Global business news twenty four hours a day at Bloomberg dot Com, the Radio plus Mobile Act and on your radio. This is a Bloomberg Business Flash from Bloomberg World Handquarters. I'm Charlie Palot. Move law for US equities today, the DAL, the SMP, NESDAC all dropping, with the SMP five hundred index down eighteen to twenty six and decline today of nine tenths of one percent. Stocks dropping ahead of tonight's debate.
Deutsche Bank shares tumbled seven point one percent, the Dow down one sixty six, down nine tenths of one percent. NASTAC also down nine tenths of one percent. Gold down ninety cents, little changed at thirteen thirty sixty ounce crude oil West Texas Intermediate advancing today by two and a half percent, forty fifty nine for a barrel of West Texas Enemedia crude. I'm Charlie Pallet. That's a Bloomberg Business flash. You're listening to Taking Stock with Kathleen Hayes and Pim
Box on Bloomberg Radio. We are broadcasting live from Midtown Manhattan from the offices of Eisner Amper. They are preparing for their fourth annual Eisener Emper Real Estate Private Equity Summit that takes place Wednesday, September. Keynote speaker is Sam's now the chairman of Equity Group Investments. In here to tell us more about the upcoming summit and about real estate is Ken Eisenberg. He is a partner in charge of Eisner Emper's real estate practice. Ken, thank you very
much for spending time with us. Thank you, Pim. What do you expect to hear and learn at this event on Wednesday, Well, we know that the market is starting to change. You think there's a correction going on, and I'm interested to hear from the speakers as to what the market is actually doing. What their take is where they see capital should be invested right now, whether they're selling, buying, or holding. Where they see the future of the market
going over the next couple of months of the year. Well, so a correction in the markets, it is? Is it the kind of correction that is number one from Oh, developers always developed too much and and so ultimately it peaks and comes down, is it? Well, it would have been okay two years ago to build this much, but a lot of foreign buyers pulled back because they want to park their money someplace safe, and they don't feel
that so strongly. Now. It does have anything to the credit cycle and people sending of the Feds finally serious. They're gonna start raising rates, bond deals are gonna rise, and that's going to mean less available financing. All of the above. UM. I think there's just a um slight retrenchment. It's not a major crash in the market. You're seeing prices stabilizing or going down a little bit, and the number of sales I think is the keyndicator that the
market is slowing. UM. Well, this might be the second highest sales year of commercial office in New York history. UM it's a teen percent off of last year, and a lot of the sales were contracts would entered into in two thousand fifteen and closed in two thousand and sixteen. So you're seeing the slight pullback, not complete pullback. I still have clients looking to buy and develop. There's opportunities to be had, but it's a slower market and people
are taking more time. Also, the price of land had gotten to the point that it made developing very expensive, and the cost of developing prevented rental as as an option. So a lot more buildings were built as condos. Those condos are now being rented out by the owners. A lot of people bought them for rental properties, and it's putting pressure on the residential rentals which are starting to come down a little bit. So you're seeing a lot
of different forces taking place. Now people say oh, they built too much, especially hotels and say, oh, they built too much. If you look at the number of hotel rooms in New York versus the number of visitors we have in New York, we are still way underserved as an overall market. Now you've been doing this, I understand for more than three decades. You helped put together about fifty billion dollars worth of transack. That that was a number of years ago. Okay, so now we've e been accelerated.
That It is um it's the it's the time frame by which people look at these deals. You mentioned, you know, looking to the future months and maybe a year, But has the time frame that people measure collapse during your your career. Real estate is a cycle. Generally the cycle runs five to seven years. We're in the seventh year of a long recovery. Whether it's a I don't and I don't see it as a two thousand and eight type correction. Um. I see this is more of a
take a breath. I'd come down five to ten over the next year to two years and then resume its upward climate. Uh. Particularly the gateway cities are seeing trumendous interest both domestically and overseas for people who want to come to the major gateway cities, who invest in the gateway cities as places to both live and work. Um, there's been a migration from the suburbs. So who's the gateway cities? Give us a top five? New York, San Francisco,
Los Angeles, Miami, Washington. Okay, so where what's the gate what's up a tent? What's this the sub tier or the next gateway city? Right, because it seems to me prices have gone up so much in the cities you just mentioned other places that are going to get the spill over and become you know, the second tier gateway There certainly is, and then those really kind of look to the tech cities. Um. You have Boston, Austin, Texas, UM,
even in Chicago, UM. Other Midwestern cities are seeing the rise of of tech being developed in their in their borders, and that is a driving force in the market today. Now, financial services is what makes New York, entertainment is what makes Hollywood. But um, tech is what's making the country. And it's really the next wave of jobs. I think you'll you'll see some manufacturing growth, but most of the growth and real earnings will be in the tech space.
As far as investment returns, the comps, the comparables. When you look at treasuries, have got to make a real estate at least attractive on on one basis. Who is that not the way to look at it? Some people look at it that way. Um, A lot of you know, foreign companies of foreign governments in particular, we're investing and they were looking at cap rates of one and a half to two, which I don't think it's sustainable in
the long term. That means that that that that the property was valued at a certain amount, that the return was only about one and a half percent, right, because they looked at long term growth or just as safety. So if you had advice for somebody, and I'm sure you do often in your business, but more probably for our people listening today when it comes to commercial real estate, when it comes to reads, when it comes to investment opportunities,
what's your number one idea right now? Well, first they should come to the conference. And here what the real experts have to say of the conference is this Wednesday at Chelsea Pierre. Tickets are still available. We have a great lineup of speakers, including several who on today's show. Um, most of whom we're on my panel were and you know, we have Paul Mazie who is running was running from the air and he's a chair of Cushman and Wakefield.
So it's very exciting. And let's not forget Leslie Hill, partner founder him All America Properties, because you know, powerful woman in real estate. That's always a great example. And oh my goodness, we had so many terrific people today, so that's just a taste. Thanks so much to you. Ken wiser Berg from Partner in Charge is Ramp for Real Estate Practice and he's talking about their fourth annual Real Estate Private Equity Summit. You can go online and
get all the information you need. I'm kathe Maas along with pim Fox. This is taking Stock and this is Bloomberg coming up. Bloomberg Law is brought to by Latin. Govern Manhattan, where New York goes for luxury. Conveniently located at fifty four and eleventh AVENU went online at land govern Manhattan dot com. Land govern Manhattan is at your service,