Staying Bullish on Commercial Real Estate

Summary

Bloomberg Businessweek Podcast Summary

Episode: Staying Bullish on Commercial Real Estate
Date: October 23, 2025
Hosts: Carol Massar, Tim Stenovec
Guest: Ron Elias, Founder and Managing Partner, Northwind Group

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Episode Overview

In this episode, Carol Massar and Tim Stenovec dive into the evolving landscape of commercial real estate, focusing on New York City while making broader connections across the country. Guest Ron Elias, head of private equity firm Northwind Group, offers a deep dive into real estate trends, office-to-residential conversions, affordable housing debates, the role of private credit, the impact of political risk, and the state of office and senior living markets in the post-pandemic era.

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Key Discussion Points & Insights

1. Northwind Group’s Focus and Business Model

• Credit-focused Investment:
  • Northwind Group operates as a Manhattan-based private equity firm focused on credit investments, especially in supply-constrained markets.
  • "We focus on credit investments, mainly providing acquisition bridge construction loans on residential properties and healthcare properties in supply constrained markets." – Ron Elias [02:22]
• Shift from Equity to Credit:
  • Transitioned completely from equity to credit in 2017 due to superior risk-adjusted returns in credit.
  • "We did not anticipate Covid or rate increases, but that definitely turned out into to be a great environment for credit." – Ron Elias [02:47]

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2. Office-to-Residential Redevelopment in NYC

• Involvement in Conversions:
  • Northwind is actively engaged in office-to-residential conversions, responding to ongoing housing shortages in NYC.
  • "We’re personally involved with about eight office to resi conversions, including the largest one, which is the prior Pfizer headquarters building." – Ron Elias [03:19]
• The Pfizer Building Project:
  • "Five out of five buildings on that city block are being converted... We’re the first mortgage lender on 235 East 42nd street, which will be turned into...1,600 rental units." – Ron Elias [03:38]
  • Success of these projects due in part to city incentives like the 467M tax abatement program.

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3. Rentals vs. Condos: The Residential Focus

• Rental Conversions Dominate:
  • Most conversions are for rentals, deemed more viable than condos for these buildings.
  • "When you’re buying a condo, you’re paying top dollar. You don’t want to compromise—in a rental, it works usually better." – Ron Elias [04:21]

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4. Complexity and Economics of Conversions

• Challenges:
  • Office-to-residential conversions are "definitely more complex, more complicated than a ground-up" build. – Ron Elias [04:49]
• Financial Viability:
  • "What happened post Covid is some of these buildings traded at...rock bottom...so they ended up buying the building for less than what the land would have traded." – Ron Elias [04:55]
  • Crucially, such projects "would not have worked without the long term tax abatement program." – Ron Elias [05:16]

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5. Affordability Crisis and Policy Debates

• On Affordability Approaches:
  • Elias criticizes policies focused on capping or freezing rents, advocating for increasing supply instead.
  • "To solve affordability you need to create more supply...in a city like New York, it’s very tough to do." – Ron Elias [06:04]
  • Suggests serious affordability solutions require a "10 to 15 year plan." – Ron Elias [06:36]

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6. Nationwide Expansion and Lending Philosophy

• Beyond Manhattan:
  • "We lend across the country in about 25 states. If the land is priced right and you can understand what the construction costs will be...if you build it, they will come." – Ron Elias [06:48]

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7. Banks vs. Private Credit

• Private Credit Advantages:
  • Private lenders can "move faster, slightly more efficient, slightly less heavy regulation" than banks.
  • "Banks...will always be able to provide a cheaper cost of capital... Private lenders, we typically move faster, sometimes more flexible solutions." – Ron Elias [07:32]
  • Banks have curbed lending in recent years, opening the door for private credit.
  • "Spreads are gradually tightening a bit, which is a good thing for the economy and for real estate." – Ron Elias [07:32]

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8. Current Real Estate Activity & Risks

• Record Year for Lending:
  • "We had a record 2024. We’ve originated over $1.1 billion in new direct loans...volume pick up, not go down." – Ron Elias [08:43]
• Top Risk: Political Risk:
  • "Political risk has become the number one risk you have to underwrite...for the federal level, it’s true for the global economy, and it’s true for New York specifically." – Ron Elias [08:57]
  • Policy changes and election uncertainty significantly affect real estate dynamics.

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9. Navigating Political and Regulatory Uncertainty

• Impact of Local Policy:
  • Real estate is "a local business, so it’s the local regulation changes" that can be disruptive.
  • Example: 2019 changes to rent stabilization laws in NY "almost got [the] entire industry decimated." – Ron Elias [09:43]
  • New mayoral election could fuel investor caution and pause investment activity due to aggressive policy proposals.

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10. Senior Living and Healthcare Real Estate

• Current Activity:
  • Northwind largely provides "acquisition bridge loans on income producing portfolios of senior housing and skilled nursing." – Ron Elias [10:51]
• Policy Effects:
  • Policy risk is also present in healthcare real estate, such as with HUD refinancing delays caused by government shutdowns.

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11. Post-Covid Office Market Dynamics

• Office Absorption Trends:
  • "Last quarter was equivalent to 2019 leasing volume, which is good." – Ron Elias [12:29]
  • While vacancies still exist, landlord sentiment is improving: "They’re starting to...look like less frowned as they did a year ago when it was a very, very tough lifting environment." – Ron Elias [12:44]

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Notable Quotes & Memorable Moments

• On the need for supply over regulation:

  • "Most politicians are going about it the wrong way, about capping rents and rent, stabilizing rent freeze, where really to solve affordability you need to create more supply." – Ron Elias [06:04]

• On the impact of policy:

  • "Look what happened in New York post rent stabilized law change in 2019, an entire industry almost got decimated." – Ron Elias [09:43]

• On the pace of recovery in office leasing:

  • "The last quarter was equivalent to 2019 leasing volume, which is good." – Ron Elias [12:29]
  • "Office landlords...starting not to smile again, but...look less frowned as they did a year ago." – Ron Elias [12:44]

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Timeline of Key Segments

| Timestamp | Segment Description | |-----------|-----------------------------------------------------------| | 01:37 | Episode introduction, macro real estate trends | | 02:22 | Northwind Group’s investment focus and shift to credit | | 03:19 | Office-to-resi conversion trends, Pfizer building project | | 04:38 | Economics and complexity of office conversions | | 06:04 | Policy and affordability debate | | 06:48 | Lending philosophy and activity outside NYC | | 07:32 | Banks vs. private credit discussion | | 08:43 | Lending activity, risk environment | | 09:43 | Local political/regulatory risk examples | | 10:51 | Senior living/healthcare investments and policy impact | | 12:29 | Office market post-Covid absorption trends |

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Summary

This episode offers an in-depth, candid snapshot of commercial real estate’s state and outlook, with a particular lens on New York’s challenging dynamics. Ron Elias brings clarity to why so many investors are "staying bullish"—opportunities exist in a convoluted mix of politics, policy risk, and shifting demand, and actual activity on the ground underscores optimism after a tumultuous few years. The main consensus: solving affordability means more supply, not just more regulation; private credit is filling gaps banks left behind; and, even as uncertainty headlines the narrative, transaction volume and creative redevelopment (like office-to-resi conversions) highlight resilience and adaptability in the market.

Transcript

[Carol Massar]

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[Tim Stanweck]

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[Carol Massar]

You're listening to Bloomberg businessweek with Carol Massar and Tim Stanweck on Bloomberg Radio.

[Tim Stanweck]

So we just talked a little bit about what's going on in Miami in terms of commercial and residential. We want to broaden out a little bit to New York City and across the country. In fact, what has been one of the most read stories on the Bloomberg today has to do with Manhattan condo buyers getting squeezed by a shortage of units on the Upper west side. I got to say, Bloomberg users always love to read about real estate. New York City in particular. Let's get a view on your York City and more. With us is Ron Elias. He is founder and Managing Partner of Northwind Group. They have transacted on over $5.6 billion worth of debt and equity investments in residential, commercial, senior living and health care properties. He's right here in our Bloomberg Interactive Broker studio. Ron, good to have you here with David and myself. Tell us a bit more about your firm and the composition of some of the investments that you guys have.

[Ron Elias]

Thank you Carol. I mean we're a Manhattan based private equity firm. We focus on credit investments mainly providing acquisition bridge construction loans on residential properties and health care properties in supply constrained markets.

[Tim Stanweck]

But debt and equity, well we start.

[Ron Elias]

On the equity side.

[Tim Stanweck]

Yeah.

[Ron Elias]

And then we've transitioned in 2017 to the credit side. And now we're 100% strictly in the credit.

[Tim Stanweck]

You are so completely. Okay, why?

[Ron Elias]

Back then we started looking at the risk adjusted returns in equity versus credit and it started to make sense back then to shift gradually into the credit space. Obviously we did not anticipate Covid or rate increases, but that definitely turned out into to be a great environment for credit.

[Bloomberg Host 2]

What I wanted to ask you about are just kind of the trends of redevelopment in this city. And I know there was so much conversation for so long coming out of the pandemic about what could we do with all of this vacant office space. Could we make them into more residential space? Where is that conversation today? And is that something that you're and your company are interested in at this point in time?

[Ron Elias]

Yes, we're heavily involved. Obviously New York City is seeing a huge shortage of housing supply. It's been a trend for the last five to seven years or so. We're personally involved with about eight office to resi conversions, including the largest one, which is the prior Pfizer, the Pfizer headquarters building.

[Bloomberg Host 2]

Tell us a bit about that because that is kind of getting a lot of attention.

[Ron Elias]

That's exciting actually. If you look at that entire city block between, on 42nd between 2nd and 3rd, five out of five buildings are being converted on that block, which is incredible. So we're the first mortgage lender on 235 East 42nd street which will be turned into combined with a neighboring building to 1600 rental units. It's a very exciting project. You think about as Pfizer left the building, moved to Hudson, Hudson Yards building stood vacant. And with the incentives that came from the city. City of yes, you know, 467M tax abatement program revitalizing a vacant building into a vibrant community.

[Bloomberg Host 2]

You mentioned rentals. That's where things are headed here when it comes to building residential units in New York City. Rent rent is where it's at.

[Ron Elias]

Most conversions are for rentals. We have seen some office to condo conversions, but usually when you do a conversion, it's a slightly more limited product. It's still a great apartment to live in. But you know, when you're buying a condo, you're paying top dollar. You want, you don't want to compromise in a rental. It works usually better.

[Tim Stanweck]

Well, how difficult are those conversions? I think for a long time people thought those office buildings couldn't easily be converted or couldn't be converted at all. Nobody was going to want it. But I hear it's not always so Easy, but walk us through.

[Ron Elias]

It's definitely more complex, it's definitely more complicated than a ground up.

[Tim Stanweck]

More costly too.

[Ron Elias]

Really depends on the building. In the Pfizer building as an example, they are opening a courtyard, kind of an interior courtyard. So that's a heavy lift, interior structural work that has to be done. So usually a conversion will take slightly longer and will be slightly more costly. But what happened post Covid is some of these buildings traded that, you know, rock bottom doll, you know, price. So they ended up buying the building for less than what the land would have traded. Right. So it end up working as a very good transaction, but it would not have worked without the long term tax abatement program.

[Bloomberg Host 2]

We have a mayoral election here on the horizon. Wait, what? And a debate tonight. And I am going to go out on a limb and guess there's going to be a lot of conversation during the course of that debate about affordability in New York City. And I know there's been some agita among some folks about the Democratic nominee for mayor and what he said about what that might mean for people coming here or leaving. But he really has centered his campaign on this notion of affordability. And I wonder how resonant that is with you. And regardless of who wins this election, how high up on that agenda, how high up on that list is this idea of how do you get more affordable units in this city so that people can live here, if not easily in a way that they might in other places?

[Ron Elias]

Well, you know, my opinion is most politicians are going about it the wrong way, about capping rents and rent, stabilizing rent freeze, where really to solve affordability you need to create more supply. And in a city like New York, it's very tough to do. You know, we have a limited amount of land and buildings, so the real route should be to figure out where we can create. It's probably not going to be in Manhattan. Right. It's probably going to be somewhere in the outer boroughs. Create more supply of rental units and you create more supply gradually. Price will go down for most New Yorkers over time. But it's not an easy thing to do. Especially we have to be reelected every two to four years. This needs a 10 to 15 year plan to really fix affordability.

[Tim Stanweck]

But do you want to provide the debt to for plants outside of maybe Manhattan?

[Ron Elias]

Definitely. Well, we land across the country in about 25 states. If the land is priced right and you can understand what the construction costs will be right now if you build it, they will come because there is A housing shortage, not just in New York, but in a lot of major urban markets across the country.

[Bloomberg Host 2]

Yeah, we've been talking about private credit, both the good and the bad of it. We've seen these headlines about regional banks, what exposure they might have, any risks that might be kind of income with that. What is private credit able to do that banks aren't able to do? Well, there's this kind of narrative that we've seized upon that the opportunities in private credit, it's growing so fast. As you look at what banks, traditional banks offer and private credit offers, why does it seem to have an edge, at least in terms of the narrative or the dialogue surrounding lending at this time?

[Ron Elias]

Listen, banks have a better cost of capital, so they will always be able to provide a cheaper cost of capital, cheaper loans, essentially. Private lenders, we typically move faster, slightly more efficient, slightly less heavy regulation as the banks do. So we're able to provide usually faster, sometimes more flexible financing solutions. But in any given day, if a bank comes in and gives a loan at 3% cheaper, the developer should and will take it. We've seen the last three years, commercial banks really curb their lending activity. They're starting to come back. We're seeing more activity. Spreads are gradually tightening a bit, which is a good thing for the economy and for real estate in general. It means cost of borrowing is coming down a bit.

[Tim Stanweck]

Well, that's what I was going to ask you. When you look at kind of the level of activity that you are doing, I think we're just in this interesting point, we're trying to figure out what is the right way or what is the way forward. I think people are surprised. Considering where we were back in the spring and we saw market sell off and there were concerns about American or US exceptionalism going away, and it does feel like earnings and things have held up. Like, how would you describe the business environment right now?

[Ron Elias]

I mean, what we're seeing, I mean, we had a record 2024. We've originated over 1.1 billion in new direct loans.

[Tim Stanweck]

Right.

[Ron Elias]

And we're seeing volume pick up, not go down. So there's more activity. Rates coming in a bit is helping.

[Tim Stanweck]

Right.

[Ron Elias]

General, a little bit more stability. I would say that the most important thing people are underwriting or cautious about right now is political risk. It's true for the federal level, it's true for the global economy, and it's true for New York specifically. Political risk has become the number one risk. You have to underwrite and take into consideration when you're considering buying or lending in any market, spell that out a bit more.

[Bloomberg Host 2]

So is, you know, when you look at the uncertainty you're having to deal with, is it principally sort of trade policy, tariffs, how much it's going to cost for the materials that you need to renovate or redevelop a building or a project? How much does immigration policy come into play? I mean, is it easy enough for you to find, not you, the folks you're working with, to find workers to do the kind of construction, building you need? What is weighing on when you talk about geopolitical risk, political risk, what are we talking about when we use that term?

[Ron Elias]

Real estate eventually is a local business, so it's the local regulation changes. Look what happened in New York post rent stabilized, law changed in 2019, an entire industry and almost got decimated. Right. So we're looking at that new mayor election. There's definitely aggressive agendas out there with some, you know, aggressive ideas on how to go about Mamdani gets elected, he's going to try and get some of that done. It's not going to happen immediately, it's going to take a couple of years, but he probably do it. And that will impact values and it will also cause in the meantime people to kind of pause and say, okay, you know what, let's wait and see how it plays out. That might reduce investment activity overall. So political risk is across the board. You know, we invest also in health care and we've seen, you know, the huge change in, you know, Medicaid, Medicare bills. I think President Trump just spoke about it a bit as well. So that's something you have to follow also very carefully to see how the wind is, you know, where the wind is blowing.

[Tim Stanweck]

Well, you guys play into senior living. Talk to us about that. I mean, I just feel like that whole aging investment play continues. How much are you doing in building? How much are you investing in that area?

[Ron Elias]

We're mostly providing acquisition bridge loans on income producing portfolios of senior housing and skilled nursing in about 20.

[Tim Stanweck]

Something like assisted living and.

[Ron Elias]

And skilled nursing. Assisted living and skilled nursing. So these are typical, you know, portfolios of 8, 10, 15 properties that are being purchased and we are providing the bridge to HUD loan. Talk about political risk. You know, government shutdown, HUD as well as impacted. You see a slower pace of refinancing from hud. So there's definitely impact of policy into business activity.

[Bloomberg Host 2]

Ron, nodding to the fact that we've been hearing from the president, he's concluded his remarks and just to give you a little digest of what he said after we ducked out of his comments. He talked oil prices going down, says he wants to see gasoline below $2 a barrel. That's the headline.

[Carol Massar]

Me too.

[Bloomberg Host 2]

There's something that we've not seen at.

[Tim Stanweck]

$2, the oil company and I'll note.

[Bloomberg Host 2]

Also a headline crossing that. Semaphore is reporting that Argentina is in conversations with private lenders to the tune of $20 billion to help its economy here. And again, that's not something that Bloomberg has matched or confirmed, but semaphore reporting that. And the story here has been, course, the US has bailed out the country to an extent, but looking we know that actively for private partners in that effort as well. So, well, synthesizing all of that news here.

[Tim Stanweck]

Right. That's partnered with China, certainly. And the US Looking to kind of come in there and assist in terms of currency. Ron, one thing I want to ask you and I think about, even around Bloomberg, we've had a lot of empty retail space. I was in Boston recently, a lot of open stores for for rent, a lot of storefronts. Is there still a lot of office buildings that are vacant post Covid?

[Ron Elias]

I mean, if you talk about New York City, we're definitely seeing absorption kick in in the office market. I think the last three quarters have been same levels of leasing like you've seen pre Covid. So the last quarter was equivalent to 2019 leasing volume, which is good.

[Tim Stanweck]

Okay.

[Ron Elias]

So to answer your question, there's vacancy still out there. It's coming down a bit. And I think when we're speaking to office landlords right now, they're starting not to smile again. But they're, they're starting to, you know, look like less frowned as they did a year ago when it was a very, very tough lifting environment.

[Carol Massar]

All right.

[Tim Stanweck]

Good to know and good to check in with you. Thank you so much for our bouncing back and forth. It's kind of our world right now and there's a lot coming out of D.C. and certainly the president, Iran Elias, he is founder and managing partner of Northwind Group, joining us right here on Bloomberg Businessweek. Daily.

[Ron Elias]

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[Bloomberg Host 2]

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[Carol Massar]

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[Bloomberg Host 2]

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[Carol Massar]

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[Ron Elias]

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[Bloomberg Host 2]

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[Ron Elias]

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