Brendan Schmitt on What’s Next for Construction in NYC
Real Estate partner, Brendan Schmitt, was profiled in the New York Business Journal discussing REBNY's latest August Quarterly New Building Construction Pipeline Report as well as what's next for construction for the second half of 2022 and beyond.
The article notes that Brendan works with stakeholders in real estate development and construction projects throughout the country, but his main client base consists of developers and project owners. Some of his notable New York City projects are condominium projects spanning Manhattan, Brooklyn and Queens that are both ground-up and major rehabilitation.
NY Business Journal noted that the REBNY report highlighted new building filings decreased by 39% compared to quarter one of 2022. In response to that, Brendan noted, "Certainly the decrease from quarter one reflects what we're seeing. The reduction of permits, units and footage from Q1 to Q2, I think shows where the market is. On the acquisition and sales side, we've seen deals being re-traded five to ten percent." Brendan continued, "...I think that things happening in June, July, August are much more reliable forward looking indicators than the permit numbers REBNY put out from Q1 to Q2."
The REBNY report found that Brooklyn had the largest number of filings at 122 and Brendan attributed that to "more opportunities in Brooklyn [that] make more sense when you [pencil] out the numbers." Brendan continued, "It's more difficult to find a underutilized property in Manhattan as compared with Brooklyn that has emerging markets and neighborhoods that are just now starting to see more significant rent generation and sales prices. It's a function of availability. More opportunities for repositioning and value add in Brooklyn than exist in Manhattan."
When predicting what's next for New York's commercial real estate market, Brendan opined, "I think there will probably be a relatively significant slowdown, at least with respect to the data, in terms of filings with the now expiry of Affordable New York. So Affordable New York together with interest rates, I think are going to depress numbers for the next two quarters."
Brendan continued on a brighter note, "I'm actually still relatively optimistic and bullish because once the numbers start coming out, the legislature with the support of the governor, will be forced to re-authorize some new version of what we used to know as 421-a. I think that rents and sales prices right now are going to both drive longer-term interest in the continued delivery of multifamily units."
In closing Brendan noted, "Across America, the barometer of political health for any politician is gas prices. I think in New York, it's rent prices. [The] scarcity
of units, with the demand of units and with consequent increases to rent, I think even politicians that have ambivalence or outright hostility towards real estate interests are going to kind of come around to how unpalatable current rent increases and rent prices are. And look at the supply side and how to start delivering more units to ease some of the pain."
Read the full piece in New York Business Journal here. Access may require a subscription.