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[Interview] Real estate

Global cities with young elites will survive in long term, RXR chairman says

Demand for high-end multifamily housing for young generations will rise further, according to Scott Rechler

By Nov 26, 2021 (Gmt+09:00)

RXR Realty chairman and CEO Scott Rechler
RXR Realty chairman and CEO Scott Rechler

Now it is time to invest in e-commerce, healthcare and multifamily housing, or the so-called three megatrends, which have increased in demand during the COVID-19 era, New York-headquartered real estate manager RXR Realty Inc. Chairman and Chief Executive Officer Scott Rechler said in an interview with Market Insight, the capital news outlet of The Korea Economic Daily.

"The paradigm for the real estate market has shifted since the outbreak of the pandemic. In detail, the three sectors are in very high demand while some other sectors are in low demand. This polarization, as a real estate market trend, will last for more than 10 years,” he said during the Nov. 26 interview.

Rechler particularly focuses on high-end multifamily housing, targeted to younger professionals with high incomes and desirable educational backgrounds. The chairman pointed out that many young people are looking for high-end multifamily residential housing these days since single-family property prices have soared in the pandemic. While housing demand has increased over the past decade as millennials marry and have children, supply has not met the needs, and this supply-demand imbalance will last for at least another 10 years, he added.

RXR Realty has been actively investing in multifamily housing developments since last year. In February of this year, it acquired a 42% stake in two luxurious residential buildings in New York City, 555TEN and EVGB, from US real estate developer Extell Development. The transaction was reportedly valued at roughly $800 million while the pre-pandemic valuation was at around $1 billion.

Focusing on the megatrends, RXR is investing in areas with high-quality medical and educational facilities, good infrastructure and a stable job market. The chairman picked Boston, Denver, Seattle, New York’s metropolitan area, Phoenix, Austin, and Miami and Orlando in Florida as promising areas in the US.

“We see that cities with young professionals with high incomes will survive in the long, term given the economic trends. We bravely create investment opportunities rather than just use the existing opportunities given to us,” he added.

He sees Korean investors as highly experienced in overseas real estate investments, with a  great understanding of the financial structure of the asset class. Meeting many Korean investors over the past month, he looks to collaborate with Korean investors in various real estate developments in the future.

Founded in 2007, the investment firm is a real estate owner, developer and operator as well. With gross asset value under management reaching $20.8 billion, the firm has earned a BBB+ rating for the first time among US private real estate investment managers. 

RXR is redeveloping Pier 57 in Hudson River Park on the West Side of Manhattan.
RXR is redeveloping Pier 57 in Hudson River Park on the West Side of Manhattan.

In addition to private real estate development, RXR Realty has led some public-private partnerships on a huge scale including the JetBlue JFK Airport Terminal Development; a 1645-foot mega-tower development replacing the Grand Hyatt building on 175 Park Avenue in New York City; and redevelopment of Pier 57 in Hudson River Park on the West Side of Manhattan.

In May, Rechler was placed at the Commercial Real Estate’s Most Powerful Players announced by financial media Commercial Observer, following Blackstone Group Chief Operating Officer Jonathan Gray. He also serves as chair of the Regional Plan Association, the New York region’s premier planning organization over the last 100 years.

Write to A-young Yoon at young

Jihyun Kim edited this article.
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