Shimon Shkury: Hi everybody, it's Shimon Shkury with Ariel Property Advisors here with my founding partner Mike Tortorici. Together with Howard Raber, our director of sales in Manhattan. Hi Mike. How you doing?

Michael A. Tortorici: I'm great. How you doing Simon?

Shimon Shkury: I'm doing well. And Howard, I'm excited to have you here. How are you doing?

Howard Raber, Esq.: I'm happy to be here. Happy to talk.

Shimon Shkury: Let's do it. We've seen a lackluster year in 2023 going into a better year, we think in 2024. And the first thing that we noticed is a lot less transactions in the multi-family sector. Howard, why don't you tell us a little bit about what happened there in 2023?

Howard Raber, Esq.: Sure. For multi-family, we did see major declines of about 64% in the amount spent. I mean about 31% decline in transactions over 2022. But what's interesting is that of all the transactions, 84% were spent on the larger deals, those that were 10 units and more where you're looking at perhaps institutional type dollars or large company offices really spending more dollars in the marketplace looking for opportunity. You know, we saw an average price of about seven $20 a square foot with an average cap rate of about 5.24. Notably, these are the highest levels in the past four years. Even though it's lower than where it's pre pandemics, it is a cause for optimism looking ahead.

Michael A. Tortorici: Well you, especially with residential rents being at their highest level in a long time and we're definitely seeing investors take that into account in their new underwriting. You're seeing more neighborhoods commanding triple digit rent per square foot, which is reassuring for these prices.

Shimon Shkury: Right. So what Mike is saying is, is strong fundamentals in addition to everything else that's happening there. And I'm wondering, you know, part of what we're seeing is that there's not enough supply of housing and that trickles down to development sites throughout the city, but specifically in Manhattan. Mike, what are we seeing in the development market in Manhattan in 2023 and what do you think we're gonna see moving forward?

Michael A. Tortorici: 2023 was a challenging market again for the development site market. The level of sales that we're seeing is essentially the lowest in I believe like 2011 or 2012 and 2022, 2021 weren't a whole lot better. That's regardless of the fact that the price per buildable square foot is also at levels not inflation adjusted that are on levels of 2011 and 2012. 2023 came in at 390 per billable square foot on average. And that's again, not with a whole lot of transactions. And this is definitely something when transactions pick up and the market's a little bit more optimistic. I could see this certainly snapping back up as we saw between 2014 and 2015. But right now I'd say Manhattan development sites are on sale for developers that have a view that in a couple of years with so little coming out of the ground and in production right now, there'll be a very healthy end user market to absorb that supply when the projects are completed. We just need to see more trades and, and I think to start the year with some development opportunities that we have, we are seeing the beginnings of that optimism. We closed out the year, Howard closed out the year with the deal on West 30th. He could talk about that, got good activity as well and a successful result.

Howard Raber, Esq.: And I think to that point is that demand you're seeing for the Manhattan sites, they are really gonna be condo type sites more than the rental. So the reliance on any type of 421A type abatement to come down the pike is not necessarily affecting the market where it's other factors, whether it's financing labor costs, etc. But I think the lack of supply as to look at down the road is what's driving a lot of this interest.

Shimon Shkury: So basically if you have a good location blend is trading for condos mostly. And we're seeing it in things that we're marketing as well. I actually called Michael Scott and ... To them about the office. They were unavailable. Mike, what did you see in the office last year?

Michael A. Tortorici: You know, people are trying to figure out, particularly with class B and C, we have owners calling us regularly to game plan about what they do with these buildings. Vacancy remains a challenge and not to be too dour, but I just think it's realistic. The long-term outlook for these buildings is to probably be torn down and placed with residential in a housing constraint and market. The city I think is starting to get that message. There's the garment district rezoning initiative that's underway and hopefully we make some strides there, but these class B and class C buildings, something needs to be done there. FAR caps need to be raised, then we need to convert them into high performing residential areas like the rest of the city.

Shimon Shkury: Yeah, we did see some transactions that took place from companies, right? Who? Who was buying?

Howard Raber, Esq.: Well you saw with the Wells Fargo is looking to buy their own headquarters, you know as an office property you are seeing then even the retail sector, you know where Prada comes in. You know, if they're seeing opportunity while the bricks might be cheaper, that it's optimistic to say, you know, we're having companies come into the market and they wanna have their foothold here. So the fact is that you're not seeing these larger companies shy away from New York City. They actually wanna come back and embrace it

Michael A. Tortorici: Right at the right location. Yeah,

Shimon Shkury: And the right building, right. Yeah it, it's not gonna be these buildings that Mike is saying are going to be knocked down, these are gonna be class A office buildings. Wells Fargo bought and Hudsons and yards. Google just converted the St. John's terminal have two buildings that were purchased in the past two years by NYU and Chantel was buying a building. You mentioned Prada retail is doing better I think now guys, what do you think retail's doing these days?

Howard Raber, Esq.: Location, location, location. And you know what it's attracting. I think we're seeing a lot of interest in the more local market where rent is replaceable. So if you're talking about neighborhood retail where it's a hundred dollars a square foot and you can actually then replace that tenant if they go under and the banks believe in that tenant, I think you'll see more attraction in deals like that. You are seeing an uptick in the Soho Madison Avenue market. But I think a lot, there's a lot more comfort knowing that you can replace a tenant.

Michael A. Tortorici: Just to build on Howard's point, Soho and Prime Midtown, those have seen some real significant rebounds. It's case by case in other areas of the city, but particularly lower Manhattan shopping destinations. There's a ton of demand there. A lot of name brands looking, signing very strong leases and it's nice to see after all the disruption that Covid cost us.

Shimon Shkury: Fantastic. So what's happening the rest of the year in your opinion? Where are we in 2024 Mike?

Michael A. Tortorici: I think we're doing better. I think the fundamentals of New York are good. Manhattan and New York as a whole is under building chronically and that should spell some, you know, better pricing for multi-family as rents go up and rates come down and a more optimistic development market as people can take on deals with lower interest rates and take advantage of our supply demand imbalance. I mean the fundamentals I think will ultimately reign 'cause people wanna live here, people wanna move here and we need a lot of space and our market just needs to make room for it.

Howard Raber, Esq.:I think I would agree with all that. I think on the multifamily front, you know, I think there's gonna be more optimism this year only because there wasn't a lot of spending last year. So investors that have long-term views on the market, they're gonna be looking to place that capital. And anecdotally they are out there looking now, right? They want to be active. There is a little comfort knowing that the interest rates aren't going to go up necessarily. So they're hoping that the worst is behind us in that regard. So I think people are feeling a little bit better about this year as we go forward.

Michael A. Tortorici: And the other thing I would just add to that is I think some things in the multifamily market were held up by the pending decisions on the Supreme Court. The two cases that were left over that last week were denied. With those now not being taken up and the current H-S-T-P-A gonna be standing for the foreseeable future, it may result in some more rent stabilized multi-family transactions by people that were looking to see the result of that now understand that nothing's changing and now may make a decision to part ways with with assets that they have.

Shimon Shkury: Fantastic. So more optimism towards 2024 more transactions and probably stabilizing and pricing. That's good news I guess for New York City and for Manhattan specifically. Thank you so much Mike, and thank you so much Howard. That concludes our podcast for today.