State of the Union: Taking Stock of Where We Are Today and Where We’re Going
EisnerAmper recently held its 4th annual Real Estate Private Equity Summit in New York City. The event featured a panel discussion of where the current real estate market stands and included topics such as a recent slowdown in sales, foreign investment in U.S. real estate, current trends in financing, and the impacts of technology on the industry.
The panel was moderated by Lisa Knee, Partner at EisnerAmper, and included the following panelists:
- Samantha Davidson, Managing Director at Goldman Sachs
- Hugh Macdonnell, Managing Director & Head of Client Capital Management at Clarion Partners
- Christopher Schlank, Founder & Managing Partner at Savanna
- David Schwarz, Managing Director at Colony Capital
- James Nelson, Vice Chairman at Cushman & Wakefield
- Brandon Weber, Founder & CEO of Hightower
Mr. Nelson started the conversation by discussing a recent slowdown in real estate sales, particularly in the land sale, market citing a recent decrease of 50%. With uncertainties surrounding the state of the industry and the economy, domestic capital has not been a significant factor because investors are waiting for more clarity on where the industry will move next in the cycle. Mr. Nelson did say that foreign investors have been a saving grace as U.S. real estate continues to be a favored investment option for foreign capital.
Mr. Schwarz discussed the impacts of continuing heavy regulation in the banking industry which has led to more lending opportunities for firms such as Colony Capital. Mr. Schlank agreed, stating that he has seen all recent bids for real estate financing sources as having come from non-traditional lending sources.
The impacts of technology on the industry were also discussed. Mr. Weber discussed four key areas where technology impacts the industry: 1) day-to-day actions taken by real estate businesses (current widespread usage of spreadsheets), 2) engagement with tenants, 3) operation of core real estate businesses, and 4) construction timelines. Mr. Schlank also discussed the impact on the industry from changes in the way the world operates. There has been a large shift in the way people want to live, work and play, and neighborhoods that adapt to the 24/7 standard of living will be the most successful. Long Island City, Brooklyn, and downtown Manhattan were all mentioned as experiencing large growth due to the active and energetic atmospheres located in the neighborhoods as well as their transit-orientated locations.
While no one can truly predict where the real estate industry is in the cycle or where it is heading next, it is clear there are still opportunities in the marketplace for investors and operators. Mr. Macdonnell wrapped up the discussion by commenting how great of a privilege it is to be able to live and work in a place like New York.