Aaron Bergman

The value of distressed assets in the #CRE marketplace continued to grow in the U.S. into Q3'24. Still, the ramp up is not as rapid as that seen following the GFC as there are different forces at play in the current market. Read more about the source of distress and a chart on comparisons to the GFC by my colleague Alexis Maltin here: http://ms.spr.ly/6049WR4GN MSCI Real Assets

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Despite what are very real headwinds (think GCE, RS regulation, interest rates, general market sentiment), multi-family and mixed-use properties accounted for over 77% of the total number of transactions in the first half of 2024 in Manhattan. There is still clear demand for the asset class, and I predict that isn't going to change any time soon (especially as pricing adjusts).

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🌆🏢 From Fixer-Uppers to High-Rises: A Commercial Real Estate Advisor's Guide to ARV vs. Value-Add 🌟 Hey there, fellow investors! 👋 As a commercial real estate advisor, I get a front-row seat to the exciting (and sometimes confusing) world of property investment. 🏠➡️🏢 Lately, I've noticed more residential investors wanting to dive into commercial real estate. But here's the catch: the strategies that work for flipping houses don't always apply to office buildings and retail spaces. 🏢💡 One common confusion? The concept of "ARV" (After Repair Value). Many clients come to me, eyes sparkling with dreams of quick flips and tidy profits, asking about the ARV of commercial properties. That's when I gently break the news: ARV, as you know it, isn't really a thing in commercial real estate. 🏠❌🏢 Curious about how to navigate these waters? 🌊 Check out my latest guide where I break it all down! 🔍👉 Read the full story here: https://bit.ly/45GJRGg #CommercialRealEstate #RealEstateInvestment #PropertyInvestment #InvestSmart #RealEstateTips #ValueAdd

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Here’s something I’m not thrilled about: congestion pricing in NYC. I understand the need to fund infrastructure and improve the subways, but charging $9 a day to drive south of 60th Street in Manhattan feels counterproductive. Right now, Manhattan is already facing a significant drop-off in midweek workers, especially on Mondays and Fridays, as remote and hybrid work redefine office life. Instead of incentivizing people to return, this feels like a deterrent. Yes, I get the argument for reducing cars and encouraging public transportation, but is this the right solution? What really hits home for me is how this impacts young professionals like my 24-year-old daughter, who reverse commutes out of Manhattan for work. She’s now looking at an additional $50/week cost on top of high rent and parking fees. It’s tough enough to get ahead in the city without these extra costs. What are your thoughts on congestion pricing? Is it the right move, or should NYC explore other ways to balance revenue and accessibility?

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🏙️ Considering buying property in NYC? Whether you're a first-time buyer or seasoned investor, navigating the market can be daunting. Pinpointe Group's guide offers valuable insights to help you make informed decisions: 📈 Understanding the NYC Real Estate Market: Dive into the dynamic landscape influenced by location, supply, demand, and policies. 💰 Determining Your Budget: Establish a realistic budget considering not just the purchase price but also closing costs, taxes, and potential renovations. 🏘️ Exploring Neighborhoods: NYC offers diverse neighborhoods, each with unique amenities. 🔍 Navigating the Buying Process with a Buyer's Agent: From property search to negotiation and due diligence, a buyer's agent from Pinpointe Group works exclusively for you, ensuring a smooth transaction. 💼 How are buyer agents compensated?: Pinpointe Group explains the compensation process, ensuring transparency in negotiations. 🏦 Securing Financing: Pinpointe connects you with trusted mortgage lenders and financial advisors to find the right financing solution for your needs. 💼 Understanding Closing Costs: Plan for closing costs, including fees for services like attorney fees and title insurance. 🌟 Final Thoughts: With careful planning and guidance from Pinpointe Group, you can confidently navigate the NYC real estate market and achieve your homeownership goals. Contact us today to start your property search in NYC! #NYCRealEstate #Homebuying #PinpointeGroup #RealEstateAdvice

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MYTH #4: SFR LANDLORDS OFTEN SPIKE RENTS, PRICING FAMILIES OUT OF THEIR NEIGHBORHOODS Reality // SFR landlords, just like multifamily landlords, set rents based on market dynamics. If they overprice their units, tenants will simply go elsewhere. SFR landlords frequently perform extensive rehabs that make properties more attractive, which benefits tenants, nearby homeowners, and entire local communities SFR companies have cumulatively poured $4.4 billion into home rehabs — an average of about $21,000 per house. These investments have supported more than 50,000 jobs and generated more than $300 million in local taxes and revenue.https://https://lnkd.in/gHX6F9Qx

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"NEW YORK'S OFFICE MARKET VALUE TOPS PRE-PANDEMIC LEVEL, STUDY FINDS" wait what??? this headline really threw me for a loop...how is this possible, with high vacancy rates, high interest rates etc, the capital required to comply with LL 97 and otherwise remain competitive...have I been missing something? But then I read further: "The total assessed value rose 4.4% to $205 billion in fiscal year 2025 from $196.2 billion in fiscal year 2020, based on a study by New York State Comptroller Thomas DiNapoli’s office, which calculated its market and taxable billable value data mostly from the city’s Department of Finance records. Total taxable billable value rose 7% to nearly $72 billion between fiscal 2020 and 2025, the report said." ah ok that explains it...everything is more valuable when it comes time to collect taxes, right!?

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Listed REITs returned -1.7% last week, underperforming the S&P by -193bp and the NASDAQ by -179bp. The catalyst for the declines was real rates that rose +14bp week-over-week to 1.74% on the heels of better-than-expected economic releases. Listed REITs had a very strong run in 3Q rising nearly 14% and have recently given back some of those gains since the Fed cut rates -50bp in September. But, it's important to remember periods of consolidation are healthy and often occur during rallies. For instance, there were 5 corrections of 10% or greater from Dec ’99 to Feb ’07 when listed REITs rose a cumulative 400%. The sector stands at +11.5% year-to-date and more than 39% above its trough in late October of 2023. Here's your pretty picture.

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NYCB is now Flagstar Financial. NYCB had been dealing with large commercial real estate loan losses and tanking profits. Among the root causes of their problems: 〰️ A portfolio of multifamily loans heavily concentrated in rent-stabilized NYC properties, and 〰️ NYC's rent stabilization rules, which have become increasingly restrictive, making it difficult for some multifamily property owners to stay above water - especially in times of high interest rates and operating costs Rent stabilization rules limit rent increases landlords can charge, even after a vacancy or a major upgrade. And once a housing unit is rent-stabilized, it is difficult to lift the constraints. Rising multifamily delinquencies linked to rent stabilization can impact lenders, investors, and tenants: 〰️ Multifamily defaults are expected to increase, forcing banks to increase reserves, reduce lending, and absorb losses. 〰️ Some investors in rent-stabilized properties will be stuck dealing with ongoing losses. Distressed asset sales will increase, creating instability and lowering valuations. But even with discounts, it’ll be hard to find buyers willing to take on properties with capped upside. 〰️ While the newest rent stabilization rules provide tenants with stronger rent protections and eviction safeguards, there could be unintended consequences. Cash-strapped landlords could cut maintenance, negatively impacting living conditions. If defaults rise, tenants could face eviction as properties fall into foreclosure. Fewer developers will enter the rent-controlled market, squeezing the affordable housing supply even further. Could AI help save the day by analyzing millions of scenarios to find a mutually beneficial balance between tenant protections, investor returns, and lender stability? https://lnkd.in/ez7ZkbRb JSR Capital Group

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How do you make money buying rent-stabilized Multifamily in NYC ⁉ Answer = ✅ It's hard.... (but that's the opportunity) ➡ Grow Scale - Ability to move tenants within portfolio to unlock new rents (example: offer a rent control apt tenant a new renovated apt at similar rent, then renovate the RC apt and set new legal rent at market) ➡Preferential Rents - study the rent roll to see if Legal rents are higher than existing rents which could give a nice pop as leases turn over ➡ Cap Ex. - look for buildings with upgraded systems and mechanicals ➡Property taxes - underwrite to 25% (even if much lower today) ➡ Buy from long-term ownership - still have meat on the bone as these buildings often have untapped value ➡Compare average rents to market (if the average rent is $1200/mo but neighborhood average is $3000, gives you long-term potential) ➡ Look for other income opportunities (laundry, Antenna on roof,) ➡ Control your expenses - invest in heating, electricity, water to improve building efficiency and improve NOI ➡Hire a GREAT super who is bilingual and highly skilled in carpentry and plumbing (pay them more than average) 💲 Bottom line 💲 It's extremely difficult for building owners to operate within the confines of rent regulation today in NYC, but with the right business plan, and execution, 2024-2025 could prove to be a once in a generation buying opportunity for Multifamily  “be fearful when others are greedy, and be greedy only when others are fearful" - Warren Buffet

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Listed REITs returned +2.3% last week, outperforming the S&P by 54bp and the NASDAQ by 50bp. Real estate was the 4th best of the 11 S&P sectors. Every subsector was positive as data centers (+4.9%), lodging (+4.7%) and office (+3.7%) led while single family rental (+0.2%), malls (+0.7%) and manufactured housing (+1.0%) were relative laggards. Year-to-date returns now stand at +12.1% with valuations only -2.7% below their 2024 highs. Here's your pretty picture.

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The most-read story from the previous week's Developer's Digest®, published by Crain's New York Business, covers office-to-residential conversions gaining traction in New York City as a solution to the housing shortage and office surplus, bolstered by a new state budget tax incentive. The Adams administration has launched a portal on the Department of Housing Preservation and Development's website detailing the program, which starts accepting applications later this year. Projects must begin between 2023 and July 2031 and be completed by December 2039, offering tax benefits lasting up to 35 years based on the project start date. To qualify, conversions must include at least six residential units, with 25% of the units being permanently affordable for households earning up to 100% of the area median income. At least 5% of these affordable units must serve households earning no more than 40% of the area median income, and the overall affordability average must not exceed 80%. Additionally, half of the affordable units must be two-bedroom units or larger, and no more than 25% can be studios. Conversions can occur citywide, with more substantial tax benefits for projects in Manhattan below 96th Street, where they will receive a 90% tax exemption initially, decreasing over time. To read more stories like this and to stay on top of the most recent news from the development world, subscribe to our Developer’s Digest® using the link below: https://bit.ly/3Qg1qXV #digest #dsa #nyc #weknowzoning #deveopmentsites #developmentnews

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Want more details about the Knakal Map Room? In this clip from a recent podcast, I share BKREA's hub of real estate information in Manhattan. The Knakal Map Room houses extensive data on development projects, construction plans, recent sales, and more, providing a comprehensive view of the market. Yes, it's analog but there is something to be said about having a physical map you can highlight, mark up, and manipulate that is very satisfying. Special thanks to Jamie Bateman from the From Adversity to Abundance Podcast for having me on his podcast. Get the link to the episode in the first comment. #bkrea #nyrealestate #bobknakal

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Listed REITs returned -2.9% week-over-week, underperforming the S&P by -155bp and the NASDAQ by -140bp. The culprit was once again rising real rates that increased by +10bp to 2.05%, the highest level since early July. Healthcare (+0.5%) and shopping centers (+0.2%) eked out positive returns while single family rentals (-7.3%), apartments (-5.2%) and cell towers (-4.6%) were laggards. Listed REITs stand at +8.9% year-to-date and +31.9% year-over-year. Here's your pretty picture.

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Why Is Office-To-Residential Conversion So Difficult To Get Done? In NYC, there is a low availability rate of apartments and a glut of B and C-level office buildings with low occupancy. Perfect, right? So why is office-to-residential conversion occurring at such a relatively slow pace? This is true even with the recent announcement of the planned conversion of Pfizer headquarters to housing. Jonathan Miller, CRE®, Member of RAC described many of the issues in a recent HousingNotes article 'The Challenge Of Office-To-Residential Conversions – Red Stapler Edition'. These are his bullet points with broader explanations in the article here https://lnkd.in/efD5wcUx - More Time Needed - Construction Costs Are Higher - Large Floorplates Are Often Not Feasible - Most Municipalities Can’t Afford To Subsidize - Zoning Variances And Community Approvals - Vacancy Rates Are Misleadingly Low _____________________________________________ If You Are Buying A Home Or Commercial Property In New York State… Did You Know That Title Insurance Companies Are NOT All The Same, Including The Cost? And, it’s your RIGHT to choose the title company you want to use! That's Where Your Due Diligence Comes In! Read '10 Significant Ways That Hallmark Abstract Service Differentiates Itself From Many New York Title Insurance Providers!' here https://lnkd.in/edc79W4Y. Questions? Contact us at [email protected] or (516) 741-4723. Hallmark Abstract Service...You Buy Real Estate, We Protect It! #architect #housingaffordability #housing #development #titleinsurance #Manhattan #Manhattanrealestate #foreclosure #WFH #office #finance #mortgage #commercialrealestate #CRE #LongIsland #LongIslandrealestate

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Here's our U.S. real estate team's update to the proposed changes to zoning regulations in New York City that are intended to spur the production of affordable housing, commonly referred to as "City of Yes". It's a quick and easy read: https://lnkd.in/eZMmiWhS #RealEstate #Zoning #AffordableHousing #Investment #Development #Regulation

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NAHB predicts a significant pullback in multifamily starts for 2024. Are we surprised? Multifamily Developer Confidence is in Negative Territory. In the fourth quarter of 2023, multifamily developer confidence remained in negative territory, as revealed by the Multifamily Market Survey (MMS) conducted by the National Association of Home Builders (NAHB). The survey produces two key indices: the Multifamily Production Index (MPI) and the Multifamily Occupancy Index (MOI). The MPI, which gauges sentiment about current production conditions in the apartment and condo market, scored 41, below the break-even point of 50. Meanwhile, the MOI, measuring the industry’s perception of occupancies in existing apartments, registered 77. Tight lending standards and high development loan costs continue to hinder financing for new multifamily projects. Given the substantial supply of multifamily units under construction, NAHB predicts a significant pullback in multifamily starts for 2024 #realestatedevelopment #realestateinvesting #passiveincome #multifamily #realestate #multifamilyinvesting #multifamilyrealestate #firsttimedeveloper #raisemasters30 #cre #financialfreedom

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