Fed Fears “Notable” Financial System Vulnerability As Renowned CRE Investor Tells Team ‘Stop All NYC Underwriting’

Democrat politicians in cities such as New York, often criticized for their disastrous progressive policies, have transformed the metro area into what some believe is a ‘hellhole,’ overrun by violent crime, migrants, homelessness, open-air drug markets, and constant chaos. According to one real estate investor with a commercial real estate portfolio worth billions of dollars, Democrats are quickly transforming NYC’s CRE market into an unattractive option for investment. 

On X this week, real estate investor and influencer Grant Gardone said his real estate team at Cardone Capital has “Immediately discontinued ALL underwriting on New York City real estate.” 

“The risk outweigh the opportunities at this time. Recent political decisions will continue to deteriorate price and benefit states that don’t have these challenges,” Gardone said. 

He told his real estate team to concentrate on “Texas & Florida” markets where the political environment is not hostile, and overall state economies are friendly towards investors. 

Dear Cardone Capital team,

Immediately discontinue ALL underwriting on New York City real estate. The risk outweigh the opportunities at this time.

Recent political decisions will continue to deteriorate price and benefit states that don’t have these challenges.

Focus on Texas… pic.twitter.com/nTdJ5d4dO5

— Grant Cardone (@GrantCardone) February 20, 2024

“Why would I buy in New York City where you can’t actually collect rent, taxes are higher, & illegals are treated better than property owners,” Cardone wrote in a post last month. 

Why would I buy in New York City where you can’t actually collect rent, taxes are higher, & illegals are treated better than property owners.

I can buy Florida and get better assets for less, actually able to collect rents & the law respects the property owners?

The city that… pic.twitter.com/aIztA4nEDf

— Grant Cardone (@GrantCardone) February 21, 2024

Adding this… 

Why take the risk of investing in
New York City & places like it when:

1) you can’t collect rents,
2) property taxes fund illegals
3) you could be fined for placing
a value on your property?

Invest in Florida! #NewYork #NewYorkboycott

To invest 305-407-0276 pic.twitter.com/07W7T6uNIy

— Grant Cardone (@GrantCardone) February 21, 2024

And the investor pointed out on X, “This NYC Judge will sell more real estate in Florida than all the real estate agents & broker’s combined.” 

This NYC Judge will sell more real estate in Florida than all the real estate agents & broker’s combined.

His overreach in Trump case will
cost NYC immeasurable amounts of revenue that will take decades to reverse.

“CardoneCapital doubles down in Florida, Texas & Arizona,” GC pic.twitter.com/WRILjvZvoe

— Grant Cardone (@GrantCardone) February 21, 2024

Cardone Capital’s website says it manages a real estate portfolio with more than 500,000 square feet of CRE office space and 11,903 apartment units valued at approximately $4 billion. 

“We invest for 14,000 investors at Cardone Capital that depend on cash flow. And if I can’t predict the cash flow because of some ruling, or because of the migrants, or because I can’t evict people, New York City just keeps doing every single thing they can to sell real estate in Florida, not sell real estate in New York,” the investor said in a Fox News interview on Wednesday. 

Meanwhile, O’Leary Ventures chief Kevin O’Leary echoed a similar warning:

The $355 Million decision against @realDonaldTrump has a lot less to do with #Trump than the emerging debate about the competitiveness of #NY State to attract investment and create new jobs in the future! #LoserState pic.twitter.com/obRfKUOcEt

— Kevin O’Leary aka Mr. Wonderful (@kevinolearytv) February 19, 2024

“New York was already a loser state, like California is a loser state. I would never invest in New York now. And I’m not the only person saying that,” O’Leary said. 

Furthermore, in the Federal Reserve’s last meeting, the minutes from the session, published on Wednesday, showed the CRE downturn is only gaining steam:

CRE prices continued to decline, especially in the multifamily and office sectors, and low levels of transactions in the office sector likely indicated that prices had not yet fully reflected the sector’s weaker fundamentals.

The minutes noted: 

Leverage in the financial sector was characterized as notable. In the banking sector, regulatory risk-based capital ratios continued to increase and indicated ample loss-bearing capacity in the banking system.

And also this:

The staff provided an update on its assessment of the stability of the U.S. financial system and, on balance, characterized the system’s financial vulnerabilities as notable. The staff judged that asset valuation pressures remained notable, as valuations across a range of markets appeared high relative to fundamentals

Back to NYC’s CRE market – well done, Democrats. The blowback wave from your failures is accelerating in a market that only points down.