Despite recent macroeconomic uncertainty, with regard to investment, development and optimism for the future, New York City is in a stronger position than many seem to believe.
This was the key takeaway from “Rethinking Real Estate,” a biannual, invitation-only event for leading commercial real estate (CRE) executives and city real estate and development officials hosted by New York-based law firm Kramer Levin. The event was held on April 10 at the firm’s Multimedia Conference Center within its offices at 1177 Avenue of the Americas.
Kramer Levin partner Dan Berman kicked off the event with welcoming remarks and Elise Wagner, co-chair of Land Use at Kramer Levin, followed by introducing New York City Economic Development Corp. (NYCEDC) Chief Operating Officer Melissa Burch for a presentation and discussion about exciting new developments along New York City’s waterfronts.
New York City's Coastline: The Next Great Development Frontier
“New York City is well known for its skyline. I think it should be known for its coastline,” said Burch, who noted that innovations and developments along the city’s 520-mile coastline are “creating a catalyst of opportunity and investment.”
Burch led by reeling off the many ways that New York’s recovery from the effects of the COVID-19 pandemic has exceeded expectations, most notably, its population and job growth.
Burch pointed to 2024, highlighting that New York gained more new residents than any other major city in the United States, a fact that, she said, “needs to be covered better.” She also said there are more jobs in New York City now than ever before: 4.8 million, which is 150,000 more than before the pandemic. Burch said industries such as finance, professional services, health care and technology — the latter of which has made New York the “applied AI capital of the world” — are leading the way, providing an abundance of job opportunities.
City Investments Are Igniting Innovation Across the Five Boroughs
Burch, further highlighting the city’s waterfronts, noted that NYCEDC investments in all five boroughs are creating “the harbor of the future.” She cited the following:
Brooklyn: A $100 million investment in a climate innovation hub at the Brooklyn Army Terminal and a collaboration with Norwegian energy company Equinor for the largest offshore wind port in the United States at the South Brooklyn Marine Terminal. The NYCEDC also recently purchased the 122-acre Red Hook Container Terminal from the Port Authority in what was the largest land sale in the history of New York. Now known as the Brooklyn Marine Terminal, the facility is being repurposed into an all-electric modern maritime facility. The site will also see around 8,000 new housing units.
Manhattan: The NYCEDC-owned Downtown Skyport, formerly the Downtown Manhattan Heliport, will become all electric. “One of the issues people have with heliports is the noise,” Burch said. “With electrification, transport vehicles are completely silent.” The NYCEDC will also be creating SPARC Kips Bay, a health and life sciences campus over an entire city block at East 25th Street and First Avenue.
Staten Island: A $400 million investment toward creating a waterfront esplanade, similar to Brooklyn Bridge Park or Hunter’s Point South, on the borough’s north shore, along with housing that will be constructed from mass timber.
Queens: Willets Point will gain a privately funded, 25,000-seat, fully electric soccer stadium — the home of New York City Football Club — and 2,500 units of housing, accompanied by hundreds of millions of dollars in city investment for urban infrastructure. “We’re not only building a stadium,” Burch said, “we’re creating a whole neighborhood.”
The Bronx: The Hunts Point Distribution Center, where the city imports 25% of its food, will receive a major upgrade, including a new produce market.
Burch also detailed the “Blue Highway” concept, which will see the city increase utilization of its waterways and ports to transport goods and freight, including food.
Following Burch’s deep dive on the five boroughs’ development opportunities, Wagner moderated a panel with NYCEDC leaders Max Taffet and Anton Fredriksson, delving deeper into the past and future of the Blue Highway concept.
After Wagner asked whether NYC already has a Blue Highway, Taffet talked about how making productive use of the city’s waterways was not a new concept.
“The city’s actually been quite successful so far with optimizing and using the waterfront,” said Taffet. “Over a decade ago, the Bloomberg administration advanced a new system for getting garbage off of the streets, using the marine transfer stations in College Point in Queens and in Gowanus in South Brooklyn. Trucks put garbage onto barges there, and those barges are the first step on the Blue Highway. They go to Staten Island and Jersey and then directly onto rail lines. That avoids huge amounts of vehicle miles traveled.”
Looking ahead, Fredriksson emphasizes that the reduction of vehicle usage will continue to be an advantage of the Blue Highway in the coming years.
“There will be a lot fewer trucks,” said Fredriksson. “For one example, we’re going to have electric vertical takeoff and landing aircraft for passengers, but there’s no reason why we couldn’t do middle-mile drone delivery to that asset as well.”
New York Real Estate Experts Discuss Development and Investment Opportunities Presented by a Growing and Ever-Evolving New York
The event’s second panel focused on current development and investment trends in the city. It was moderated by Jay Neveloff, partner and chair of Real Estate at Kramer Levin, who pointed to what he sees as obvious signs of progress in the city.
“I see cranes up,” Neveloff said. “I see a lot of activity.”
Other panel participants included StacomSilverstein Co-CEO Wendy Silverstein, JVP Development founder and CEO Van Nguyen, Fortress Investment Group Managing Director and Co-Head of CRE Credit Spencer Garfield, and Vanbarton Group founder and Managing Partner Richard A.C. Coles.
Garfield noted that residential rents in the city have never been higher and that no other U.S. city maintains New York’s 97% – 98% multifamily occupancy rate.
“Young professionals want to come to New York,” he said, adding that “retail is back, and hospitality is back to 2019-plus levels.”
Coles expanded on Burch’s earlier point about the city’s population growth by noting the positive ripple effects of its new residents.
“There have been a million new people coming to New York over the past couple of years, and those million people are the people who rent from us and occupy our office space,” Coles said. “They’re college-educated, white-collar employees who are coming back to the office, and it’s causing a rebirth of street-level retail. Every office occupant spends upward of $6,500 a year in the local street-level retail around their office. So there’s a tremendous derivative effect that will happen over the next few years as people return.”
As Capital Sources Shift, New York City Remains One of the Best Locations in the United States for Investment
On the capital front, Silverstein noted that New York is still one of the world’s best cities for investment, although how that investment occurs is changing.
“There’s clearly capital coming into the city for development, but it’s not the developers that have the capital,” she said. “The banks are pulling back with respect to real estate, for the most part, but private capital is all over it, both in debt and equity. There’s lots of investible opportunity in New York.”
Garfield expanded on this by saying that there is a growing trend, globally, but especially in the United States, for individuals to allocate larger percentages of their portfolios toward alternative investments, including real estate.
“There is a huge wave of capital coming into alternatives,” he said. “This is really going to help support the system where the banks have pulled back and create a ton of liquidity, and places like New York City are going to be the beneficiaries of that. So we’re super excited. I think the future is very bright.”
Coles drove this point home by noting that his company recently brought a $400 million asset to market for sale, and while they received numerous credible bids in the $400 million – $425 million range, they all came from high net worth individuals. Not one came in from an institution.
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