rates since 2008; in 2020, they approved Proposition I, which doubled the tax rate for sales of at least $10 million, with the sellers of homes at $25 million or more now paying 6%. Not all have succeeded: Chicago’s Bring Chicago Home referendum, which sought in part to raise the city’s real-estate transfer tax on property purchases of $1 million and up, was defeated in March.

New York City’s mansion tax helps fund public transit, with the Metropolitan Transportation Authority collecting $345.1 million from the tax in 2023 for capital projects, according to an MTA spokesperson. In August, the MTA announced it would start selling debt backed by mansion-tax revenues to help raise $2 billion for infrastructure upgrades.

But most of the new measures around the country aim to address the housing crisis. The sharp jump in the homeless population, a shortage of affordable housing and increasing income inequality have helped sway public opinion in favor of mansion taxes in many places, said Peter Dreier, a professor of Urban & Environmental Policy at Occidental College who was involved in drafting Measure ULA.

Seven states, plus Washington, D.C., have a form of mansion tax, according to Kamolika Das, local tax policy director at the Institute on Taxation and Economic Policy.

“Taxing the people who have benefited the most from the real-estate boom—that’s a pretty attractive way of addressing the housing crisis,” Dreier said. After ULA passed, “we got a lot of calls asking, ‘How did you do it? Can we do it here?’ ”

In San Francisco, funds from Prop. I go into the city’s general fund but are intended for rent relief and affordable housing. Between January 2021 and March 2024, Prop. I raised $324 million, according to a June report by the city’s Housing Stability Fund Oversight Board. Of that, more than $203 million had been spent to advance new affordable housing initiatives and provide emergency rent relief to San Franciscans, the report said, including acquiring five sites to build more than 550 units of new affordable housing.

In Los Angeles, ULA revenues go into the House LA Fund, with roughly 70% going to affordable housing programs and 30% to homelessness prevention. As of April, $54.7 million in ULA funds had been proposed to expedite the building of 795 affordable housing units, and an estimated 11,000 people had been approved for ULA-funded emergency rent assistance, according to a
report by Dreier and others. Between June and August, more than 1,500 people received legal services in eviction cases, Dreier said.

Governments often fail to anticipate the initial ups and downs when forecasting how much money mansion taxes will bring in, Miller said. For example, Measure ULA was projected to raise nearly $1 billion a year. Instead, from the time it went into effect to early October, it had generated only about $403 million from 623 transactions.

Dreier acknowledged that after ULA was introduced “for the first couple of months, the tax numbers were nowhere close to what we had anticipated.” He attributed this largely to the real-estate industry going “on strike, basically, against the measure. It worked for a while, but eventually people had to sell their properties.”

When New York City increased its mansion tax in 2019, it saw a similar pattern. In June 2019, the month before the increase took effect, the number of Manhattan sales of $2 million or more jumped to 661 from 355 the previous month, then plummeted to 164 in July 2019, Miller’s data shows.

“There was a sharp drop-off in transaction volume after a bit of a frenzy just before the enactment,” recalled Steinberg. By December, the number of sales had returned to normal and even surpassed the number in December 2018.

Now, New York buyers are accustomed to the tax. “It’s become the norm,” said real-estate attorney Shaun Pappas with Starr Associates.

When North Carolina oncologist Dr. Sean Wang started looking for a Manhattan pied-à-terre, he didn’t realize that New York has a mansion tax.

In August, he paid $985,050 for a one-bedroom in Midtown. While he said he feels “lucky” to have avoided the tax, his choice had little to do with that—mostly, he liked that the south-facing condo has an extra half bathroom, unlike many of the apartments he looked at. For the right apartment, “I was prepared to pay more than $1 million,” said Wang, 55. The mansion tax was “a minor contributing factor.”

Like Wang, most buyers are more focused on finding the right home than avoiding mansion taxes, agents said.

“I don’t think a buyer is going to lose out on their dream property because of a 1% payment,” said Salem of Compass, who works in both New York and Los Angeles.

In San Francisco, real-estate agent Nina Hatvany of Compass said the tax only factors in a bit. “No one has said to me, ‘I’m not buying an expensive house because when I sell I’ll have this big tax,” she said. There are some situations when it comes into play, she said; for example, if a homeowner is renovating their home and considering buying a house to live in temporarily, the high cost of selling may be a deterrent.

In Washington state, which expanded its excise tax in 2020, sellers also pay little attention to it in part because home values have steadily increased for years. “It has been a nonissue, other than that people do not enjoy paying it,” said real-estate agent Jen Cameron of the Agency Seattle.

Buyers and sellers try various tactics to avoid paying mansion taxes, especially for homes on the cusp of a price threshold where the tax kicks in or increases. Hirsch and her colleague Howard Morrel, who listed the New York home that Wang eventually purchased, purposefully priced it just below $1 million to help lure buyers. “If they can avoid the tax, it sets our listing apart,” Hirsch said.

For communities considering measures like a mansion tax, Shane Phillips of the UCLA Lewis Center for Regional Policy Studies advises governments to implement marginal taxes, where the effective rate increases gradually with every dollar spent, rather than all-or-nothing thresholds. That would avoid “these weird threshold effects that occur,” he said, calling them “inefficient and wasteful.”

Another challenge with the politics of mansion taxes is how the funds are allocated, according to Auxier, the tax policy expert. The money collected fluctuates with the real-estate market, making it difficult to predictably fund specific programs.

https://www.wsj.com/real-estate/luxury-homes/what-is-mansion-tax-new-york-california-7a9a6bfe?mod=real-estate_lead_story

New York City’s Commercial Property Assessed Clean Energy (C-PACE) program got off to a sluggish start since the first loan was made three years ago. But the commercial real estate industry is hoping new guidelines can provide a spark for the financing vehicle.

The guidelines released last month by NYC Accelerator, which is managed by the Mayor’s Office of Climate and Environmental Justice, aim to spur more C-PACE deals by opening the program to new construction projects and expanding to include buildings with ground leases.

New York City’s C-PACE program previously enabled only property owners to obtain low-cost and long-term financing in exchange for certain energy-efficient building improvements on projects involving renovations, but not gut rehabilitation. The lone New York City C-PACE transaction in June 2021 originated by Petros PACE Finance involved renovating the former 25-story Citibank building at 111 Wall Street with retrofitting for energy efficiency upgrades.

Jessica Bailey, president and CEO of Nuveen Green Capital (NGC), said she worked closely with the New York State Research and Development Authority and city officials to open the door to bigger C-PACE projects in the Big Apple. NGC, a clean energy lending arm of Nuveen, has been active with C-PACE deals nationally originating more than $800 million of volume in 2023.

“One of the restrictions that we had in Phase One of the program was that it just didn’t lend itself to interpretation that would allow for proceeds being meaningful enough for large developers to take advantage of it,” Bailey said. “It was a little bit overbuilt in terms of some of the energy savings requirements and the cost-benefit analysis that had to go into the engineering review of what was eligible.”

Bailey said NGC is actively working on “several” C-PACE deals for New York with plenty of demand from property owners in Manhattan and the outer boroughs across all asset types seeking out the financing vehicle. She said there are a lot of C-PACE inquiries in particular for hotel construction and office owners seeking conversions to residential use.

The timing of New York City’s expanded C-PACE program arrives as property owners begin to contend with how to respond to the city’s new Local Law 97 initiative aimed at reducing carbon emission.

Spencer Levine, president at RAL Companies & Affiliates, said C-PACE could be an attractive financing option for some building owners who seek necessary upgrades to comply with New York’s sustainability requirement under Local Law 97.

“It’s another tool for landlords and property owners to utilize here in New York.” said Levine, who is part of an advisory board at the Urban Land Institute holding discussions about the rollout of Local Law 97. “I think it could be an interesting opportunity for New York and another motivating factor to upgrading buildings here.”

Levine said C-PACE could be especially beneficial in New York for older office properties where owners are looking to either upgrade or convert into multifamily assets. Ral Companies’ Zero Irving office property in Union Square was completed in early 2023 with many sustainability features paid for through traditional financing, and Levine said C-PACE would have been a consideration had the program been greenlighted for new construction then.

Shaun Pappas, a partner at Starr Associates who practices in the law firm’s general real estate group, said he has seen interest from developer clients he works with about utilizing C-PACE and sees great potential for the program in New York City given how many properties need overhauls. He said a key to C-PACE taking off in the city will be educating landlords, developers and building boards about the financial benefits of these transactions for certain projects.

“The ones that are building now that are in prebuilt stages are already contemplating compliance with new standards and trying to become just more energy efficient across the board,” Pappas said. “There’s also existing buildings that just need to be upgraded, and finding the money for that is important.”

While New York City’s C-PACE program has been slowed, New York State has seen multiple deals for new construction projects in recent years. These include a $36 million financing package from X-Caliber Rural Capital and CastleGreen Finance in May 2022 to build a Marriott-branded hotel property in Hyde Park, N.Y.

New York is among 38 states along with the District of Columbia that have active C-PACE programs, according to data tracked by the nonprofit association PACENation.

Officials for NYC Accelerator did not immediately return a request for comment on the city’s expectations and goals for C-PACE in New York City.

Bailey said that, after some starts and stops with C-PACE in the Big Apple, the new guidance should spur plenty of momentum for the overall C-PACE program nationally with the nation’s largest city now on board.

“Not having an active program in New York City has been frustrating for those of who are based out here and we see the opportunity here, so we’re cautiously optimistic that this new launch of the guidelines has made a program that will be robust,” Bailey said. “New York City has been the star on top of the Christmas tree for a long time.”

https://commercialobserver.com/2024/09/new-guidelines-nyc-c-pace-program/