by Neil A. Dolgin
As owners and managers of dozens of properties throughout NYC and across the US, we know what we want to see from each in terms of revenue, tenant mix, and branding. And we are willing to reimagine our buildings in more competitive ways, especially at a time of renovation, a topic that I wrote about in April’s edition. Whether a client is buying, selling or leasing commercial real estate, we offer them the full level of expertise and out of the box thinking that we have gained as owners.
This morning I met an owner wanting to sell a commercial building with multiple tenants. Based on my experience, it was clear that the building would be difficult to sell given the mix types of tenants currently leasing. With one particular type of tenant occupying the building at the time of sale, it was likely the owner would receive offers to buy that were below market price. I suggested the owner should release that tenant from their lease in a favorable way, and absorb the loss of rental income so that the building could be prepared for sale at a more competitive price. That worked and it was a win-win for all parties.
We have tried to think out of the box in restructuring tenant leases in the wake of Covid. Struggling tenants have welcomed the opportunity to avoid moving and instead, pay arrears as part of a longer term lease aimed at helping companies to recover post-pandemic. Keeping a reliable and healthy long term tenant is mutually beneficial and we do want our tenants to succeed.
Another issue requiring out of the box thinking is the Climate Mobilization Act passed by New York City Council in 2019 and aimed at reducing greenhouse gas emissions 80% by 2050. There are eleven pieces of legislation, but the core is a triad of local laws 84, 87 and 97. According to Real Estate Weekly, The Real Estate Board of New York (REBNY) is challenging the City of NY for “getting its environmental goals backwards” after the industry lost a key vote to help commercial property owners meet strict new emission guidelines. REBNY’s view is that building owners are being penalized because the city can’t provide them with enough of the renewable energy that they need to curb the pollution their properties spew. As part of the city’s Climate Mobilization Act, New York City’s 50,000 largest buildings will be required to reduce their carbon emissions by 40 percent by 2030 and by 80 percent by 2050. Owners of noncompliant buildings face the prospect of multimillion-dollar annual fines beginning in 2024. After getting hit hard by losses in rent due to Covid-19, owners are now trying to assess and manage the requirements of this new legislation. We’ll keep you posted moving forward.
Neil A. Dolgin is co-president of Kalmon Dolgin Affiliates. Founded in 1904, Kalmon Dolgin Affiliates (KDA) has grown into one of the New York metropolitan region’s leading commercial and industrial real estate firms. Kalmon Dolgin Affiliates specialize in all aspects of real estate services for developing, managing, selling, leasing and marketing commercial and industrial property. KDA’s highly-trained professional brokers offer clients a practical, street-wise approach to commercial and industrial real estate brokerage, leasing and sales, supported by the latest in real estate marketing, management and research technology.