(Second of a two-part series)
Globest.com recently sat down with Cushman & Wakefield vice chairman John Santora, who was appointed president of C&W’s tri-state region last October and officially took on the role in November.
In the first part of the series, Santora in an interview at his offices at 1290 Avenue of the Americas discussed the health of the New York City markets and growth plans for the global commercial real estate brokerage and services firm.
In this report, Santora shares his views on the local markets, the East Midtown rezoning plan and the changes he has experienced over the four decades he has been in the commercial real estate business at Cushman & Wakefield.
Globest.com: One of the great things about the New York City metro market is its diversity. At present the markets in Manhattan are pretty strong, while Westchester is reinventing itself and New Jersey is having its issues as well. How do you see the markets you serve heading?
Editor’s Note: Santora offered his views on the New York City market in the first part of the report. Here are his thoughts on the outer boroughs and suburbs.
Santora: In New Jersey (activity) is around the transportation centers. When you look at the train lines and you look at those markets, like Morristown, those markets are very strong. You’ve got development around them and the talent is there. People don’t want to drive, so the train is the only way to go for these kids (millennials).
I think the activity will only stress our transportation system. The whole discussion around our infrastructure and getting our subways working properly, getting the Long Island Railroad working properly, we need to do more and more investment because we are stressing the system.
The fast ferries are a great idea. They are going to charge the same amount as the subway and coming across the water it is like six or eight minutes. It’s fabulous.
Globest.com: You have seen tremendous changes in the industry in your 40 years at Cushman & Wakefield. What were some of the bigger changes you have seen?
Santora: I think the biggest change, not just in real estate, is technology. I started in 1977, we didn’t have fax machines, you didn’t have cellphones, at one point I had a beeper but all it did was beep. I had to go find a pay phone and call my secretary (to find out information on the alert). So, without question it is technology. It has shaped everything we do, from communications to how we work, to how we build buildings; anything and everything we do.
If we are specific to real estate and took technology out of the equation it is the way we use real estate today, going away from these big offices and how the workplace is changing. It is the speed, the speed of development (for example). In terms of transactions, when we do a deal today it is no longer just two brokers getting together and making a deal. Today, the financial analysis, the studies about the space itself, where people need to be and how it impacts their brand are critical. For us, there are a lot more resources on a deal today than there ever have been before—and there needs to be because of the cost to the tenant and satisfying their needs and creating an environment for them for the long term.
Over 40 years since I started here at Cushman & Wakefield to today the culture remains the same that the client is first. It is the creative nature of our top professionals here. It is about talent. We have gone through all these changes. I remember when we first started even thinking about doing deals internationally in Canada and Mexico when I was on a number of these boards as we developed these alliances and then actually owned them in these markets throughout Europe. So you start to move around the country and move around the world to support your clients and now today to be in an organization that has a footprint and the same consistent platform to deliver in every market around the world—for me that is the most exciting part of this. It’s been one hell of a run.
Globest.com: What are some of the changes you see on the horizon?
Santora: Looking at the big picture I think cities like New York will always be the epicenters of business and real estate… The whole concept of everybody working from home doesn’t work. You need to have the face-to-face (communication).
You have the ability to communicate anywhere. We all do. We are always connected. I just got off a cruise ship and I was still connected—e-mails are coming, phone calls are coming, so we are always connected, but there is still that need I think of bringing people together face-to-face.
Will the co-working environments change a little bit how space is utilized and whether it is owned or lease for one tenant or not? I think it might. It has its place. Is it going to change the fact that most companies will lease their space? No. It gives them the ability to flex, which I think is great because in good times when you are growing a little bit, you may take some flex space and in other times if you may need to shrink you have the ability to do that. So I think it is an important part of our real estate economy.
I think there will be a move back to the suburbs at some point and we are starting to see that around the train stations. So I don’t think they are dead. I think they need to re-invent themselves around things like specialties. For example, Stamford, CT has been down for some time, now it’s starting to come back.
I do think that some of these (NY suburban) cities are not dead, but you have to provide the amenities. Talent is not going to be there if you don’t have great amenities for them and within that area great reasons for families to be there—great schools, fair taxes and reasonably priced real estate.
You look at New York; most people can’t grow a family in New York. You look at the cost of housing and schooling; you have a couple of kids, you can’t afford it. I guess it’s no different than what our parents went through or the generation before them, didn’t everybody start out in New York City and they eventually moved out to Brooklyn, Queens and Staten Island. They wanted a little bit more land, they wanted a better place for their families to grow up and they needed it to be cheaper.
Globest.com: With that in mind, are you seeing some New York City-based firms studying a possible move to the suburbs?
Santora: Not to relocate out. They are starting to look at some of the cost differences. So, I don’t see them picking up and moving out. What you see them doing is looking to put part of their organizations (in the suburbs)… In fact, the headquarters are coming here (to New York City), such as Aetna… A lot of these headquarters can’t find the talent in some markets.
Globest.com: It looks like the East Midtown rezoning will be approved. What impact do you believe it will have on that area?
Santora: If it gets approved, I think it is an important step, but I don’t know if it went far enough because when we look at it there are only a handful of buildings over the next five to seven years that would have the opportunity to be redevelopments. Most of those buildings have multiple owners or have multiple sites. You have to get tenants out of them and so forth so I don’t see it in the short term having a major impact. I think over a 20-year span, without question it will change things. I wish there was more they would have done to incentivize some redevelopment, if they could have, in the short term.