14. From Multi-Family to Student Housing with Margaret Streicker

Welcome. This is Real Estate Investing Live from New York with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program, you'll learn about the world of commercial real estate and find out why it is one of the largest investment opportunities in New York and around the world. Now, here is your host, James Nelson.

Welcome back, everyone. This is your host, James Nelson of Real Estate Investing Live from New York. This is our 14th episode and wow, what a great conversation last week with our head of global research, Nick Axford. If you have not listened to it, please check it out on itunes, Spotify. You need to know these things before going out and investing. So and I do want to start with an apology. I did say that I was gonna give you an update on the New York state of the market. We were having such a great time that was not able to fit that in. So stick around for the end of this show and I will give you that spotlight on the New York City sales markets. So you have it. But tonight we've got an incredible interview. This is going to be a first.

For the show where we have Margaret.

Stryker on who is a candidate for US Congress for the state of Connecticut. So she has an incredible track record in history now as head of Fortitude Capital, also having founded Plato Advisors, a student housing company. And that is one of the asset classes that we haven't spoken about yet. So it'd be very interesting for you all to learn about that. But before we do, let's get to the weekend review, powered by the Daily Beat in sales, investors are now paying top prices for apartment buildings in many parts of the country. Despite growing political support for rent control measures, Harbor Group bought a portfolio of 13,243 apartments in eight Southern and Mountain states valued at $1.85 billion. Earlier this month, Kushner Companies also agreed to buy 1,058 units in a deal that values the apartments at 266.5 million. US investors are predicting that rent hikes will continue to outpace inflation in many parts of the country because housing production remains below what it was at peak levels, according to a Wall Street Journal article. In other sales, TF Cornerstone and Trinity Place holdings have acquired 250 N. 10th St. In Williamsburg from Nuveen Real Estate holdings for $137 million. The multifamily building spans 150,000ft, containing 234 apartments. There are eight years left on the 15 year abatement. The buyer secured an $82.75 million loan from M&T Realty. Nuveen had paid $169 million for the property back in May of 2015, according to real Estate Alert. Other sales Tokyo Trust and MC Real Estate Partners have acquired 434 Broadway and SoHo from Savannah for 103.5 million. The nine story office and retail building span 61,500 square feet. Its retail tenants include Champion, a Hanes division brand occupying the retail component which contains 4,900 square feet on the ground floor. Elsewhere, SL Green has acquired 70711 Ave in Midtown west from Kenneth Cole for 90 million. The six story property spans 158,000ft and will be redeveloped onto leasing. Law firm Sherman and sterling has renewed 338,000ft at Boston Properties, 599 Lexington Avenue in Midtown. The 20 year lease spans the second to 15th floor and rents in that building were asking between 79 to $97, according to the Real Estate Weekly article. This is part of Boston property's 4.5 million square foot Midtown campus which includes 601 Lexington Avenue. Nearby, Apple is also negotiating to lease office space at Voronado's 11 Pen Plaza. The 1.15 million square foot building has 638,000 square feet available. This was apparently after they lost out on the Farley building to Facebook. So now with some leasing challenges, we've got Fairway Market which has filed for bankruptcy protection, proposing to sell its Manhattan stores to Shoprite for 70 million. Clothing retailer Express is expected to close 100 stores across the US and Notel is now laying off a third of their employees in New York. So Crain's recently revealed that Notel has 33% vacancy in its nearly 2.4 million square foot New York City portfolio, according to also reports from the Real Deal and Bloomberg. Finally in politics for the second year in a row, governor Andrew Cuomo and Mayor Bill de Blasio snubbed the Rebny gala, which is reflective of the political climate we find ourselves in. Schumer was the exception. Senator Minority Leader Chuck Schumer spoke at the event and said that if he becomes Majority leader, he'll restore the full deduction of state and local taxes and get the Gateway project built. New York is facing a $6.1 billion deficit, but Governor Cuomo said new revenue streams are not on the table, including the Pierre tax. A Real Deal article in the Commercial observer pointed out that real estate taxes are already making up 53% of all city tax revenue, including 28 billion in property taxes. Okay, so that's it for this week's report. Stick around for a quick break and we'll be right back with our interview with Margaret Stryker.

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And now it's time for our Investor Spotlight. And with us today is my good friend Margaret Stryker. Margaret has expanded her investments throughout the country under plato, a student housing platform. So Margaret, thanks so much for joining us today.

Thank you for having me, James. And always good to see you.

Good. So I think we met. What was it? It was almost 20 years ago. It was probably my first day on the job. I think maybe I was probably only about 5ft tall back then.

That's hysterical. And I remember you were probably only 3 years old at the time too. That's it.

So we looked at a property on 9th Avenue. This was in Chelsea. And I don't think that you bought that property, but I think you did end up purchasing maybe the next one that I showed. Before we get to that, let's talk a little bit about why real estate. Maybe talk a little bit about how you started off and how did you decide to get into the business?

Oh, thank you. So I came to real estate through architecture, having also worked as a real estate broker in the residential space for rentals over at City Habitats. Worked at Deloitte and Touche for a couple summers, Landauer doing valuations. And I really came to it by touching all the topics that surround the value add and asset repositioning of multifamily.

That's actually, I had forgotten about your history before and a lot of our listeners who are aspirational real estate investors might be in the real estate profession right now. Maybe they're a rental broker and they're listening to this show, starting off as a rental broker. How did that inform your decisions today?

Well, from my perspective, there are three typical ways that people come to real estate investing. One is generally construction or contractors who grow up to do their own deals. Another is frequently the attorneys who then say, wait, I can do this the same way my clients are. And then the third would be the bankers and the more finance oriented people who start to grow into their own deals. I think having come at it from architecture or somewhat alternative viewpoint is less common, but in fact gives you an edge because you quickly learn the skill sets that everyone else has, but you still have a somewhat unique way to identify and start assessing what it is you're bringing to the table. So frankly, from my perspective, anyone can do this. It's just a question of how you approach it. And I have the wonderful opportunity to be teaching entrepreneurship up at Columbia University through the graduate school there. My focus is of course on multifamily, but it's interesting, the students in my class, how they're coming at it from urban planning, how they're coming at it through the business school, and really everyone has to take and apply their own approach.

So I was definitely going to ask you about that because I think when most people think about entrepreneurship, they think about, okay, I'm going to start the next unicorn tech company, but building a real estate business, I mean, there is entrepreneurship involved. It wasn't just that you were learning how to invest in real estate, but also build a business along the way.

Absolutely. And far be it for me to stop anyone from starting the next Google. I would never try and do that. But I do think that the skills of being an entrepreneur. Excuse me, I'm stumbling a little. The skills of being an entrepreneur are very well suited to real estate, where frankly, it's still the wild west in a lot of ways. If you can dream it and it's legal in whatever district you're working in, then it's on the table. So figure out how to get it done and it's all yours to do. So.

Along those lines, take us back to that first investment. And I think it was that the properties that we. Over the years, we've worked on a lot of things together. But you bought several apartment buildings in Chelsea and you had a vision for them. So at the time, what was there and what did you have in mind?

Those weren't the first, but that was a portfolio acquisition that I worked on with you. I think that was back in 2004. And essentially one of my perspectives has always been make sure to be able to pay your mortgage. That's a pretty basic.

It's a good rule I like.

It works for me and frankly for the banks. But anyway, so one of the approaches with that one was in acquiring a portfolio of several buildings, only touching one at a time. So whatever the value add strategy was for that particular individual asset, do that one while you've got the other. In this case it was seven properties while you've got the other six running at steady state. So that way you can always pay your loan while you're doing what you're doing. On the one side, it also enabled me not to have to take construction financing. Construction financing obviously is a market condition, as is your basic loan, but it's typically significantly more than a primary loan. So the extent that you can save 4 or 5% on a construction loan versus ordinary financing, it really is mutually beneficial to both yourself and frankly to your own headaches, if you think of it that way. Because managing the construction loan process is always more costly but also really much more difficult. And that's how that one got done.

One thing that's always amazed me about you, and you're a very details oriented person and clearly the quality of product that you bring to the table at the time. Now, given the types of rents that are achievable in New York, a lot of operations bring what we would call condo level finishes. But even back then it wasn't really. I mean, most of these properties were owned and many are still owned by mom and pops. And it's the same kind of Home Depot level finishes. And not that I have anything against that type of build out and it might be appropriate in certain markets not to improve, but you clearly saw the opportunity that this market demanded, a higher level finish. So you know how, you tell us how. And maybe this is where your architecture background comes into play. But when you're looking at a building and maybe half of it was vacant at the time, you're going in, you're doing improvements, and you're trying to figure out what are you going to do with the property? How do you envision it?

Okay, very full question. Thank you. I'll try and take it apart piece by piece. So one of my underlying theories, which frankly, I've stuck to my knitting on this one for 15 years now, is that you don't have to spend more to bring a higher quality. You have to invest thought and attentiveness to what you're bringing to the market. Which means that, frankly, I do buy Home Depot quality materials, but it's the attention to detail and design and the execution that gets that to appear to be more than it is. One of the guiding principles I have is in a good market, good architecture allows someone in a free market economy to charge more. In a bad market, it actually will keep your unit filled where somebody else's may be empty. So when I come in to a property, and I generally, I have done out of the ground, but typically I'll take asset repositioning, I will see where there are, we'll say design flaws or holes or places to be improved, and I will focus on those. So if I can figure out what's broken in an existing product and make that better, or even make it the feature, it frequently will drastically change the market dynamics within that particular property to make it more appealing or more compelling. As I look nationwide and I'm doing student housing nationwide now, we are finding that the caliber of what people have grown to expect in these properties is astronomical. However, especially in a lot of the existing portfolio of, you know, 1980s, 1990s product, it doesn't yet meet the market demands of what's being built today. So our niche now is to take existing, somewhat older generation. We're not talking like 1920s stuff. We're talking, you know, 1990s, 2000 early, and revamp it to start to meet some of the expectations of today's student population. There is a cost to doing construction, but at the same time, the opportunity to grab a greater percentage of the market is there, and we don't need to charge top dollar. So we aren't competing against the massive reits of the world. I admire their product tremendously, but I know I'm not a big fish in that pond, and so I don't try to be. I try and find a product that I can deliver at a value that allows my incoming resident or tenant to understand there's a value proposition without necessarily being the top dollar. They can find and achieve what they need to meet their budget. And quite honestly, in all but one of our properties this year, we're at 100% occupancy.

Wow.

Well, the housing today is a far cry from back in my days in college and my freshman year they had actually accepted too many students. They had to actually put up trailer homes. And my dorm room that was meant for four people, we ended up putting six people in the room. And I remember we couldn't even close the door to our room because we had the extra bed in there.

Gone are the days of the army cot and the bathroom in the basement, which is also what I was familiar with.

Yes, let's talk about again. And I really like what you had to say about, and maybe you call it value engineering, but kind of knowing what is the right execution for the area. You've also sold condos in your career. How do you determine what is the next neighborhood where you want to be looking? And how do you determine what is the product that's going to sell? Because I guess if it comes to condos, it could be if you were doing a project in a neighborhood where there's families, you better have the right size apartment. Remembering back to some of your New York investments, how do you determine what is going to fare the best in the market?

There's always risk in every deal. So you have to understand what it is that matters to you and understand what it is you think matters to your consumer. Now of course you're going to go fact check that and try and test the market and see comps and so on and so forth.

So you're talking to brokers, you're trying to say what do you think about, know, a two bedroom condo or this or that or amenities, space. I mean it's, it's a lot of research.

Before you, you were doing these projects.

It's an iterative process in my mind. I think that the real estate developer should always be able to make a decision and stick with it, be humble enough to change. If facts are telling you you're dead wrong. But if you inherently believe that you're doing the right thing and it's your, you know, belief and you've got the supporting knowledge through either a demographic study or research or local comps or whatever it may be, then getting from point A to point B has to be about driving the bus from point A to point B and sticking to your knitting that way. In terms of how do you source your next deal. Well, every person has to come to the deal with a different set of goals. And actually, one of the things that I'm teaching up at Columbia right now is there might be a goal in mind for one set of investors which makes something a perfect deal. It makes it absolutely the wrong deal for somebody else. So if you're coming at something saying I need to have a 10% IRR, you're going to be looking at something drastically different than if you come to it saying I need to have a 20. And so what are your goals, what are your objectives? What are you looking to do? Are you also looking to hold it for three years or are you looking to hold it for 30? All of these are factors that come in. Any deal can be the perfect deal, but it can only be the perfect deal if your expectations of what you're getting out of it are the same as what A, the market will bear and B, what you're bringing to the table. Right. You can walk into a room and say, you know, I want no money down and I want 100% return. Well, okay, aside from the fact that.

No money down makes sense, there's shows that our listeners can watch. They're usually at 2 or 3 in the morning, buy real estate, no money down, you know, flip homes. So, so, but no, I, I think.

Right, so some of it's about realistic expectations for what it is that you can bring to the table. What it is that your skill set, personal or your team skill set is what the opportunities are and what you're looking to achieve. If you're looking to be a local player in a local market, then you probably have a, a broader depth in terms of what you're able to do and the size of a deal you're able to execute upon in your market. If you are trying to manage a property from 3,000 miles away by virtue of the distance, your projects have to grow in scale because you simply can't execute the smaller things. So a lot of this, and especially if we're talking about the first deal, is about biting off something that's appropriate for you to chew.

So what has been your investment philosophy.

Over the years for you?

What makes a good investment? Do you have a long term perspective.

Or are you, I mean, your value.

Add, clearly, I mean these opportunities you're looking to improve. But what is it for you that signals a good investment?

What signals a good investment is I'm excited to do it. And I know that sounds a little bit hokey, but can I make something Better, Can I improve it? Can I improve the quality of the experience for those people who happen to live there? At the end of the day, multifamily real estate, which is really my specialty, is a emotional as well as financial situation. The people who live there, these are their homes. You want something that people are happy to come home to. Now there's an operational point of view, there's a construction point of view, there's a financial point of view. And how these all come together to make it a experience that engages the resident population but also produces a financial return is really the best possible outcome.

So maybe now talk a little bit about how you built your company because a lot of our listeners, maybe they're working for another developer now, maybe they're a broker and they want to start with their first investment. So, you know, your first deal, was it you? Were you, you know, were you the developer? Were you the asset manager? Were you, you know, doing the bank loan, you know, the, what is it, the cook, the bottle washer? I mean you were doing everything. But, but at what point did you begin to scale the business? And what did that look like? You know, one, two years in the business?

Was it three people? Was it five people?

If our listeners are looking to build an investment company, what should that look like in its early years? And.

Yeah. So what advice would you give there?

Well, I have a, it's a true story, but it sounds like a joke. When I was 7, 8, 9 years old, my brother, best friend and I built what we call Box City out of used refrigerator boxes. And we built, each person got their own home and then we built a town hall and we built a little cafeteria out of boxes that we kind of picked up from the moving boxes down the street. So it's perhaps in my blood to be doing this, but fast forward. The first real estate deal that I really worked on myself and a friend did a conversion of an industrial building over in the 30s in the West 30s in New York City while I was in graduate school. And we converted an industrial building to half industrial, half office. At the time, this was obviously a couple years back when industrial was still a thing in Manhattan and the zoning had just changed to allow for that to happen. So that was our first deal. The first acquisition I made. I was working at Tishman Spire at the time and I was in a fantastic program, this is pre 9 11. And I went to contract on a two building deal down in the West Village while I was working there, which was scheduled to close faithfully on 9-14-2001. It didn't close that day, but it closed less than two weeks after. Wow. So it was a very wild entry to the real estate world.

So fast forward a couple years from there. I mean, did you have an acquisitions person, Is it an asset manager, and you were managing everything in house? I mean, a lot of. I know some investors bring in a lot of the expertise third party, but maybe talk a little bit about kind of the pros and cons of keeping that expertise in house as opposed to going outside.

Okay. So the simple answer is that because of the ultimate closing date, I continued working at Tishman through 2001. And then the world was what the world was in New York City in 2001. And ultimately, by about six months later, when the program had been dismantled that I was working on was out on my own. So I just said, okay, well, you know, here I am. We could all use a break. I could use a little rest. And I just launched my company from there, which I'm sure was a fool's errand at that point in time. And I had no idea, but wasn't really necessarily thinking about anything beyond the immediate. I started it myself in one admin. When we finally got office space. It was inside one of the properties that I had then gone up to buy at the Chelsea portfolio that we were talking about earlier. And it was just a question of bootstrapping it, getting it done, and probably.

Doing each of those pieces. Even though as you grew your portfolio and your business, the fact that you were in those situations before and even backed your rental brokers to days, you knew what was involved in renting an apartment and how to get a lease done, I would imagine, you know, you were able to build on that experience.

Sure. I mean, there's a certain scrappiness that I suppose I have that might be unusual, but it's just innate to who I am. And so I didn't even recognize that this was unusual in terms of why to start running things in house. Essentially, what I turned Newcastle into was a black box for asset repositioning. Now, why would I do that? It's a good way to control costs, but it's also a good way to control efficiency. So I created what I think business schools teach as a positive loop cycle. A positive loop cycle means that each component of a business helps to feed itself. Why would one do that? Well, it reduces cost, it reduces overhead, it creates efficiencies. It also, generally speaking, means that your sales team doesn't have to be as strong. And I don't mean sales in terms of buying and selling buildings, but I mean in terms of keeping payroll afloat. So if you have. And what I did was I created essentially four silos of work. I had property management, construction management, legal services, which essentially was an LT law firm, and then property and asset level financial services.

So vertically integrated. So you really could take a project from start to finish.

Correct?

Yeah.

We never did transactional legal work and we never did architectural and engineering because I consider those to be conflict of interest.

Right, but you did do some third party. You did manage properties for others as well along the way.

Sure, absolutely. And we've run well over a billion dollars worth of real estate and have had a fairly significant third party management business. But anyway, back to why we're doing what we're doing is that there's really quality control. And I appreciate that everyone works slightly differently than they did 15 or 20 years ago. Right. That wacky interweb really has changed the world. But in order to manage somewhat complex turnarounds, and I'm perhaps being a little bit gentle and saying somewhat complex, to make sure everyone's on point to keep people in the same room, to keep your teams aware of what's going on, and to always have the expertise down the hall whenever you need it, is tremendously valuable. So if a property manager has a legal question and their lawyer's standing right there, it's not going through secretaries and conference calls and this, that and everything else. They're literally standing there together at the water cooler. Same thing with construction, same thing with budgeting and so on and so forth. So it's, to my mind, a really good way. And I had a wonderful opportunity to do it, which frankly, not everyone does that. As I'm growing the business, we manage to keep all of these disciplines, which are discrete and individual disciplines, in house. I think it strengthened the whole.

So I'd like to now talk about.

Creativity and its importance. I remember I sold you this property in the West Village and you always had an approach that no other investors had. I knew you had something in mind and you asking for surveys and this and that. It was an apartment building and. And somehow you determined that you could build a carriage house on the rear of the property. I had no idea you found value. I apologize to my, my, my client, the seller back then, who, you know, maybe we could have gotten a couple, you know, maybe a million dollars more if we knew what your plan was. But, but talk about why creativity is so important in this business and how you might be able to look At a situation where others might not see.

Value, that was a really fun deal. And that was a really fun deal for a lot of ways. I don't know if you remember the other half of this is that the other half I brought in a fairly famous restaurant.

That's right.

Restaurateur.

That's right.

And then I also ended up selling that building, too. Do you remember who you were? The broker on that one?

I think it was another celebrity. There was a lot of. When you're dealing the West Village, it's. Yeah. Yes. A lot. A lot of the Page Six names that would come up around town, that.

Was a fun time. And honestly, to get to hang out with that crowd of people when you're 28, 29 years old, that was a lot of fun.

Yes, yes. Good, good, good, good.

We won't name drop here.

But also a profitable endeavor. So you built your carriage house and you found out. And I don't know if it was some nuance or the zoning code, but it was really trying to figure out how to add value. Right.

So. Thank you. So in that particular property, and again, that was a portfolio sale as well. So what James is referring to is I bought three buildings on two different tax lots that were adjacent to one another on a corner in the West Village. It was also a obtuse corner, which is particularly relevant here. Obtuse corner.

I only got a C in high school geometry. So is that like the. The trapezoid or where it means a.

Triangle that has a greater than 90 degree angle?

Okay. That's probably why I couldn't figure out where you'd fit the carriage house. I should have been. I should have studied harder. Yes.

It was also a very unusual shaped lot.

Yes.

So part of the lot on one of the buildings actually kind of looped and hooked behind the property that was then adjacent to it, which was not something that I was buying. So. I'd seen carriage houses before. Frankly, I'd owned one or two, and I always wondered how they got there, how they were allowed to be, etc. And so I sat down and I started reading the zoning code. Now, I mean, the.

Did you need horses to do this?

Was that.

Was that a. I did not need.

Horses to do this. I did need a caretaker's.

Okay.

So it had to be less than 2,000 square feet. And in the rest of the world, that's nothing. And nobody's going to pay to build it in the middle of the West Village. It was worth a thing or two.

Yes.

I also, on that Lot had the first, second story restaurant, I don't know.

Oh, that's right.

Yes, yes.

So I, you have a lot of.

Firsts in your career. That's good. Yes.

I have had the perhaps misfortune of making case law a few times.

Yes.

Which I've never really looked to do.

But I, I, well, you're really pushing the envelope. I guess so, yes.

Some days more than others. I don't know. So I try to sit down and actually read the law. I don't necessarily read how it's been interpreted and that's perhaps gotten me into trouble. Sometimes I just sit down and I read the law.

So you play it by the book, but you want to make sure that you, you know, where there's opportunity that.

Correct. And that can make me aggressive and that can, you know, make me some friends and make me some enemies.

Right.

It's just part of the job. So I think one of the also important things that we should talk about in real estate is that you have to have a thick skin because the hits, they do come.

Yes. Perseverance.

Right.

And I think you also mentioned the tenacity. That's what my grandfather always says, that stick to itiveness to see something through. So we only have a couple minutes left and this has been fantastic. But student housing, the appeal for you, I mean, how did you decide that you wanted to go into this? And at this point, in a very short time, you've amassed quite a portfolio. I think you've done this through a fund structure. But how did you make this all happen?

A couple years ago, I will say, smelled a sea of change in the politics of New York. And I didn't really think that I was going to enjoy being a one horse pony for my whole career. And so I started to look nationwide, see what else there was to do. Spent most of 2016 essentially looking around, seeing what there was. And then at the end of that year, really assessing where I was and what deals I'd come close to doing. As I was looking through them, I realized that I had come pretty close on a deal up at Yale. I had come pretty close on a deal with St. Joe's University down outside of Philly. I'd come pretty close on a couple of other things that were always close to schools. And what I realized is that a lot of what we've been doing here in New York at Newcastle is asset repositioning for people that are of course, of any age and any background and so on and so forth, but a lot of them are kind of a couple years out, they haven't necessarily planted roots. And as we're looking at that market and how we work towards that, which is frankly really just providing middle income housing to hard working men and women, if we take a lot of those skills that we've learned and we dial them back a few years, we're in the student space. And learning how millennials think in their goals and their aspirations and how they want to interact with their housing just became a natural point for us. Can I see moving from Plato and student housing to Socrates and senior housing or Pythagoras and, you know, storage space? Absolutely. But again, I'm trying to do one thing at a time and not grow too far too fast and get out over my skis.

Great. Well, Margaret, this has been really fantastic having you here. And just last words for our listeners out there. I mean, if, and I think you already said it in many different ways, but what one piece of advice would you give to someone looking to make their first investment?

Trust your instincts. I think it's really important. If you think something's wrong, fix it. If you think something's right, stand up for it.

Great. That's a fantastic way to end. Margaret, thank you again. Really enjoyed having you on the show.

Thank you, James. This has been wonderful.

Perfect. Well, stick around folks. This is James Nelson. I'm your host of Real Estate Investing live from New York on the Voice America Network. We're going to have a quick break, but please stick around. Thank you.

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This is your host of Real Estate Investing live from New York, James Nelson. And we're going to start something new for tonight's show, which is we're going to do a city spotlight. So even though we are live from New York, we're going to be talking about investing in a variety of different markets. And that started with that interview that we just had with Nick Axford who was really talking about global investment principles. So over the next future shows, we're going to start mixing in some of the reports on the various cities. So I know some of my requests. I want to hear from our Austin office. I want to hear from Nashville, Louisiana, Miami, San Fran, Chicago, Boston, D.C. we're going to have a lot to talk to you about. Definitely tune in as we continue to teach you how to invest in commercial real estate. What took place in New York City in 2019 and what do we look for for the future? So as we just wrap up the books for this year, we did see a decline of 35% year over year. There was about $28.7 billion in investment. We saw a big drop in sales activity and that was really a result of a lot of the rent reform that took place with multifamily housing. But it was also more than just regulation for multifamily. It was the intervention of government in Amazon and a lot of these other factors. A lot of the investors have been on the sidelines waiting to see where this all is headed. When you look at the number of transactions also down, maybe not as significant by dollar volume, but about 26% across all the boroughs. There was only about 750 sales that took place last year. When we record these sales, we're talking about trades that are over $5 million in a city as big as New York, where we track, I mean, there's 250,000 properties. Now granted, not all of those are worth over $5 million, but there's only about 750 opportunities in any given year. The 10 year average has been about 1,000, but it still remains still, I would say, a seller's market. So we then dig into Manhattan and talk about where the dollar volume is coming from in just this borough, which is that in this past quarter we saw 5.8 billion in sales. About 37% of those were office. And we did actually see an uptick in the number of trades and dollar volume and a big trend that I think we're going to start seeing a lot more. And something that you all might want to start thinking about is the bifurcation of the fee and the leasehold. So I star they have a new platform called Safehold and they have actually been buying up the fees, the dirt if you will, of these properties. And then owners are either then going out and selling a leasehold position where you have future rights to the improvements for call it a 99 year period. So what they've created is what you would call the safest investment in that you own the dirt and if there ever was a default in those payments, you would get the improvement. So it's really helped capitalize some of these transactions. And we noted that Safehold accounted for about $1.7 billion in transactions in this last quarter alone over multiple office buildings. So this is certainly something we want to pay close attention to. We also look at the multifamily market in Manhattan. Clearly, as I mentioned before, a decline in activity as a result of all this reform. This past quarter there was only $380 million in sales. That's a 55% decrease over the trailing four quarters. Cap rates now are close to over 4.3%. This is up from the lowest cap rate in 2016, 3.5%. Again, when investors are willing to accept lower returns, they pay higher prices. We have seen that the multifamily market has started to correct here in New York as a result of this reform. Once again, about a million of the housing units out of 3.5 million are now permanently in the rent regulation program. So you're unable to decontrol those units and increase those rents. So that certainly has had a big decrease. Going back to 2015, we saw as many as 480 sales over 12 billion. I think that was the year that Blackstone bought Stuytown and now we're down to 119 sales for the year. So it certainly had a big impact. Land sales. Manhattan land still trades for about high six hundreds of buildable foot. That being said, there's not a lot of these trades happening. Land is still priced for condo development as opposed to rental. But you look back again to 2015, there was $10 billion in land sales, almost 200 sales that took place this past year. We only had 29 sales for about 1.1 billion. That's almost 1/10 the amount of land sales. So if you go into a market like this where development really contracts, that should conceivably help dry up some of the excessive inventory that we're seeing out there. Meanwhile, retail, and we've seen that segment hit so hard where in some cases high street rents are half of what they were at peak. You see cap rates where back in 2015 we're at the 3.6% level, have expanded tremendously over 5%, 5.22% on average. And you see average pricing come down from a PE of $34.85 a foot down to 2032. All these assets pricing has really corrected and you still have great opportunity to lock in very attractive debt. You really could be benefiting from strong cash on cash returns. Office sales, as I mentioned, is the one asset class really bucking the trend where we've had a real uptick in activity. Pricing hasn't hit maybe the 2015 average, but it's getting very close. Certainly an uptick from 2017, 2018. The average building now sells for almost $1,100 a foot at a 4.75% average cap rate. We're also seeing a pretty big uptick in the amount of office condo sales. So now companies are thinking about owning real estate as opposed to just leasing. There are these FASB accounting rules now. If a company signs a long term lease, that now becomes a liability on their balance sheet as opposed to the benefits of ownership depreciating and of course the appreciation that you can experience. So we saw in 2019 and granted some of these had to do with some of these blockbusters sales or purchases I should say from by some of the companies in Hudson Yards. But we saw almost $3 billion in sales this past year, which is an all time high. We had some big record sales this year in the city. We had the Coca Cola building selling twice, being resold within a matter of months from 909 million to 955 million. I think we talked about that on one of the the past week in reviews with the Daily Beat. We talked about that office condo sale at 30 Hudson Yards with Time Warner at $2.1 billion. Then we see Lord and Taylor's sale of 424 Fifth Avenue for $850 million to WeWork. That was another one of the big blockbuster trades this year. Lastly, Google just keeps expanding. 450 W. 15th St. They paid $592 million. These are really the things to be thinking or to be aware of in the past. If you are looking to invest In New York, things that you should be thinking about is with rent reform, does this stay limited just to fair market, or does this expand to all units? A lot of investors are watching what they are calling good cause eviction, which would ultimately be a way of controlling all, all the rents in the city. Because if that were to go through, then you have tenants could bring to the courts if they felt there was a rental increase that was unjustified. We're talking about 150% increase over CPI. That could be you go and try to increase a tenant's rent by 3% and they could say, ask the courts to keep them in possession. So the question is, does that expand? There's also other types of rent reform, whether it's the Small Business Survival act, where they're talking about regulating the process of renewals for retail tenants. Other things to look for in the form of other regulation is the Climate Mobilization Act. There's now some really strict guidelines for reducing carbon emissions. How is this going to impact the market? You're going to have to see a lot of these buildings being retrofitted. Certainly good for the environment. But what is that going to do to the cost to actually make these improvements? We're also watching closely the Opportunity Zones, which just received a nice benefit where now you have the ability to.

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The construction over 62 months as opposed to 30 months. Although opportunity zone program covers 8,700 zones throughout the U.S. it also clearly has implications, especially in the boroughs here in New York City. Last but not least, one of the things on my list, and really a positive note to end the New York discussion is with all this new leasing activity. And We've seen over 30 million square feet lease leased last year, which was a record. And a lot of that is with the tech companies and Facebook taking a million and a half square feet. Apple out there looking. Google, as we were talking about with Nick, there's a question, where are these people going to live? We've got vacancy right now at 2% on average. There's only typically 20, 25,000 units added in our city per year in a city that has three and a half million housing units. Units. So less than 1% of the housing stock being added every year. It's just not significant enough. So that is good news, especially not just for New York City, but really for the metro area. So for those of you investors out there, I'd be looking closely at New Jersey waterfront. I would be looking at Westchester, I'd be looking at Fairfield county up in Connecticut. As again, with all this new talent coming to town, they're going to be looking for places to live and shop as well. So that's it for the New York recap, and that's it for this show. Thank you again, as always, for tuning in. I appreciate your support, sharing with your friends, adding your comments, and we'll look forward to speaking to you next week. Thank you.

Thank you for tuning in this week to real estate investing live from New York. Please join your host, James Nelson for another program next Tuesday at 7pm in New York, 4pm Pacific Time on the Voice America Business Channel. All shows are rebroadcast Wednesday mornings at 7:00am Eastern Time, 4:00pm Pacific Time, as well as always on Demand. We'll talk again next week.

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