Interest Rates Are Cut, An Election Is Decided And Real Estate Looks To The Future
What You Need To Know
Last week a lot of real estate was holding its breath. Congrats, we collectively didn’t pass out!
The industry enters this week with a lot more clarity, greenlighting business plans that have been frozen due to uncertainty.?
Interest rates were reduced again, this time by 25 basis points. The reduction, following the Federal Reserve’s initial 50 bps cut in September, reassures investors that the spigot of capital will increasingly open up.?
On top of that, a developer — and a native New Yorker — is headed back to the White House.?
Across the country, the industry is hopeful that former President Donald Trump’s second term will consist of tax cuts, a loosening of development restrictions and pressure on the Fed to continue lowering interest rates.?
But not all are shouting “Huzzah” to the developer-in-chief.
As my colleague Ciara Long writes, in New York, there are some hesitations that his proposals for lesser taxes and more tariffs could up the cost of doing business in an already expensive city.
In Washington, D.C., local brokers told my colleague Emily Wishingrad that they fear Trump will follow through on plans to gut the federal workforce and relocate agencies away from the nation’s capital.
Still, developers have many reasons to be positive. After all, Trump was born and raised in a real estate family and has helped glamorize the profession to the masses. His background creates an expectation that this time around, Trump will further lend a hand to the industry.
In his first term, he passed the 2017 Tax Cuts and Jobs Act, which introduced opportunity zones. He also slashed corporate taxes, with nearly 300 of the country’s largest corporations paying $240B less in taxes from 2018 to 2021, according to the Institute on Taxation and Economic Policy.?
In the coming four years, Trump will have the chance to protect 1031 exchanges and reverse the SALT deduction cap — a policy proposal with bipartisan support In New York.
That alone is reason to raise a toast.
Okada & Co. CEO Christopher Okada told Ciara that the election was “just like a New Year's Day.”
“Now it's time to get back to business,” he said. “We have four years.”
— Sasha Jones
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What I Want To Know
?We’ve also made it through earnings season, with a mixed bag of winners and losers.?
CRE brokerages, for example, even surprised analysts with their results. JLL blew past expectations by a whopping 31%, according to earnings forecaster Zacks Investment Research. Cushman & Wakefield, CBRE and Newmark Group surpassed forecasts by 15%, 13% and over 6%, respectively.
Meanwhile, Office Properties Income Trust, which owns a nearly 20M SF portfolio, admitted to investors that it could be filing for bankruptcy next year if it can’t rework $457M in maturing debt. After reporting that its bookings are down 34% from the second quarter, CoStar’s stock plummeted 10%. Vornado Realty Trust revealed a $19.2M net loss, with executives discussing the possibility of handing away overleveraged assets.
Which earnings were you most shocked by? How has this earnings season shifted your prediction for the coming quarters??
First Look
Nowadays, it seems that amenity offerings are a frenzy of one-upmanship.?
Gyms are only enough if they are Equinox flagships. Office and residential developers now build out tenant-only restaurants, lounges with golf simulators and branded furnishings.
Real New York has a new residential offering: Cybertrucks.?
To sell out 328 Grand, the brokerage’s package includes the futuristic pickup truck along with an amenity space that could be used for, among other things, a recording studio.?
Can I Give You My Number?
3%
The percentage that REIT stocks were down the day after the election, based on the FTSE Nareit Index. That same day most other indexes surged, including the S&P 500, which hit an all-time high.
They Said What??
“Today is election day in America and extra important since this is a once-in-four-year presidential election,” Vornado Realty Trust Chairman and CEO Steven Roth told investors while reporting earnings last week. Despite the lack of enthusiasm during the call, Roth has been a long-term partner of Trump, co-investing in real estate with the Trump Organization and attending campaign fundraisers for the president-elect.?
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Drop The Hot Goss
The Slice is produced by Bisnow Senior New York City Reporter Sasha Jones and is edited by Deputy Managing Editor Ethan Rothstein. Got an answer to my questions or info that you think I’d be interested in? I’m always happy to chat, on or off the record. Reach me at [email protected] or @SashaJones.06 on Signal, an encrypted messaging app.