Marc Norman and NYU’s Schack Institute of Real Estate once again set the stage for one of the industry’s most candid conversations, as the Institute’s real estate capital markets conference in Midtown became the backdrop for a pointed debate about whether New York City is truly back, or whether smarter money is already looking elsewhere. The answer, as it turned out, depended entirely on who you asked.
The bullish case was made firmly by Karen Horstmann, head of US real estate at Quebec pension fund La Caisse, which manages a C$75 billion global property portfolio. Speaking from the conference floor, Horstmann offered a clear verdict: “We really are happy with being in New York. We see a lot of new opportunities coming in that are very compelling. We’re being very selective, but New York is here. New York is back. It’s a good place to be.” Despite acknowledged pockets of vacancy across the city’s office market, she pointed to La Caisse’s trophy holdings, including 1211 Sixth Avenue and 3 Bryant Park, where the fund secured a $1.1 billion refinancing and a key renewal from anchor tenant Salesforce – as evidence that premier assets are performing strongly. Blackstone Real Estate’s Jacob Werner echoed that confidence, calling the city’s office market “incredibly well positioned from a demand perspective” and offering a simple investing philosophy: “Over the last 20 years, the one thing I’ve learned investing in real estate is don’t bet against New York.”
Not everyone on the panel agreed. Adam Gallistel, chief investment officer and co-CEO of CBRE Investment Management, offered what he described as “the contrary view,” arguing that New York’s appeal as an investment destination is undermined by sheer competition: “Just because the economy is doing well and there’s GDP growth and lots of prospects for the city itself, it doesn’t necessarily make it a great place to invest. There are so many people – some of them are the world’s sharpest, most intelligent minds – looking at the same tiny island and going after the same exact opportunities. The ability to have an edge in New York City, I would posit, is slim to none.” Gallistel, who joined CBRE after 20 years at Singaporean wealth fund GIC, said the most compelling opportunities he sees today are in Europe, where regulatory constraints have created a supply-demand imbalance even more favourable to investors. CBRE acquired roughly $6 billion worth of European real estate over the past year, compared to less than $1 billion in the US. Sarah Hawkins of Hines struck a middle ground, acknowledging the need for selectivity while noting that leasing momentum has created “a great moment” for long-term holders, adding: “We’ve never seen a more robust leasing market.”
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