Commercial Real Estate: New York City real estate: "Bubble"??? Not really

There is a perception that the rising prices in New York City real estate are indicative of a bubble - and bubbles, as we know, will inevitably burst. Investors, according to the many skeptics, have inflated the market beyond its real value, which will ultimately lead to a crash. Nothing could be further from the truth. New York City investment is not speculative; it is based on market fundamentals. The city has a limited supply of affordable and mid-tier housing as well as undeveloped land, so despite a recent uptick in construction activity, there is every indication that the dearth of supply will continue. It's not just the residential market, as there is significant demand for office space, as well. New York continues to be attractive to media companies as well as international firms seeking a presence in the United States, and the city's tech sector is robust and growing. Despite the construction of several major office properties, notably in Hudson Yards, the city still has a shortage of up-to-date quality office space. What's the true indicator that New York City real estate is truly for real? It's not just our neighbors driving demand. Foreign capital has been flowing into the Big Apple because savvy international investors recognize that, compared with other major domestic and foreign real estate markets, New York provides both favorable yields and incredible stability. Even if prices do decline, the limited supply will ensure that they do not fall very far. New York's upside is that it will continue to be one of - if not the - most popular cities, which contributes to making it one of the healthiest real estate markets in the world. The downside is that it will provide investors with yields more on par with other leading international cities, but greater stability. And when that's your downside, it's just not called a bubble. Michael Weiser is the president of GFI Realty Services, Inc., an affiliate of GFI Capital Resources Group, Inc., New York, N.Y.