June 1, 2017

John B. Levy, president of John B. Levy & Company, recently sat down with Bloomberg Surveillance in New York to discuss recent market trends, including a revelation that the rise in eCommerce is driving a major shift in the commercial real estate market.

Bloomberg Surveillance is a daily radio show hosted by Tom Keene and David Gura who cover the latest in finance, economics and investment, and talk with the leading voices shaping the conversation around world markets.

Reviewing recent research published John B. Levy & Company, the interview began with commentary on rents in Richmond which are doing much better than many other big cities. According to Levy, the over building that has plagued other locations “has never really gotten out of hand” in Richmond.

Host Tom Keene then shifted the discussion to research revealing rapid – and potentially frightening – supply growth in warehouse space, questioning whether or not people should prepare for another 2006-like market crash. Levy noted that the internet and online shopping has been the key driver behind warehouse construction boom.

“A lot of the growth that’s coming up – and there was 200 million square feet – was all due to ecommerce,” said Levy. “We’re changing the vista of real estate from retail, where you went to the store, to where you go to the internet.”

The good news, Levy indicated, is that there is little sign of a letup any time soon.

“What’s really interesting is only 8% of retail is ecommerce, but it was only a couple of years ago when it was 4%. So there’s a lot of room,” explained Levy.

“And ecommerce takes a lot of warehouse space – three times the space that retail takes for bricks and mortar.”

Turning the conversation to financing, host David Gura asked how commercial banks felt about commercial real estate attitudinally these days.

Levy noted that because it can be very profitable, banks actually like commercial real estate, “but their regulators don’t.”

“There’s the saying, sixty is the new forty, well in the real estate business, 65% loan-to-value is the new 75%,” Levy said, noting that regulation is driving a market for “non-bank banks,” funded by private equity, to fill a commercial real estate financing need in places “where banks just can’t take on any more exposure.”

Gura asked Levy what he thought the biggest lesson to be learned was, as he walked the streets of New York before going on the show.

“I take away the same lesson I think most people do, which is people are buying online,” Levy said, noting the high rents which make retail space difficult in New York, with flagship stores becoming more about branding than actually selling.

”Anything you can buy now, you can buy either cheaper or more efficiently online, and it’s not stopping,” concluded Levy.

Separately, Levy also made a guest appearance on the nationally syndicated Bloomberg Small Business Report later that day.

To listen to the full segment of Levy’s appearance on Bloomberg Surveillance, visit