Latest / Bloomberg Intelligence / EisnerAmper's Weissenberg on Owners Renting Out Condos (Audio)

Transcript

EisnerAmper's Weissenberg on Owners Renting Out Condos (Audio) · Bloomberg Intelligence

• 0:03
  Speaker 1: Global business news twenty four hours a day at Bloomberg
• 0:06
  Speaker 1: dot Com, the Radio plus Mobile Act and on your radio.
• 0:10
  Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Handquarters.
• 0:14
  Speaker 1: I'm Charlie Palot. Move law for US equities today, the DAL,
• 0:17
  Speaker 1: the SMP, NESDAC all dropping, with the SMP five hundred
• 0:21
  Speaker 1: index down eighteen to twenty six and decline today of
• 0:26
  Speaker 1: nine tenths of one percent. Stocks dropping ahead of tonight's debate.
• 0:30
  Speaker 1: Deutsche Bank shares tumbled seven point one percent, the Dow
• 0:34
  Speaker 1: down one sixty six, down nine tenths of one percent.
• 0:37
  Speaker 1: NASTAC also down nine tenths of one percent. Gold down
• 0:41
  Speaker 1: ninety cents, little changed at thirteen thirty sixty ounce crude
• 0:45
  Speaker 1: oil West Texas Intermediate advancing today by two and a
• 0:49
  Speaker 1: half percent, forty fifty nine for a barrel of West
• 0:52
  Speaker 1: Texas Enemedia crude. I'm Charlie Pallet. That's a Bloomberg Business flash.
• 0:58
  Speaker 1: You're listening to Taking Stock with Kathleen Hayes and Pim
• 1:01
  Speaker 1: Box on Bloomberg Radio. We are broadcasting live from Midtown
• 1:06
  Speaker 1: Manhattan from the offices of Eisner Amper. They are preparing
• 1:10
  Speaker 1: for their fourth annual Eisener Emper Real Estate Private Equity
• 1:13
  Speaker 1: Summit that takes place Wednesday, September. Keynote speaker is Sam's
• 1:19
  Speaker 1: now the chairman of Equity Group Investments. In here to
• 1:23
  Speaker 1: tell us more about the upcoming summit and about real
• 1:26
  Speaker 1: estate is Ken Eisenberg. He is a partner in charge
• 1:29
  Speaker 1: of Eisner Emper's real estate practice. Ken, thank you very
• 1:32
  Speaker 1: much for spending time with us. Thank you, Pim. What
• 1:35
  Speaker 1: do you expect to hear and learn at this event
• 1:38
  Speaker 1: on Wednesday, Well, we know that the market is starting
• 1:42
  Speaker 1: to change. You think there's a correction going on, and
• 1:45
  Speaker 1: I'm interested to hear from the speakers as to what
• 1:48
  Speaker 1: the market is actually doing. What their take is where
• 1:51
  Speaker 1: they see capital should be invested right now, whether they're selling, buying,
• 1:54
  Speaker 1: or holding. Where they see the future of the market
• 1:57
  Speaker 1: going over the next couple of months of the year. Well,
• 2:01
  Speaker 1: so a correction in the markets, it is? Is it
• 2:03
  Speaker 1: the kind of correction that is number one from Oh,
• 2:06
  Speaker 1: developers always developed too much and and so ultimately it
• 2:10
  Speaker 1: peaks and comes down, is it? Well, it would have
• 2:13
  Speaker 1: been okay two years ago to build this much, but
• 2:15
  Speaker 1: a lot of foreign buyers pulled back because they want
• 2:17
  Speaker 1: to park their money someplace safe, and they don't feel
• 2:19
  Speaker 1: that so strongly. Now. It does have anything to the
• 2:22
  Speaker 1: credit cycle and people sending of the Feds finally serious.
• 2:24
  Speaker 1: They're gonna start raising rates, bond deals are gonna rise,
• 2:26
  Speaker 1: and that's going to mean less available financing. All of
• 2:29
  Speaker 1: the above. UM. I think there's just a um slight retrenchment.
• 2:34
  Speaker 1: It's not a major crash in the market. You're seeing
• 2:37
  Speaker 1: prices stabilizing or going down a little bit, and the
• 2:40
  Speaker 1: number of sales I think is the keyndicator that the
• 2:42
  Speaker 1: market is slowing. UM. Well, this might be the second
• 2:47
  Speaker 1: highest sales year of commercial office in New York history.
• 2:52
  Speaker 1: UM it's a teen percent off of last year, and
• 2:55
  Speaker 1: a lot of the sales were contracts would entered into
• 2:58
  Speaker 1: in two thousand fifteen and closed in two thousand and sixteen.
• 3:02
  Speaker 1: So you're seeing the slight pullback, not complete pullback. I
• 3:04
  Speaker 1: still have clients looking to buy and develop. There's opportunities
• 3:07
  Speaker 1: to be had, but it's a slower market and people
• 3:10
  Speaker 1: are taking more time. Also, the price of land had
• 3:13
  Speaker 1: gotten to the point that it made developing very expensive,
• 3:17
  Speaker 1: and the cost of developing prevented rental as as an option.
• 3:23
  Speaker 1: So a lot more buildings were built as condos. Those
• 3:26
  Speaker 1: condos are now being rented out by the owners. A
• 3:30
  Speaker 1: lot of people bought them for rental properties, and it's
• 3:32
  Speaker 1: putting pressure on the residential rentals which are starting to
• 3:34
  Speaker 1: come down a little bit. So you're seeing a lot
• 3:36
  Speaker 1: of different forces taking place. Now people say oh, they
• 3:39
  Speaker 1: built too much, especially hotels and say, oh, they built
• 3:41
  Speaker 1: too much. If you look at the number of hotel
• 3:44
  Speaker 1: rooms in New York versus the number of visitors we
• 3:47
  Speaker 1: have in New York, we are still way underserved as
• 3:50
  Speaker 1: an overall market. Now you've been doing this, I understand
• 3:54
  Speaker 1: for more than three decades. You helped put together about
• 3:57
  Speaker 1: fifty billion dollars worth of transack. That that was a
• 4:00
  Speaker 1: number of years ago. Okay, so now we've e been accelerated.
• 4:04
  Speaker 1: That It is um it's the it's the time frame
• 4:09
  Speaker 1: by which people look at these deals. You mentioned, you know,
• 4:11
  Speaker 1: looking to the future months and maybe a year, But
• 4:14
  Speaker 1: has the time frame that people measure collapse during your
• 4:18
  Speaker 1: your career. Real estate is a cycle. Generally the cycle
• 4:24
  Speaker 1: runs five to seven years. We're in the seventh year
• 4:28
  Speaker 1: of a long recovery. Whether it's a I don't and
• 4:32
  Speaker 1: I don't see it as a two thousand and eight
• 4:34
  Speaker 1: type correction. Um. I see this is more of a
• 4:38
  Speaker 1: take a breath. I'd come down five to ten over
• 4:41
  Speaker 1: the next year to two years and then resume its
• 4:45
  Speaker 1: upward climate. Uh. Particularly the gateway cities are seeing trumendous
• 4:50
  Speaker 1: interest both domestically and overseas for people who want to
• 4:54
  Speaker 1: come to the major gateway cities, who invest in the
• 4:56
  Speaker 1: gateway cities as places to both live and work. Um,
• 5:00
  Speaker 1: there's been a migration from the suburbs. So who's the
• 5:03
  Speaker 1: gateway cities? Give us a top five? New York, San Francisco,
• 5:07
  Speaker 1: Los Angeles, Miami, Washington. Okay, so where what's the gate
• 5:10
  Speaker 1: what's up a tent? What's this the sub tier or
• 5:12
  Speaker 1: the next gateway city? Right, because it seems to me
• 5:15
  Speaker 1: prices have gone up so much in the cities you
• 5:17
  Speaker 1: just mentioned other places that are going to get the
• 5:18
  Speaker 1: spill over and become you know, the second tier gateway
• 5:22
  Speaker 1: There certainly is, and then those really kind of look
• 5:24
  Speaker 1: to the tech cities. Um. You have Boston, Austin, Texas, UM,
• 5:30
  Speaker 1: even in Chicago, UM. Other Midwestern cities are seeing the
• 5:35
  Speaker 1: rise of of tech being developed in their in their borders,
• 5:39
  Speaker 1: and that is a driving force in the market today. Now,
• 5:42
  Speaker 1: financial services is what makes New York, entertainment is what
• 5:45
  Speaker 1: makes Hollywood. But um, tech is what's making the country.
• 5:49
  Speaker 1: And it's really the next wave of jobs. I think
• 5:51
  Speaker 1: you'll you'll see some manufacturing growth, but most of the
• 5:54
  Speaker 1: growth and real earnings will be in the tech space.
• 5:58
  Speaker 1: As far as investment returns, the comps, the comparables. When
• 6:03
  Speaker 1: you look at treasuries, have got to make a real
• 6:06
  Speaker 1: estate at least attractive on on one basis. Who is
• 6:10
  Speaker 1: that not the way to look at it? Some people
• 6:12
  Speaker 1: look at it that way. Um, A lot of you know,
• 6:15
  Speaker 1: foreign companies of foreign governments in particular, we're investing and
• 6:18
  Speaker 1: they were looking at cap rates of one and a
• 6:20
  Speaker 1: half to two, which I don't think it's sustainable in
• 6:24
  Speaker 1: the long term. That means that that that that the
• 6:26
  Speaker 1: property was valued at a certain amount, that the return
• 6:30
  Speaker 1: was only about one and a half percent, right, because
• 6:32
  Speaker 1: they looked at long term growth or just as safety.
• 6:36
  Speaker 1: So if you had advice for somebody, and I'm sure
• 6:39
  Speaker 1: you do often in your business, but more probably for
• 6:41
  Speaker 1: our people listening today when it comes to commercial real estate,
• 6:44
  Speaker 1: when it comes to reads, when it comes to investment opportunities,
• 6:46
  Speaker 1: what's your number one idea right now? Well, first they
• 6:49
  Speaker 1: should come to the conference. And here what the real
• 6:51
  Speaker 1: experts have to say of the conference is this Wednesday
• 6:53
  Speaker 1: at Chelsea Pierre. Tickets are still available. We have a
• 6:57
  Speaker 1: great lineup of speakers, including several who on today's show. Um,
• 7:02
  Speaker 1: most of whom we're on my panel were and you know,
• 7:07
  Speaker 1: we have Paul Mazie who is running was running from
• 7:11
  Speaker 1: the air and he's a chair of Cushman and Wakefield.
• 7:13
  Speaker 1: So it's very exciting. And let's not forget Leslie Hill,
• 7:16
  Speaker 1: partner founder him All America Properties, because you know, powerful
• 7:20
  Speaker 1: woman in real estate. That's always a great example. And
• 7:23
  Speaker 1: oh my goodness, we had so many terrific people today,
• 7:26
  Speaker 1: so that's just a taste. Thanks so much to you.
• 7:29
  Speaker 1: Ken wiser Berg from Partner in Charge is Ramp for
• 7:31
  Speaker 1: Real Estate Practice and he's talking about their fourth annual
• 7:36
  Speaker 1: Real Estate Private Equity Summit. You can go online and
• 7:38
  Speaker 1: get all the information you need. I'm kathe Maas along
• 7:41
  Speaker 1: with pim Fox. This is taking Stock and this is
• 7:43
  Speaker 1: Bloomberg coming up. Bloomberg Law is brought to by Latin.
• 7:48
  Speaker 1: Govern Manhattan, where New York goes for luxury. Conveniently located
• 7:51
  Speaker 1: at fifty four and eleventh AVENU went online at land
• 7:54
  Speaker 1: govern Manhattan dot com. Land govern Manhattan is at your service,