Research & Publications
New & Recent Publications
New & Recent Publications
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The Impact of Distressed Real Estate Loans on CMBS Performance
As real estate prices adjust to new market conditions, including lower rents and occupancy, the commercial mortgage market is impacted by stricter underwriting standards and limited financing. When a New York office building's mortgage was sold to an investor, it shortened the life of the Commercial Mortgage Backed Security (CMBS) bond, reducing the bond’s value. In addition, foreclosed real estate also generates significant prepayment risk to bond investors. Real estate investors, bond portfolio managers, and those interested in understanding securitized financing will all benefit by reading this paper.
The MoMA Complex's Tower Verre
The zoning approval process for the Tower Verre, the latest addition of a building on the Museum of Modern Art’s complex, took place in 2009. The museum, along with the internationally renowned architect, Jean Nouvel, and the project’s developer, Hines Interests, requested project approval for the tower. The West 54-55 Street Block Association, representing residents in the West Fifties between Fifth Avenue and the Avenue of the Americas, sought a height reduction in the 1250-foot planned building. In response, Nouvel asked, "Why is Manhattan, of all places, afraid of heights?"
Banking on The Future Post Conference Report
The Banking on the Future conference served as a platform to bring together notable experts and thought leaders to broadly examine concepts related to national, regional and state infrastructure banks. This report summarizes conference proceedings, reviews selected infrastructure bank and finance models that have already been implemented in areas around the world, and sets forth several solution-oriented recommendations to help continue the conversation on rebuilding and expanding infrastructure in New York City, New York State and the United States.
The Waterfront
Brooklyn has evolved like many older industrialized areas within and outside of New York City. To prepare for the future, it needs to continue to evaluate the deployment of its infrastructure and existing land use in an effort to understand if it is prepared to support current and future development. The area definitely has components of its economic capacity and urban design that are significantly underutilized, as well as regions with high levels of congestion, activity and growth. Some existing levels of activity are linked to actual competitive advantages, such as location, weather or access to labor. The state of the waterfront in Brooklyn has much to teach us about the structural transformations that occur in modern urban regions.
This Recovery Explained
In mid-September, 2010, the Business Cycle Dating Committee of the U.S. National Bureau of Economic Research announced that the recession of 2007 - 2009 officially ended in June, 2009. That is when many, but not all, of the key broad-based indicators of economic performance shifted from declining to rising. This gave the country's economists a benchmark to assess the recession and the emerging recovery. It can now be said that the recession was the longest and deepest in the post-war era. It can also be said that there is an emerging state of recovery, although, as it is widely known, the recovery is sluggish.
Open Space Redefined
Union Square Park has undergone several dramatic transformations. Most recently, it's north end was renovated in a way that included many significant improvements. These include a new and expanded playground; a finished plaza with utilities for the Greenmarket farmers; new shade trees and flowering trees; new light poles, both in and around the park; new lighting for the Abraham Lincoln statue and the James fountain; a renovated pavilion ready for seasonal concession and providing off-season community space; and new public restrooms.
Banking on the Future
One of the most difficult challenges facing New York and the nation is the dire condition of our roads, bridges, and other transportation infrastructure. And yet New York state has no concrete strategy in place when it comes to repairing and upgrading public infrastructure. A promising solution to address these looming infrastructure needs-- and to assure a more prosperous future-- is the establishment of a national, regional or state infrastructure bank.
24-Hour Cities, Part 3 of 3
For rents, vacancies, and returns, the Central Business Districts in 24-hour cities have shown more favorable performance than for their own suburbs, and also have outperformed the downtowns of the 9-to-5 cities. Economic theory suggests that, if such conditions prevail over time, capital should flow disproportionately to the 24-hour metros, and even more disproportionately to their central business districts. It is now possible to test that proposition empirically.
Unprecedented Visibility
This case study presents Vornado's efforts to engage its submetered tenant base in its energy reduction and sustainability efforts by providing tenants with their real-time energy usage. By making energy usage data available to the users of energy in a building, coupled with a sustainability outreach program, Vornado's energy and sustainability team has worked to reduce energy consumption and to identify and eliminate wasteful practices.
Discovering Distressed Assets
Knowing that Commercial Mortgage Backed Securities (CMBS) is simply a packaging of commercial real estate loans can open an investor's eyes to a new universe of potential investments that others fail to see. Whether looking for distressed assets, managing a loan workout, or monitoring a CMBS portfolio, there are strategic techniques that can be applied by a real estate practitioner to maximize access to useful information and reveal insights waiting to be discovered.
The Evolving Landscape
A working group from the New York City Building Performance Stakeholders Consortium, an assembly co-sponsored by the Steven L. Newman Real Estate Institute and the CUNY Institute for Urban Systems’ Building Performance Lab, found that it would be best if federal stimulus funds were incorporated with incentive programs and public-private financing mechanisms to provide a clear pathway for projects at the scale required to transform NYC’s commercial property. The purpose of this paper is to describe the elements of such a pathway so that property owners may more readily walk down it.
Waves of Opportunity
Many people in the real estate industry had predicted a "tsunami" of distressed assets coming to market. This dynamic has not occurred, however, since the general awareness developed of problems with commercial real estate. Robert Knakal explores the market movement of distressed properties in this paper and provides insight on what might be ahead and why. The dynamics of the construction industry is also explored as it relates to real estate, and a discussion of what can be expected after a “natural bottom” is reached is provided.
Reconsidering Gowanus
The decision by the U.S. Department of Environmental Protection to designate the Gowanus Canal as a Superfund site will substantially protract the time horizon for additional residential and commercial development along the canal. However, the 10 or 12 years that it will take to complete the Superfund's environmental cleanup offers the city, the community, and private developers an opportunity to plan for additional remediation and future development. Recognizing the area's great potential, there is a growing consensus within the Gowanus community for an inclusive framework for redevelopment that will both preserve the area's distinctive social, economic and architectural fabric and set the stage for growth.
24-Hour Cities-Part 2 of 3
The data provided by the National Council of Real Estate Investment Fiduciaries ("NCREIF") on commercial real estate investments by the pension fund industry proves to be a useful way to evaluate comparative performance of investment returns in 24-hour cities and 9 to 5 cities. NCREIF returns over time and cyclical differences reflect the strengths that downtown 24-hour metropolitan areas in particular offer in the form of rental premiums. Across the board, the investment performance of 24-hour cities is positively differentiated from that of the 9 to 5 cities when the property-type specification is precisely defined.
A Precarious Balance — Inflation, Deflation and Real Estate
Over the past two years, the economies of the Americas have experienced the most severe stress in seven decades. The collapse of the residential real estate sector in the US in 2007 triggered the financial crisis that led to the worst recession since the Great Depression. The government response to this crisis was massive. There was an unprecedented increase in liquidity and government spending to stimulate growth. Between the Federal Reserve and Treasury, an estimated $16 trillion in programs was authorized to put the financial system back together and to stimulate the economy.
24-Hour Cities and Office Rent Performance, Part 1 of 3
Using a hypothesized set of 24-hour cities and a complementary set of 9-to-5 cities, as defined by the widely read 1995 survey of Emerging Trends in Real Estate, office rent performance is closely examined. Among the key findings, it is determined that real rents in 24-hour city downtowns commanded a 28.8% premium over their adjacent suburbs, when considering a 21-year timeframe. In sharp contrast, 9-to-5 metros commanded only a 0.5% average real rent premium in the past 16 years.
Downtown vacancy rates versus the respective suburbs are considered for both 24-hour cities and 9-to-5 cities. How well each type of market is able to sustain higher occupancy rates versus their suburbs is also among the key points examined. This sets a solid stage for Part 2 of this 3-part series of papers, when we will examine what effects, if any, the 24-hour and 9-to-5 cities’ economic dynamics have had on investment pricing and returns.
Sustainability Today: Where are we now & where do we go from here?
On a global and national level, sustainable business efforts are on-going. How quickly is progress being made, though, and what can be done to further these efforts? “Sustainability Today” discusses the environmental impact of US buildings, electricity consumption, and US electricity use per capita, in comparison to that of other countries. A case study is also presented as a success story, and property-level opportunities are listed as possible additions to any property’s energy strategy.
"ET" is the New "IT" for Landlords and Tenants
The deregulation of the energy industry in 2003 is similar in many ways to the deregulation of the telecommunication industry in the early 1990s. There are also a number of commonalities for built “IT” and “ET” solutions in urban environments. A closer examination of the energy demands of today and tomorrow reveals several key market barriers for “ET” deployment. In particular, adequate incentives for urban decentralized energy solutions are a key shortcoming.
