How Are Business Leaders Viewing the Post Election Rally and What that Means for Real Estate

The Weekly Recap

Good morning and happy Friday! Mortgage rates have leveled off, the stock market is in a post election boom, rents in NYC are up, Gov. Hochul announced that congestion pricing begins in January lifting an “indefinite” pause a week after the election. Speaking of bad policy, the NYC council passed the FARE Act-regulating how rental commissions are paid to agents (this is next weeks newsletter btw), bitcoin is closing in on $90,000, inflation stalled in October and it seems that work from home is coming to an end as office buildings are almost at pre-pandemic levels in NYC.

If you missed last weeks newsletter on What’s Next for Real Estate Following the Election?, you can read that through the link.

How Are Business Leaders Viewing the Post-Election Market Rally and What That Means for Real Estate

Last week, the most important takeaway from the election when it came to the economy was centered around certainty. This week, it is most definitely around the theme of confidence. All three stock indices have hit massive new highs while more volatile assets such as crypto have also gone on a run. Now that markets have started to digest what the future may hold, bullishness is on the forefront of every CEO’s mind and it has a cascading affect. Below are some insightful quotes from industry leaders from this past week:

"The election certainty and the change in monetary policy are a powerful combination, supporting economic growth and our business. Where we can feel much more confident is around regulatory touch, tax policy and all things that will be really powerful elixers for the market...and investing opportunities" Harvey Schwartz, CEO Carylye Group

"US Markets have more cash ready to invest than I've seen in decades, roughly $23 Trillion is sitting in deposit and money market accounts... and trillions will flow into growth generating assets" -Larry Fink, CEO BlackRock

"The business community is giddy with excitement about the Trump administration. I am hearing this from everyone including from people who didn't vote for Trump. Business confidence is a self-fulfilling prophecy. Business leaders are becoming more confident about the country and the economy...deregulation will drive government efficiency and make America a vastly better and lower-risk place to do business." Bill Ackman, CEO Pershing Square Capital Management

"We believe we're now advancing towards the stage in the cycle that is always the most fun. This virtuous cycle is one that fuels the business" -Stephen Schwarzman, CEO Blackstone

"Holdings of private equity firms and other fund sponsors support the expectation for a rebound in M&A and IPO activity"- Ted Pick, CEO Morgan Stanley

"Donald Trump's election has unleashed big hopes in the market for deal making, regulatory ease and private credit." Telis Demos, Wall Street Journal

Why is this important? Smart money moves first. And when smart money and investors are confident in the future of the marketplace, they invest heavily. An increase in IPO’s (Initial Public Offerings) and M&A (Mergers and Acquisitions) activity show the intent of major firms, whom are currently sitting on BILLIONS of dollars in cash, a willingness to invest in growth with the expectation these investments provide long-term returns.

With growth and confidence brings an increased demand for commercial real estate which leads to residential market growth near major business hubs, especially those with large finance and tech sectors (i.e. Manhattan). The increased investment activity can lead to growth for REITs as well as demand for luxury real estate with new wealth significantly being generated by such activity. In anticipation of demand growth beyond current levels, you will see developers take more risk in supplying new homes to the market even if the local regulatory environment is challenging.

Market Performance

Here are how some other indexes and asset classes have performed as of this morning’s opening bell.

NYC Market Update

Here is a view of new inventory that has come onto the NYC market over the past MONTH as well as newly signed contracts in Manhattan. MoM NYC has seen a 14% increase in signed contracts.

Mortgage Rate Update

After a six-week climb, rates have leveled off, but overall purchase affordability continues to be an issue nationally. With political certainty at the forefront of future market moves, hopefully the trend back down to 6% starts now.

News You Can Use

• Hochul Announces $9 Congestion Fee Charge to Begin in January NY Post

• US Inflation Stays Firm for Third Month with 0.3% Core CPI Gain Bloomberg

• Annual Inflation Rate Hit 2.6% in October, Meeting Expectations CNBC

• Big Bank Deals Could Be Spurred By Trump Administration, Executives Say Reuters

• Trump Win May Usher in M&A Revival Axios

• Citigroup CEO says it’s ‘Game On’ For M&A in the US Post Election Seeking Alpha

• Manhattan Apartment Rents Rise to Highest Level Since July Bloomberg

• Why Affordable Housing in NYC Can Still Cost $3,500 Per Month NY Times

• NYC Office Buildings Are Near Pre-Pandemic Levels NY Post

• Bitcoin to Top $100,000 Before Year-End According to Bettors on Kalshi CNBC

• You Need to Make $108,000 a Year to Afford a Home in America CNN Business

• NYC Council Votes to Shift Broker Fees to Landlords Bloomberg

• Hudson Yards Lure Another Legendary NYC Power Dining Spot Bloomberg

The Deep Insight

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