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Miami residential rents up 20% year-over-year: EB5 Capital

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Angelique Brunner, EB5 Capital founder and CEO, joins Yahoo Finance’s Alexis Christoforous to discuss the impact of the pandemic on commercial real estate.

Video Transcript

ALEXIS CHRISTOFOROUS: One thing is clear over this past year. COVID-19 has fundamentally changed the way real estate business is being conducted. The demand for space has been impacted by social distancing, shutdowns, quarantines, remote work. Here to talk about the changing landscape of commercial real estate is Angel Brunner. She is founder and CEO of EB5 Capital, which is a commercial real estate investment firm.

Angel, it's good to see you. What have you been seeing in your business, in terms of demand for commercial real estate and also the prices for that real estate?

ANGELIQUE BRUNNER: Thank you for that question. Well, the prices for commercial real estate are not where they were in 2019 because prices are set by the operating income of the asset. So we really have a falloff, and the buyers are the winners. The folks that are selling are really in a forced sale situation. It's not the ideal time to sell. We-- our office, we closed it immediately in March, and we have not been open, and we don't know when we're going to open.

But as a microcosm of the issue, we have decided to take more space because, when we return to the office, we need to socially distance, and then we need more space to socialize. So I think as we see businesses return to offices, it's going to be interesting to see what they do in terms of the commercial space that they held previously and how they use the commercial space they have and if they expand.

ALEXIS CHRISTOFOROUS: Where are you focusing your real estate investments right now, and in terms of even geography? You know, what states, what cities are you looking at?

ANGELIQUE BRUNNER: Well, that's a great question. So for the very first time, we're at 10 years operations, about 30 deals, and we're looking at one of our first suburban deals right now. And part of that is because we're seeing an expansion of people staying in the suburbs. And the inner-- the center city is going to come back maybe at not the same space-- not the same pace. So we're definitely watching how the center city returns, and we're starting marketing in the suburbs.

ALEXIS CHRISTOFOROUS: What about-- you know, a lot of people said that New York was going to be down and out, unable to recover. You know, what are you seeing in the New York commercial real estate market right now?

ANGELIQUE BRUNNER: Yes. Well, I have some-- I have a large project in New York, and I would say I would never bet against New York. I'm in that group that I just don't bet against New York. So I think New York is going to come back. It's going to come back as fast as it can. I think a lot of people miss New York. I, for one, miss New York. I miss Broadway. I'm not alone, I'm sure.

And New York's going to come back in waves. You're going to have to get people coming back to the office, you're going to have to get people coming back to their apartments, and you're going to have to get people coming back for tourism. And so New York is going to come back in waves, and it might take a while, as one of our largest cities.

ALEXIS CHRISTOFOROUS: I'm with you on that. As a native New Yorker, I never bet against New York, either.

ANGELIQUE BRUNNER: I never.

ALEXIS CHRISTOFOROUS: I, too, miss-- I, too, miss Broadway. But what about-- I mean, we have so much commercial real estate in this city, in New York, and skyscrapers that are just sitting with, you know, 20% occupancy, if not less, right now. Is it ever really going to return to pre-pandemic levels, or is that landscape here, in a city like New York, just changed forever?

ANGELIQUE BRUNNER: Well, I do think that we will find a new normal, that we've found some efficiencies in the pandemic that we won't let go of. I think that we all have to accept that there are certain meetings that we're going to attend on screen, and that we're not actually going to get on a plane to attend them. And that will be part of the new normal.

But I also think that people miss their co-workers. I know I have this at my company, where my coworkers actually enjoy each other. My team enjoys each other, and they miss each other. And so they want to socialize, they want to be in the same space, but they want to do it safely. And so as an employer, you have to ask yourself, how are you going to make that possible. And for us, that answer is with more space not, with less.

ALEXIS CHRISTOFOROUS: Yeah, not everybody can do the more space because more space is more square footage, presumably, and more-- more rent. Where are you seeing the best deals right now, in terms of commercial real estate? What are some up-and-coming areas that people might want to look at?

ANGELIQUE BRUNNER: Well, your last guest mentioned spring break in Miami, and the leisure markets are coming back faster. I'm even seeing hotel deals shopped to me in the Florida area, in the Miami area. People are looking at acquisitions. They're looking at building. They're looking at being in that market long-term. You have to remember, all the demand that places like Miami are seeing is independent of international demand because of the existing travel restrictions.

So you're going to see even more demand. And places where people can enjoy a lifestyle are really booming right now, where they can enjoy living and working. And that's a new equation. It used to be that you could tell talent where they had to move for a job. And I think you're going to see a lot of pushback on that, and you're going to see a lot of growth in places where people can enjoy a lifestyle.

ALEXIS CHRISTOFOROUS: Yeah, I think you're right on that one. Angel Brunner, CEO and founder of EB5 Capital, thanks so much for being with us today.