New York Real Estate Recovers From Coronavirus?
Dean of NYU Real Estate Sam Chandan Sits Down With Rebellion
When did you first know you wanted to get into real estate? And how have your interests in the field developed over the years?
“I would say I started getting into real estate public policy when I was an undergraduate student at Wharton. I had the very good fortune to come back to Wharton for my doctorate, and my focus there was on issues relating to public finance, public policy, and certainly to real estate markets.
I did some dissertation research on housing affordability, in particular on how people were able to access public schooling and other important public amenities through the housing market. That really piqued my interest on the research side. Ever since, I have been focused on various aspects of the housing market, commercial real estate markets, and the dynamics of capital markets.”
What do you like most about being a college professor? Do you have a favorite course that you’ve taught?
“I love working with students and with my faculty colleagues. I find both of those to be extraordinarily rewarding - the research questions we are tackling, the way we are informing policy - all of those are really close to my heart.
Over the last two months, as we have been living in this very unusual time, I have heard from many students and former students, both from my time teaching at Wharton and at my time at the Schack Institute. They have shared the unexpected turns their careers are taking, and so hearing from my students about the different things they are up to has been special, and it has really captured why I became a professor.”
How did you come into your current position (s)? How do you divide your time and how do they compliment each other? Can you take us through a typical day of yours?
“I started my career with part of my time in academia and part in the private sector. I have spent time as a faculty member at Dartmouth and Wharton, and now NYU.
Throughout my career, I have had to find that balance, but now I am almost exclusively focused on the academic side. I have had the extraordinary privilege of being the Silverstein Chair at the Schack Institute the past four years.
My day begins and ends with things we are doing at Schack, whether it is the classes we are offering next year, or the co- and extracurricular programming that we are offering.
Over the last year, we have expanded in a number of really important ways; we have developed a partnership with the Commercial Real Estate Finance Council (CREFC).
We also host some of the largest conferences in the industry like the Reach Symposium, which is in its twenty-fifth year, the Women’s Leadership Symposium, which is one of the largest of its kind and entering its fourth year.
In addition, through the support of our sponsors and board members in China, we have recently opened a new center at our NYU Shanghai campus, which, as far as I know, makes us the only real estate program in the world that offers degrees from two continents.”
How did you get into your Sirius XM show (Real Estate Hour) and your new program, the Urban Lab Show, available on Apple and Spotify? Who has been your favorite guest and why?
“The Sirius XM program is under the banner of Wharton’s business radio channel on Sirius XM. As I came to focus much more on my role at NYU, the program has gone from being a weekly endeavor to special episodes from time to time. The on-demand podcast has been really exciting, because if there are interesting things happening in the market, I might launch many new segments in a week.
The guests are all amazing. Some of the most recent segments on the Urban Lab have included a colleague in policymaking roles in Washington and the real estate c-suite. A recent guest from the Brookings Institution shed light on why minority communities have seen higher rates of diagnoses and mortality during the COVID pandemic. Understanding the reasons, the demographics, and the outcomes are critically important in informing our policy.”
You have already accomplished so much, where do you go from here?
“My focus right now is really at NYU and making sure our students have the most exceptional experience. I want to engage with industry and with alumni to really craft an extraordinary experience.
I have the honor to work with Larry Silverstein and other board members who have overseen Schack’s growth into what is now the largest real estate program in the world. It is a program that allows me to pursue my interests, to investigate critical issues in policy, and so when I think about what I want to do next, it’s right here at the Schack Institute.”
Secondly, we shifted towards his perspective on our current climate:
What are your thoughts on the need for more warehouses? (ex. Amazon is hiring 100,000 more people for warehouse work)
“There is inevitably going to be a short term bump in demand for goods purchased online. We have seen that Amazon, even as it engages in massive increase in its payrolls, is not able to meet its standard delivery commitments because they have to prioritize essentials.
There is an element of this that is short term - the surge in demand because brick and mortar retail channels are simply not available. That inevitably will moderate once we see a gradual resumption of normal business practices. That being said, we have seen over the course of the last decade and longer a slow but steady move to online commerce.
We have seen with the Covid-19 pandemic having a significant impact on the market, one of the ways we describe it is that the future is arriving early. Many of the trends that have been ongoing and sustained over longer than a decade, and now we are seeing a very abrupt and sudden adoption by an even broader range of the population.
An example might be online groceries delivery. While we have some of the biggest and most visible players in the market - Amazon Fresh or FreshDirect - we see the actual rate of adoption nationally has been very limited to markets like NYC, DC, LA, where we have seen significant penetration.
What we have had in the past couple months is the forced adoption. The muscle memory that has tied us to going to the actual grocery store has been cut off, so that may affect things in the long term.
Even with a slow resumption of our normal behaviors, a lot of people are going to stick with what they have now learned to use. They are going to see that online groceries have some real advantages -- product diversity, product quality, convenience, price, and more.
A key issue I need to raise. There are segments of our population that do not have ready access to the hardware or the technology that are necessary to participating in the digital economy.
As we have suddenly come to rely on digital tools for every aspect of our lives, the digital divide is being exacerbated and has never been more significant. I do worry about ways in which people’s access to goods and services are impacted when the brick and mortar channels are unavailable.”
What are your thoughts on the fact that there will most likely be a huge number of restaurants and businesses that will never reopen again? What will happen to these properties and the areas around them?
“A lot of the attention recently has been on identifying safe, thoughtful ways to reopen, to get the economy moving again. You can understand that for a small business which is not able to sustain itself with a PPP loan, that the desire to get back to work, in a way that is mindful of the primacy of customers and employees’ health, is very real. Businesses want to stay in business and remain viable.
We have to make sure that consumers feel comfortable enough to venture out again, to go to the store or to the restaurant. The median consumer is going out on a discretionary basis in very limited ways. So for a lot of restaurants and establishments that rely on density, they are not going to be able to remain profitable with these guidelines.”
How do you see the nature of developing and building changing for the future? Will they have to rework spaces to keep in mind disasters and conditions like this from forcing companies to clear their offices in the event of a similar event?
“We are hearing a lot of different things. For office buildings, there are concerns about what are the bottlenecks and how to manage them. At least initially, staged returns of people to the offices or staggering people’s hours are going to be important protocols.
I think we have to realize the most challenging piece of getting people back to the office is not how we manage congestion in the building itself but how people get from home to the workplace. The public transportation infrastructure is a real issue for us, more so in NY than in other large cities. In NYC, we all ride the subway, regardless of where we are in the socioeconomic spectrum.
How will the coronavirus pandemic affect pre-existing disparities in the labor market?
“I think these disparities are being exasperated. I think there are certain segments of the population that will have a slower return to normal, including low or moderate skill labor. In many cases, real wages are not really remaining steady, but rather declining over this period. We see a larger number of Americans displaced from the labor force during a very short period of time. We see the deterioration of the labor market that is more rapid than anything we have experienced in modern history.
When the labor market begins to recover, the kind of job opportunities that become available are not necessarily job opportunities where the required skills are a good match for the folks that are looking for jobs. There may be a skills mismatch, or spatial mismatch.
We do not have the infrastructure in place in the US to support millions of people that need to develop or acquire new skills very rapidly to remain relevant in the labor force once those new job opportunities become available, and that is really problematic. The educational infrastructure needs to catch up to the dynamics of the modern labor force.”
Realistically, how do you see the U.S. bouncing back from this? What needs to be done, in your opinion?
“I had the privilege of speaking with Larry Silverstein a week and a half ago, and he offered some words of encouragement to our students and everyone in our industry. He has seen many crises during his career, such as the 9/11 attacks, and has had a great role in helping lead the city in recovery.
I share his optimism in our recovery. That said, we must make wise decisions about how to invest public funds, in how we support small businesses and large businesses alike, and ultimately in a strategic reopening. These are critical to ensuring we return to our potential.”
Written by Michael Ding & Jack Argiro, Edited by Alexander Fleiss