Posted 1:10 PM 01/27/10 People, Investing, Real Estate

 New York City’s real estate market will recover ahead of other areas of the country, perhaps by the end of the year, predicts Manhattan real estate mogul Elie Hirschfeld. The president of Hirschfeld Properties, who owns more than 1,000 apartments and in excess of 1 million square feet of commercial space in the metropolitan area, says most of New York’s overbuilt office space inventory will finally be absorbed in 2010. What’s more, he expects more distressed properties will become available through deals or foreclosure sales. Furthermore, developers will have the opportunity to begin repositioning themselves as land, construction and renovation costs drop to more reasonable levels.

Most real estate forecasts don’t predict recovery until 2011 or beyond, as high vacancy rates and plummeting property prices across all real estate categories hamper any revival. Real estate services firm Grubb & Ellis (GBE) has forecast a slow recovery starting in 2011. When forecasting the strength of markets for real estate opportunities from 2010 to 2014, Grubb & Ellis doesn’t rank New York on its top ten lists in the office, industrial and retail categories. But New York’s Long Island and Westchester County do rank in the top ten in the multi-unit housing category. That doesn’t exactly suggest a rousing recovery for New York.

Opportunity For ‘Savvy Investors’

It’s not surprising that Hirschfeld believes the New York area, where his entire portfolio is located, will be the first to rebound. But his experience there may also allow him to see opportunities when others can not. In fact, Hirschfeld may not be that far off the mark. The Urban Land Institute warns that New York will see vacancy rates skyrocket into the mid teens, office rents plummet 40% and co-op prices drop 25% in its 2010 market forecast. But it also says that “New York offers savvy investors opportunity and more affordable costs over the long term.”

The owner of the J&R Music Center, Hotel Pennsylvania, the Manhattan Mall and the Park Avenue Court apartments, Hirschfeld is betting New York will recover before other areas of the country because in his view, the region didn’t indulge as much in over-development as did places like Las Vegas and Miami.

“New York didn’t suffer the tremendous over-development because the cost of entry into this market is so high,” he explains. The high construction costs and the wherewithal needed to obtain all the necessary permits prevent many speculators from coming in and developing properties in Manhattan.

Having Deep Pockets Helps

Those barriers give well-financed industry players an advantage during times of crisis like now. Hirschfeld says that since he resisted buying properties or starting new projects when the market was peaking between 2005 to 2008, his company did not become loaded down with debt. Nor was he stuck owning properties that are now worth significantly less than they were just a few years ago.

While he admits his high profile partnership with the Trump organization to develop the West Side Penn Yards “is delayed now for several years,” that disappointment hasn’t hurt the company financially. Hirschfeld says he is receiving less rent for the same spaces he did a few years ago, but not having additional debt has allowed his firm’s cost structure to stay low enough to remain profitable.

“Now I’m looking at buying projects from banks that are foreclosing on some of the very properties I didn’t buy [back] then,” he says.

‘Avoiding Things That Are Over-Priced’

His guiding principle in deal-making: “Looking for value when we make purchases and avoiding things that are over-priced.”

Hirschfeld wouldn’t say which properties he was negotiating to snatch up at distressed prices, but he said he is already buying land in the New York market again. The reason? It has become cheap because almost no one will finance it, he says. He also said he is planning to renovate and upgrade some of his existing properties with state-of-the-art mechanics and interior finishes in order to attract higher rents when the market turns.

When looking at investment opportunities, Hirschfeld said residential is the healthiest area of real estate because the need for housing is perpetual. He feels commercial, which will benefit when jobs return, is the next strongest area, followed by hotel, which is benefiting from strong tourism. As prices continue to drop in 2010, he suggests individuals look for opportunities to buy property in Manhattan at a discount while they can.

“If people want to get their foot in the water,” he said “They can find a single apartment to buy that they can rent out. Now there is good value in doing that.”


Surviving the Economic Downturn: Real Estate Mogul Elie Hirschfeld Gives Tips to Stay Afloat While the Market Continues to Struggle

NEW YORK, January 11, 2010 — New York real estate tycoon, Elie Hirschfeld, President of Hirschfeld Properties, LLC releases the following commentary on how to keep a business afloat while the commercial and residential market continue to struggle, including  short-term and long-term investment strategies he has implemented through the past three recessions.

 “Be proactive. Building and maintaining strong relationships with commercial and residential tenants, lenders and brokers is the key to staying afloat during these tough economic times. For example, give tenants relief by helping them with space improvements and general maintenance,” said Elie Hirschfeld. “Also, stay in front of your lenders with frequent phone calls, emails or in-person visits. From a developer’s perspective, if you need more debt on a project, having the dialogue with your lender can make it much easier to get what you need.”

 “Also, I have learned to avoid the exuberance many investors have during market highs. It is difficult to avoid the temptation to invest because in the moment it feels like the real estate market will continue to expand forever, but know it is cyclical and what goes up must come down. During the downtime, adequately prepare your company for recovery,” added Hirschfeld.

 Elie Hirschfeld currently serves as President of Hirschfeld Properties, LLC, a NYC based development firm. Hirschfeld Properties, LLC has engaged in the development or ownership of renowned office buildings, hotels, multi-family residential buildings, parking facilities and retail projects New York City. The company has contributed projects, such as New York’s first open-air garage, the Hotel Pennsylvania, and the Manhattan Mall.

Elie Hirschfeld

President and CEO of Hirschfeld Properties since 1997, Elie Hirschfeld has dedicated his professional life to real estate development planning and implementation. Since joining the company in 1976, Mr. Hirschfeld’s projects have included the development of prominent New York City properties such as the Grand Sutton, the Hotel Pennsylvania, the Crowne Plaza Hotel, and Park Avenue Court. Mr. Hirschfeld is responsible for guiding the strategic direction of the company and leading all aspects of development including new project analysis, lease marketing and negotiation, legal strategies, and architectural and construction management. Elie Hirschfeld directed Hirschfeld Properties, LLC into partnerships with other distinguished real estate development firms such as the Zeckendorf Organization, the Donald Trump Organization, The Silverstein Organization, Empire Realty Group, Belz Enterprises of Memphis and the shopping mall development group, The Mel Simon Organization.

Additionally, Hirschfeld is an avid sportsman, having completed the New York City Marathon and the New York City Triathlon several times, and the Mighty Hamptons Triathlon for the last twenty consecutive years. In 1990, Elie Hirschfeld completed the 12th Hawaii World Championship Ironman Triathlon. He is also an avid art collector, collecting original art scenes of New York City. Mr. Hirschfeld graduated Phi Beta Kappa, magna cum laude and President of his Class from Brown University and received his law degree from New York University School of Law.