U.S. President Donald Trump's plans to cut financial services regulation, repatriate overseas corporate profits and increase infrastructure spending bode well for New York commercial real estate, a leading owner of city office space said on Tuesday.
Business sentiment has risen since Trump's election in November, but it may take time to be seen in financial services employment, traditionally the biggest driver of office jobs in New York City, executives of Vornado Realty Trust
The city is the largest magnet for foreign investment in U.S. commercial real estate and regarded as the most solid long-term holding in the sector
New York City office sector employment grew by 5,000 jobs in 2016 to a record 1.37 million, said Dave Greenbaum, president of the New York division of Vornado, a real estate investment trust.
However, the rate is below the blistering pace of 35,000 that were added annually in recent years, he said, speaking during a conference call to discuss the company's results. Jobs growth in Manhattan until last year surpassed the U.S. average.
Employment in media and tech companies has driven the city's employment so far this decade, while the number of jobs in financial services has barely surpassed the previous peek prior to the financial crisis.
While Trump-related jobs growth may take time to be seen, "there is reason to believe that we may once again see increases in financial services employment here in New York with important implications for the real estate market," Greenbaum said.
"All of this has been validated by the capital markets, with New York the absolute No. 1 market where investors want to put capital," he said.
The New York office market posted a healthy 2016 with leasing activity exceeding 35 million square feet, on par with a 10-year average, according to Vornado.
Ultimately, it will be the strength of "animal spirits" at play in the market that will drive New York commercial real estate, said Steven Roth, founder and chief execute of Vornado.
"Financial services companies are innovating and growing, there is an enormous amount of liquidity in the world that needs to be invested, and so we believe that New York is at the epicentre of all this activity in many different industries," he said.