When it comes to tax reform, executives at Brookfield Property Partners are voting with their feet, at least anecdotally.
“The elimination of the state and local income tax and deductibility of interest is a big deal,” Brookfield Property Partners chair Ric Clark said Monday at the Real Estate Board of New York’s spring members’ luncheon. “I can tell you this anecdotally: We have a couple of senior executives that work for us that actually moved to Florida.”
Clark said tax reform has negatively impacted the city’s condo market, but been positive for office the office sector, at least for now.
“If enough people decide, ‘You know what, why the hell am I here?’ because it’s too expensive to be here, maybe it impacts the market,” he said.
Clark was joined at the Hilton Hotel on Sixth Avenue by Square Mile Capital COO Laurie Golub, SL Green Realty co-chief investment officer Isaac Zion and Douglaston Development chair Jeff Levine on a panel discussion hosted by Cushman & Wakefield’s Bruce Mosler on the topic of “mega trends” in New York City real estate.
Levine said the Trump administration’s caps on state local tax deductions and new limits on the mortgage-interest deduction put “the for-sale housing market in the toilet.”
“Frankly speaking, we in the liberal, Democratic states on the East and West coasts have been very negatively impacted by this tax reform plan,” said Levine, who added that New York could see some positive changes if the Senate flips into Democratic hands in this year’s midterm elections.
“I think we may see some very positive steps if we see some change in the elections,” he said.
SL Green’s Zion said he thought tax reform gave corporate America and large office tenants a sense of optimism.
“It’s all about office-using job growth,” he said. “It’s not just what do I need. It’s when you look forward three to five years, is my business going to grow?”
And Square Mile’s Golub said it may be a little too soon to tell, but in the long run she thinks tax changes will be largely positive for real estate.
“There’s job creation; there’s the bringing back of capital from overseas and there’s a boost to real estate operators,” she said. “And I think that all leads to more development and more growth in the country and I think on balance that can only be really good for us in the end.”