Compound delivers real insight into real estate investing. This week, we took a closer look at recent events impacting real estate in New York City and a new investment trend.

Taxes, taxes, taxes.

The past few weeks have brought clarity around new tax policies that stand to dramatically impact Manhattan real estate prices.

For example:

  • Congestion pricing gains support and momentum.

Congestion Pricing Is Bad News for Parking Garages in New York. (WSJ)
“Starting in 2021, commuters entering Manhattan below 60th Street could be charged a fee somewhere around $11.52, according to estimates. That measure is likely to accelerate the disappearance of parking garages from Midtown and downtown, real estate owners and brokers say.”

  • The new mansion tax kicks in this July.

NYC Brokers Relieved as Mansion Tax Replaces a Pied-a-Terre Levy. (Bloomberg)
“The mansion tax has the benefit of being simple. New York buyers already pay a flat 1 percent tax on home purchases of $1 million or more. Now, there would be a scale of graduated levies that would start at 1 percent. The rate would increase at $2 million and continue to rise until it reaches a top of 4.15 percent on any amount over $25 million.”

  • The IRS offered more clarity around opportunity zone taxation.

Rules of the opportunity zone road road pave way for investors. (Crain’s New York)
“Clarifications to a Trump administration initiative that offers shelter from capital gains taxes in exchange for investment in designated geographic areas has energized a growing list of city investors seeking to take advantage of the program.”

But it’s not all bad news, because New York is really starting to bring home the bacon from the tech industry.

Netflix plans $100 million expansion in Manhattan, Brooklyn. (Crain’s New York)
“Netflix will invest up to $100 million to expand its presence in the city with a new production hub in Brooklyn and corporate office in Manhattan.”

Uber looking for large Manhattan office ahead of planned $100B IPO. (TheRealDeal)
“Ride-hailing startup Uber is looking for a big new office in Manhattan ahead of its anticipated $100 billion initial public offering next month.”

And, as we always say, “imitation is the sincerest form of flattery.”  (Are we imitating them or are they imitating us?)

We’ve been describing our targeted fund returns as “beta plus” for awhile, and Goldman is targeting the same.

Goldman Sachs ETF chief breaks down new investment trend. (CNBC)
“A concept called smart beta, which blends passive and active investing strategies to build portfolios based on non-traditional metrics. At Goldman, the strategy is branded as ActiveBeta and revolves around four factors: value, quality, momentum and low volatility.”

Industry newsletter talks about the rise in popularity among pension funds for open-ended single-asset real estate funds.  (Sound familiar?)

Institutional investors are plowing into open-ended, single-asset real estate funds. (PERE News)