WEBVTT - ONE Sotheby's Intl. President on Real Estate

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<v Speaker 1>This is Bloomberg Business Week with Carol Masser from Bloomberg Radio.

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<v Speaker 1>Real estate stories definitely popping up constantly on our radar today.

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<v Speaker 1>One about office vacancies in Manhattan jumping to a twenty

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<v Speaker 1>one century record as the COVID nineteen pandemic froze new

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<v Speaker 1>rental deals and sub lease opening sword that caught my attention.

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<v Speaker 1>Also Virtue Financial they're heading to Florida. So we've seen

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<v Speaker 1>a wave of financial firms setting up bases outside Manhattan.

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<v Speaker 1>And then earlier this month he had Goldman wing plans

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<v Speaker 1>to house a key division in South Florida. So a

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<v Speaker 1>lot going on. Meantime, Black Rock is really planning its

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<v Speaker 1>feed firmly in Manhattan and still plans to move its

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<v Speaker 1>New York City workforce to new offices in Hudson Yard.

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<v Speaker 1>So just some of the Yinnan gang going on. Let's

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<v Speaker 1>get into this with Daniel de la Vega. He is

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<v Speaker 1>president of One Southeby's International Reality. He joins us on

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<v Speaker 1>the phone in Miami. Daniels, So nice to have you

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<v Speaker 1>here on Bloomberg. So what are you seeing in terms

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<v Speaker 1>of the migration south? Which isn't a new one, but

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<v Speaker 1>it does feel like it has picked up some moment

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<v Speaker 1>as a result of COVID. Thank you, Carol, So happy

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<v Speaker 1>to be nice to have you here, so thank you,

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<v Speaker 1>thank you. So like colony like virtue that you guys

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<v Speaker 1>just mentioned. It's one company after another. Blackstone just signed

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<v Speaker 1>a forty one square foot least Starwood is doing their

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<v Speaker 1>hundred and forty four thousand square feet on Miami Beach,

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<v Speaker 1>And we're experiencing something that we've never experienced before, quite frankly.

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<v Speaker 1>And we've always had the no personal income tax, we've

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<v Speaker 1>always had a lower corporate tax rate, we've always had

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<v Speaker 1>no state income tax. But because of the pandemic, because

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<v Speaker 1>of these companies realizing that they don't have to be

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<v Speaker 1>all the time in these offices, they're all relocating to

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<v Speaker 1>South Florida. And it's been a boom like we've never

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<v Speaker 1>experienced before, and I don't really see it flowing down,

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<v Speaker 1>and it's incredible to be living here and seeing this happen. Well.

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<v Speaker 1>What's interesting, though, is that I think it's fair to

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<v Speaker 1>say that there are a lot of people who work

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<v Speaker 1>at New York financial firms that like living in the

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<v Speaker 1>New York metro area. They like New York City they

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<v Speaker 1>like the New York City suburbs. So I do wonder about,

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<v Speaker 1>you know, in terms of the people who are moving down, Um,

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<v Speaker 1>is it everyone? We heard from the Goldman Sack CEO

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<v Speaker 1>earlier this year that he expects by the end of

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<v Speaker 1>the year to see his workers back here in offices

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<v Speaker 1>in New York City. So who is it, you know moving?

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<v Speaker 1>Is it smaller boutique firms? I mean, you did mention

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<v Speaker 1>I think it was did you say black Rock or

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<v Speaker 1>Blackstone that's actually moving down Blackstone Blackstone? So so you're

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<v Speaker 1>seeing right now divisions of some of these larger corporations.

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<v Speaker 1>So Goldman is going to move their asset management department,

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<v Speaker 1>or at least there's rumors that they're going to move it.

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<v Speaker 1>So I guess they're dipping their toe sort of here

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<v Speaker 1>in the sand. No pun intended to see if they

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<v Speaker 1>like it, to see if they can actually attract a

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<v Speaker 1>good talent pool. But we we are seeing it happen

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<v Speaker 1>more and more, and and we really believe that it

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<v Speaker 1>is going to continue. And yes, some of the smaller

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<v Speaker 1>we're seeing this movement now of tech firms, and some

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<v Speaker 1>of the tech firms are smaller firms, although some of

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<v Speaker 1>The buyers of some of these residential properly properties are

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<v Speaker 1>large time, very very large tech executives like Keith Rabbos,

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<v Speaker 1>who's with PayPal, Square LinkedIn, etcetera. He moved from San Francisco.

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<v Speaker 1>So we're seeing a little bit of both, a little

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<v Speaker 1>bit of both. Yeah, it's it's kind of interesting to see. Um.

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<v Speaker 1>Having said that there's great cities like Miami, there's great

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<v Speaker 1>cities like Chicago, like l A, like San Francisco, like

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<v Speaker 1>New York. Do you anticipate, as someone who follows um

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<v Speaker 1>the real estate market, that we're going to see a

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<v Speaker 1>demise of some of those big cities or not necessarily.

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<v Speaker 1>Maybe there's a little bit of a rework for a

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<v Speaker 1>little bit, but ultimately when we get on the other

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<v Speaker 1>side of this, what do you expect? You know, what

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<v Speaker 1>we've predominantly seen is New York to try State Area

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<v Speaker 1>in New York. And again it's a little bit of both.

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<v Speaker 1>When I say what I'm about to say, you've got

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<v Speaker 1>a lot of large hedge funders, investment bankers that are

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<v Speaker 1>moving down and saying this is temporary, this is a

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<v Speaker 1>three or four year moved for me because I need

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<v Speaker 1>to be in Manhattan, private equity deals are done in Manhattan,

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<v Speaker 1>their ton out in the hand into the summer, etcetera.

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<v Speaker 1>So that's where I need to be. And unless these

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<v Speaker 1>companies dip their toes in the sand, really like what

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<v Speaker 1>they see and then move the entire organization, I think

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<v Speaker 1>you will see a bit of that migration kind of

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<v Speaker 1>heading back north as things start to um normalize a

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<v Speaker 1>little bit. But look, for us, it's great that they're coming,

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<v Speaker 1>that they're realizing what a great place it is here

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<v Speaker 1>in South Florida and that they can actually work here

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<v Speaker 1>and operate out of here. And I think that the

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<v Speaker 1>way we're operating as businesses will continue to be a

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<v Speaker 1>bit more virtual. I think that Zoom is going to

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<v Speaker 1>be something of the future and that is the way

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<v Speaker 1>that transactions are going to take place, and everything's moving

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<v Speaker 1>to a more e sech platform and it's just going

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<v Speaker 1>to embrace everything that's happening. Who's buying properties on a

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<v Speaker 1>global scale right now when it comes to South Florida

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<v Speaker 1>and the proper and the and the markets that you

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<v Speaker 1>play into, Oh my god, it's so many people. So

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<v Speaker 1>it just went public today. We just broke it a

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<v Speaker 1>deal for Randy Gerber and Cindy Crawford on North Bay

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<v Speaker 1>Road on Miami Beach, which was pretty interesting for a home.

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<v Speaker 1>I'm assuming resident here for a residential home. Yeah yeah,

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<v Speaker 1>yeah uh. Same with Tom Brady and just Sell. They

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<v Speaker 1>bought an Indian Creek, which is great. And we spoke

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<v Speaker 1>a little bit earlier about Goldman Sachs. I mean, those

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<v Speaker 1>are celebrities. We spoke a little bit earlier about Goldman

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<v Speaker 1>Sachs and Douglas Sacks, the managing director there. He he

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<v Speaker 1>bought a home for twelve million dollars on Miami Beach.

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<v Speaker 1>Um John Oranger, who's the founder of Shutterstock, he bought

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<v Speaker 1>a home for forty two million dollars on Miami Beach.

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<v Speaker 1>Sam Nasarian in the hospitality industry just closed on something

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<v Speaker 1>in Gables the States and Coral Gables. So it's all industries, celebrities, everybody.

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<v Speaker 1>It just seems like, you know, South Florida is the

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<v Speaker 1>spotlight of everything, and we've spoken about Miami, but it's

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<v Speaker 1>really happening in Dave, Broward, Palm Beach, all of South Florida,

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<v Speaker 1>I mean Miami, Dave County, year over years up over

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<v Speaker 1>thirty Broward forty two, the Island of Palm Beach over fifty,

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<v Speaker 1>So you're blended at over almost throughout South Florida. And

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<v Speaker 1>this is on single family homes and condominiums. Um. So

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<v Speaker 1>the increases that we've been experiencing are crazy, and it's

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<v Speaker 1>we've had almost like this reset Carol of pricing. I mean,

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<v Speaker 1>you've got homes that are up fifty in some of

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<v Speaker 1>these luxury neighborhoods and you're looking at these houses that

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<v Speaker 1>are now trading for twenty that pre pandemic, you couldn't

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<v Speaker 1>get ten million for them. And it's just become the

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<v Speaker 1>new norm. And we've had this this now reset of

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<v Speaker 1>pricing that that is what the numbers are. So it's

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<v Speaker 1>just yeah, there's some deals over a hundred million that

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<v Speaker 1>are going to be done before this quarters over. You

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<v Speaker 1>talking about residential or no, you're talking about commercial now

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<v Speaker 1>residential residential? Yeah, I mean commercials on fire as well.

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<v Speaker 1>We run a commercial firm that's called One Commercial. I mean,

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<v Speaker 1>the demand for office right now is strong. In the

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<v Speaker 1>Brickle Downtown corridor. You've got triple net numbers around forty

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<v Speaker 1>five sixty four dollars a square. It's forty five to

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<v Speaker 1>sixty five dollars a square foot. That's the range um

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<v Speaker 1>and there's over I would say a million square feet

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<v Speaker 1>right now in a man for office space in these areas.

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<v Speaker 1>So it's not only people buying these these residential homes,

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<v Speaker 1>they're also looking to move their headquarters Daniel, at least

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<v Speaker 1>divisions within these courts. Is it a trend that would

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<v Speaker 1>have happened if we didn't have COVID or is there

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<v Speaker 1>is this the COVID factor. I think it's the COVID factor.

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<v Speaker 1>I really think it's the COVID factor. Like I said earlier,

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<v Speaker 1>I mean we've always had had, you know, a strong

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<v Speaker 1>migration from the northeast from Canada. We started to see

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<v Speaker 1>a little bit of California in tech to service Latin America, etcetera.

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<v Speaker 1>But it really is the COVID factor. I mean, in

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<v Speaker 1>March and April, we didn't know what was going to happen.

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<v Speaker 1>And then come May, June, July, which are typically our

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<v Speaker 1>slowest months, they were our strongest months. We were up

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<v Speaker 1>over a hundred in July alone. So it happened, and

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<v Speaker 1>it happened very quickly. Well, and when I you know,

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<v Speaker 1>when I kicked this off and we started talking about

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<v Speaker 1>who's buying and you said, you know a lot of

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<v Speaker 1>people are buying. Um it used to be a lot

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<v Speaker 1>of I feel like foreign or non US investors and buyers.

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<v Speaker 1>What are we seeing from Europe, What are we seeing

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<v Speaker 1>from Latin America, What are we seeing from Asia? It's

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<v Speaker 1>pretty dry. So we traditionally, especially in our new condominium division,

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<v Speaker 1>we saw a lot of what we would call flight

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<v Speaker 1>capital from Latin America, and that has just dried up

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<v Speaker 1>because of everything that's happening in the respective economies up

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<v Speaker 1>down in Latin America. So we we have just seen

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<v Speaker 1>the domestic buyer, I mean, and because of you know,

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<v Speaker 1>the low interest rate environment, we've also seen a lot

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<v Speaker 1>of refinancing. So that's of course helped sort of spur

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<v Speaker 1>the market forward. But it's really been the domestic buyer

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<v Speaker 1>from the Northeast, from California that's been relocating here Boston, Washington, Chicago.

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<v Speaker 1>We just did a deal. We're representing one thousand Museum,

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<v Speaker 1>which is in downtown Miami Asahahadeed building. We just did

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<v Speaker 1>it deal for fifteen million dollars over fifteen hundred of

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<v Speaker 1>square foot or sixteen million, fifteen hundred of square foot

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<v Speaker 1>to a buyer from Chicago. So it's just it's it's

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<v Speaker 1>it's incredible what's happening. So okay, I'm going I just

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<v Speaker 1>kind of put a if you weren't in Florida and

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<v Speaker 1>this wasn't the market you were playing in right now

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<v Speaker 1>when it comes to and selling and and working with

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<v Speaker 1>in um, if it wasn't South Florida or Florida, where

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<v Speaker 1>would it be that you would want to be working

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<v Speaker 1>in me? In New York City? I think that there's

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<v Speaker 1>see I I go to New York City often with

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<v Speaker 1>my family for business, etcetera. We love it, and my

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<v Speaker 1>wife and I this year we're talking about how sad

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<v Speaker 1>it was. She does a girl's trip actually every Christmas

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<v Speaker 1>to New York and they couldn't go. And then some

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<v Speaker 1>of my buddies and I were talking on New Year's

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<v Speaker 1>about when, when, when is the right time to go

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<v Speaker 1>back to New York And I hope it's very soon.

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<v Speaker 1>But from a business perspective, I heard you say earlier

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<v Speaker 1>and I agree with you. Prices, especially on the condominium

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<v Speaker 1>front and the new developments have not gone down the

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<v Speaker 1>way you've expected then two or the way we've expected

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<v Speaker 1>them to help kind of firm and you are seeing

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<v Speaker 1>some deals get done thirty forty million. But I do

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<v Speaker 1>believe there will be opportunity, and I think that it's

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<v Speaker 1>it's it's the it's the intelligent thing to do to

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<v Speaker 1>be investing right now. And then yeah, that's what people

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<v Speaker 1>have said, it's great opportunities. The median price have previously

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<v Speaker 1>owned homes that changed in the fourth quarter just down

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<v Speaker 1>about one and a half percent by Miller Samuel and

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<v Speaker 1>you know, just looking at those Manhattan home shoppers, people

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<v Speaker 1>who are selling are not cutting their prices at this point. Um,

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<v Speaker 1>Daniel is so great to check in with you. Um,

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<v Speaker 1>be well and hopefully we'll check in again throughout the

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<v Speaker 1>new year. Daniel de la Vega, President at One Sotheby's

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<v Speaker 1>International Reality, on the phone from Miami.