In this inaugural episode of The Real Estate Forum, host Raphael Sidelsky speaks with Professor Stijn Van Nieuwerburgh—Finance Division; Earle W. Kazis and Benjamin Schore Professor of Real Estate; and Faculty Co-Director of the Paul Milstein Center for Real Estate at Columbia Business School. The discussion centers around the profound shifts occurring in urban real estate, triggered by remote work trends and rising interest rates. Stijn details the "Urban Doom Loop," where declining office values weaken city finances and services, further pushing residents and businesses away. He shares insights from his groundbreaking research, highlighting cities like New York and San Francisco, and explores potential solutions, including converting outdated office buildings into residential spaces..

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(00:00:00) Stijn's academic journey and interest in macroeconomics and real estate

(00:04:45) Early signs and origins of the "Urban Doom Loop"

(00:05:32) Explanation of the Urban Doom Loop and its economic impacts

(00:06:43) How rising interest rates compounded urban real estate challenges

(00:07:39) Research findings on remote work's impact on office valuations

(00:09:10) "Flight to quality": High-quality vs. low-quality office space

(00:10:12) Reflections on how office market predictions have unfolded

(00:13:16) Market-specific insights: Variations between Midtown and Downtown Manhattan

(00:14:28) Office market conditions across major U.S. cities, including Miami and San Francisco

(00:15:41) Rising office mortgage delinquencies and prolonged distress in debt markets

(00:17:10) Fiscal implications for cities amid declining real estate values

(00:20:04) Political and fiscal challenges cities face in addressing urban decline

(00:21:07) Growing momentum for office-to-residential conversions

(00:23:22) Case study: The successful residential conversion of 25 Water Street in NYC

(00:25:27) The importance of long-term urban planning and climate resilience

(00:27:18) Encouraging leadership in private and public sectors for urban revitalization

(00:27:55) Non-real estate recommendation: Francisco Zobel exhibition in Singapore

Links:

Stijn Van Nieuwerburgh Faculty Profile and Research: https://business.columbia.edu/faculty/people/stijn-van-nieuwerburgh