With 2017 upon us, observers continue to wonder whether the New York area’s real estate market has reached its peak. To participants in Friedman LLP’s recent industry forum, the year ahead brings cause for guarded optimism, as opportunities and challenges lie ahead.
“One concern is that we will overbuild through up markets,” said Eric M. Gural, executive managing director of Newmark Grubb Knight Frank. “Everyone has had a pretty good run of it, now the question is: Are we adding too much supply, and our inability to measure demand going forward -- will that come back to haunt us?”
The forum was an opportunity for Friedman’s Real Estate Group to interact with clients who trace their connection to the firm back through several generations, and to celebrate their success and growth together.
Overall spirits were high, with 59 percent of participants in an event survey describing themselves as optimistic about residential real estate in the new year, and 74 percent saying they were optimistic about commercial real estate. Sixty-two percent of respondents said they were optimistic about the future in the aftermath of the presidential election.
But on a cautionary note, they cited economic conditions as the biggest risk ahead (35 percent), also citing oversupply (31 percent) and political uncertainty (15 percent).
The survey reached a cross-section of the real estate community, including owner-operators of companies (41 percent), developers (9 percent), investors and brokers (26 percent) and service providers to the industry (24 percent).
Max Poltarak, associate at Hanover Street Capital Partners, said that while the amount of deals in the industry pipeline is encouraging, “there are external market factors that are going to determine how easy that will be.”
Shimon Shkury of Ariel Partners said he sees “opportunities for investors, especially in the multifamily asset class.”
Farrukh Khan of Mercantil Commercebank observed that growth has been “flattening out” after a boom period over the last two or three years. “The luxury condo market has already slowed and there are apartment properties that are having a slow period now.”
But more optimistically, Paulo Garcia, senior vice president and New York regional manager of Mercantil Commercebank, said that while developers and their backers have “put a pause” on major investment decisions, “that will evaporate in the next few months. New York City is a very dynamic place so I think it will continue to be business as usual.”