On Tuesday March 13, 2007, Stephen Ross -- Chairman, Chief Executive Officer and Founder of the Related Companies -- appeared before a packed audience at New York Law School's Center for Real Estate Studies, and addressed the question, "Will New York City Remain the Capital of Real Estate?"
According to Ross, the answer is yes … with a few caveats.
Mr. Ross noted that as a developer, "I wish we could freeze time because you know it can't get any better."
According to Ross, New York real estate is at its "best moment in history."
What explains this phenomenon?
Land prices in New York City have risen 300% in the last three years and commercial and residential rents are rising to unprecedented levels. Wall Street firms, taking advantage of the current economic climate and stellar returns, are willing to invest in some of the world's largest real-estate development projects. Ross suggests that development will slow when financing dries up, but no one knows precisely when that will occur.
Despite this euphoria, Mr. Ross warned that "storm clouds are on the horizon. If we don't address them, the results could be disastrous."
One of those threats includes the city's diminishing supply of affordable housing, (something we've commented on this blog before). According to Ross, unless the city addresses how middle class residents -- the bulk of the city's workforce -- can afford to live within our great metropolis, New York is in danger of losing its social and commercial preeminence to other cities.
Mr. Ross also criticized the City's elimination of certain tax-abatement programs designed to offset developers' upfront real-estate taxes. Without the tax relief, developers spend up to 35% of their gross income from new development projects on real-estate taxes, which are often passed onto the purchasers/renters, causing rents and purchase prices to rise even further.
The Real Estate Board of New York, also lead by Ross, is working to address these and other issues of concern to the industry. Ross portends that only if we plan now for the future, will New York City remain steadfast as the world's real estate capital.
To view Mr. Ross's speech, please use this link: Ross video
To learn more about Mr. Ross, please use this link: Ross bio