New York’s commercial real estate debt markets remain liquid for the right kind of deals despite interest rate hikes and other secular pressures, according to Scott Singer, a principal and co-lead of tri-state debt and equity finance at advisory Avison Young.
The firm recently arranged a $230 million facility to refinance debt on a 576-unit apartment building at 200 Water Street on behalf of an affiliate of Rockrose Development. Equitable Financial Life Insurance Company funded the 10-year, fixed-rate loan.
“We’ve been closing transactions throughout the summer, and our Manhattan-based tri-state debt and equity finance team has over $1.8 billion of active deals in the market,” Singer said.
From an advisory’s perspective, Singer believes the current capital markets volatility has led more investors to seek another view on their options. “So far, the upward trend in volatility has driven debt and equity finance business our way,” he said.
Singer noted, however, that while there is plenty of capital out there for deals, sponsors and lenders are more circumspect than usual.
“The market is very liquid, albeit cautious,” Singer said, adding that distress remains very asset specific. “Overall, I would say it is a market that is at equilibrium with the times. Aggressive competition can be created around deals that have a measure of strength/security, whereas overleveraged assets find significant headwinds.”
New signs of life for office
Avison Young is highly active in the office market, and Singer remains concerned about the pace of return-to-office measures. But other signs point to office occupancy eventually resembling pre-pandemic numbers.
“Given the activity on the streets – pedestrian, vehicular, and public transportation – this seems to have become more of a sociological challenge than a health issue. I believe that ambition rules the day, and offices will soon fill back up four to five days a week,” Singer said.
Diversified debt placement
Singer expects the firm’s New York debt and equity team to continue to branch outside the major food groups in recent years. “In recent years, the team in New York has financed a shipyard, power plant, distillery, breweries and other fun [or] atypical assets,” said Singer.
And he doesn’t see this changing anytime soon. “Our focus is on our clients – and we will rise to the occasion to provide best in class service to them regardless of the property type, size or location,” he said.