MARIA: THE BIG BUSINESS OF REAL
ESTATE WITH TECHNOLOGY IS
SPREADING TO SILICON VALLEY.
GOOGLE IS HOLDING THE TWO TOP
SPOTS FOR THE LARGEST DEALS OF
THE YEAR IN TERMS OF REAL ESTATE
ON THE EAST AND THE WEST COAST.
THE TECHNOLOGY GIANT SPENDING
$1 BILLION FOR A BUILDING IN
MOUNTAIN VIEW, CALIFORNIA AND
MORE THAN $2 BILLION FOR A
BUILDING HERE IN NEW YORK CITY.
JOINING US RIGHT NOW IS BILL
RUDIN TO TALK ABOUT REAL ESTATE
TODAY.
IT'S GOOD TO SEE YOU.
>> GOOD TO SEE YOU.
MARIA: CHARACTERIZE WHAT YOU'RE
SEEING IN TERMS OF REAL ESTATE
IN NEW YORK, WHAT COMPANIES ARE
DOING MUCH OF THE BUYING, WHERE
YOU'RE SEEING THE EXPANSION AND
GROWTH.
>> WELL, WE'RE HEADING FOR A
NEAR RECORD YEAR IN TERMS OF
COMMERCIAL LEASING, OVER
30 MILLION FEET YEAR-TO-DATE.
SO WE'VE ALREADY SURPASSED LAST
YEAR'S RECORD OF
30 MILLION FEET.
WE'LL PROBABLY BE NORTH OF
32 MILLION FEET OF COMMERCIAL
LEASES DONE WITH COMPANIES LIKE
GOOGLE, ZILLOW, WEE WORK,
PELETON AND THEN OBVIOUSLY WITH
THE AMAZON ANNOUNCEMENT IT'S AN
INCREDIBLE SIGNAL THAT NEW YORK
REALLY IS A TECHNOLOGY HUB.
OUR CITY IS DIVERSIFYING ITS
ECONOMIC BASE WITH THESE LARGE
TECHNOLOGY COMPANIES, SMALL
TECHNOLOGY COMPANIES, BUT
REAFFIRMED BY AMAZON COMMITTING
TO LONG ISLAND CITY.
MARIA: THE HEADQUARTERS TO HQ2
FOR AMAZON, THEY HAVE CHOSEN
QUEENS AS ONE OF THE PLACES.
THE ANNOUNCEMENT FACING BACKLASH
OVER INCENTIVES AND
NONDISCLOSURE AGREEMENTS
INVOLVED IN THESE DEALS.
SO AMAZON'S MOVE, WERE YOU
SURPRISED THAT THEY CHOSE NEW
YORK?
>> WELL, OUR PROJECT, THE
BROOKLYN NAVY YARD, WE SUBMITTED
ALONG WITH THE CITY TO TRY TO
GET THEM TO GO TO BROOKLYN.
WE'RE VERY HAPPY THEY DECIDED TO
GO TO LONG ISLAND CITY.
BUT I THINK SOME OF THESE ISSUES
THAT ARE RAISED, INFRASTRUCTURE,
EDUCATION, THEY WILL BE
RESOLVED.
THE FACT THAT WHEN THEY'RE
MOVING INTO THE FIRST BUILDING
IT'S BEING VACATED BY CITI CORP.
SO THERE'S NOT AN IMPACT IN
TERMS OF POPULATION.
AS THEY CONTINUE TO GROW, THE
CITY'S ALREADY COMMITTED SEVERAL
HUNDRED MILLION DOLLARS FOR
INFRASTRUCTURE.
THERE'S A NEW FERRY SERVICE,
THERE'S EDUCATION REQUIREMENT AS
PART OF THE DEAL.
WE THINK IT'S NET-NET FOR THE
FUTURE OF THE CITY VERY, VERY
POSITIVE.
MARIA: THAT HAS TO HAVE LEGS,
IN OTHER WORDS.
BECAUSE AMAZON IS BUILDING THIS
BIG PROJECT WHERE IT IS, YOU SAY
FERRY, IN OTHER WORDS, IT'S
GOING TO CREATE A LOT MORE
ECONOMIC ACTIVITY THAN WHAT JUST
MEETS THE EYE.
>> BILLIONS AND BILLIONS OF
DOLLARS.
WE'RE BUILDING A PROJECT RIGHT
NOW IN THE BROOKLYN NAVY YARD.
MARIA: THIS IS DOCK 72.
>> DOCK 72.
WE DESIGNED IT WITH OUR PARTNERS
BOSTON PROPERTIES AND OUR LEAD
TENANT TO REALLY BE THE OFFICE
BUILDING OF THE FUTURE.
IT HAS ALL THE INFRASTRUCTURE,
THE TECHNOLOGY, IT HAS THE
AMENITIES, HAS A FOOD HALL, IT
HAS A BASKETBALL COURT, A
CONFERENCE CENTER, IT HAS A
WELLNESS CENTER, THESE ARE ALL
AMENITIES THAT COMPANIES LIKE
AMAZON, GOOGLE AND EVERYBODY IN
BETWEEN WANT TO HAVE SO THEY CAN
ATTRACT AND RETAIN EMPLOYEES.
MARIA: WE WERE JUST LOOKING AT
IT, 675,000 SQUARE FOOT BUILDING
THAT IS DESIGNED TO INTEGRATE
MODERN INFRASTRUCTURE.
WHAT DOES SOMETHING LIKE THIS --
HOW DOES IT DIFFER THAN SOME OF
THE TYPICAL BUILDINGS YOU SEE IN
NEW YORK?
WHY IS IT SPECIAL AND DIFFERENT?
>> WE WORK WITH WEE WORK, ONE OF
THE PREEMINENT SHARED OFFICE
COMPANIES IN THE WORLD, TO
REALLY CURATE AND DESIGN THE
BUILDING TO MEET THE DEMANDS OF
THE TENANTS OF THE FUTURE.
THEY WANT THE AMENITIES.
THEY WANT THE LOBBY TO BE A
PLACE WHERE THEY CAN GATHER AND
TALK TO EACH OTHER.
WE CAN OPERATE THE BUILDING OFF
OF OUR iPHONE.
MARIA: IN OTHER WORDS,
TEMPERATURE, LIGHTING, YOU CAN
DO THAT FROM THE PHONE.
>> WE HAVE A SYSTEM WE CREATED
AND WE HAVE A BUILDING APP SO A
TENANT CAN ORDER FOOD, GET IT
DELIVERED FROM OUR FOOD HALL
DOWNSTAIRS.
THEY WANT TO HE SEE WHEN THE
NEXT FERRY IS COMING, GO TO THE
APP.
THEY WANT TO SEE WHEN THE
SHUTTLE IS COMING, GO TO THE
APP.
IT'S LOOKING TO THE FUTURE IN
TERMS OF WHAT COMPANIES AND
EMPLOYEES WANT TO HAVE THIS
LIVE, WORK ENVIRONMENT AND HAVE
A PLACE TO ENJOY THEMSELVES
WHILE THEY'RE WORKING.
MARIA: I LOVE THE PICTURES.
14 FEET FLOOR TO FLOOR HEIGHT
WITH 8 FEET OF VISION,
UNOBSTRUCTED VIEWS OF MANHATTAN
AND BROOKLYN.
>> I'M GOING TO HAVE YOU AS OUR
RENTAL AGENT.
MARIA: LET ME ASK YOU ABOUT
DEMAND AND WHAT YOU'RE SEEING.
IS IT RESONATING?
I WANT TO ASK YOU ABOUT DOMESTIC
AS WELL AS FOREIGNERS.
FOR A LONG TIME THE APPETITE FOR
REAL ESTATE BY THE CHINESE WAS
VERY STRONG.
BUT APPARENTLY CHINESE INVESTORS
FOR REAL ESTATE IN THE U.S. HAS
DECLINED.
WHAT CAN YOU TELL US ABOUT THAT?
THE SOUTH CHINA MORNING POST
SAYS CHINESE INQUIRIES DROPPED
11.4% IN SEPTEMBER.
>> THE CHINESE IN TERMS OF THE
APPETITE TO BUY IN THE UNITED
STATES HAS WANED.
THEY'RE SELLING PRODUCT.
WE'RE SEEING OTHER INVESTORS.
YOU SEE CANADIANS COME IN,
DOMESTIC BUYERS ARE COMING IN.
AGAIN, THAT SHOWS THE STRENGTH
OF PARTICULARLY OF NEW YORK AND
THE DEMAND IN TERMS OF PEOPLE
WANTING TO BE HERE AND LIVE HERE
AND COMPANIES WANTING TO FIND
THE TALENT.
THAT'S WHY AMAZON CAME HERE.
THEY'RE LOOKING FOR THE TALENT.
MARIA: EVEN THOUGH CHINA REAL
ESTATE INVESTMENT IS DOWN, IT'S
STILL NUMBER ONE.
>> NO QUESTION ABOUT IT.
MARIA: OKAY.
LET ME ASK YOU YOUR TAKE ON WHAT
YOU'RE SEEING IN TERMS OF THE
BROAD ECONOMY.
REAL ESTATE IS A BIG PORTION OF
THAT.
SO YOU'RE TALKING ABOUT THIS
BOOMING SITUATION RIGHT NOW FOR
REAL ESTATE AND YET MARKETS ARE
NERVOUS, PEOPLE ARE WORRIED THAT
GROWTH IS GOING TO SLOW DOWN IN
THE COMP
THE COMING COUPLE OF YEARS.
>> THERE'S CONCERNS ABOUT
INTEREST RATES, WHERE THE
INTEREST RATE MARKET IS GOING.
WE STILL SEE STRONG DEMAND.
HOUSING, THERE SEEMS TO BE AN
OVERSUPPLY.
MARKETS HAVE COOLED DOWN.
WE LOOK AT THAT AS AN
OPPORTUNITY TO COME IN, AS A
BUYING OPPORTUNITY FOR PEOPLE
THAT ARE LOOKING FOR HOMES,
PEOPLE LOOKING TO DEVELOP AND
FIND LAND A LITTLE BIT CHEAPER.
HOPEFULLY THIS TARIFF SITUATION
GETS RESOLVED, SO COMMODITY
PRICES WILL START COMING BACK
DOWN.
THOSE ARE BIG ISSUES.
WE STILL SEE JOB GROWTH.
THAT REALLY FOR OUR BUSINESS
DRIVES OUR DECISION IN TERMS OF
WHERE WE WANT TO INVEST, WHEN WE
WANT TO INVEST, AND WHAT TYPE OF
PRODUCT WE WANT TO INVEST IN.
MARIA: WHERE'S THE PROJECT NOW
IN TERMS OF FILLING IT UP?
>> WE ARE ABOUT A THIRD LEASE
WEE WORK IS THE MAIN TENANT.
WE'LL OPEN THE BUILDING EARLY
NEXT YEAR.
WE HAVE A DIRECT FERRY
CONNECTION THAT THE CITY IS
PUTTING IN RIGHT AT THE FOOT OF
OUR BUILDING.
SO WE'VE SEEN VERY GOOD DEMAND
AND HOPEFULLY SOMETIME NEXT YEAR
WE'LL BE ABLE TO TALK ABOUT SOME
LEASES AND I'LL COME BACK TO YOU
AND TELL YOU WHO'S MOVING INTO
THE BUILDING.
MARIA: THIS IS AN IMPORTANT
CLIENT, AN IMPORTANT TENANT, WEE
WORK.
THEY'RE EXPANDING THROUGHOUT THE
COUNTRY.
WHAT'S YOUR TAKE ON WEE WORK
GETTING SO MUCH OF THE CAPACITY?
>> WE MADE OUR FIRST DEAL WITH
WEE WORK BACK IN 2012, 2013,
WHEN WE NET LEASED OUR BUILDING,
110 WALL STREET TO THEM OF.
THEY'VE OBVIOUSLY GROWN.
I THINK THE VALUE THEN WAS
$500 MILLION.
NOW WE'RE SEEING IT OVER
$40 BILLION.
MARIA: WOW.
THAT'S INCREDIBLE.
>> THEY PROVIDED INCREDIBLE I
THINK NICHE IN THE MARKETPLACE
FOR SMALL COMPANIES AND EVEN
LARGE COMPANIES TO FIND SPACE ON
A FLEXIBLE BASIS.
THAT HELPS THE COMPANIES GROW
AND HOPEFULLY THEY GROW AND THEN
THEY MOVE INTO OUR BUILDING.
AT DOCK 72, WE HAVE THE
FLEXIBILITY TO MAKE A LONG-TERM
LEASE WITH A TENANT AND IF THEY
WANT TO TAKE ADDITIONAL SPACE ON
A SHORT-TERM BASIS, WE'RE ABLE
TO DO THAT AT -- WITH THE WE
WORKS SPACE.
MARIA: IT LOOKS BEAUTIFUL.
YOU MENTIONED THE GDP.
WE'RE GETTING THE GDP OUT IN AN
HOUR.
WE'RE EXPECTING 3.5% GROWTH FOR
THE THIRD QUARTER.
WHEN WE GET THAT NUMB BURKES I N
WHEN WE GET THAT NUMB BURKES I M
WHEN WE GET THAT NUMB BURKES I E
WHEN WE GET THAT NUMB BURKES I .
AM I GOING TO SEE YOU AT THE JAY
POWELL SPEECH?
>> I WILL BE THERE.
MARIA: SO WILL I.
THE FED CHAIRMAN WILL SPEAK AT
12:00 NOON.
ARE YOU COMFORTABLE WITH WHAT'S
HAPPENING WITH INTEREST RATES,
WHERE THE FED HAS BEEN RAISING
CONSISTENTLY, WE'RE EXPECTING
ANOTHER HIKE ON DECEMBER 18th
AND ANOTHER THREE HIKES NEXT
YEAR.
>> INTEREST COSTS ARE A BIG
COMPONENT OF OUR BUSINESS.
WE HAVE 10 YEARS OF VERY, VERY
LOW INTEREST RATES AND IT'S NOT
SURPRISING IN OUR VIEW THAT
RATES ARE STARTING TO GO UP.
AND --
MARIA: IS IT GOING TO SLOW
THINGS DOWN A LOT, THOUGH?
>> HOPEFULLY NOT TOO MUCH.
THEY'RE TRYING TO BALANCE
OBVIOUSLY INFLATION AND THE
GROWTH ISSUES AND EMPLOYMENT.
BUT WE'LL HAVE TO SEE WHAT THE
CHAIRMAN HAS TO SAY IN A COUPLE
HOURS.
MARIA: WE'LL BE THERE.