April 4, 2016
Here’s Why New York Real Estate Developers Are Richer Than Ever
In 2007, the real estate market was at it’s then-peak. In New York City and elsewhere, though, the bubble was about to burst. Major players like Jerry Speyer would go on to forfeit multi-billion dollar deals, like Tishman Speyer’s $5.4 billion Stuyvesant Town and Peter Cooper Village project. Others took advantage of the drop.
Now the New York market has officially rebounded, and as a result its real estate tycoons are richer than ever. More money was spent in commercial real estate deals last year than at any time since 2007′s peak, according to new analysis by New York-based brokerage firm Ariel Property Advisors. The total – across 3,576 transactions of more than $850,000 apiece – was $69.62 billion, which is 11.48% more than 2007.
Manhattan real estate, long thought of as a safe harbor for investments, started its rebound quicker than other regions across the country that were worse hit. Demand for housing and cheaper leases pushed developments further to the outer boroughs. The report also notes that amid those shifts, several key factors – from a growing technology industry to city rezoning efforts to low interest rates – created perfect conditions for the richest real estate developers in the city. ”If you read the market correctly, you could make even more,” says Ariel founder Shimon Shkury, comparing the 2015 market to the 2007 boom.
Take David Walentas, who joined the billionaires list in 2014 after transforming 1970s investments in Brooklyn’s once-industrial Dumbo neighborhood. In Williamsburg, another then up-and-coming neighborhood, he acquired the old Domino Sugar refinery’s 11 acres for $185.5 million in 2012. It’s now undergoing a $1.5 billion redevelopment plan and will soon be a luxury residential and retail complex. ”A lot of it is timing. There is an advantage to size here in the sense that in 2009, 2010, and 2011, there were opportunities to buy sizable transactions and improve them,” says Shkury.
As for taking advantage of the budding tech craze taking over the city’s Silicon Alley, look at Mortimer Zuckerman, who cofounded the now-sprawling commercial real estate trust Boston Properties BXP +0.17% in 1970. In 2014, he was personally part of a $150 million funding round in tech unicorn WeWork, the shared office space company popular among freelancers and self-employed entrepreneurs.
For the richest real estate investors in New York, these underlying factors created a major pay day. The top 10 real estate billionaires with Manhattan or outer borough holdings are richer than ever before. Most have doubled their net worth since 2007′s market high.
Perhaps no one has benefited more from city-wide rezoning efforts thanStephen Ross, whose Related Companies now has about $30 billion in assets under management. In 2007, FORBES estimated his net worth at $4.5 billion. The most recent Forbes Billionaires list, released in March, counts it at $12 billion. (While his real estate company is his largest asset by FORBES’ count at an estimated $8 billion, he also has substantial non-real estate holdings like ownership of the Miami Dolphins and a stake in Equinox Fitness). Related has developed Hunters Point South, the largest affordable housing complex built in New York City since the 1970s, and broke ground on the 28-acre mega-project Hudson Yards in 2012. Both of those projects were made possible by the Bloomberg administration’s 2004 rezoning initiative, which redrew about 40% of the city to make room for new developments around subway lines like the 7 train which now goes to Hudson Yards. The report notes that New York has seen $300 million in public investment in real estate, which spurred private investment of $10.5 billion.
FORBES currently estimates that there are 163 real estate billionaires in the world, 38 of whom are in America. Below is a list of the top 10 richest New York real estate developers:
1. Stephen Ross: $12 billion in 2016, $2.5 billion in 2007
2. Richard LeFrak: $5.9 billion in 2016, $3 billion in 2007
3. Donald Trump: $4.5 billion in 2016, $2.9 billion in 2007
4. Jerry Speyer: $4 billion in 2016, $2 billion in 2007
4. Leonard Stern: $4 billion in 2016, $3.7 billion in 2007
6. Sheldon Solow: $3.9 billion in 2016, $1.7 billion in 2007
7. Jeff Sutton: $3.4 billion in 2016, new in 2013
8. Wilbur Ross: $2.9 billion in 2016, $1.2 billion in 2007
9. Mortimer Zuckerman: $2.5 billion in 2016, $2.4 billion in 2007
10. David Walentas: $2 billion in 2016, new in 2014
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Keith Knutsson 
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