38: Phase 3 & Beyond

Foreign.

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 to show number 38 of real estate Investing Live from New York. This is your host, James Nelson and we've got a great panel discussion for you today which is the Phase three and beyond New York is opening back up for business. And so with us we have Ofer Yardeni who is CEO and founder of Stonehenge Properties. And if you haven't heard his Investor Spotlight interview, definitely go back and listen to that. You can find that on iTunes, Spotify or iHeartRadio, I just learned or wherever you get your podcast. Also with Ofer we have Jessica Walker, who's the executive director of the Manhattan Chamber of Commerce, and Mike Keogh who is from Bolton St. John's he's a lobbyist with over 20 years experience, having also worked for the City Council Department of Finance. So we're going to have a really interesting discussion on New York and how businesses are getting back on their feet. And we did also do a State of the Market where I introduced the presentation and if we didn't have time for it on this episode, but you can go to my YouTube channel which is James Nelson NYC and you can see the first half 2020 State of the Market report there with the slides and I'll walk you through that. And definitely worth a listen as there's some trends you're going to want to know about. But we're going to have a quick word from our sponsor and we'll get right into that panel discussion and just want to thank you all again for your support. We did pass 65,000 downloads, so we are really cranky now. So please continue to tell your friends and really appreciate your ratings and your comments. Please keep them coming. All the best.

When it comes to business, you'll find the experts here.

Voice America Business Network hi, I'm Mark.

Rose, Global CEO of Avis and Young, the world's fastest growing real estate services firm. And we are proud supporters of Voice America. With over 5,000 professionals in 120 offices in 20 countries, Avis and Young delivers local expertise in partnership with global reach. Because we are principally owned, Avis and Young prioritizes client success over shareholder profits through our open architecture. Our firm's experts provide value added client centric investment, sales, leasing, advisory management and financing services to clients across the office, retail, industrial, multifamily and hospitality sectors. Our culture is the bedrock for collaboration that enables each assignment to benefit from the collective intelligence garnered from a company wide database. Partnership Performance Learn how we Deliver different@avisonyoung.com to learn more.

Without further ado and I did that at 15 minutes on the dot. I want to give a proper introduction and thanks to our panelists. So again with us we have Mike Keogh who is partner at Bolton St John's Mike has over 20 years experience working with the city and the State. Previously he was the Director of Finance for the New York City Council. He also lobbied for District 37 and was in private practice before. We have also with us Jessica Walker. I had the pleasure of serving on her board. She is President and CEO of the Manhattan Chamber of Commerce, represents and supports the business communities throughout the borough. She's on not one but two Power 100 lists, the Manhattan Power 100 and the Power of Diversity Black 100 list. So congratulations there Jessica. Prior to the Chamber she was VP of Government affairs for the Partnership for New York City. She's also an appointed member of of Governor Cuomo's Regional Economic Development Council and our Mayor's Business Sector Advisory Council. So it'd be great to get some of her feedback on what's going on with those councils. And last but not least, my friend Ophirdeni, who's chairman and CEO of Stonehenge. He founded this company in the early 90s. He's amassed a portfolio of $1.9 billion, 2, 800 apartments, 2.9 million square feet. He's a great advocate for New York and the industry, serves on revenue ym, the Urea, amongst other boards. And he's got an incredible story of coming to the US from Israel back in the 1960s. And I'm going to make a plug for my radio show, Real Estate Investing Live from New York. Go back, listen to the interview that I did with Ofer. Amazing stuff. You can find it on itunes, Spotify, or I just found out this week iheartradio.com so if you're tired of listening to the same top 40 songs over and over, you can listen to my interview with Ofer. So please check it out. Okay, so let's dive right into it. So Mike, again, when we started talking about this, we were going to announce phase two and beyond. We're already in phase three and beyond. So what businesses are open right now and what's left to open. What's phase four and beyond?

Well Jim, first off, thanks so much for hosting this important discussion and also your prior discussion which feeds into this regarding the city and the state and their financial and budgetary challenges that they're doing during this time. Both of these are going to really inform why we're going through the phases that we're going through and the ability of the state and city to weather the storms that they're seeing. Because everything that you just went through in terms of the real estate market is going to have a significant and lasting impact on the state and the cities ability to respond to the challenges of COVID and continuing the reopening phases. But in terms of what we're seeing opening now at this particular point, if you didn't know you were in phase two, you have missed it. We are now into phase three. As Jim mentioned, real estate offices are open, commercial building managements are open. You can buy and lease your vehicles. Again, the showrooms are open. There are now in the next phase, Phase three barbershops will be joined by nails care spa like services. There will be an opportunity to dine indoors outside of New York City. There will be an up to 50% capacity as long as the tables can stay six feet apart. Outdoor dining Everybody saw the work going up in the city for barriers so that people can be safe if the outdoor dining has to happen within city streets. So those activities will continue for New York City to just be outdoor and pick up from your favorite restaurants in New York and folks are looking for when we will get to indoor dining in New York City. It's a significant question that we wind up getting asked by a lot of our folks in the hospitality industry. It's being driven by the experience of the states that are seeing spikes that went to indoor dining rather rapidly and the governor has very much made keeping the number of infection rates low and putting down or rather delaying activities such such as indoor dining until we see more of a flattening of the curve throughout the rest of the country. Whether or not that's going to happen anytime soon and the real risk and concern is that New York will again start to climb up the pandemic mountain and seeing an increase of infections. So I do think that we're also going to probably see things like Broadway has already said that they're not coming back and until the earliest of the beginning of next year. But other theaters and movies those are likely to be put off into phase four and it will also depend on whether or not we're seeing those activities keep the spike, or rather keep the infection rate low in New York.

Excuse me, I was on mute. I said that's a great summary. Thank you. And it really seems that the city has been cautious as well as the state with our reopening plans. And you know, that's really representative in the number of cases and how we have been able to control the new cases there relative to some of the other states which have been a little more open, shall we say, with how they've gone about getting back to normal. But I know some of the questions we talked about before this call. We're not going to sit here and talk about when could Yankee Stadium open up. I mean, it's just some of these questions. You have to start thinking about things in a post vaccine world as well. But it seems like there's certainly been a prudent approach. So, Jessica, the Manhattan Chamber represents thousands of businesses here. You know, how are they doing out there? Talk about. And not that your constituency isn't just retailers, it's, you know, small businesses that use office space. But how are they faring? How are they getting back on their feet?

Yeah, well, thank you, James, for putting a spotlight on the issue. So obviously it's a tough time for everybody. I think everybody's seen revenue declines. But those who are faring worse, it's no surprise are the companies. The businesses that because of the shutdown had to completely lose their revenue for a time. So restaurants, of course, really have gone through it. We're starting to see them pick up because of some creativity in government. They're, you know, allowed to do more of the outdoor dining and there are some opportunities there. But you know, retail is really suffering and gyms, event planners, those are the types of businesses that really have just seen no revenue coming in with offices, with more office space work. A lot of them obviously were able to move operations into homes. And so with a little bit of technology that has allowed a lot of those businesses to continue. But I think, you know, everybody knows this has been tough for every business.

Are there any, Jessica, are there any bright spots, any businesses? I mean, we know Amazon has certainly done well throughout this. I mean, that is not your constituency. But are there any of your local businesses who have actually, you know, thrive throughout this?

Yeah, I mean, listen, we actually launched an initiative in the last few weeks called Pivot to Win, which is really geared towards trying to help our small and medium sized businesses figure out what the opportunities are. We did a internal survey of our members and found out that the three things that they're really looking for right now, besides financing, of course, which is. We could talk about that. That's still a concern. But after that, a lot of these businesses, you know, they don't have this big capacity in house to really examine what's going on with their business and look for opportunities. So what they really need is strategic help and advice on how they can be pivoting their business, what the opportunities are. Also, the two needs that we're seeing are really around finding tech solutions and marketing. Because I think that this is what we're seeing is a lot of businesses right now and in order to save money, have really cut back on their marketing, when, in fact, depending on what the business is, this is the opportune time to actually double down on the marketing.

That's fantastic. And I definitely want to get back to some of those points and how we can be most helpful to businesses getting back on their feet. But, Ofer, maybe from the owner's perspective, I know you've already started seeing some signs of life and I appreciate all three of your updates. You all do great jobs giving weekly updates on what's going on, your segments of the market. But Ofer, in reading yours, it seems like you're seeing better collections from residential and commercial tenants alike. So I would assume that that means that they're also starting to find their way back. Ophir, you might still be on mute there.

Yes.

Great.

Good morning. Yes, I was on mute. So, James, thank you very much for having me and hosting me and thank you very much for the panel. I have been in New York investing for the last 30 years and I was listening very careful to your presentation that took 15 minutes. I can tell you that I enjoyed listening to it, but I disagree with your assessment over the market. You're making an assumption that our last six months we will be able to duplicate and we will be able to match it in the next six months. And I completely do not see it at all. I do not see one in terms of pricing, in terms of value, in terms of anything that you mentioned. And it can be another conversation that we can speak about why I don't think that COVID 19 the crisis that we are now can be compared to 2009. It's a completely different fundamental. Yes, we were in crisis, but it's a completely different way we are coming out of it with businesses and any other. With respect to your specific question, actually.

Ofer, let's feel free to dive into this. I think we can take an extra minute because I really value your perspective and what you brought up is exactly what our research department and I've been struggling with over to try to read the tea leaves, so to speak. But again, when you look at annualizing the first half, we are in full agreement that that is not. If you just annualize the first half, that's not representative of what's going on. And that's why I was trying to make the distinction of first quarter versus second quarter. And I do agree with you also that this is very different than what what happened in 2009. Very set of circumstances. But the net result is going to be a very low number of sales this year and hopefully that pent up demand is going to have. It's certainly going to grow in the years to come. Probably not as quickly as we saw last time. But would love to get your thoughts on that because this is one of the sales reports where you look at the stats and you just say this can't be right because the first quarter is very, very different than what happened in the second quarter. So we'd love to get your thoughts.

But even if you speak about the crisis, that are not the same crisis. If you look at 2009 with the crisis of the banks and the financial meltdown, clearly we as a nation, we as people could have blame the banking institution and the financial institution that brought us to this chaos. The government was not prepared. The government did not know how to act, did not know how. Yes they saved and bailed some of the banks. But if you look at the layoff that we had, the layoff were at the top executive big earners that trickled down towards affecting of the retail and the restaurant and other businesses. The crisis that we have right now, it's really not anybody's fault. We are together fighting an enemy that we can't see. Anybody that ran a business and overnight was supposed to shut down and have financial crisis today, it's not because he did not run his business properly. It's because the government forced him to close and overnight he lost his business. But I think that the government in most cases try to help incentivize and immediately recognize where we are and try to fuel the economy and try to provide financial help to The Citizen. During 2009, we as owners of multifamily, especially in Manhattan, our tenants lost their job. If you worked for Lehman or Stern, any financial institution, you lost the jobs. Today these tenants are working from home. If you look at the 30, 40 million people that lost their job or laid off, these are people that are making somewhere between 30 to 70 thousand dollars a year. These are people that are working in the service industry, if it's the hotel, retail, if it's the city, if it's other agencies. But it's not really affecting the people that are earning from 125 to over and making more. So we are not in. We can't compare those crisis. What we know is that we hope that things that the government will do and the comfort level and the safety, we will all be able to come together. And families are affecting right now kids are affecting emotionally, physically, versus in 2008. Yes, maybe you were foreclosed on your own, but the majority of the families were not affected. We are affected, all of us together. And the implications are tremendously and it will take a long time to heal. With respect to your asking about the collection, I'll be candid with you. I left New York, Manhattan on March 14th and I was quite concerned because the media immediately started to report about tenants not being able to pay. Tenants should not pay. The media started and some of our politicians started to talk about organize national rent strike started to talk about don't pay your rent, don't pay the mortgage. And as an owner of real estate, I was a little bit surprised because nobody really said don't go and pay at whole food. When you buy food and don't pay, just take the food. Nobody said that if you have a car, a lease on your car, don't pay your lease payment. Nobody said anything about non payment of many if you go to the pharmacy, just take the medicine that you need and don't pay. They looked at the real estate some way as a 501C, as a charitable organization that with owner of real estate you don't have to pay the rent. So I was a little bit concerned. But overall I believed in New York City. And I believe that the people and I can tell you that collection improved from April, May, June. And we understood why they even improved. So in the residential field, if you look at the rent stabilized that they pay by check, our collections on April were around 80%. Our collection on May were around 90 and our collection in June were 98. And now we are at 99%. And the reason why we got a delay was not because the tenants did not want to pay the rent. We moved offices and by the time they sent the check to us, by the time the post office delivered the check to our other location, by the time we deposited, we recorded late payment. But on the fair market tenants in the city we got over 95% of our rents. And yes, the message was we will work with you guys. We are in it together. We need to take make sure that everybody is safe and healthy. But overall the residential, the thousands of residential people who live in New York paid the rent. We had some surprises on the commercial side on the retail and the garages. And I think that maybe the garages especially they made a decision on the business level. We are not paying rent. The rumor started that even though they were operating, they did not pay rent and some of them acted in bad faith. Clearly I can't tell you that as an industry, they all acted in the right way, they worked, they got money and they decided not to pay because they figured that's what they are going to do. So as an industry, we are going to deal with that. And with respect to the retail, our hearts are with them. You know, some may we find that the small tenants that we have, the family that run the business, they pay the rent, they try to do the best. They understood how much is important their business for them. But we find that the credit that you mentioned before, that you can buy and finance a credit tenant. James, there is no credit tenant anymore because a credit tenant can make a decision not to pay the rent. And you cannot do anything right now because the courts, you can't enforce it. So we find that on the retail side, we got paid close to 40% from the pharmacy, from the UPS, from the banks. And we find from some of our tenants that were opening and allowing takeouts, we found that they paid them a certain amount of rent and we are working with that because I'm telling you, this crisis is a completely different crisis than anyone imagined or thought because it's nobody's fault. We are in it together and we need to come from it together.

That's really, really great perspective and you bring up really important points. And so I'm trying to unpack them and I want to give a chance to Jessica and Mike to respond. And I really like what you had to say about the mom and pops versus the credit tenants because if you talk to maybe some of the publicly traded companies and looking at their retail collections, they're at 25%. And you hear these stories of billion dollar corporations who've just systematically sent letters to everyone saying we're not paying rent even when there's cash clearly on their balance sheet. So really appreciate that these mom and pops are trying to work with their landlords to make it happen. So Jessica, maybe we can go to you on that which is how are these tenants surviving? Did they take advantage of Triple P? Have they been able to work things out with their landlords and get things back on track?

Yeah. So we've actually worked with a lot of our businesses to try to get the federal assistance through PPP and Manhattan fared very well, we're happy to say about that. But as you know, there were especially early on, before the program was amended, most or all of that money had to be put towards retaining employees. And so it could not, most of it could not be used towards rent. We did a lot of webinars with our members to counsel them with lawyers of how to have a responsible conversation with the landlord if you need more flexibility, if you're having issues. Clearly all of the lawyers said it's a bad idea just to flat out stop paying the rent. That's not a good idea. I think Ofer's right that we did see a lot of the smaller and medium sized businesses want to make those rent payments. Stress about it. But I'm happy to say we heard some really great stories and anecdotes about, you know, landlords really willing to work with, work with the business to try to, you know, provide the flexibility that they could. So. But I think that's right. We're going to see more of this as this goes on. You know, it's going to be hard. Revenue is still not coming in the way that a lot of these businesses would like to see. So even those who are, who might be paying now, I think it is probably going to become more of a hardship in the next few months.

Yeah. And I know the lenders have had a part in this as well. And just anecdotally, certainly with the community banks, without fail, most of them have given three to six months forbearance. So if the borrowers don't have this burden of debt service, they can pass on that relief to the retailers. I wish the same could be true. I know the city might gave a little bit of relief on taxes where instead of if you're late on your real estate taxes, instead of getting hit with 24%, I think it's only a 7% penalty. But what else has the city and state been doing to try to work with tenants to get them back open for business.

Yeah. In terms of the rental protections that Oferd was talking about, that was done simply because the city and the state were not able to deal with potentially dealing with a lot of people losing their homes during the pandemic crisis. And some of that extent has been extended throughout some of the different phases. But they city and the state are directly dependent on the funds that real estate transactions create in terms of the tax revenue and just the regular paying of taxes that rent rolls are fueling that makes up a dramatic portion of the city's budget. So they need to find a path to have those things continue. There is a very well coordinated, organized tenant lobby at the city and state level and they are still very active and have great relations with their elected officials. So they have been able to put the tenant concerns at the forefront of most of the legislative and executive both at the city and state level. So they've been looking more with an eye towards dealing with more of the aspect of how do I deal with somebody who may have lost their income and may not be able to pay rent as opposed to how do I make sure the real estate industry is functioning so that revenue can continue to flow not just through the entities in the private sector, but the tax revenue that comes from all of the activities that happen because that's how they're going to be able to afford essential services. You spoke a lot about this in your previous webinar and this is really going to be a crunch for the city and the state because they've kicked so many of the kids cans down the road in terms of dealing with decreased revenue that they're getting and it is primarily from real estate based taxes or industries that make money off of real estates that apply for the lion's share of the city and the state's revenues. That's going to be the challenge for them. How do they keep those entities? Sorry, I couldn't hear.

On the back from your cell. You might have to go to mute.

Thank you.

That's going to be the challenge. That's going to be the challenge for the city and the state because traditionally when you have hard economic times, the government has used real estate and infrastructure projects to drive economic activity which then leads through funding for those governmental entities to provide essential services going forward.

Great. I should have said at the beginning of this webinar because I want this to be interactive. So please use your Q and A button if you have questions. I'll do my best to try to ask them throughout, but we're also just trying to keep this to an hour to be efficient with everyone's time. We're already getting some comments. One anonymous attendee says that 18% interest for unpaid taxes isn't a solution. I would agree with you. And another attendee asked if there's been Any thoughts about a reduction or pause in property taxes, especially for properties that have been affected by tenants unable to pay for rent? And as we all know, and maybe Ofer's got some thoughts on this as well, but most of these real estate taxes with a retail tenant, a lot of them gets pushed through to the tenant as a, as a pass through. So if they're having trouble paying the rent, I would assume they're having troubles paying the taxes. So it's a tough one, as you said, Mike, because we've got a huge budget shortfall, whether it's 9 billion at the city, 33 billion at the state over a couple years, and the real estate industry pays half of the city's budget. And so if we're not getting it from transfer taxes this year, we're not going to get it from mortgage recording taxes. So, you know, it's a tough answer. So, Ofer, I don't know if you.

Have any thoughts, so. Yes, of course I have a lot of thoughts about many, many things. You know, I'm not a guy that does not share his view and I'm trying to be as much as politically correct that I am one from the point of view that I love New York, I've been in New York, I came to New York by choice. I love walking in the street, I breathe smell, and I really love what the city has been provided me. And I'm talking here from the point of view of citizen, and I'm talking about here from the point of view of somebody that's involved in the real estate community. I don't want to say leader, other people will decide. But I was very, very, very surprised a second ago when I heard that the city needs taxes and the city needs money. And of course we understand that. But if you look at it as a real estate developer owner, I'm very disappointed from the way the way the administration handled the real estate for the last few years. And I don't want to get involved here with the issue with Amazon and I don't want to talk about the new legislation that happened in 2018 with the change of the rent laws. But I rather concentrate here on the 2000 where we are now with the COVID 19 and to hear somebody said, but the city needs the taxes because they have a budget. And what do you think we as an owner, don't you think that we are entitled to get paid? Don't you think that we have the mortgages to pay and we have to run properties? Everybody has obligation and from the city to Come and to insult to us that we should pay 7%. That is almost 10 times higher than the 10 year treasury or 12 times. And they are doing us a favor. The fact that we are not occupied, the fact that people are not paying rent and the city officials, city council and several representatives are saying let's have a rent strike, let's not pay again. I have nothing against the whole food, but nobody speaks about any other industry other than us where we are providing so much capital for the city. So I think that we had amazing mayors. Mayor Bloomberg for 12 years, the city prospered. The city real estate taxes increased by maybe 30, 40%. We as owners supported it. We loved what was created in the city. But to sit here at COVID 19 and to see where the city is going, the financial crisis that New York City will have and you will see, James, this is going to be. We are going to have two to three years of horrendous crisis in New York City. For me to sit at home and to watch TV and to see the protesters and I support civil rights. Everybody that knows me knows my passion and love for democracy, for liberal, as a humanitarian and everybody knows me knows where I get involved. But to see the looting and to see the damage that was done to the buildings and five or six of my buildings got hurt and the city never gave us any assistance. We needed to go in to protect the building by ourselves and the crime that is right now going in the city where families are not willing to come back. COVID 19 is not the issue. People will not come back to New York because of COVID 19 until we get a vaccine. We need to give vaccine to several of our politicians, people at City hall. The way they are running the city and the way they are viewing it us enough is enough. We are in it together. But we cannot just put the blame on everything at the landlord community and the real estate community. So from my point of view, the city did not do for us anything. On the contrary, the city hurt us by creating all those laws that non eviction. Nobody was going to evict any tenant. The tenants today, the tenants on the high end in the city are getting paid and the tenants that need assistance, the government is giving them tremendous amount of compensation every week. So nobody is really sitting and being homeless and being thrown out from their homes. The city needs to take the responsibility and cure all the damage that they did in the last several years. So that's my thoughts about where we are today.

James, if I could, if I, if I could just for just one second.

Because I think I want to get Jessica's response because.

Oh, go ahead, go to Jessica first because there's a lot of different things in what Alfred said that really impact the direction that where the city can go next.

Right. And before Jessica does that, I want to. If you all did not see that webinar that we did with Martha Stark, Andrew Rhine and Ari Shalom, a lot of that webinar is what Ofer was just talking about. So you can go to my YouTube channel to go watch that again if you haven't already. But yeah. Jessica, any comments on what Ofer just had to say?

I mean, I think it was well said. I think that, you know, there has definitely been an anti business feel to the city for a number of years now. It's something that we've been pushing back on for a very long time. And unfortunately, when this crisis happened, you know, it was sort of more of the same. There's no question about it. We even saw, we saw the city council put forward a well intentioned bill to try to do more to help the essential workers who were still making deliveries. But it was going to put a lot of new costs onto small businesses right at a time when there was no revenue coming. Like it was very shocking. And the good thing though is that the business community, all facets, I mean, all of the organizations, even some nonprofit organizations came together very quickly to say this is a terrible idea and sort of pushed back on that. So I think one, it showed that there is some organizing that's happening now to try to push back on these things. The other thing which I'm sure, I'm sure Mike will talk about is that next year we have a big election coming. We're going to have, you know, we're going to get a new mayor. Over half of the city council is term limited out. So we're going to have, you know, turnover maybe two thirds. Mike of the city council will be new.

Almost 40 council members will be gone and will be brand new.

So, you know, I guess what I would say is that this is a great time for people to get involved, to really be thoughtful about where we're headed. But go ahead, Mike. He knows politics better than I.

You do very well at it though, Jessica. And I think Jessica's point is really what is the path forward is to bring the business community story, real estate's story to bear, by and large, because we live in a tabloid culture still in terms of how the city is reported. The bad tenant, excuse me, the bad landlord the bad business owner. That story gets front page treatment and it may be indicative of a lot of other people's day in, day out experience, but there are a lot of other folks who aren't doing that. They are a vital part of their neighborhood and they are working, providing a service, providing homes and doing things responsibly. That story is never going to make news. But the organizing efforts, like what Jessica just demonstrated, that bill was ready to pass, that bill was going to then do a lot of unintended harm to restaurants and small businesses. And that would have had negative impacts in terms of being able to afford the person who's helping me in the restaurant. I may not be able to afford them now at this particular point, or whether or not their ability to stay open to provide the food services that we had so they would have, it would have had the unintended consequence of hurting the very essential workers that they thought that they were helping. By telling your story in terms of business as opposed to throwing one's hands up saying the politics are what they are and I can't do anything about it. That is a default position that businesses tend to fall into. And then we wind up with legislative outcomes and unintended consequences because nobody's balancing the politics. And Jessica is right to point out that we are going to. We're in the midst of this election year in which the state legislature is up for for election. By and large, the makeup of that elect of that legislative body is going to be determined by the absentee ballots that are being counted starting as of today from the primary that happened last week. So we'll know who is returning and who has been voted out of power. There are a number of legislators who did not win their primaries or who are behind in the vote totals. So we're going to see a different body, just as we saw when in 2018 the legislature switched over from Republican to Democratic control. And most of the folks who were running ran on progressive issues that were pent up and held in abeyance by the Republican majority that would not have necessarily affected business in the city of New York, but didn't deal with a lot of the historical, social justice and societal ills that we have now seen come in the aftermath of the homicide, the murder of George Floyd, sweeping the country. If we can, as a business community acknowledge and James, you did this very well in your prior seminar. Talk about how business is, is part of the solution for getting to a more just society and take some concrete steps to do it, then there isn't Necessarily the fervor for let's throw everything out that we have today and not necessarily be clear about what we'll replace things with. And government, I think, would be a willing place partner not to just find ways to work on or off of a progressive agenda that does not take business concerns into account, but is informed by people who have a lot to offer and who are basically paying for the majority of the city government that we have, both at the city and state level. And quite honestly, in terms of the taxes that are taken out of New York and sent to other parts of the country to help subsidize them because they don't have the tax base to support the federal services that they're receiving. So there's a lot to unpack.

I didn't want to call you up because that is really good stuff, but unfortunately we only have five minutes left and we have two really good questions that I want to get answered. But before we do that, just a comment. Thank you, Michael Salzhauer, for just saying that elected officials need to know better about the fact that landlords somehow benefit from keeping stores empty. That that's in no way the case. So I'm not asking you all to respond to that. Just, you know, take it under advisement, because I know that is, you know, some fallacy out there that somehow landlords like keeping space vacant. Quite the opposite. But I wanna. And I don't know if you saw the Barry Sternlicht interview that's been going around, and this isn't the first time that he's talked about how a lot of the business is leaving, pursuing red states and driving our highest taxpayers out. Margarita made a comment, she had a question, her statistic, and I don't know if this is right or not, but could believe it that since March, 420,000 people left the city between March and May. You know, some of them might be living with their parents. We're hoping, you know, they'll come back. But, you know, over that comment of, you know, and really more of a case for New York City, but why should. Why do you believe that New York will come back, will continue to thrive when you have contrarians, you know, like Stern, like, saying that, you know, businesses and people are leaving for other states that are more business friendly.

So thank you very much. I heard the interview that Barry Stoney gave, and Barry is very, very smart, he's very articulate, and he has a lot of valid points in his description about New York City. But let's all remind everybody that Barry's Office was never, I think, in New York. He was in Connecticut for many, many years. I don't think he was able to attract a lot of talent to his organization there. And he moved to Florida many, many years ago. It's not that he moved right now. There is definitely a flight from New York City right now. And I can tell you that it's not necessarily just because of COVID 19. It's another poor decision by the administration. I'll give an example even about opening schools. We all know that the most valuable thing in our life is our kids. It's not the building that we own. It's not how much money we have. We are all parents, we are all family. It's our kids. People still do not know if New York is going to be open or not. Those families are going to stay where they are. If it's in the Hamptons, if it's in the Berkshire, if it's in other places, they are not coming back to Manhattan until there is evidence. So you're going to have a crisis in the multifamily, in the two, three, four bedrooms, all those rentals on York Avenue and other parts of the city because people will not come back. And they will decide to stay where they are until the government will make a decision and there will be a clear message. I believe dearly that Manhattan overall will. And we are in a crossroad, to be honest with you. We are in a crossroad between the capitalism and the socialism. Do you want New York City to be like the 70s, that would be crime and prostitution and homeless? Or do you want it to be during the time of Giuliani at Bloomberg? We are in a crossroads. Proud right now. I personally believe that the young kids want to be in Manhattan. It's from the 22 to 30 they graduate from college, they want the jobs, they want excitement. New York City is a vibrant city. It's exciting. It's exciting. Every time I walk in the city, I feel like 30 years younger. So these kids will come back and they will be in New York City and they will rent. They will not buy. Because if you don't have safety, if you do not feel comfortable to walk on the streets, if you have no police protection, if you cannot call for help and if you see people are working with guns, people would live. So am I, am I, do I believe that people will come to the right sense? And let me tell you something, Michael. Yes, we have a choice and it's not a cup up. We can vote and we may be somebody Told me that the darkest night part of the night is just before the dawn. So maybe we are right now in the darkest place in Manhattan in our life. Maybe right now people who are be so mad that they will come and vote and change those politicians that are really not thinking in the right way, that are anti business, that are completely progressive, that are destruction, that they want to transfer the wealth. I came as an immigrant with $600. Nobody gave me anything. I worked hard and I'm very grateful. There are opportunities here and I believe people can do well if they put their time and the effort. So one, we have a choice to vote. The other choice that we have is we don't need to live in New York City, we can live in other places. And I'm not saying that because of taxes. New York City used to be a brand and for a brand you are willing to pay more. But when the brand is homeless, when the brain, when the brand is people urine on the street, when people loot your stores, when people fret you, that's a negative brand and that's what I'm concerned. So we are in the pinnacle point. If we will not make the changes now, we will suffer for the next decade because as you know, when you get an injury, even if you're in the best shape in your life for a surgery for you to heal, it takes six months or a year. We have been under a current administration that has been so progressive that has not been able to listen to, yes, they listen to the demand of some of the people, but this is not democracy. This is oklokratia. This is letting the mess run city hall. That's what's going on. So either we change it or I can tell you that all your graphs about New York will have to change. All your investments about New York will have to change. It's our choice. So either we will choose by voting or we will just leave the city. But the status quo cannot continue.

Thank you Ofer and Mike for sharing your thoughts there. And we are over time. So just Jessica with maybe a minute left and a question from Mike Sankari. How do people get involved? They wanted to ask, you know, in the political discussion and the elections, you know, how can people get involved?

Well, of course, you know, obviously funding helps but to you really need to learn who the candidates are in the race right now. And I think that we're going to be doing some candidate forums. I assume Rebny will as well find out what the, you know, which candidates you want to support and then do everything you can to help them. And also don't forget that some of the people out there might even consider, you know, putting forward a candidate or running themselves. Mike, do you want to you have.

About eight people who are eight to nine people who are planning to run for mayor of the city of New York alone. That's going to be one of the largest numbers in a Democratic primary that we will see. And you will have many more people coming out of the protest movement that's going on right now looking to seek higher office who currently had not thought about doing it, but now they're going to be doing it. So the city council field is going to expand dramatically.

Right.

Well, this has been a wonderful conversation. Want to thank everyone for joining today. Ofer, Mike, Jessica, thank you as always. Really good discussion here and some really great thoughts. Forget New York moving forward in phase three and beyond. Thank you all. We'll be in touch.

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.

Sam.