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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: dot Com, the Radio plus Mobile Act and on your radio.

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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Handquarters.

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Speaker 1: I'm Charlie Palot. Move law for US equities today, the DAL,

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Speaker 1: the SMP, NESDAC all dropping, with the SMP five hundred

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Speaker 1: index down eighteen to twenty six and decline today of

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Speaker 1: nine tenths of one percent. Stocks dropping ahead of tonight's debate.

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Speaker 1: Deutsche Bank shares tumbled seven point one percent, the Dow

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Speaker 1: down one sixty six, down nine tenths of one percent.

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Speaker 1: NASTAC also down nine tenths of one percent. Gold down

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Speaker 1: ninety cents, little changed at thirteen thirty sixty ounce crude

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Speaker 1: oil West Texas Intermediate advancing today by two and a

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Speaker 1: half percent, forty fifty nine for a barrel of West

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Speaker 1: Texas Enemedia crude. I'm Charlie Pallet. That's a Bloomberg Business flash.

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Speaker 1: You're listening to Taking Stock with Kathleen Hayes and Pim

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Speaker 1: Box on Bloomberg Radio. We are broadcasting live from Midtown

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Speaker 1: Manhattan from the offices of Eisner Amper. They are preparing

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Speaker 1: for their fourth annual Eisener Emper Real Estate Private Equity

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Speaker 1: Summit that takes place Wednesday, September. Keynote speaker is Sam's

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Speaker 1: now the chairman of Equity Group Investments. In here to

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Speaker 1: tell us more about the upcoming summit and about real

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Speaker 1: estate is Ken Eisenberg. He is a partner in charge

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Speaker 1: of Eisner Emper's real estate practice. Ken, thank you very

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Speaker 1: much for spending time with us. Thank you, Pim. What

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Speaker 1: do you expect to hear and learn at this event

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Speaker 1: on Wednesday, Well, we know that the market is starting

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Speaker 1: to change. You think there's a correction going on, and

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Speaker 1: I'm interested to hear from the speakers as to what

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Speaker 1: the market is actually doing. What their take is where

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Speaker 1: they see capital should be invested right now, whether they're selling, buying,

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Speaker 1: or holding. Where they see the future of the market

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Speaker 1: going over the next couple of months of the year. Well,

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Speaker 1: so a correction in the markets, it is? Is it

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Speaker 1: the kind of correction that is number one from Oh,

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Speaker 1: developers always developed too much and and so ultimately it

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Speaker 1: peaks and comes down, is it? Well, it would have

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Speaker 1: been okay two years ago to build this much, but

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Speaker 1: a lot of foreign buyers pulled back because they want

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Speaker 1: to park their money someplace safe, and they don't feel

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Speaker 1: that so strongly. Now. It does have anything to the

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Speaker 1: credit cycle and people sending of the Feds finally serious.

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Speaker 1: They're gonna start raising rates, bond deals are gonna rise,

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Speaker 1: and that's going to mean less available financing. All of

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Speaker 1: the above. UM. I think there's just a um slight retrenchment.

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Speaker 1: It's not a major crash in the market. You're seeing

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Speaker 1: prices stabilizing or going down a little bit, and the

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Speaker 1: number of sales I think is the keyndicator that the

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Speaker 1: market is slowing. UM. Well, this might be the second

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Speaker 1: highest sales year of commercial office in New York history.

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Speaker 1: UM it's a teen percent off of last year, and

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Speaker 1: a lot of the sales were contracts would entered into

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Speaker 1: in two thousand fifteen and closed in two thousand and sixteen.

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Speaker 1: So you're seeing the slight pullback, not complete pullback. I

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Speaker 1: still have clients looking to buy and develop. There's opportunities

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Speaker 1: to be had, but it's a slower market and people

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Speaker 1: are taking more time. Also, the price of land had

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Speaker 1: gotten to the point that it made developing very expensive,

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Speaker 1: and the cost of developing prevented rental as as an option.

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Speaker 1: So a lot more buildings were built as condos. Those

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Speaker 1: condos are now being rented out by the owners. A

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Speaker 1: lot of people bought them for rental properties, and it's

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Speaker 1: putting pressure on the residential rentals which are starting to

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Speaker 1: come down a little bit. So you're seeing a lot

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Speaker 1: of different forces taking place. Now people say oh, they

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Speaker 1: built too much, especially hotels and say, oh, they built

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Speaker 1: too much. If you look at the number of hotel

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Speaker 1: rooms in New York versus the number of visitors we

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Speaker 1: have in New York, we are still way underserved as

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Speaker 1: an overall market. Now you've been doing this, I understand

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Speaker 1: for more than three decades. You helped put together about

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Speaker 1: fifty billion dollars worth of transack. That that was a

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Speaker 1: number of years ago. Okay, so now we've e been accelerated.

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Speaker 1: That It is um it's the it's the time frame

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Speaker 1: by which people look at these deals. You mentioned, you know,

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Speaker 1: looking to the future months and maybe a year, But

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Speaker 1: has the time frame that people measure collapse during your

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Speaker 1: your career. Real estate is a cycle. Generally the cycle

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Speaker 1: runs five to seven years. We're in the seventh year

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Speaker 1: of a long recovery. Whether it's a I don't and

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Speaker 1: I don't see it as a two thousand and eight

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Speaker 1: type correction. Um. I see this is more of a

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Speaker 1: take a breath. I'd come down five to ten over

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Speaker 1: the next year to two years and then resume its

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Speaker 1: upward climate. Uh. Particularly the gateway cities are seeing trumendous

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Speaker 1: interest both domestically and overseas for people who want to

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Speaker 1: come to the major gateway cities, who invest in the

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Speaker 1: gateway cities as places to both live and work. Um,

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Speaker 1: there's been a migration from the suburbs. So who's the

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Speaker 1: gateway cities? Give us a top five? New York, San Francisco,

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Speaker 1: Los Angeles, Miami, Washington. Okay, so where what's the gate

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Speaker 1: what's up a tent? What's this the sub tier or

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Speaker 1: the next gateway city? Right, because it seems to me

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Speaker 1: prices have gone up so much in the cities you

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Speaker 1: just mentioned other places that are going to get the

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Speaker 1: spill over and become you know, the second tier gateway

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Speaker 1: There certainly is, and then those really kind of look

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Speaker 1: to the tech cities. Um. You have Boston, Austin, Texas, UM,

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Speaker 1: even in Chicago, UM. Other Midwestern cities are seeing the

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Speaker 1: rise of of tech being developed in their in their borders,

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Speaker 1: and that is a driving force in the market today. Now,

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Speaker 1: financial services is what makes New York, entertainment is what

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Speaker 1: makes Hollywood. But um, tech is what's making the country.

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Speaker 1: And it's really the next wave of jobs. I think

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Speaker 1: you'll you'll see some manufacturing growth, but most of the

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Speaker 1: growth and real earnings will be in the tech space.

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Speaker 1: As far as investment returns, the comps, the comparables. When

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Speaker 1: you look at treasuries, have got to make a real

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Speaker 1: estate at least attractive on on one basis. Who is

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Speaker 1: that not the way to look at it? Some people

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Speaker 1: look at it that way. Um, A lot of you know,

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Speaker 1: foreign companies of foreign governments in particular, we're investing and

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Speaker 1: they were looking at cap rates of one and a

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Speaker 1: half to two, which I don't think it's sustainable in

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Speaker 1: the long term. That means that that that that the

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Speaker 1: property was valued at a certain amount, that the return

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Speaker 1: was only about one and a half percent, right, because

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Speaker 1: they looked at long term growth or just as safety.

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Speaker 1: So if you had advice for somebody, and I'm sure

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Speaker 1: you do often in your business, but more probably for

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Speaker 1: our people listening today when it comes to commercial real estate,

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Speaker 1: when it comes to reads, when it comes to investment opportunities,

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Speaker 1: what's your number one idea right now? Well, first they

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Speaker 1: should come to the conference. And here what the real

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Speaker 1: experts have to say of the conference is this Wednesday

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Speaker 1: at Chelsea Pierre. Tickets are still available. We have a

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Speaker 1: great lineup of speakers, including several who on today's show. Um,

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Speaker 1: most of whom we're on my panel were and you know,

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Speaker 1: we have Paul Mazie who is running was running from

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Speaker 1: the air and he's a chair of Cushman and Wakefield.

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Speaker 1: So it's very exciting. And let's not forget Leslie Hill,

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Speaker 1: partner founder him All America Properties, because you know, powerful

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Speaker 1: woman in real estate. That's always a great example. And

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Speaker 1: oh my goodness, we had so many terrific people today,

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Speaker 1: so that's just a taste. Thanks so much to you.

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Speaker 1: Ken wiser Berg from Partner in Charge is Ramp for

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Speaker 1: Real Estate Practice and he's talking about their fourth annual

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Speaker 1: Real Estate Private Equity Summit. You can go online and

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Speaker 1: get all the information you need. I'm kathe Maas along

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Speaker 1: with pim Fox. This is taking Stock and this is

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Speaker 1: Bloomberg coming up. Bloomberg Law is brought to by Latin.

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