CRAINSNEWYORK.COM I APRIL 8, 2024
FINANCE
Anxiety grows over banks’ big real estate exposure By Aaron Elstein
Labor unions, which rallied for housing reforms at the state capitol this month, have more influence on housing policy than ever before. | NYS SENATE MEDIA SERVICES
HOUSING’S NEW POWER BROKERS Labor unions will decide whether Albany reaches a deal. Not everyone thinks that’s a good thing. | By Nick Garber The fight for housing reforms in New York is often described as a battle between tenants and landlords. But any action on the state’s housing crisis this year may actually be decided by another group: labor unions. After an ambitious set of housing policies collapsed in Albany last year, some observers attributed the failure to the fact that labor organizations were not closely involved in the discussion. Now, with the
BY THE NUMBERS
23%
Increase in construction costs in the city due to prevailingwage policies, according to the Independent Budget Office.
state budget stalled through at least April 8 amid thorny negotiations on housing, unions have become more involved than ever, according to officials in both labor and government. “We negotiate contracts for a living,” said Candis Tolliver, vice president and political director for the powerful service workers’ union 32BJ SEIU. “We understand what it takes to bring people together, to actually get things done.”
There was pretty much only one thing anyone wanted to talk about when Morgan Stanley analysts made the rounds visiting investors last month: commercial real estate. The mounting anxiety was captured best in a Fitch Ratings report on April 2 alarmingly headlined “Global Contagion Risk Growing from Rising CRE Losses, Led by Office.” If global contagion does emerge, there’s nowhere for banks to hide because, collectively, they’ve loaned nearly $3 trillion to office buildings, hotels, shopping centers and everything else that makes up commercial real estate in the U.S. Every bank has a piece of this business, from JPMorgan Chase and its colossal $140 million CRE loan book to several New York lenders who are See BANKING on Page 20
HEAVY EXPOSURE Small New York banks have some of the heaviest exposure to commercial real estate. Loan-to-capital ratios:
Gov. Kathy Hochul made the arrangement explicit in her budget plan this year. Instead of drawing up her own proposal to replace the 421-a tax break for affordable housing construction, Hochul simply put in what she called a “placeholder,” which left it to the real estate industry and labor unions to hash out a deal on wage standards for eligible projects. Unions are trying to stake out the middle ground, hoping to unite developers who want a new 421-a and left-wing lawmakers who are insisting on tenant protections such as “good cause” eviction. Labor’s involvement has been encouraging to many in
Dime Community Bank
662%
Flushing Bank
653%
See UNION on Page 22
Source: Morgan Stanley
Valley Bank
590%
ConnectOne Bank
587%
New York Community Bancorp 500%
545% 700%
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