Interviews Abe Schlisselfeld, Senior Managing Director at CBIZ Marks Paneth

0:00 Speaker 1 Good morning.

0:00 Speaker 2 This is Michael Stolen for the Stolen real Estate Report on the Cats round Table this morning. I have a very lea seasoned real estate administrative executive of the accounting and professional firm. He is a senior managing director of ce Bismarck’s Paneth and a shareholder of Mayor Hoffman and McCann pc abe. I’ve known you for a couple of years,

0:21 and how do you look at the market today as compared to let’s say, five years ago when you were in a different role at the company and so so on.

0:30 Speaker 3 So definitely interesting times. What I would say is, you know, you know, you turn back the clock five six years ago and anytime you had a conversation like this or at any conference, the big discussion was what inning are we in in the cycle?

0:45 Speaker 1 So since you asked the question what ending are we in?

0:48 Speaker 3 I think we’ll way past the extra innings right now. We’re in an exciting time where every pitch counts and it’s uh, you know, even back then, I was always a big proponent of every every even within real estate, you had commercially at residential, you had hospitality at industrial, and each of the different classes had their own where

1:11 they were holding the business cycle and in the environment, and it’s an exciting time in New York City. Do we have challenges one thousand percent. We have a lot of challenges here. People are talking about whether or not the office market will return won’t return. All I know is I just walked up Third Avenue coming here, and

1:28 it’s hustling and bustling.

1:30 Speaker 1 I don’t know.

1:31 Speaker 2 Where Third Avenue for many people is the low cost advantage, correct?

1:37 Speaker 3 But you know, then again, you go a few weeks ago, I was in Times Square eleven forty five at night and it felt like it was two o’clock in the afternoon. You go Fifth Avenue, Seventh Avenue, Madison Avenue, pick any street in Manhattan generally speaking, or as exceptions. Generally speaking, you walk up and down the streets to Manhattan now

1:59 and it literally feels like twenty eighteen all over again.

2:04 Speaker 2 But now getting to the client’s question, how are the clients being affected right now?

2:10 Speaker 3 They’re managing through So let’s take the office space for a second, which is where I deal a lot with. So office space is going through interesting times. Generally speaking, many companies are in the midst of assessing whether or not they need the same amount of footprint that they needed before. While many companies are saying, you know what,

2:36 we need the same amount of footprint, but we’re just going to use it differently.

2:40 Speaker 2 Let’s talk about using it differently because many people in the professional business used hotelling before. Okay, So I’d like you to explain what hoteling is and what today’s market looks like.

2:50 Speaker 3 So telling is a concept has been around for many years.

2:53 Speaker 1 This is way probably in a quarter of a century.

2:55 Speaker 3 This is way before even you know, work from home was even a thought process. Uh And and basically people that don’t want to come into the office on a full time basis for a variety of reasons, and the office space works around that those decisions, and and how to fit everyone into the into the work model. Fitting

3:16 the right amount of times that people come into the office to work together with each other and to the extent that you can minimize your footprint but maximize the output from all your employees is obviously the optimal way to maximize costs versus benefit.

3:30 Speaker 2 When we spoke earlier in the week, there was a discussion of what the occupancy is in New York of people and how much in the suburban discuss that a little bit.

3:40 Speaker 3 So the suburban offices occupancy is significantly higher than a New York City Why that is we can debate forever. A lot of that has to do with the fact that as the lockdowns opened up, people that had shorter commutes, people that didn’t to use public transportation, were quicker to go back to the offices. I know that in many

4:06 of out not many, almost all of our suburban offices, by June or July twenty twenty the vast majority of people back in the offices. Well, in New York City it took a lot longer, and quite frankly, even as we see here today in the summer, actually, I guess we’re out here past the summer almost full of twenty

4:25 twenty three, we still don’t have the majority of people back in the office.

4:29 Speaker 2 Okay, getting to another subject. When you and I met, one of the big subjects was the opportunity zones. So why don’t you explain what the opportunity in zones and if there’s still an opportunity, as they would say, to get involved with that.

4:42 Speaker 3 So, yes, Mike and I have had the fortune to spend quite a few times talking about opportunity zones and so opportunity zones for those that Let’s go back to the videotape for those that aren’t familiar with it, as part of the Tax Customer Jobs Act of twenty seventeen past at the end of twenty seventeen. It was during

5:02 throughout twenty eighteen, it was on the front page of every single business newspaper in the country, and it was a no pun intended. It was a huge opportunity for those that wanted the benefit from it. It had a lot of tremendous amount of traction of traction in twenty eighteen nineteen into twenty twenty as well, and then COVID

5:23 sort of slowed things down, partially because of the economy and uncertainty about where the future will go. As we move forward to twenty twenty one, and some of the benefits, the tax benefits, we’re.

5:34 Speaker 1 Going to start.

5:35 Speaker 3 We’re going to start expiring people accelerated again. As we say there today in the middle of twenty twenty three, it’s not as hot as it was a few years ago. That being said, there are still plenty of developers, business owners that are still maximizing opportunities, and there’s still a lot of There are tremendous amount of benefits that that

5:58 business owners and real estate owners, developers can see there. I’ve been saying for many years, it’s not the hype that everyone was saying. But it’s not the bashing that a lot of people were a lot of the newspapers were putting on it.

6:13 Speaker 2 Okay, what about people returning properties to the bank. The tax ramifications, great discussion.

6:23 Speaker 3 What I would say is, and we don’t have three hours yere, do we? But generally speaking, obviously some tax impacts there. With the right amount of planning and the right discussions, well prior to giving the keys back, perhaps we can mitigate and or defer the taxes.

6:43 Speaker 2 What are their tax ramifications or opportunities? Because there’s a lot of hype about this employee retention credit, which I believe you are not. I think there’s more to it than it is. But could you briefly give an idea of the credit.

6:58 Speaker 3 So everyone out there has gotten one or two or three or many phone calls or heard the advertisements, there are some really great incentives if you kept employees during twenty twenty and twenty twenty one. What I would say is just make sure you speak to your tax advisor.

7:18 Time is starting to run out. Don’t listen to the phone calls that you get on your cell phone and.

7:23 Speaker 1 On the radio.

7:24 Speaker 3 But that being said, there could potentially be some great opportunities to get some refunds from the guard.

7:31 Speaker 2 So it’s a good opportunity to buy notes from a bank if you could secure that.

7:37 Speaker 3 If you’re a real estate operator and you’re ready to start operating the property, some really great opportunities to stop buying nos some banks. There’s some banks that are that are holding notes that the banks don’t want to be in the business.

7:52 Speaker 2 I mean some of the funds. You saw what Blackstone did with their residential apartments. You know, everybody loved residential apartments in New York. Nobody loves it now.

8:00 Speaker 3 It’s you know, it’s a flavor of the day. You know. It’s interesting because you know, we were just talking a minute ago about giving the keys back to the bank. Ultimately, at the end of the day, the banks, generally speaking, want to lend money and get their return. The operators want to manage properties and get their return. Each one

8:18 wants to do what they’re best at doing. There’s always a balance between the two and making sure they’re getting the right benefit. But with the right discussions and the right team intact, the operators and the banks can work together.

8:33 Speaker 2 What do you think of the condominium market in New York City?

8:37 Speaker 3 Wow, that’s an interesting one. People want to be in the city. What I would say is the big X factor. There’s the foreigners that either are aren’t buying the city and to what degree people want to be in the city.

8:52 I know a lot of people have migrated south over the last bunch of years. A lot of that quite frankly, I believe at least was the natural migration of New Yorkers going down to Florida.

9:02 Speaker 2 But a lot of New York investors went down to the South, you know, for buying multi family in other.

9:08 Speaker 3 Areas, and those for other reasons. That’s because during COVID especially, people were able to work from wherever they wanted. With interest rates rising, it just became easier for people to rent, rent versus buy. So a lot of opportunities for real estate owners to buy multi family in the South, Midwest, you know, anywhere across the country, and for them to

9:31 benefit from those that are working around the country, you know, renting for six months, a year or two years and them being able to benefit from it.

9:41 Speaker 2 Besides New York City and the metropolitan region, what areas do you like.

9:48 Speaker 3 I’m a big fan of Dallas, and anyone listen to this that knows me knows Dallas and Chicago my two top cities.

9:55 Speaker 1 Like warm weather and cold weather.

9:57 Speaker 3 That’s what it’s like, different, different, different opportunities. But if I have to be at number ones, Dallas is great.

10:05 Speaker 2 I’d like to thank Abe for being here today and I’ll see you next week. And it’s still the real estate Report.

10:10 Speaker 1 Thank you, Mike,