- Developers with brokerage relationships can look at brokerage data to determine market trends.
- Related Companies' focus "will always be the very, very top of the domestic buyer market," said CEO Jeff Blau.
- Remote working is definitely a trend in retail space, but at the moment, it's actually fueling new development, not inhibiting it, because older buildings can't accommodate density changes.
- The Hudson Yards project will change New York City -- it's "a brand-new city unto itself, right in the middle of Midtown."
Hudson Yards is going to change New York City, said developer Jeff Blau, CEO at Related Companies, which is in charge of the massive project. “It’s a brand-new city unto itself, right in the middle of Midtown,” he explained to Brad Inman on stage at the inaugural Global Connect event.
“I wouldn’t say there are too many cranes in New York City,” Blau began (but he added that Related Companies owns, well, a lot of cranes). “You have to look at it neighborhood by neighborhood.”
How developers know what’s hot
Blau noted that Related Companies owns a stake in CORE and uses information from the brokerage to track the market.
The last quarter was the No. 1 most successful resale quarter in CORE’s history, he said. “That’s an interesting headline, but you have to look into the details and go into some of the data.”
The $1 million to $5 million segment of the market is “on fire,” said Blau.
But above that price point, he said, prices are falling. So the question “How’s the market?” needs some qualification: “Depends on what you’re looking at.”
‘This isn’t really investing; this is gambling’
The developer behind the Time Warner Center noted that oftentimes in development, “this isn’t really investing; this is gambling.”
Why? Because developers don’t know who the buyers will be when they first break ground, or what their financial situations might look like.
“We have no idea what that market’s going to be like,” explained Blau. Wealthy international buyers from Russia, China and other parts of the globe could face economic uncertainty, and that will affect whether or not they can really buy that luxury property in the latest talked-about development.
“Our focus will always be the very, very top of the domestic buyer market,” said Blau. “The small portion of the market who can afford to live in these buildings.”
What about Hudson Yards?
This Related Companies project is deservedly the talk of the town, incorporating eight acres of land and 20 million square feet of development, according to Blau.
He noted that the 7 subway line means that Hudson Yards is a six-minute train ride from Grand Central Station; Hudson Yards itself is accessible to New Jersey, which is growing, Blau said, and the 7 line “crosses every other subway line,” making this development particularly easy to travel to and from.
The first office building opens next week, said Blau, and the second is totally leased. There are retail units under construction, and the development will also incorporate 5,000 housing units.
“We’re really marketing Hudson Yards in a B2B manner,” said Blau. “That 7 million square feet of leases — we haven’t had residential for sale on the market. Next month, we’ll have a consumer campaign and educate consumers as to what it is, followed by July-August opening of sales office, followed by launch of new buildings.”
How will development change as technology changes how we live?
Remote working is definitely a trend in retail space, said Blau.
“No doubt companies are putting more people in the same amount of square footage, consolidating locations and taking less space. That’s difficult to do in older buildings,” he explained, which don’t have the capacity to handle modern buildouts. So companies are interested in moving into newer developments so they can maximize their workforce.
“We’ve bene the beneficiary of that,” said Balu. As a macro trend, however — especially without job growth — he predicts declining rent prices for older buildings.
How can you become the Blau in your city?
“I think a career in real estate development is really one of the most satisfying things you could possibly do,” said Blau.
He gave some simple advice for aspiring developers: “You have to have passion. If you really love this, stick with it and find a mentor.”