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Spencer Levy
I'm Spencer Levy and this is The Weekly Take. it's been a calendar year since the COVID lockdown sent us home all over the nation in the world, in New York it came as close as anything ever has to shutting down the city that never sleeps. And on this episode, we explore the state of the city. Three leaders returned to the show to offer experience and expertise. The first is Big Apple royalty: Darcy Stacom, chairman and head of CBRE’s New York City Capital Markets Group. Darcy’s stratospheric sales figures once earned her the mantle queen of the skyscrapers from the Wall Street Journal. She'll share her market viewpoint with a focus on office.
Darcy Stacom
I think that there's a lot of product that could go to market and it just needs to show a depth of bidding. So we're getting ready to go.
Spencer Levy
Then our vagabond shoes will stray right to the very heart of the retail sector with another heavy hitter. Annette Healey, executive vice president of our tri state regional retail brokerage services group, Annette will share her insights into a sector where she's been our company's top producer for three years running.
Annette Healey
Innovation is what retail is known for. Retail, like New York City, is ever resourceful and ever resilient.
Spencer Levy
And then it's an encore from Mary Ann Tighe a Bronx, New York native whose eye for art, design and dealmaking has helped transform the skyline from Times Square to the World Trade Center and beyond. The CEO of CBRE New York tri state region for nearly 20 years, Mary Ann brings her big deal perspective to our discussion of this ever evolving metropolis.
Mary Ann Tighe
New York is a place where you only succeed if you develop strategies to overcome obstacles because obstacles are a given in the New York acquirement.
Spencer Levy
Coming up, the finale of our New York Story special featuring Mary Ann Tighe, Annette Healey and leading off in our lineup, Darcy Stacom. That's right now on The Weekly Take. So, Darcy, let's start with a big picture question what is the state of New York right now?
Darcy Stacom
I think that there is optimism and pessimism in equal measures. It depends on which side of the area of real estate you're on. I do believe leasing brokers are having a very hard time of it right now. And in capital markets, I saw on the sale of 410 10th, which we did get in the heart of COVID for almost a billion dollars. We had a lot of international bidders and I mean down to the wire, marking up contracts, international bidders. What does that tell me? They've seen their cities go through turmoil. They've watched London go through turmoil. They've watched Paris go through turmoil, Berlin. But they believe in global cities and the need for them and the desire of young people to work in them and those young people that are at home right now and it's a global city, get back to work. You're here for the reason of the livelihood, in the synergy. And so I have good, strong optimism for the future. It's just going to be a bumpy ride.
Spencer Levy
Let's talk about that foreign capital for just a moment. What are you advising them of people that want to get into the market today?
Darcy Stacom
Look, I think that there's a lot of product that could go to market and it just need to show a depth of bidding. So we're getting ready to go. We're going to go out with at least two, if not three properties. And that's bold, but it's positional. We've really looked at the markets, what happens in every cycle, flight to quality. If you got stuck on a side street, you move to an avenue. If you're in an A building, you move to a trophy. Right. If you're if you're lease lines right, you're going to take advantage of this time in this moment. So do you buy a multitenant office building? Yes. If it's A to double A, do you buy one on a side street right now? Yeah. If you're buying it out of bankruptcy and it's a serious discount. So there are buyers that are by the pound. This is what we come back to. This is the buy the pound market. Right. Or it's the flight to quality market. So it's the stuff in between that right now it's very difficult to justify spending time on.
Spencer Levy
Well, I'm glad to hear that you are going to be bringing to market some of these multitenant offices. And it's, by the way, not unusual that you're bringing the higher quality product first, because that's what happened in multifamily. That's what happened in industrial last year. Now we're seeing the quality spectrum in industrial multifamily. Some of the lesser quality stuff is coming to market as well. And I think that will be the trend we see in New York, too. Would you agree, Darcy?
Darcy Stacom
Yes. And I look, I think there's an interesting phenomenon occurring. Office got hit with it's a capital hog. But look at what's happening in the industrial space is an example. Robotics are changing how the real estate has to function so much. You can change an office building to be something else. Lot of these warehouse facilities are just going to have to be torn down. Let's talk capital hog. Right. But I do think right now that, look, we have two deals closing in the next few weeks because we stayed working throughout COVID and we've continued to try when the client either wanted us to go or the product was right. And I'm saying this key thing to all buyers: your biggest competitor is the debt markets. I have a building I valued at four hundred and seventy five million dollars. I can borrow four hundred and twenty five million dollars from my client. Easy solution, right? Why sell, why pay tax consequences. Just ride it out for another day.
Spencer Levy
Yeah, well I think that's also good news to hear about the debt capital markets healing. You mentioned at the beginning here, Darcy, about international capital. What other capital sources are you seeing coming in, high net worth or otherwise?
Darcy Stacom
Yeah, look, we usually see the ultra-high net worth lead us out. And that's in fact, that's what exactly happened on 410 tenth, although their biggest competitor was a massive institution with global capital behind them. So we definitely are seeing ultra-high net worth money. We're definitely seeing U.S. pension money and they just want to measure the risk and make a decision. I would say that this has not been the typical cycle where everybody pulls back and says, I will do nothing until some hero leads us out. It's creating a different form of cycle from my viewpoint.
Spencer Levy
Let me ask you a little bit of a tactical question. How does a high net worth individuals you haven't transacted with beat that big international institution that you have? It's a question mark that I'm sure you get a lot, Darcy, what do you say to them?
Darcy Stacom
I made them have multiple people call on their behalf. I called all of their individual investors. I made them set up for phone calls where the people are going to write the fifty million dollar in the twenty five million dollar checks so I could have direct conversations with them. They have to do a slightly lighter contract mark up and they probably have to put up a bigger contract deposit, so they just have to want it more and they have to listen to strong guidance. And that's where I always say this is my market. A white hot market is pretty much anybody's market because you can just throw it out there and it's going to get done. A difficult market where you need reputation and track record and strong sage advice. That's my market. So this is my market.
Spencer Levy
There you go. So, Darcy, let's shift now to the other asset types. Talk to me for just a moment about how some of these smaller asset classes are growing in New York.
Darcy Stacom
Look, right now, the alternatives are where all the capital wants to go. So they want to go to life science, they want to go to cold storage. They want to go to the data. This is a little bit of if you build it, they will come. Right. We don't have as robust of a leasing pipeline as, say, Boston does, but we have all the scientists, all the talent and all the money. So we got to get people to come in here, put the ground stakes in, and then they'll get it done. You know, the Georgetown deal over Eleventh Avenue to sign a big lease with Mount Sinai and these leases are happening. Deerfield has a deal pending on Park Avenue South. It's there. It's just you got to move to it, you know, on the storage side of it, it's look at the size of the city and look at the volume. I think what Internet sales used to go up 12 percent a year and they went up 40 some odd percent. So think about New York City. How many packages were probably delivered here? I don't care how many people think people moved out. It was like 400,000 people in a city of nine million. Right. Last mile delivery in this city is going to be an explosive growth area. So there'll be areas for people to invest.
Spencer Levy
Give us your point of view on when retail comes back and how in New York City.
Darcy Stacom
Oh, it's already coming back. I decided to play tourist in New York City two weekends ago, went to, you know, walk the High Line, got the last reservation to walk the High Line during that block of time. And then we went into the Hudson Yards Mall. And not only were there more people there than I expected, they had shopping bags in their hands. And by the way, there were tourists, the languages they were speaking, the clothing that they were wearing, maybe they were violating protocol, but they were there. And I mentioned that to somebody they said, oh, yeah, I was there the weekend before. Same thing. I then tried to go pick a new purse on 57th Street, which I like to do every couple of years, and was told I had to wait twenty five to thirty minutes to get into Louis Vuitton. I went shopping in Dior instead. But even there I had to wait and the people coming out had bags and bags. So luxury has already started. Revenge retails ready to go. Side street restaurants in New York City I think are doing better in COVID because they can build the structures on the sidewalk and don't have the same traffic problem as the avenues. So it may be interesting to see how restaurants look at some of this stuff going forward.
Spencer Levy
What are you seeing in in the world of ESG capital in New York, Darcy, and how might it apply to women's businesses?
Darcy Stacom
Yeah, look, I'm the co-head of the diversity committee of the Real Estate Board of New York. And so within that, we're obviously tackling the ESG and looking to take this down to lower levels, meaning in high schools, to start getting people to think more about real estate, because people think of real estate mostly as residential real estate brokers and don't understand at a company like ours with what, one hundred thousand employees that only thirty five hundred of them are brokers. So it's really education, I think is critical. Keeping the conversation going is critical. And I do think that there's been enough of a change that we will see a path forward. I just think generally couples have to have a more honest conversation with each other about balance in the home to allow women to move forward. And women have to stop saying, oh, no, no, this all naturally falls to me, I'm the mom and say if they want the career, how to have that conversation strike the balance.
Spencer Levy
A couple more questions and we'll wrap it up. What's the future of work from home in New York City?
Darcy Stacom
I get it. For some people it works, but for me it doesn't work at all. For my team, it doesn't work at all. The speed with which I can hang up this conversation in which three ideas have sprouted in my mind and walk out and assign to three different people while preparing for the pitch I have in an hour. And that's why work from home doesn't work when you want to work at this speed and at this level of success. So will there be some? Yes, I imagine there will be. Will there be then somebody saying, well, I could just hire that job in India, I think. There will be and I think people are also beginning to recognize that work from home is way more expensive than they thought. So there's all those issues. We're still in a very opaque landscape on the issue of work from home. I don't think it works and I think it's our social responsibility to get back to work. When you're in a city like New York and 20 New Yorkers depend on whether or not I and others are at the office.
Spencer Levy
That is certainly a very important comment that we're in this together. Would that be a message that you'd share?
Darcy Stacom
Absolutely. I do think when you said ESG, the social responsibility, I think the pandemic has really brought that clearly to the forefront. And I've always looked at it that way. If I make my money in New York City, you know, when you talk to Mary Ann or Annette, you know, we all are deeply involved in charities because we do well in this city so we give back to the city as a way of saying thank you and we're grateful.
Spencer Levy
One more question: state of New York today and when does it get back to what you consider to be New York or maybe it's never left?
Darcy Stacom
New York is still not New York. I'm looking across town and there's like eight cars where there should be 50. So we still do have a good amount of recovery. But I have to stress to everybody, New York typically sends 35 billion dollars the federal government every year. Texas takes in 10 billion. Florida takes in 60. If New York isn't sending money to the federal government, your taxes are going up no matter where you are. So help us get New York back on track.
Spencer Levy
Any final thoughts you'd like to share today?
Darcy Stacom
We're going to get through it. We're all going to learn something new from it. Every cycle is very, very similar and very, very different. And I think it's really all about teamwork and sharing ideals and information. And that's the way I see the path forward for a city like New York, which is so critical to the support of the rest of the country and even, in fact, the world. Go New York.
Spencer Levy
Go New York indeed. Important and encouraging words from Darcy. And now we turn to our top retail producer, Annette Healey, the executive vice president of our Tri-State Regional Retail Brokerage Services Group. Annette moved into retail leasing more than two decades ago after starting her business career in international banking. We pick up our conversation as Annette reflects how she's seen the retail landscape in New York evolve. How do you expect retail to be different after the pandemic?
Annette Healey
What has been really interesting to me is talking to clients. They are laser focused on customer feedback, customer relationships. You know, the word health comes up so often, not only physical health, keeping people, customers, associates safe, but also mental health. You know, people are worried that people have been so isolated. So there's this sense of comfort and creating a sense of comfort for your customers that I think is going to change everything. I mean, one of my clients was saying that they've taught their sales associates to work through Zoom and to show product and to have these relationships. And, you know, they said the customers love it because they're in their own home and they have this one on one conversation with a sales associate who they can't wait to get back in the store to see. But right now, when they can't, they've been able to make that relationship deeper, healthier, stickier. So there's been a lot of training. And I think that that's going to carry forward into the future. And I think it runs the gamut, whether it's financial services or beauty or fashion or tech, it is becoming a mantra that is resonant and it's resonating with the customers.
Spencer Levy
Let's get a little bit more granular and talk about the physical space. And New York is probably 20 cities in one. If you go from Fifth Avenue to SoHo to the far east side of the west. I mean, you can't just say New York is this. It is a city of different neighborhoods. But at the same time, the physical space needs, desires of retailers is changing. Tell me some of the big picture themes you see in the future.
Annette Healey
Well, I do think that you're really right. I mean, I think the pandemic has shed a huge spotlight on the residential markets. And I think that there is a migration. We're already seeing it with some of the big beauty players of, you know, that normally have flagships are now doing more neighborhood stores, getting closer to the customer. However you do it, whether it's, you know, via ecommerce, whether it's Instagram, whether it's actual physical bricks and mortar, that is going to become the clarion call. So I, I do think we're going to see much more of this sort of flagship in a daytime population environment where hopefully tourists will eventually come back and then the hub and spoke kind of idea where you're going to be able to touch the customer in some way, whether it's a pop up, whether it's just a three month experience, the increasing fragility of the demand has meant that landlords are becoming a lot more amenable to different structures. I think that's going to breed a lot of creativity and excitement in the retail space because it's a lot of newness. And real estate has always kind of been the anchor where you've got to be there for 10 years. But I think we're going to see some big changes. I mean, even right now, we're I mean, on the health side, you know, it's not just people's health, it's pet health. A lot of veterinary clinics opening up dental has now become, you know, as opposed to going up to some remote office at the Empire State Building. Now they're doing, you know, glamorous salons where you can go in and have all kinds of treatments and feel like it's a luxury product. This kind of innovation is what retail is known for. Retail, like New York City, is ever resourceful and ever resilient.
Spencer Levy
Let's talk about two of the themes you just mentioned there a moment ago, one of them was the fragmentation theme, which is the flagship, and then have this hub and spoke model, smaller stores closer to the customer. And the other was the changing lease structures. Tell me about how those have evolved, because landlords have been saying, no way, I don't want that. But now you're telling me landlords are willing to accept that. Tell me about that.
Annette Healey
Well, we have a lot of dark stores, so having creativity on the part of landlords is just it's necessary that they're going to have to partner more significantly with their tenants. And it's a hard conversation to have. But I think that there's definitely been some blinking and we are seeing some much more accommodative structures. For a lot of tenants, it doesn't work because they must have their brand displayed in a way that is consistent with their overall brand package or story. And they are not going to spend that kind of money on a build out for a short term deal. So you're always going to have that yin and yang of the startups, the people who really want to just experiment and there are a lot of establishments around the country now that are speaking to this. Like if you look at the seaport in Boston, you know, they have a whole program of tiny homes really on the green there where they you know, one company can take over all of them and really do a brand extravaganza for a couple of months or a number of tenants can take them. And it's just driven a lot of traffic. It's very exciting. So I think that this is something that we're going to see in a more consistent basis, particularly in new developments.
Spencer Levy
I wrote a short blog last year called New Rent about retail specifically in addition to these more flexible, shorter term structures I also talked about the possibility of landlords being more partners with their retailers than they have been in the past, not just on a percentage rent basis, but what this this may sound like blasphemy to some retailers, but sharing in some of the Internet sales in the trade zone near your store. Are you hearing any types of partnerships like that being discussed?
Annette Healey
I have not. You know, one of the problems or one of the challenges to do that is the way those sales are booked. So if I walk into a store, see something I want and buy it, that goes through that cash system, that goes through that whole avenue of information, if I see it, but go home and go online and buy it, that is allocated to a completely different accounting structure. So being able to capture that information, I don't see logistically how you do it. If I go into a store in Manhattan and they have to ship the product from one of their stores in San Francisco, that sale would go to the Manhattan store, would not go to the San Francisco store because the company is just moving product and then the percentage room would have to pay in the New York stores. So we do see that kind of conversation. But to do the accounting, to trap the e-commerce, that is the cloud around that. I logistically I mean, it's not my forte, but I haven't heard anybody tell me how they can do it.
Spencer Levy
Let's talk very briefly. Manhattan, is Manhattan. The crown jewel in so many ways, but we have a bigger market here with the Bronx, with Queens and with some of these other outlying areas. How do you see retail evolving there? And there is a big place versus Manhattan in the years to come.
Annette Healey
The outer boroughs are I think they've been flourishing during all of this time as opposed to, you know, the heavily dependent on CBD daytime population. You know, those markets are not super vibrant because of international tourism. They're super vibrant because they've got a lot of people who live there and who have needs. I think they've been the beneficiaries of less commutation into Midtown, you know, so we've lost here all the little restaurants and so forth that are just suffering terribly in Midtown because you don't have the residential. But yeah, the outer boroughs, I think, are doing really well.
Spencer Levy
New York's infrastructure is its great strength. The trains, the planes, all that. But the best piece of infrastructure are your own two feet, the ability to walk from place to place. Would you agree with that?
Annette Healey
Oh, without a doubt. I mean, I cannot imagine living in I don't live in Manhattan, but I live in a small urban village just a little bit north of the city. I would never live anywhere where you can't walk to everything. I mean, my husband and I for the last 25 years have had one car. We think it is a key element to staying vibrant, young, involved. And I know that the exurbs have been beneficiaries of the pandemic. But I think that in general, people want to be where they can walk down the street and pop into a cafe. I mean, that is to me, heaven.
Spencer Levy
So I'm going to ask you for your final thought, final thought that you share with your landlord friends what they should do. And final thought for young professionals coming up, what they should be thinking about post pandemic?
Annette Healey
Well, for young professionals coming up, I think that they are going to really want to be back in an office situation and meet people and have those adjacencies. I mean, I think that that's been what's missing for the young people in the business. They are not thriving, sitting in an apartment remotely. That's not been a good place. So I just think the pent up demand for that is going to create a tremendous amount of vibrancy in our market. In terms of landlords, it really depends whether if it's a family, you know, assets that are owned by a big family. They've weathered these storms there, you know, have very different capital stacks, the big institutional landlords are a totally different story, but we will all get through this. We just have to be patient. And there's going to be some continuing pain. But I think in 18 months or so, New York is going to look very much more like it used to.
Spencer Levy
Now we jump back into our conversation with Mary Ann Tighe, CEO of CBRE’s New York Tri-State Region, as we talked about big projects that helped transform historic Times Square. Mary Ann has a great eye for neighborhoods we pick up as Mary Ann and I delved into some gritty ideals that are rooted in a New York state of mind: resilience and reinvention.
Mary Ann Tighe
I feel very strongly that while we have lived through a period that will change many aspects of how we all work in our office environment, there are too many core benefits that New York City possesses that are not going away. Start with the people. You know, it's a city where over one hundred and ninety languages are spoken, where you can have the smallest community of interest and people will come to you with expertise and they're all around you. You want to scale your business. I can't think of a place where you can scale it easier than here. And if you want to learn your business and learn it at the highest level at which it's practiced and I'm talking about everything from medicine through accounting, you come to this city and you don't come to work out of your apartment. I guarantee that to you. So I tell you that there are these core benefits of scale of diversity, by the way, of tolerance for diversity. It takes a lot to get a New Yorker uncomfortable, a lot. And the sheer notion that the way we work represents excellence. That's true from the guy who sells you hot dogs on the street, who can tell you why his hot dogs are better than the guy a block away. So I don't think these things are changing. Again, I don't think there's going to be a moment where it all rushes back, as you say, and you can feel it happening, particularly as the vaccine rolls out.
Spencer Levy
Well, Mary Ann CBRE has studied New York. We studied San Francisco. And while it's fair to say from a demographic perspective, we have seen a net outflow of gross number of people. We're seeing a net inflow of the most highly educated, most highly talented, dare I say, most productive people. And then we expect that to continue, even if there is a gross outflow of people. But there are some who are saying, well, you know, the new kid on the block is Austin, Texas, is Nashville, is Denver, is Raleigh. What's your reaction to those folks?
Mary Ann Tighe
Amusingly, recently, I have a customer who told me that they wanted to relocate a significant piece of operations somewhere in the United States and it was going to be 7,000 people they were going to hire. So I called the excellent Mark Seeley in our labor analytics group. And I said to him, you know, these are the jobs and here are the cities, Austin, Nashville, you know, everything in Charlotte. And then there was like a beat and he said it was just the cutest thing the way you did because he was trying not to make me feel like I was dumb. And he said, how long do they think it'll take for them to get to 7,000 employees? I said, well, what do you mean? I don't know, 18 months? Two years? You know, they're not thinking of, like, phasing this in. And he said, Mary Ann, do you understand the size of the relative populations? He said, Austin's now at nine hundred and fifty thousand people, Nashville, 600,000 people. You land this quantity of these kind of jobs. You've distorted the whole pay scale and the whole nature of that segment of the labor market in each of those locations. I don't think that's really how you want to do this. And I had this funny moment where I realized, dumbbell, of course, you can't just descend into a marketplace unless it's a significant scale to be able to have that. And frankly, that's why I think we're seeing so much tech growth in New York. We got people and we got the people who can, you know, do things that, as I say, would be obscure in another market but be put out into the ether here four hundred people show up at your door saying that they know how to do that.
Spencer Levy
I want to talk about asset types for just a moment because many of these buildings that are on the far west side that are being picked up by some of these tech firms are older industrial buildings, and we are now talking about data centers. We're now talking about life sciences. Talk about that is New York not just an office town anymore?
Mary Ann Tighe
First of all, New York has never been just an office town. We have a history of repurposing our buildings. One of the saving graces of downtown post 9/11, one of the things that transformed our downtown market is that pre-9/11, 15,000 people lived south of Chambers Street. Today, that number is at sixty five thousand people going to seventy thousand people. And you know where most of those buildings came from? From repurposed office buildings that had become functionally obsolete as offices, and I can tell you that we are going to see and you're already seeing office buildings being repurposed as life science buildings and we're seeing the demand for warehouse. The consumption that takes place in a relatively tight geographic area here surrounds us with the need for warehousing of all sorts. So, yes, I do. I think, by the way, that there's going to be more office space converted to residential. Yes. Just not as much as people think because it's an expensive venture to do.
Spencer Levy
What about the old hotel rooms we had on this show a couple of weeks ago, Bob Webster and a few of our top hotel folks, and unfortunately, we predict twenty, twenty five thousand hotel rooms in New York and may never reopen. Will those become apartment buildings?
Mary Ann Tighe
Yeah, I think that there's a variety of residential type uses. For example, student housing is an ongoing challenge here in the city, not only for the colleges and universities, but for medical institutions. You go to the Upper East Side and you'll find that many of the buildings that have been taken over there house the doctors, the nurses, the techs, people who actually need to be near the hospitals where they work, and that, in fact, part of the recruitment package in order to get people into our market. And I don't know if you follow this, NYU Langone has now announced that it will charge no tuition for medical school and they will provide room, board and a salary to all medical school. The trick is you got to get it. If you qualify as one of those glorious gifted people, they're going to house you for free for four years. So what is NYU Langone doing in its neighborhood? It's going out there trying to find buildings that they're going to medical students and now that they have to give them housing. So I must tell you, I lived in medical housing for New York Hospital. My husband was on staff at Memorial Sloan Kettering and we lived for more than a decade across the street because it was easiest for him to be able to run from the hospital housing across to see his patients.
Spencer Levy
That's a great story,
Mary Ann Tighe
By the way, comment about the residential market in New York. This first two months of 2021, it's been a hot market basically in Manhattan, Queens and Brooklyn. What people are doing are using the time to move up even more space, outdoor space, better location, whatever. And they're taking advantage of effectively a real price correction has occurred.
Spencer Levy
One of the things that you mentioned was the outdoor space. And that really goes to the key word of 2021 might be the viewer's wellness. Now, I know that pre pandemic, the number one of many of in New York was outdoor space. But wellness, how is that going to transform New York City real estate?
Mary Ann Tighe
The good news is we were already on that path in terms of office space. The higher end buildings of our city have added all manner of wellness, whether that’s air filtration, whether it be actual classes, whether it be providing food options for people, they're very healthy. But beyond that, now no one is building or renovating who is not also going to issues that have to do with air filtration and circulation and in general creating an environment that allows people to engage with the natural rhythms of daylight and the day. The days of the office tower that had those dark black film on the windows to keep sunlight out, all of that's gone. Everybody is looking to both engage with nature, but at the same time to filter it in such a way that you're experiencing it in the best way possible. It's the major selling point, you know, the foosball tables, et cetera, that's sort of been pushed to the side. And now what people are really focused on is, you know, am I safe in my environment in terms of health?
Spencer Levy
Let's talk now about the ESG component and the social component to it. Speak to a lot of developers. They say, well, why don't you build in some of these emerging neighborhoods? Why don't you build in places that needed opportunity zones or otherwise? We think that's an emerging trend. What's your point of view?
Mary Ann Tighe
The trend that I think is going to be most compelling is definitely the new buzzword, the 15-minute city trend, and that that is what's going to help New York's underdeveloped neighborhoods really flourish. Because if you can bring the jobs to where people live and if you can bring the apartments to where people work and mix that with neighborhood retail throughout, you've made yourself a much more hospitable environment for people. You know, I've often joked about what are the luxuries of life in New York City and among the three greatest luxuries, I always say, one of them is walking to work. And by the way, the other two, just to let you know, our silence if you have that and the last is excess space, closet space, whatever, you have all three, you're by definition at the higher end of life in the city. So I do think we're going to see more dispersion of people throughout the city. It's also going to be about making the central business district like downtown and like midtown south already more work, live, play than just work.
Spencer Levy
I agree with your comment there. And walkability is key in terms of infrastructure in New York. Let's just talk about something that's a little touchy, but I got to go there. One of the things that many people think that's holding New York back is the same thing that makes it great: is its mass transit. When will people get back on the trains?
Mary Ann Tighe
I wouldn't start by telling you a couple of different things. One is that I have no doubt that we have the best minds at the helm of the MTA. Secondly, we now have a Democratic administration in Washington that is not looking to punish New York, but in fact, with our senior senator as the majority leader in the Senate, the likelihood of getting significant infrastructure money into the city, starting with our gateway project but others as well is actually already high because there's some infrastructure money coming in this COVID relief bill to just get things started. So if you listen to the guys who run the subway, the MTA, they'll tell you that they're in a lot better shape as a result of that bill than they were before it. I think that we have the talent in place. What we need to do is figure out how to finance the work that has to be done. And because of the scale of our subway system and the age, of course, it's a job that will never end. Common problem, by the way, is our homeless problem. And I think that that is an enormous challenge. And they almost have to be solved in relationship to one another. We can get new signals for the train line. But what we need to do is keep the cars clean and safe and to keep it from becoming a place of housing for people who need better situations.
Spencer Levy
So, Mary Ann, one of the very many famous songs about New York: New York, New York, if you can make it here, you could make it anywhere. Do you agree with that?
Mary Ann Tighe
Yes, because New York is a place where you only succeed if you develop strategies to overcome obstacles because obstacles are a given in the New York acquirement. Every so often, by the way, I'll have a developer who works nationally or internationally and they'll say to me: do you understand that it's not this hard to build a building in any place, practically I don’t mean San Francisco OK, but, you know, other parts of the country and I will laugh out loud. And I said, yes, I've heard that before, that you don't have to go to the kind of crazy extremes we go to in order to make a project viable. So that's why New York is a testing ground. On the other hand, when you make it in New York, everybody wants to replicate it. Everybody wants a piece of the success, et cetera. So that's why you put yourself to all the problems.
Spencer Levy
I'd like to thank all of our guests for being part of our New York story special, Mary Ann Tighe, Annette Healey and of course, Darcy Stacom, whose return marked a full year since she was our very first guest last spring. And there's plenty more to come in the weeks and months ahead, including spotlight episodes on other markets around the world. For more information, please visit our website, CBRE.com/TheWeeklyTake, and if you have any feedback or suggestions, please drop us a note and also subscribe, rate and review us wherever you listen. Thanks as always for joining us. I'm Spencer Levy. Be smart. Be safe. Be well.
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