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|Moderator||Christopher Mayer, Columbia Business School|
|Panelists||Nicholas Bienstock ’96, Savanna|
|Richard Coles, Vanbarton Group|
|Matt Bronfman, Jamestown|
|Jeffrey Kaplan, Meadow Partners|
By Alex Cemaj ’17 and Mandy Yeung ’18
Professor Christopher Mayer kicked off this engaging panel on urban growth and development by inviting the four esteemed panelists to provide examples of projects focused on exciting urban investments. Nicholas Bienstock ’96 spoke about the Falchi Building, a historic building in the heart of Long Island City that his company, Savanna, is in the process of purchasing from Jamestown. Jamestown had previously purchased the former industrial building and performed extensive upgrades on the property to transform and revitalize the asset. For Mr. Bienstock, this is an ideal marriage between a good asset in an up-and-coming location and a company that is able to provide the capital and expertise to continue and improve upon the already successful repositioning strategy that Jamestown initiated.
The theme of adaptive re-use in older buildings resonated with the rest of the panelists as well. Richard Coles of Vanbarton Group discussed his company’s purchase of an office building in San Francisco that the company plans to reposition through building redevelopments. Matt Bronfman of Jamestown emphasized the value of the “authenticity” of older buildings and described the beauty of finding new and creative ways to redeploy space to take advantage of the growing migration of people into city dwellings. Jeffrey Kaplan of Meadow Partners spoke about his company’s purchase of a former pleating factory in South Williamsburg, Brooklyn that his company has now fully leased to the coworking space provider WeWork.
The conversation segued into a discussion on the growing popularity of open workstations and floor plans for office spaces, and not just in TAMI (technology, advertising, media, and information) companies. Mr. Bienstock noted that Savanna has built over 100 spaces for tenants, and only two have been traditional perimeter office designs. Mr. Coles stated that it is important to avoid obsolescence by constantly repositioning, pinpointing that New York, where the average age of a building is 73 years, is flush with repositioning opportunities. The panelists agreed that shared office space is a good business, but are wary of the high valuation for companies like WeWork. Mr. Bronfman believed that a well-curated retail experience is an important differentiator for repositioned buildings, but a “great ground floor” is becoming more challenging, as retail is struggling.
Another topic of interest was where to invest next. There appear to be opportunities in secondary markets across the U.S. that can be ripe for urban growth and development. However, the panelists cautioned against mistaking rent growth caused by constrained supply for organic growth. Mr. Bronfman warned that while cities like Chicago may look like New York, they can behave more like Dallas or Atlanta. According to Mr. Bienstock, there are increasingly clear distinctions between cities of “haves” and “have nots.” Cities that have a critical mass of business, cultural institutions, educational and academic institutions are becoming magnets for millennials and the next generation. Mr. Coles reminded the audience that growth in other cities may look big, but that’s because other cities are starting from a much lower position. As both a domestic and foreign investor, Mr. Kaplan focuses on liquidity and the flow of capital to spot opportunities. In the U.K., for example, Mr. Kaplan noted that despite the challenges and uncertainties from Brexit, London still remains a liquid safe-haven. He also pointed out some softness in the London office market, but said there are potential opportunities in multifamily where there is a long-term supply and demand imbalance due to the lack of institutional housing.
The panel wrapped with questions from the audience. In response to concern over limited housing supply in New York City as a result of suburban flight, the panelists discussed the need for more affordable housing, more micro-housing, and how to deal with the congestion issues due to growth in city population. Another question raised was the impact of climate change on tenants and investors. For real estate developers and owners, potential damage to assets or other business interruptions due to extreme weather events can be crippling. While tenants seem less concerned, developers and investors see environmental analysis as a major component of underwriting and continue to place value on green and LEED certified buildings.
Ultimately, this panel focused more on some of the topics that will drive change in cities over the next several years. Some noted that city living could improve if we invest more in infrastructure, as the new administration has promised to do. Interestingly, most of the panelists agreed that we are in the early days of major technological achievements, such as transportation improvements and driverless vehicles, which will significantly impact the consumption of real estate.
Alex Cemaj ’17 received his Bachelor’s degree in economics from Brandeis University in 2010. He began his post-collegiate career in the Corporate Solutions department at JLL servicing two large international accounts—Iron Mountain and DirecTV. He later went on to work at Prudential Capital Group, investing in over $1 billion worth of Credit Tenant Leases throughout the U.S. This past summer, he interned with Long Wharf Real Estate Partners’ acquisitions team, a Boston-based real estate value-added investor.
Mandy Yeung ’18 is the AVP of Trips for the Real Estate Association at Columbia Business School. She is a first-year student focused on real estate development. Prior to Columbia Business School, Mandy worked in construction management for Turner Construction as a field engineer, purchasing agent, and change management engineer.