Well, if you’re in the Real Estate business, by now you have probably read your fill of articles on the new rent regulations and how they will impact your respective portfolio. The changes are coming fast and furious. If you take the time to do some digging, you will find these sweeping changes are not limited to Rent Controlled and Rent Stabilized units. Market Rate units are also significantly impacted. Layer on top of this, New York State has amended its Human Rights Law to include Source of Income as a protected class and you have a perfect storm - and it’s headed right for the residential multi-family market in New York City. While the sheer quantities of the housing stock in NYC and the other boroughs is significantly higher than Staten Island - don’t kid yourself - get ready for some serious valuation changes right here on our beloved borough also.
As noted, you have probably read your fill of these articles already. So, instead of boring you rehashing all of these changes I decided we should take a look at what the potential silver lining may be - and talk about how to capitalize it while most others are crying over spilled milk.
Here’s how I see it- Short term, Landlords will begin to divest some of this product. If you’re not doing this already you should be. I think it’s the perfect time to diversify those portfolios and limit some exposure in the residential rental market. You can expect to see some of that short-term money invested into the Stock Market...we talked about this with our client’s months ago - and guess what - just this week the stock market hit all-time highs... I can hear the snickering now... no way Landlords are selling product this fast and making that type of investment strategy shift. Like I said, we have been talking about this for months. There are plenty of savvy Landlords that began selling product off long before these rules were changed.
That said, us Real Estate types are a certain breed. We like to be able to touch and feel the product. It won’t be long, in my opinion, before we see this money shift back in real property transactions .... but where is the question.
We see this as a perfect opportunity to shift investments into the retail marketplace and warehouses. Rates continue to hover around historic lows. They won’t stay low forever folks. This is a perfect time to diversify those portfolios and lock in 20 year notes. As the retail apocalypse has certainly begun to slow down we are seeing tremendous opportunities. Properly positioned and laddered retail centers are a wonderful alternative to the unstable residential market.
Don’t look past the manufacturing and industrial parks also. As we continue to lose M zoned properties to gentrification - businesses are looking for an alternate, more affordable place to lock in and locate their businesses for the foreseeable future.
It your looking for the double whammy shift some of these dollars into the opportunity zones. Staten Island is a real sleeper in this department. We are currently working with several tax professionals and gearing up to make a serious push into the opportunity zone investment arena.
We have a full complement of retail and warehouse developments available, both stabilized and those with a bit more upside that require some elbow grease.
So, if you’re looking to diversify those portfolios give me a call, I’d love to talk through these opportunities with you.
As always, please consult your tax and legal representations whenever making investment decisions.