Breaking Down Real Estate Cap Rates with Leslie Wohlman Himmel of Himmel + Meringoff Properties
September 30, 2014
There is no denying the impact Leslie Wohlman Himmel has had on the commercial real estate market in New York City. As co-managing partner of Himmel + Meringoff Properties, which she co-founded in 1985 with Stephen Meringoff, Ms. Himmel has been extremely successful in acquiring and maintaining a portfolio of commercial real estate holdings valued at over $500 Million. She has been an influential figure in the real estate industry for over three decades. A panelist at the upcoming EisnerAmper Real Estate Private Equity Summit, Ms. Himmel shares her thoughts on capitalization rates in Manhattan.
Cap rates are at a record low right now. What are you seeing first-hand?
Ms. Himmel: I’ve been in real estate for a long time and these are some of the lowest cap rates I’ve seen. Government influence and artificially maintained low interest rates have been the driving force behind four key areas in the real estate market: lending, financing, selling, and buying. The lending market is really booming right now due to low interest rates, and low cap rates have helped bolster the financing, selling, and leasing market. However, the impact on the buying market has not been as favorable.
How is this impacting areas outside of Manhattan?
Ms. Himmel: It’s a very exciting time to be working in New York City real estate and to witness the rapid pace at which all this is happening! Many new industries such as media and technology companies are drawn to New York City for a variety of reasons, and we are seeing more and more of them expand outside of Manhattan and into other boroughs.
What do you find most interesting about all this?
Ms. Himmel: Who would have thought that there would be an opportunity to buy real estate for 3-4 percent cash-on-cash return?! The artificial factors caused by the government have compressed the cap rates to record lows, so rental operating income would not have to escalate dramatically in order to achieve a significant increase in value. Real estate has always been very costly to own and operate, but now we are seeing tremendous opportunities.
Ms. Himmel will be sharing more of her insights and industry experience at our upcoming Real Estate Private Equity Summit on October 1!