The Real Deal April 2013

TheRealDeal

www.TheRealDeal.com

A defining decade

N ew Yo r k R e a l E s tat e N e w s

The biggest winners and losers, best skyline additions and TRD’s own story since it launched. See page 43.

10 year mock 3jn.indd 1

Condos of the boom, revisited Ten major projects that hit the market before the crash: Which ones are near the finish line and which are still struggling?

See page 72.

Vol. 11 No. 4 April 2013 $3.00

Fascitelli’s grand finale Did the chief of mega-REIT Vornado leave of his own volition or was he pushed out?

See page 54.

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Highlights April 2013 51

A 10-year roller coaster ride A look at the highs and lows in the New York City real estate market since TRD launched a decade ago and began covering it all. The blustery market conditions have meant that many one-time highs, like the record $5.4 billion purchase of Stuy Town, became lows as the economy did a 180.

16 Words of wisdom

Amir Korangy

TRD publisher Amir Korangy, who started the magazine 10 years ago, tells readers about growing a business and about sacrificing friends in the name of hard-nosed news.

20

Crazy for condos Manhattan new-construction condos have reached a new price threshold, topping even boom-time highs. The spike is attributed to several new condos hitting the market, including 150 Charles Street.

150 Charles Street

24

mortgage contingency 22 Good-bye, With the lack of inventory creating conditions

Long Island City redux

reminiscent of the real estate boom, many buyers are waiving the clause in their contract that protects their down payment if they can’t get a mortgage.

But with banks skittish about loans, that decision is much riskier than it once was.

The Long Island City waterfront

8 April 2013 www.TheRealDeal.com

Long Island City went from industrial to residential in the mid-2000s when condos popped up like wildflowers. Then the recession hit. But LIC is back, with new and once-stalled projects now hitting the market and more in the construction pipeline. In the next five years, more than 3,500 residential units will be finished.

Recent Transactions S ince 2005, we have invested approximately $1 billion in the origination and acquisition of commercial mortgage loans collateralized by multifamily, retail, office and light industrial properties throughout the United States.

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Highlights continued

UN VEILED

26 Lenobel’s pig pen Jeffrey Lenobel — chair of the real estate group at the law firm Schulte, Roth & Zabel — has a serious collection of pig figurines that he tends to in between doing legal work on mega-deals for projects like Hudson Yards.

Jeffrey Lenobel

34

words...

30 InThistheir month’s funniest and most insightful comments on real estate.

under-the-radar power broker 34 The Marcos Cohen, Douglas Elliman’s No. 1 agent, puts his South American connections to good use amid a flood of international buyers.

Marcos Cohen

When erected in 1952, the United Nations Secretariat symbolized the latest advances in curtain wall construction.

But rapid deterioration by the elements soon masked the transparency envisioned in the original design. Only after HLW International and R.A. Heintges & Associates undertook its replacement as part of a 21st-century update has the facade’s intended splendor been revealed. Now, along with adding the energy efficiency and blast-resistance required by its prominence, it gives the city a long-denied glimpse of the grandeur that helped shaped global architecture in its day.

Transforming design into reality For help achieving the goals of your next project, contact the Ornamental Metal Institute of New York.

36

36

Hotels take over 29th

38

Seward Park: Next on tap

40

The heir unapparent

In Midtown South, prices rise as hotel developers follow the Ace’s example.

Developers are rushing to get in bids to remake a six-acre swath of the Lower East Side.

Boston Properties bypasses cofounder’s son and taps Lehman’s liquidator as its new CEO. The Eventi

43 madness — 43 Market and malaise Stacking up the last decade in real estate, from hot new neighborhoods to frozen credit and everything in between.

Publisher of Metals in Construction 211 E 43 St | NY, NY 10017 | 212-697-5554 | www.ominy.org

the years 46 Through Following TRD’s trajectory — from its early days in a psychic’s office to its evolution into an award-winning magazine.

Design Architect, Architect of Record: HLW International Architect of Record, Facade: R.A. Heintges & Associates Photo: UN CMP/John Woodruff and Peter Brown

10 April 2013 8 October 2012www.TheRealDeal.com www.TheRealDeal.com

48

NYC’s shifting skyline A look at some of the new (and notable) buildings to go up since TRD launched 10 years ago. www.TheRealDeal.com March 2012 00

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Highlights continued Fascitelli’s departure 54 Behind Did the Vornado CEO leave of

UP STAGED

his own volition, or did the REIT push him out?

Leonard: Back from the brink 63 56 After nearly toppling, the “Jenga”

54

tower is reaching new heights.

Vornado Realty Trust’s Michael Fascitelli

67

Follow the money Experts weigh in on where investors — from newbies to megadevelopers — should put their cash for the best returns.

72 Eero Saarinen is a tough act to follow. But when Lincoln Center sought space to build a home for its LCT3 program by adding onto his 1965 Vivian Beaumont opus, it found H3 Hardy Collaboration Architecture right for the part.

Opting to locate the new stage atop the existing theater—a design made possible by using lightweight steel trusses as exterior walls—the architects were able to create the longspan spaces needed for theatrical productions while giving theatergoers a fresh vantage point from which to view both emerging playwrights and Lincoln Center’s exciting 21stcentury encore.

Structural Steel Right for any application

Where are they now?

A look at the biggest boom-time condo projects to see which are close to sold out and which are still lingering.

78

82

A new era for the $6 billion Manhattan portfolio of legendary landowner Sol Goldman.

Checking in with brokers to take the pulse of the apartment market.

Commercial Market Report Tracking rents and vacancy figures in Manhattan’s three office districts.

102

National Market Report Reports from around the country on significant developments and trends.

The ‘big data’ buzz The start-up push to fill real estate’s number-crunching needs.

82

For help achieving the goals of your next project, contact the Steel Institute of New York.

Residential Market Report

28

Striking Goldman

Goldman’s daughter, Jane, who now heads the firm

20

109

The Deal Sheet A roundup of office and retail leases, building buys and financing.

126

Development Updates An update of the construction and sales status of projects around the city.

Publisher of Metals in Construction 211 E 43 ST | NY, NY 10017 | 212-697-5553 | www.siny.org Jason Griffith, left, and Ross Goldenberg, co-founders of SiteCompli, which tracks city violations for landlords.

97

The East End’s sales surge Prices stay steady, but activity is on the rise as buyers fight over limited inventory.

170 The Rockrose CEO says his father Elghanayan — Henry, that is

Architect: H3 Hardy Collaboration Architecture Engineer: Severud Associates Photo: Francis Dzikowski/Esto

10 12 April October 2013 2012 www.TheRealDeal.com www.TheRealDeal.com

would have hated to see the family firm split, and talks about coming to work in sandals.

160

Calendar of Events Check out this month’s activities.

164

Comings & Goings The stories behind the latest job moves and company announcements.

166

We Heard A lighter look at industry buzz.

www.TheRealDeal.com March 2012 00

THE REAL DEAL N E W YO R K R E A L E S TAT E N E W S PUBLISHER Amir Korangy EDITOR-IN-CHIEF Stuart W. Elliott MANAGING EDITOR Jill Noonan DEPUTY MANAGING EDITOR Candace Taylor EDITORIAL DEVELOPMENT DIRECTOR Melanie Gray

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Bronx: Aggregate sales of

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8 Buildings / 381 Residential Units / 12 Commercial Units © Copyright 2012 Rosewood Realty Group. All rights reserved.

14 April 2013 www.TheRealDeal.com

The Real Deal is a registered trademark of Korangy Publishing Inc. Copyright © 2013. Call 212-2601332 or e-mail news@therealdeal.com. Warning: It is illegal to photocopy or reproduce any part of The Real Deal without express written consent. For reprints and duplication rights, call 212-260-1332.

Principal office: 158 West 29th St., New York, NY 10001. The Real Deal is published monthly. Annual subscriptions cost $95. Send check or money order to 158 West 29th St., New York, NY 10001.

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from the desk of the publisher

Turning 10: L earning to live without friends

N

Of course, we haven’t been perfect here at the magazine. We’ve made our share of reporting errors and our previous policy of allowing anonymous comments on

ewspapers should have no friends,” publisher Joseph Pulitzer once said.

our website drew industry ire. But we pride ourselves on correcting our inaccura-

That’s what I’ve learned in my 10 years since founding The Real Deal.

cies as quickly as we can. And we even make structural overhauls where we see fit.

Sure, I’ve formed a lot of great relationships and met a lot of great

Case in point is the web comments: While discussions in that area of the website

people, who I want to thank for helping feed The Real Deal’s success. But being a

were hugely active, they often devolved into unnecessarily mean and snarky terri-

magazine publisher can be a lonely job.

tory. So we began requiring users to register before posting comments.

We’ve covered the market’s booms and busts, the players who’ve climbed to the top of the industry and those who have fallen fast after billion-dollar losses.

We’ve written about record-breaking deals and covered the bitter lawsuits that

The point is, we are learning, too.

The Real Deal’s first decade dovetails with the tenure of Mayor Bloomberg.

The industry has done right by the mayor (whose father incidentally was a real estate broker). I hope the mayor’s commonsense approach to improving the city

inevitably spring up when the market sours.

When people do like a story, you usually don’t hear from them. When people

(even if the ban on sugary sodas was an overreach) will be carried forward by the

don’t, it’s not unusual for me to get 15 voicemails from one person in the span of an

next mayor. It’s not a given, though — and it’s scary to think that a career politician

hour if I’ve left my desk for a meeting. And, of course, there are no off-limit times for

could again take the helm at City Hall, whether it be Christine Quinn or someone

angry publicists or CEOs when it comes to stories they would rather not see in print.

else. It makes me think back to the dark days of David Dinkins.

CEOs of major companies have said to me they would “destroy me.” One ex-

The magazine’s first decade has also coincided with the rebuilding of ground

ecutive who was unhappy with a story even threateningly told me, “New York is a

zero following the Sept. 11 attacks, the gentrification of much of Brooklyn, the re-

dangerous place. Accidents happen.”

claiming of the Manhattan waterfront and the development of Hudson Yards.

Then there was the time when a company head, who was featured on the cover, threatened to fly to The Real Deal’s printing press in New Jersey and pay to

In many ways, The Real Deal’s growth has mirrored the city’s growth. Our first office was located in a second-floor retail space once occupied by a psychic on 23rd

destroy all copies of the issue.

But that is clearly the price of editorial independence, which has been the cornerstone of our success.

I launched the magazine in my Brooklyn apartment a decade ago, after starting as a real estate investor, because I realized there was no sophisticated coverage

CEOs of major companies have said to me they would “destroy me.” One executive who was unhappy with a story even threateningly told me, “New York is a dangerous place. Accidents happen.”

for real estate insiders. Too much of what was being written was recycled news and self-serving press releases. Too little of it was “speaking truth to power” in the form

Street; we later upgraded to our current space, which is five times the size. We’ve

of insightful, balanced coverage of both the positives and negatives in the market.

also grown from one employee to 34 employees (and dozens of freelancers), and

I know The Real Deal has changed the way the industry is covered in New York.

I’ve gone from answering the main phone line, distributing copies of the magazine

The proof is in our loyal readership, on display when we sell out Avery Fisher Hall’s

to newsstands myself and designing the pages, to hiring talented people to do that

2,900 seats for a forum; in the million-plus visitors we get on the web each month;

for the magazine. Nonetheless, I am still on-call when someone forgets their keys

and in the awards we’ve won. That’s not to mention our loyal sources and advertisers

and needs to lock up the office at night. And I am still the worrier-in-chief.

Whatever the long-term outlook for the city, the immediate future looks

(those who get that we have to write the news as it happens — warts and all).

Bringing greater transparency to the market — and making it a level playing

bright for real estate. If our magazine page count is any indication of what’s happening in the market, you can sleep easy — this issue is our largest in five years.

field for everyone — is the goal.

Transparency has improved in the decade since we’ve launched — thanks to

Another telling statistic: In the last decade, the number of housing units

increasingly rigorous coverage by us and by others who have followed us onto the

grew by only 5.3 percent in the city, while the population grew by 9.7 percent.

scene. There are, of course, more public records now readily available thanks to

That’s a big supply-demand imbalance, and it’s part of the reason we’re seeing

the Internet. But there is still plenty to be done.

an inventory squeeze now. That’s great news for real estate prices as well as for

For example, if the press had done a better job of covering subprime loans during the boom, we could have avoided (or at least reduced) the economic melt-

developers who want to construct more residential buildings.

While the market is heating up again, progress at The Real Deal has been

down. But look at how little reform has taken place since the crash and how we

proceeding apace. In the past year, we’ve started a new magazine, Luxury List-

are setting ourselves up for another crisis. I assure you, The Real Deal will be there

ings NYC, which targets a general Manhattan audience and reaches more than

to uncover the warning signs and sound the clarion call next time.

100,000 doorsteps; launched an iPad app; had a TRD-created documentary air

There are plenty of old-school players who have stood in the way of progress.

The fact that New York’s residential sector still doesn’t have a Multiple Listing

on PBS; won major awards in two journalism competitions; and surpassed 5 million page views a month on the web.

Service is egregious. Transparency has come instead from firms like StreetEasy

Real estate is a long-term game, and we plan on being around for the long haul.

and OLR, which have sidestepped those recalcitrant mega-players to build the

Thank you very much for reading. And here’s to another 10 years. Even if it’s

closest thing the market has to an MLS.

hard to keep friends when you’re a publisher, it’s well worth the effort.

Amir Korangy

16 April 2013 www.TheRealDeal.com

www.TheRealDeal.com MarchMendoza 2012 00 Photograph

by Jacobo Bergareche

EDITOR’S NOTE

THE NASSIMI GROUP REPRESENTING SELECT NEW DEVELOPMENTS

T

The next boom market?

he Real Deal started publishing at the beginning of an epic real estate boom back in 2003, so it’s fitting that as we celebrate our 10th anniversary this month, another boom looks to be on the way.

Back then, right before our first issue came out, publisher Amir Korangy, marketing director Yoav Barilan and I watched the “shock and awe” bombing of Baghdad on CNN at a Park Avenue South bar while discussing the magazine’s direction. (I wrote a freelance story for the first issue. I guess Amir liked it, because I was promoted to editorin-chief after that.)

There was a mild recession at the start of the Iraq War, and the idea that the market was poised for a huge run-up seemed seriously unlikely. (That’s not to mention that it was harder for me to discern what would happen because I knew very little about real estate.)

But being on the front lines for the last 10 years, amid a roller coaster ride that’s seen some dramatic highs and lows, it’s become a little easier to try to read the tea leaves (even if the last decade has taught me that nobody ever really knows what’s going to happen).

Brokers may throw around terms like “boom market” and “bidding wars” casually, but I try not to. That said, it does look like the stars are aligned for a hot market ahead — the kind of market that gets the adrenaline pumping, and can make New York real estate an exciting blood sport or spectator sport (depending on your vantage point).

This time, it’s all about the inventory, and supply versus demand run amok, as we write about in many stories in this issue.

As we all know, developers basically stopped building new projects during the recession, meaning there are few new homes coming on the market today. All the while, the city’s population has been increasing at a faster rate, and international money continues to flow in.

A few key stats show we may be in for some prolonged good times: • The number of homes on the market in Manhattan is at a 10-year low. And available

The number of homes available is at a 10-year low, population growth is outpacing new building, and the market looks ripe to rise dramatically.

For all inquiries about regarding these new developments contact Director of Sales

Richard Nassimi Senior Associate, Licensed RE Salesperson 212.875.4064 richard.nassimi@corcoran.com

inventory dropped by one-third in the last year alone to around 4,900 units, down from 7,600. When you have that sort of shortage of for-sale apartments, with demand still present, it sends prices up significantly, as reporter Hayley Kaplan spells out on page 20.

• Some neighborhoods have almost nothing on the market. In Soho, for example, there were between 400 and 500 apartments for sale at any given time in each of the last five years. According to the most recent numbers, there are now just 160 apartments on the market. (Our sister consumer publication, Luxury Listings NYC, has some of these dramatic by-neighborhood inventory figures in its latest issue. Go to LLNYC.com.)

• In the last decade, the number of housing units grew by only around 5 percent in New York City, while the population jumped by nearly 10 percent, as we mention on page 16. We haven’t been building enough to match the number of people moving to the city, by a long shot.

• Finally, if market guru Jonathan Miller said it, it must be true. “This market has choked off supply with two hands,” the appraiser noted on page 20. “That’s providing upward pressure [on prices], and we don’t anticipate much relief this year in terms of new supply.”

Of course, financing is still tight, and other hurdles like political gridlock in D.C. could present bigger issues, but signs do look positive.

Meanwhile, there is a lot to feast on in this large issue.

We have a comprehensive look back on the last decade (starting on page 43); a story on where investors should put their money in New York real estate today (page 67); a status report on big condo projects that launched during the boom and are still finishing up their sales (page 72); a profile of 56 Leonard, which will be Tribeca’s tallest building and likely an iconic addition to the city’s skyline (page 63); a look at big changes at the top for massive REITs Boston Properties and Vornado (pages 40 and 54, respectively); a story about how more real estate companies are mining “big data” to make decisions (page 82); and much more.

I also want to thank each and every member of our talented staff for all their tireless hard work and dedication, and for making the magazine what it is today. And thanks for reading.

Enjoy our anniversary issue!

The Corcoran Group is a licensed real estate broker. Owned and operated by NRT LLC.

Stuart Elliott 18 April 2013 www.TheRealDeal.com

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R E A L

E S T A T E

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2.8.13 • TMD • Real Deal • magazine trim: 10.5 x 14.5 • mechanical size: 10.75 x 14.75 • Issue: March 2013

RE S I D E N T I A L MA R K E T

BY HAYLEY KAPLAN anhattan new-construction condos have reached a new price threshold, topping even boomtime highs, brokers said.

The average price per square foot for a Manhattan new development in the first quarter was

M

Crazy for condos

Demand for new construction drives prices to new highs as inventory drops

$1,332, according to a Douglas Elliman market report compiled

by Miller Samuel Real Estate Appraisers. That’s up from $1,263 in the first quarter of last year, and from $1,132 in the first quarter of 2007, at the height of the real estate boom.

And in some new development

buildings, prices are reaching as much as $2,200 to $2,300 per square foot, a price point previously reserved for penthouses, according to Douglas Elliman broker Frances Katzen.

“These are numbers we never even considered in 2006,” Katzen said.

The price spike is attributed, at least in part, to several new highend condos hitting the market, including much-hyped new developments 150 Charles Street, 56 Leonard Street and 432 Park Avenue. According to the Olshan Luxury Market Report, most of the 63 contracts over $4 million

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signed during the week of March 11 were deals at 150 Charles and 56 Leonard (see related story on page 63).

These pricey new projects are coming to market at a time when buyers are starved for new inventory, in the wake of a construction slowdown following the financial crisis.

“There isn’t a large number of new units coming to market, since developers backed off during the Great Recession,” said Veronica Raehse, a broker at the Bellmarc Group. “There is large demand and few new projects.”

Indeed, new development inventory fell 41.7 percent year-overyear to 872 from 1,495, Elliman’s report showed. And overall Manhattan inventory continued to fall to “unprecedented” lows, said Miller Samuel CEO Jonathan Miller.

The number of listings dropped 34.4 percent in the first quarter to 4,960 units, down from 7,560 units in the same period of last year.

“This market has choked off supply with two hands,” Miller said. “That’s providing upward pressure [on prices], and we don’t anticipate much relief this year in terms of new supply.”

As a result, buyers are willing to pay a premium for the few brandnew homes available.

“Bottom line: supply and demand,” Katzen said. “And the consumer is prepared to pay. As much as [developers are] pushing, the buyers are prepared to engage.”

Another reason for the high prices, Miller said, is that the majority of the new developments currently hitting the market are targeted at über-wealthy buyers.

Overall, home prices in Manhattan increased slightly yearover-year but declined from the fourth quarter’s end-of-the-year closing madness. The average Manhattan sales price in the first quarter was $1.35 million — a 7.3 percent decline from last quarter’s $1.46 million, but a 1 percent increase from $1.34 million in the first quarter of last year, the report said. The median sales price, meanwhile, grew 5.9 percent year-overyear from $775,000 to $820,555.

Meanwhile, there were 2,457 closed sales in Manhattan in the first quarter, the report said. That’s up 6.3 percent from 2,311 a year prior. TRD

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Good-bye, mortgage contingencies In boom-time déjà vu, NYC buyers risk their down payments when purchasing

By Hayley Kaplan o long, mortgage contingency. With lack of inventory creating conditions reminiscent of the real estate boom, many buyers are waiving the clause in a purchase contract that protects their down payment if they can’t get a mortgage.

But with banks skittish about home loans, that decision is much riskier than it was in the mid2000s, brokers said.

These days, getting a mortgage is “always a risk until the bank comes to the table with the money,” said Tracy Makow, a partner with the Brooklyn-based law firm Brickner Makow. Still, “some people are willing to take it,

S

because they want to buy the property. There’s very little inventory out there.”

Mortgage contingency clauses have been nearly universal in contracts signed since the financial

beat out other bidders. Others are acquiescing to demands by sellers, who don’t want their deal to collapse because a buyer can’t get a mortgage.

“No mortgage contingency is a

months because of the tightening inventory.”

In the easy-credit days of the mid-2000s, it was common for homebuyers to skip mortgage contingencies. But that famously

“I’m being asked by many brokers, ‘Are your buyers willing to go non-contingent? Because we have two or three other buyers that are not contingent on financing, and I just don’t see your deal happening.’”

Keith Burkhardt, the Burkhardt Group crisis of 2008, brokers said. But in the face of a continuing inventory shortage, brokers told The Real Deal that some buyers are voluntarily waiving these clauses to help

great situation for the seller — it makes the deal a lot more solid,” said Howard Margolis, a broker at Douglas Elliman. “We’re seeing it a lot more over the past few

led to a flurry of lawsuits during the economic downturn, when buyers found they could no longer finance apartments they’d signed contracts to purchase, and sued

developers to get their deposits back. Since then, mortgage contingences have been nearly ubiquitous.

But Margolis said that’s now changing. In recent months, he said at least half of all sales he’s seen have closed without mortgage contingencies.

“Because the lack of inventory is so severe, every viably priced property has got a line forming,” said Neil Binder, president of the Bellmarc Group. “The only way that you can entice sellers to agree to your terms over someone else’s is if you offer some kind of chocolate.

And the only chocolate is if you don’t have the risk of a mortgage.”

Keith Burkhardt, founder of the buyers’ brokerage the Burkhardt Group, said he advises all his clients not to waive mortgage contingencies because the risk is just too great. Consequently, a number of his buyers have come up empty-handed.

Burkhardt said: “I’m being asked by many brokers straight away, ‘Are your buyers willing to go non-contingent? Because we have two or three other buyers that are not contingent on financing, and I just don’t see your deal happening.’”

In fact, with supply low and demand high, the terms of a sale — like no mortgage contingency — can become just as important as price, brokers said.

“One guy is offering $25,000 above the ask,” Margolis said, “but if the other person has a stronger ability to close, which is the better deal?”

And not every buyer is offering to waive the mortgage contingency. Many sellers are insisting that they do so — or no deal.

“It’s a seller’s market, and in a seller’s market, when they hold the cards, they want to make sure there’s no out for the buyer, so to strengthen their deal, they take away the financing contingency,” said Core CEO Shaun Osher.

H.OM.E. Mortgage Bank’s Rolan Shnayder noted that high-end buyers are more likely to forgo financing contingencies, since they’re less likely to depend on a mortgage to get the deal done.

“Obviously, [this is more prevalent in] the upper echelon of the market, where a lot of those deals are done in cash anyway,” he said.

Continued on page 136

22 April 2013 www.TheRealDeal.com

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Second wave

Long Island City went from industrial to residential in the mid-2000s when condos popped up like wildflowers. Then the recession hit and sales lagged. But the residential LIC market is back, with new and once-stalled projects now hitting the market and more in the construction pipeline. In the next five years, more than 3,500 residential units — in 23 buildings or conversions — will be finished and ready to be sold. (StreetEasy)

Through the roof

In February, a three-bedroom penthouse at LIC’s the View set a new record for the highest price ever paid for a Queens condo: $3.1 million.

The old record — $3.04 million — was set in 2008 for a home at LIC’s Arris Lofts. Most apartments in the nabe don’t cost near seven figures. The median listing price at the end of last year was $827,000, up from $704,500 in December 2011.

More affordable homes

After years of planning, the city and developers Phipps Houses, Related Companies, and Monadnock Construction last month broke ground on Hunter’s Point South, the largest NYC housing development to be built since the Bronx’s Co-op City in the early 1970s. The multi-year project will add 5,000 residential units, 28,000 square feet of community and retail space, and 11 acres of parkland to LIC. (Crain’s)

Court (Square) action

Feel the power

A sellout, at last

Another hub of activity is LIC’s Court Square, where housing prices have skyrocketed in the last three years — from $550 to nearly $850 per square foot. Rockrose Development is nearly done with the Linc LIC, a 709-unit rental tower at 43-10 Crescent Street, and plans another 1,100 units in two towers on a neighboring lot. (New York Daily News)

Rockrose is also converting the former Eagle Electric building in Court Square into 700 rental units. The developer paid $48 million for the 320,000-squarefoot structure at 43-22 Queens Street late last year. Construction is slated to start in 2014.

After four years on the market, the L Haus condominium finally sold out in February. Asking prices at the Stahl Organization’s 123-unit project ranged from $340,000 to nearly $1.4 million.

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PHOTOGRAPH FOR THE REAL DEAL BY MICHAEL TOOLAN

Lenobel has more than 500 pig figurines, which started with a family of oinkers that his now 30-year-old-daughter bought him when she was 12. These porkers came from retired residential builder Marty Goodstein. A few years ago, Lenobel moved the collection from his Midtown apartment at his wife’s request.

Late “Meet the Press” host Tim Russert presented Lenobel this award in 2007. The honor, bestowed by the American Bar Association, recognizes lawyers and law school students who use clear, plain language in their writing. “I think an award for it being readable is pretty cool,” he says.

When he started practicing law, Lenobel ordered vanity license plates that read “DIRT LAW,” a play on the slang term “dirt lawyers” sometimes used to refer to real estate attorneys.

But Lenobel later replaced them with “NY METS” plates passed down from his father .

This photograph of the Olympic U.S. hockey team, signed by all the players, was taken moments after the U.S. beat the U.S.S.R. and won a gold medal at the 1980 Winter Games in Lake Placid, N.Y. “It brings tears to my eyes to this day,” Lenobel says of the win, which is often referred to as “the Miracle on Ice.”

the

Desk

of:Jeffrey

LenobeL

Lenobel has two rules for his collection: no salt and pepper shakers and no piggy banks. But he has no prohibition against X-rated pigs.

“This is definitely a pig orgy,” Lenobel says of this grouping. “These are from a client, too, but I don’t want to tell you who.”

Much to his parents’ dismay, Lenobel “had the biggest afro of any Caucasian in the PennsylvaniaWashington [D.C.] area,” says Lenobel, who often was in the nation’s capital for war protests. protests “When someone sat behind me in a movie theater, the first thing they would say was ‘Oh, shit.’”

effrey Lenobel, chair of the real estate group at the law firm Schulte Roth & Zabel LLP, is at work on one of the largest developments underway in Manhattan — the $15 billion Hudson Yards project, where he represents the joint venture of Oxford Properties Group and the Related Companies.

And this month is going to be a busy one for Lenobel. That’s because the

J

At

Each pig tells a unique story. This “capitalist pig” came from a friend he made at Gettysburg College who was chiding him for “selling out,” and becoming a real estate lawyer after their years together protesting the Vietnam War.

Lenobel says he opens these bottles maybe once a week — to convey a “Mad Men” feeling.

His office decor was “100 percent” inspired by the TV show, which is set at a Madison Avenue ad firm in the 1960s.

A self-described “sports fanatic,” one of Lenobel’s favorite players is baseball legend Willie Mays, pictured here with Lenobel in 1995. “I invited Willie Mays to my Bar Mitzvah and my wedding,” says Lenobel. Mays didn’t come, but years later he not only met the then-60-year-old retired slugger, but played a round of golf with him.

This hardhat is from a 1982 Midtown development called Executive Plaza that Lenobel worked on. The deal involved dividing the building into three condos — for the retail, hotel and residential portions — and then dividing those condos into condos. The transaction was incredibly complex. “It’s never been done before or since in the state of New York,” he said. The site is now home to the Michelangelo Hotel.

developer is slated to close on a massive construction loan and finalize office deals for two of the three tenants at the Far West Side site — Coach and L’Oreal. To get it all done, Lenobel says he’s in his 919 Third Avenue office “15 hours a day, six or seven days a week.” He says he’s turned the space into the home that his wife would “never let him” have. By Guelda Voien

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Avoiding the Plaza District

Companies needing large spaces look to Grand Central area

By Adam Pincus he first quarter of 2013 saw few large leasing deals, especially in Midtown’s pricey Plaza District, according to an analysis compiled by commercial firm Jones Lang LaSalle last month.

The Plaza submarket — which JLL defines as 47th to 65th streets between Sixth Avenue and the East River — is the city’s most expensive, and accounts for nearly a quarter of Manhattan’s office inventory. But it saw only 12 percent of the city’s largest deals in the first quarter of 2013 (through late March), JLL’s data showed. And the median deal size there was a paltry 9,902 square feet.

The Real Deal and others have reported since last year on large companies’ reluctance to ink big leases in Manhattan. But this research reveals a new twist to the old story: When firms do sign big deals, they seem to be avoiding the high-rent Plaza District.

The smaller (and cheaper) Grand Central submarket, with only 16 percent of the city’s office inventory, saw 28 percent of Manhattan’s 25 largest deals, the study found. For example, the financial research company Value Line in February leased some 44,000 square feet at 485 Lexington Avenue in the Grand Central submarket, according to CoStar, while the fragrance maker Inter Parfums signed a deal for 42,740 square feet at 551 Fifth Avenue.

Smaller companies, however, do seem interested in the Plaza area. For example, in February, the fine-diamond company Andiamond leased 5,063 square feet at 590 Fifth Avenue, CoStar showed. As a result of this phenomenon, “the Plaza district is becoming an enclave for smaller firms,” said Bill Peters, an executive vice president at JLL. Plaza district landlords may be responding to tenants’ desire for more affordable space, however. The average asking rent for Class A office space in the submarket was $85 a foot last month, down $4.28 a foot from the end of last year, according to commercial firm DTZ. The overall asking rent in Manhattan was $59.80 per square foot, down from $60.62 in December. The availability rate — which measures the amount of space up for grabs in existing buildings — inched upward to 11.9 percent during the same period, according to preliminary data from DTZ.

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Midtown

With the Plaza District having trouble attracting large tenants, a new tower farther south is hoping to pick up the slack.

A joint venture of Hines and Pacolet Milliken Enterprises is constructing a 28-story building called 7 Bryant Park that is expected to be completed in 2015. The 474,000-squarefoot building is located on Sixth Avenue between 40th and 41st streets.

A CBRE Group team of Mary Ann Tighe,

Manhattan office stats AVAILABILITY RATE

AVG. ASKING RENT

Mar ’13 Dec ’12

Manhattan 11.9% $59.80 11.8% $60.62

Mar ’13 Dec ’12

Midtown 12.2% $68.27 11.9% $69.88

Mar ’13 Dec ’12

Midtown South 9.4% $49.77 9.0% $49.44

Mar ’13 Dec ’12

Downtown 13.1% $41.75 13.0% $41.45

Source: DTZ

Howard Fiddle, Evan Haskell and Ben Friedland is leasing out the building, which has asking rents of $100 to $200 per square foot.

Those prices are far above last month’s $68.27-per-foot average asking rent for Midtown, which in turn dropped from $69.88 in December, DTZ figures showed. At the same time, Midtown’s availability rate rose to 12.2 percent from 11.9 percent.

The leasing team at 7 Bryant Park expects most tenants in the building to take 100,000 to 250,000 square feet of space, and said it’s targeting firms that typically turn to the Plaza District for office space.

“We think the building is ideally suited for financial service firms, hedge funds, private equity firms, consulting firms, tech companies and law firms,” the team said in a statement.

But 7 Bryant Park has competition for large tenants from other new-construction Manhattan buildings, including the Moinian Group’s 3 Hudson Yards, Related Companies’ Coach Building, Extell Development’s 1 Hudson Yards, Brookfield Office Properties’ Manhattan West and One World Trade Center.

Midtown South Technology firms continue to flock to the popular Midtown South market. But while landlords boast about having tech firms in their buildings, brokers said some newer companies are finding it hard to compete for space with more established companies.

One rapidly growing information analysis firm, Datadog, inked a deal last month for 6,500 square feet at 286 Fifth Avenue.

Launched in 2009, Datadog will relocate from 1140 Broadway, according to the firm’s broker, Daniel Schwartz of Winslow & Company.

Schwartz said Datadog found several suitable locations during its three-month search, but lost out to older firms that had better credit Continued on page 140

© 2013 Douglas Elliman Real Estate.

Equal Housing Opportunity.

SALES | RENTALS | RELOCATION | NEW DEVELOPMENTS | RETAIL | MORTGAGE | PROPERTY MANAGEMENT | TITLE INSURANCE

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3/29/13 5:39 PM

In their words...

The month’s funniest and most insightful comments on real estate

“You must stop this blatant harassment of your tenants.”

City Council Speaker Christine Quinn, in a letter to developer Joseph Chetrit demanding that he stop construction at the Hotel Chelsea.

“Matzah sucks. Why can’t my people work with Cadbury for a tastier treat during these important spiritual times?”

David Schechtman, executive vice president, Eastern Consolidated.

“Sometimes it feels like it would be faster to commute from Connecticut.”

Greenpoint resident Jennifer Jones, summing up her feelings about the G train. (New York Post)

“I’d rather live in squalor in New York City than a mansion anywhere else in the country.”

Douglas Elliman broker Sarah Williams, on what she tells clients who express concerns about the city.

“Some of the lobbies haven’t been touched since ‘Ozzie and Harriet.’”

Halstead Property broker Gerard Splendore, regarding mid-century buildings on Ocean Parkway in Brooklyn.

(The New York Times)

“The main thing is that Sutton, for more than seven years, called me every week.”

Abe Goldstein, a co-owner of 529 Broadway in Soho, explaining how investors Jeff Sutton and Joseph Sitt eventually secured the property for around $150 million.

30 April 2013 www.TheRealDeal.com

“She said her daughter was going to go to Columbia, or NYU or maybe Harvard ... and that was why she was picking this one particular apartment.

So I said: ‘Oh, how old is your daughter?’ and she said: ‘Well, she’s two.’ And I was just shocked.”

Sotheby’s International Realty broker Kevin Brown, on a Chinese client who bought a $6.5 million condo at new luxury tower One57. (Telegraph)

“My main tip is you need a lot of money.”

German historic building specialist Bernd Neuhäuser, on what it takes to buy and maintain a castle. (Wall Street Journal)

“You kiss a lot of frogs before you find the apartment you want. But once I found it — I walked in and I thought, ‘Oh, this is my apartment.’”

Andy Cohen, a Bravo TV executive and host of the show “Watch What Happens Live,” on his two-bedroom apartment in a Bing & Bing building in the West Village. (The New York Times) www.TheRealDeal.com August 2006 00

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DAY IN THE LIFE OF:

Bruce Schonbraun The co-head of the real estate group at FTI Consulting has had a hand in more than $150 billion worth of real estate transactions during his 35-year career

NOON If I stay in the office, I have the same lunch every

single day: a scoop of tuna fish over shredded lettuce, and diet peach Snapple. On Wednesday, I met Joe Sitt of Thor Equities, who’s a client and good friend. He likes the

5 A.M. I generally get up at 5 every morning even though

I set the alarm for 5:30. I’ve trained myself to do this over the years. The alarm clock never goes off.

Four Seasons, so we went there. We pretty much spent Schonbraun’s drink of choice: diet peach Snapple

the whole time talking about his growing international business. Joe has one speed: fast.

6 A.M. If I eat at home — I live in Livingston, N.J. — I eat

at about 6 a.m. and have the same thing every single day: a

2 P.M. My afternoons are similar to my mornings, focused

diet peach Snapple and a chunk of Laughing Cow cheese.

on client meetings. Today, I’m meeting with Jeff Goldberg,

It’s pretty strange, but it’s habit by now. If I eat out, I like

managing partner of the Milestone Group, which owns

the Peninsula Hotel, or Cafe Centro, because it’s close to

apartments across the country, though not in New York.

my office at 750 Third Avenue. Or I go to Michael’s, where

I talk to my wife, Lynn, a few times a day. I also try to talk

I went last week with Joel Marcus from Alexandria Real

to my sons every single day. Michael is a senior principal

Estate Equities, a public REIT focused on the life science industry. Since most places don’t serve Laughing Cow

Tennis great Ivan Lendl’s 1984 winning French Open racket

for Square Mile Capital, an investment firm, and David is the co-chief investment officer of SL Green Realty. But

cheese, I order scrambled egg whites, with nothing else

I consciously try not to talk to them about real estate, be-

on the plate, not even sprigs of parsley. I tell them to clear

cause I want to have some balance in our relationships.

the plate.

5 P.M. Around 5 o’clock, I start to think about the next 7:30 A.M. I like to do some kind of sporting activity three

day and make a new to-do list. There’s a saying from Henry

or four times a week before work, usually tennis or nine

Ford that sets the tone for me every day: “You can’t build a

holes of golf. Tennis has always been a huge part of my

reputation based on what you are going to do.” That’s a big

life. I was a competitive player from a very early age. My

part of who I am. I’m about action and execution.

son Michael, 37, was captain of the varsity tennis team at Colgate [University], and my other son, David, 35, was a star tennis player at Princeton. Tennis is like boxing: mano

6:30 P.M. I spend two nights a week at charitable events,

A quote from Henry Ford serves as a daily inspiration.

focused mostly on underprivileged children and medical

a mano. It’s a fight. You win or you lose; it’s nobody else’s

research. I feel incredibly lucky to be where I am in life,

fault. There are a lot of life lessons in that. I also have one of

certainly compared to where I started out, in Jersey City.

the largest collections of tennis memorabilia in the coun-

I like to joke that we paid rent by the week in arrears. We

try, though maybe that’s because not many people have

also eat out a lot when there aren’t events. Two couples

tennis memorabilia collections! I have 1,000 tennis rack-

is the ideal number for conversation. Eight people is too

ets, 1,000 cans of tennis balls, plus books and articles.

many. We recently went out with [SL Green Realty CEO] Marc Holliday and his wife, Sheree, but I very rarely talk business.

9 A.M. If I play tennis or golf, I’m in the office at about 9.

I like it to be quiet time when I go over my to-do list. The items are highlighted in different colors, in terms of im-

Music legend Eric Clapton, who Schonbraun met while working at the Fillmore East in college

10 P.M. I get home around 10 and like to watch those info-

mercials that feature rock bands from the ’60s. They show

portance. I’m kind of old-fashioned that way.

the Yardbirds for 12 seconds and then Janis Joplin for nine 9:30 A.M. I try to have two or three meetings a day. It’s

seconds. [In college] I had a job as a bouncer at the Fill-

all about one-on-one time. [Last month] I met with Jeff

more East, the legendary rock club. I was going to school

Kelter, the senior partner at KTR Capital, a private equity

at Rutgers and then at Fairleigh Dickinson. I would work

firm, who is a client. They are one of the fastest-growing

at the club on weekends. I got to meet the Yardbirds and

industrial real estate funds, and they’re in meaningful ac-

Eric Clapton. I usually conk out around 11:30.

By C. J. Hughes

quisition mode.

Developer Joe Sitt, a client and good friend

32 April 2013 www.TheRealDeal.com

www.TheRealDeal.com March 2012 00 PHOTOGRAPH OF SCHONBRAUN FOR THE REAL DEAL BY CHRIS MARTIN; PHOTOGRAPH OF SITT

BY MAX DWORKIN

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ON THE MOVE The Bellmarc Group: Meet the Office Managers Larry Friedman, one of the owners of The Bellmarc Group, actively recruits experienced agents for the company. He spoke to our managers about their office environments, camaraderie and their approach to supporting their agents. Here is what they had to say.

STACEY MAX Bellmarc Greenwich Village 16 East 12th Street My office is very supportive and a fun place to work. We understand that helping each other benefits everyone. The Village and the surrounding area have the most interesting housing stock, and we love it. We appreciate that Bellmarc, though a large company, feels like a small company. We are all in it together.

All the managers are mentors for new agents. We teach the agents how to “work smart” and help them along the way.

JANICE SILVER Bellmarc East Side 1178 Lexington Avenue Our office is very polished and the neighborhood is unlike any other; it ranges from quirky to elegant. We are professional and well trained, and everyone gets along. Bellmarc is like a family yet we have the benefits of a larger company.

We encourage flexibility and creativity, and welcome the involvement of all agents in developing company plans and improving performance.

I’m available 24 hours a day because for an agent, no issue is too small. By the way, I came here 25 years ago to see if I liked the business and I never left.

DAN BERMAN Bellmarc Midtown 681 Lexington Avenue With a great location, our newly renovated storefront office attracts a lot of walk-in traffic.

I love the huge windows and bright environment. Many of our agents have been with the company for 15 to 20 years, and we have a fabulous administrative staff that has been here for over 10.

There is a family feeling here; we aren’t too big and agents don’t feel disconnected. New agents are not lost; we encourage them and help them grow. With our customized listing system and programs, the company is dedicated to doing business the right way.

Agents get a lot of individual attention though they are real entrepreneurial pros. We are a partnership. I strive to empower them to be the best they can be.

VERONICA RAEHSE Bellmarc West Side 841 Columbus Avenue My agents are all dedicated and many are long-time professionals. Bellmarc has been on the West Side for over 30 years so we are an “institution” and are well-known in the community. What I love about Bellmarc is that it is a large firm and a small firm at the same time. There is a definite connection between the agents and the different layers of the company. Everyone wants to be helpful, from the administrative staff to the managers to the owners — we are all on the same page. I try to be as connected, present and engaged with my agents’ daily business as they would like me to be.

LISA STROBING Bellmarc Gramercy Chelsea 48 West 22nd Street I love the people in my office.

They probably have the most high-energy, positive personalities of any group I have ever met. They work together to become successful. Agents here have long relationships with

From left: Veronica Raehse, Dan Berman, Lisa Strobing, Stacey Max, Janice Silver

BELLMARC

From left: Cammy Cutler, Denise Salizzoni Bellmarc and are given a lot of latitude and flexibility. They run their own businesses, yet they have the services of a large company behind them.

We create an atmosphere of helpfulness and encouragement, and offer plenty of assistance, especially to new agents. I want our people to have the tools they need and to be as happy and prosperous as possible.

CAMMY CUTLER AC Lawrence 936 Broadway My office has fantastic agents and my staff is amazing. Our location is ideal. We have a large street-level office that is one of the nicest real estate environments I’ve seen. Our culture is very special — it is competitive, yet everyone gets along. I respect the owners’ personal commitment. They are accommodating and eager to get input from each individual. My management philosophy is simple — be there for everyone. While experience is my best guide, I still learn

from my agents daily. I am always available because even a minute can make a huge difference in making a deal.

DENISE SALIZZONI AC Lawrence Times Square 729 Seventh Avenue We have an incredible environment, 14,000 square feet of open loft space filled with sheer energy in the heart of Times Square. I really enjoy working with my team — they are a seasoned group who know the business inside and out. This helps me close a volume of deals and my day goes by in what seems like minutes.

We have a wonderful staff and a phenomenal Listings Department. AC Lawrence is the company of the moment. It’s focused on everything that matters — technology, marketing and training. I feel fortunate to be in a position where my expertise is in demand and serves many agents in closing deals. I tell them, “we can make it happen.” And that’s the bottom line — together, we make it happen.

THE BELLMARC GROUP has openings for top-quality agents in both sales and rentals in all seven locations in Manhattan.

To schedule a meeting or to ask questions, please contact: New agents Experienced agents only Larry Friedman Olinda Turturro larry@bellmarc.com olinda@aclawrence.com 212-872-2296 917-670-9861

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Pr o f i l e

The under-the-radar power broker Elliman’s new No. 1 broker puts his South American connections to good use amid a flood of international buyers

M

By Sanna Chu

arcos Cohen’s motto is “fun first, real estate second.”

The Brazil-born Douglas Elliman executive vice president may be fun-loving, but his successful career is no joke.

In February, Cohen was named Elliman’s top individual broker by gross commission income for 2012. Among his sales last year: a 4,170-square-foot condo at Olympic Tower at 641 Fifth Avenue, which Cohen and his Elliman colleague Sabrina Saltiel sold for $14 million, according to the listings website StreetEasy.

Cohen also sold a unit at 110 Central Park South for $6.25 million.

But the low-profile Cohen, 48, shied away from talking about his deals during a sit-down interview with The Real Deal at his Upper East Side apartment last month.

When asked about his priciest sale of 2012, he said: “I really don’t like to pinpoint one. Because it wasn’t just one, it was a combination of all of them. They were all nice, big deals.”

flush with cash now that the country’s economy is booming. Cohen has carved out a niche working with international clients; he said Brazilians now make up about half of his clientele.

“People feel more comfortable with

“He knew exactly what to show us,” Mauricio said.

The recent up-tick in Brazilian buyers in the marketplace has helped catapult Cohen to the top of the heap. In 2010, he was named Elliman’s No. 2 broker, behind

“I love Marcos,” she said. “He always makes me laugh.’”

But Cohen keeps a low profile, and prides himself on his self-sufficiency. Unlike other top producers, he doesn’t have a team or even an assistant. He doesn’t have a publicist

Selling the big stuff Cohen grew up in Rio de Janeiro in the 1970s, the middle child of four. From the time he was 15, Cohen worked in his dad’s textiles store, mostly helping out during the busy Christmas period. His job was waiting on customers, who loved his happy-go-lucky approach. But he wanted a better life — and he figured New York City was the place to find it.

After a short stint in Europe, the then22-year-old Cohen moved to New York in 1987. After a couple of odd jobs, he landed a position at an electronics store, where he was assigned to get passersby to come into the store. The multi-lingual Cohen lured customers by speaking to them in their own languages. “If they were Russian, I’d say something in Russian,” he said.

Douglas Elliman’s Marcos Cohen, pictured at his home on the Upper East Side

someone who speaks their language, especially when you’re talking about technical terms,” said Mauricio Morato, a Brazil native and longtime client of Cohen’s.

Maurcio’s wife, Simoni Morato, is CEO of Safra National Bank. The couple first met Cohen when they moved to the U.S. from

“I can sell ham to a rabbi.”

Marcos Cohen, Douglas Elliman The strategy worked. He was quickly promoted to salesman, then store manager. With his talent for sales, real estate seemed like a logical next step. “Why sell the small stuff? Go sell the big stuff!” Cohen recalls being told.

He joined Elliman in 1994, and said he’s been in the top 20 percent of agents at the firm ever since.

Recently, however, New York City has seen an influx of international buyers and especially Brazilians, many of whom are

34 April 2013 www.TheRealDeal.com

Brazil in 1996, and he helped them find a New York apartment.

During that first search, Cohen paid close attention to what kind of home the couple wanted by picking up on subtle signals about their lifestyle, Mauricio said.

The Moratos now live in Westchester, but when they decided to buy a Manhattan pied-à-terre last year, they called Cohen, who helped them buy a $1.35 million apartment on the Upper East Side.

super-broker Dolly Lenz (who has since withdrawn from the awards competition).

Last year, Cohen said he closed around 20 deals — more than his usual total of 10 to 15 — ranging from studios to 11-bedroom apartments.

His deals are mostly condos on the Upper East and West sides, but he said he never turns down a listing because it’s too small. The only thing he steers clear of: buyers and sellers who aren’t serious, which he said he can spot a mile away after years of working retail.

“I would sell anything,” Cohen said. “I can sell ham to a rabbi.”

Marcos and only Marcos Cohen’s sense of humor makes him popular with his colleagues as well as his clients.

Elliman CEO Dottie Herman, whose office is on the same floor as Cohen’s at the firm’s Madison Avenue headquarters, said she “couldn’t be more pleased” that Cohen landed the top-broker spot.

and he rarely advertises, preferring to get clients through referrals and word-of-mouth.

And despite having warm relations with the company’s heads, he said he has never received a client through the firm.

Cohen “never really asks for anything,” Herman confirmed.

Many nights, Cohen can be found breaking bread with clients at one of his favorite haunts: Bar Pitti, Da Silvano, Nello’s, Amaranth, E.A.T. or Sant Ambroeus.

During these evenings, contracts sometimes get inked and properties are pored over, but Cohen said he also just likes his clients’ company.

“Especially buyers coming from Brazil, he really spends a lot of time with them, entertaining them so that they understand New York City better,” said Alfred Renna, Cohen’s manager.

Renna added: “When people hire Marcos, whether it’s a buyer or a seller, they know they get Marcos and only Marcos. That’s the level of service he’s able to provide.” TRD

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Hotels take over 29th

In Midtown South, prices rise as developers follow Ace’s example

By Tracey SamuelSon cross New York City, hotels have been popping up like post-recession beacons of an improving economy. But the area around 29th Street in Manhattan has seen an especially noticeable transformation.

Just a few years ago, the street was mostly limited to retailers selling an inexpensive hodgepodge of goods and discount clothes. Now there are nearly a dozen hotels clustered on and around 29th Street, including the trendy Ace Hotel, which opened in 2009. It was followed in 2011 by a sister property, the NoMad Hotel. On 29th Street and Park Avenue, the 249room Gansevoort Park Avenue opened in 2010. The Eventi hotel, at the corner of 29th and Sixth Avenue, launched the same year. And developer John Lam has plans for two more hotels on Broadway between 29th and 30th streets.

Twenty-ninth Street, especially the area between Sixth Avenue and Broadway, “is all high-end boutique hotels,” said Joe Long, chief investment officer for Kimpton Hotels, which manages the Eventi. “They all helped each other and legitimized the neighborhood as a credible hotel destination.”

A

The area also now has a smattering of lower-priced chain offerings, from a Hilton Garden Inn to a Holiday Inn. And more hotels are on their way.

In the last 14 months, “we’ve probably received a dozen to two dozen requests” for hotel construction financing in Midtown South, said Ayush Kapahi, a partner at HKS Capital Partners.

Ace in the hole Twenty-Ninth Street has gotten a lot of buzz in the last few years for its trendy

transformation. But in many ways, the still-gritty neighborhood is an unlikely place for a hotel hot spot.

As surrounding neighborhoods gentrified in recent decades, the Garment District didn’t see much change, in part because much of the area was zoned for commercial and manufacturing rather than residential, brokers said.

“Because of those limitations on zoning, you didn’t necessarily have the runup in price that you would have had with residential,” said John Fox, a senior vice president at PKF Consulting USA, which specializes in hospitality. “The area overall had much more of a loft and manufactur manufacturing feel to it.”

But especially after the economic crisis depressed prices, the area offered a number of affordable par parcels ripe for hotel devel devel-

opment, industry insiders said. Plus, there were properties available for developers to snap up. “There were a number of assets in the area and a number of vacant lots and garages that had the ability to be developed at a price basis that allowed the developers to go in and have the economics make sense,” Kapahi said.

For example, Lam closed in November on a $16 million deal to purchase 1227 Broadway, a site with over 50,000 buildable square feet. Lam, who bought 1205 Broadway and 1225 Broadway in 2011 for $72 million, now owns the entire block, where he’s planning to build two hotels with a total of 650 to 700 rooms.

The first three floors will be devoted to retail, while the

The Holiday Inn Express NYC

The Eventi’s lobby 36 April 2013 www.TheRealDeal.com

The Eventi Hotel

The Doubletree Hotel

Th PHOTOS FOR THE REAL DEAL BY DEREK ZAHEDI

fourth floor will house the lobby, restaurants and an open deck, according to Joseph Yi, vice president at the Lam Group.

The company is still in discussions with potential brands to partner with on the hotels, Yi said, but is planning to follow the boutique and lifestyle models of the Ace and the NoMad. Yi said the firm was interested in the Broadway site because the price — less than $300 per buildable square foot — was about 10 percent lower than in nearby neighborhoods.

“The price point in this area was a little bit better than some of the more highly sought-after markets, like in the Times Square area and in the 40s and 50s,” Yi said. “For the amount of frontage we have on Broadway, I think we executed this well below market.”

Prices have increased somewhat since the Lam Group made its purchases, bro brokers said: Land in the area now goes for $300 to $400 per buildable square foot, depending on the specific location. Yi said the Lam Group has recently been offered as much as $450 a foot for the Broadway site, but it isn’t interested in selling.

In 2012, land on and around 29th Street sold for an average of $360 per buildable square foot, roughly double 2009’s prices, according to data from inin vestment sales firm Eastern Consolidated.

Meanwhile, hotels on 29th Street can charge guests up to $700 to $800 a night,

depending on the season, according to Kapahi. While New Yorkers may not view 29th Street as über-trendy, tourists tend to be less discerning between neighborhoods, industry insiders said, as long as they are centrally located, with easy transit access to city attractions.

“Tourists don’t necessarily know that it’s much different from Madison Square Garden or even Times Square,” said Fox. For them, “Manhattan is Manhattan.”

Plus, when it came to attracting the young and stylish clientele of the Ace Hotel, “it almost helped to have a gritty neighborhood,” said Steven Hurwitz, executive vice president of GFI Development Company, which developed the Ace and the NoMad. “That demographic wants to be in a cool spot and a place that feels undiscovered.”

The landmarked 1904 building that is now the Ace Hotel is owned by LGF Enterprises, part of Lillian Goldman Family Foundation (see related Sol Goldman story on page 78). In 2007, GFI paid $40 million for a long-

The Lam Group’s development site

The Ace Hotel

The NoMad Hotel

term lease of the building, a price Hurwitz said “was appropriate for an undiscovered neighborhood.”

With laptops in hand, young tech types now flock to the Ace lobby, where it’s often difficult to find a spare seat (or plug) most afternoons. Stumptown Coffee Roasters and the Breslin Bar & Dining Room, which occupy retail space off the lobby, also helped establish the hotel as a destination.

Shifting economics Now that these hip and stylish hotels have set up shop in the area, they’re driving further development.

The NoMad — which has a higher-end, older clientele than the Ace — has benefited from the Ace’s pioneering efforts, Hurwitz said.

“The NoMad was the right product to open on the heels of change,” said Hurwitz. “It would have been harder to open first.”

Meanwhile, the Eventi opened in the spring of 2010, with an aesthetic Kimpton’s Long calls “playful” and “mascu “masculine.” Developer DLJ Real Estate Capital Partners bought the site — formerly a vacant lot — in 2005

for over $132 million, according to city property records. Rates in the nearly 300room hotel range from $350 to $600 a night, depending on the time of year.

But the economics that helped drive the 29th Street hotel boom are shifting.

Now that the area is more established, deals are tougher to come by.

“It’s definitely become pricier; there’s no question,” Hurwitz said.

Yi said the Lam Group is looking for a new site in the area, but only if the price is right.

“I think the market has gone completely upside down in the area now,” said Yi. “A lot of the owners are asking numbers above what [they] should be in that location.”

GFI, too, would build another hotel in the area if it found the right property at the right price, Hurwitz said.

“We’re out looking,” he said, but “we haven’t found anything that makes sense for us.” TRD

The Gansevoort Park Hotel

The Ace Hotel’s lobby www.TheRealDeal.com April 2013 37

REGULATING REAL ESTATE

U.S. home equity grows Fewer underwater mortgages could mean the highest prices since the boom years

By Kenneth Harney ome equity is back! And it’s growing fast: According to the latest data from the Federal Reserve, Americans’ net equity holdings in their homes jumped by nearly half a trillion dollars during the last three months of 2012, and have increased by $1.7 trillion since the spring of 2011.

What does this mean to homeowners? Depending on where they own, it could mean that finally — after years of struggling with underwater mortgages — the market value of their properties has risen enough to put them into positive equity territory. Or closer to break-even equity than they assumed. Zillow Real Estate Research estimates that nearly 2 million American owners exited

H

ing advantage of unprecedented low mortgage rates. Foreclosures and principal forgiveness by lenders also have helped whittle away mortgage debt. Americans now owe about $1 trillion less on their homes than they did in 2008.

Jed Kolko, chief economist for Trulia.com, an online real estate research and information company, said growing home equity has three key effects. First, owners feel wealthier and are more likely to spend some of that perceived wealth — even if it’s illiquid in the form of real estate equity — on goods and services. Second, higher equity stakes reduce the likelihood of mortgage defaults.

People have a deeper financial stake in their properties and are less willing to risk loss through foreclosure.

the inland cities of California — the increases in values elsewhere tend to be more modest and solid, simply making up for the declines experienced in the latter half of the last decade.

One major market does concern him, however: Washington, D.C., and its Maryland and Virginia suburbs. Though the District of Columbia has seen significant year-to-year gains in prices recently, Duncan said prices could “flatten out” if the federal budget sequestration and cutbacks in government jobs and defense spending continue for an extended period.

Despite the impressive increases in equity reported by the Fed, there’s a sobering flip side: There are still millions of owners — nearly 14 million according to

Americans now owe about $1 trillion less on their homes than they did in 2008. negative equity status during 2012 alone.

It could also mean that should they wish to sell their homes, they’re now in a better position to do so. And in one of dozens of markets — like New York City— that are experiencing severe shortages of listings for sale combined with strong demand from buyers, this spring could bring higher prices than at any time in the past seven years.

Here’s what the Fed found in its “flow of funds” study released last month: Thanks to recovering housing values, total home equity is now at its highest level — about $8.2 trillion — since the bust and gaining rapidly. From January 2012 through December, it rose by a stunning $1.2 trillion.

Outstanding mortgage debts continued to fall as owners paid down their balances and refinanced into smaller loans, tak-

Fewer delinquencies, in turn, Kolko said in an interview, “mean less stress on the financial system,” thereby reducing the probability of another banking crisis à la 2008-09. Finally, by encouraging owners to consider selling — either now or later in the cycle when prices could be even higher — growing equity holdings allow the real estate market to work better, with more transactions, more mobility for families, more new construction, more jobs, and so on.

Doug Duncan, chief economist for mortgage investor Fannie Mae, said the recent jump in equity holdings “puts us back on track toward where we were prior to the crisis,” and represents a “transition to normal” conditions in the housing market. Though there are local markets where last year’s double-digit price gains look bubbly and unsustainable to Duncan — notably in some of

Zillow — who remain in negative equity positions. They are often the folks who purchased at the wrong time — near the peak of the market from late 2005 through 2006 — or used mortgages that required little or no down payment to buy bigger homes than they could afford.

In Miami and Phoenix, roughly 40 percent of owners have mortgage debt in excess of property value. In Tampa it’s 41.5 percent; Chicago 37 percent; Seattle 33.5 percent; Columbus, Ohio, 29 percent; San Diego and Washington, D.C., about 28 percent; and Los Angeles 24 percent.

The bittersweet news from the Fed for most of these owners: The odds are good that you are not as deep in negative territory today as you were 12 months ago.

Kenneth Harney is a syndicated columnist.

Hand-delivered to over

100,000 doorsteps in Manhattan Next issue: May 2013.

For more info call: 1-855-703-9671 To subscribe email: Subs@LLNYC.com 38 April 2013 www.TheRealDeal.com

GOVERNMENT BRIEFS Developers rush to bid on Seward Park project Nearly 50 years after demolishing a stretch of Lower East Side tenements, the city has finally issued a request for proposals to develop the six-acre Seward Park Urban Renewal Area, eliciting an enthusiastic response from developers, the New York Times reported.

With some 1.65 million feet of development space along Delancey The Seward Park Urban Renewal Area and Essex streets, the site is the largest section of undeveloped land in Manhattan south of 96th Street. Proposals are due next month, and bidding information has been downloaded from the city’s website 750 times, according to the Times. The Gotham Organization confirmed that it is bidding on the project, and more than 200 people attended an information session in February, including representatives from the Related Companies, Forest City Ratner, Edward Minskoff Equities and AvalonBay Communities.

Midtown up-zoning begins public review A proposal to rezone Midtown East will begin a six-month public review this month, Crain’s reported. At a presentation last month, the Department of City Planning revealed details of the rezoning, which would allow some Midtown properties to double or triple their current size. The city also hopes to sell air rights for $250 per square foot within the rezoned area, which lies between East 39th and East 57th streets. The city has also identified 32 buildings — including the Philip Morris building, Citicorp Center and the MetLife Building at 200 Park Avenue — The Met Life Building as potential landmarks that would be protected from the up-zoning.

The plan could create roughly five million new square feet of office space by 2033, a 5.5 percent increase.

Fannie and Freddie to form joint company Fannie Mae and Freddie Mac will be combined to form a new joint company, in a move to shrink the two government-backed mortgage giants and reduce risks to taxpayers. Fannie and Freddie currently back about two-thirds of new home loans in the U.S., but have received nearly $190 billion from the U.S. Treasury since the 2008 financial crisis. By creating a new securitization company, the Federal Housing Finance Agency said it aims to shrink the government-sponsored enterprises’ role in the housing system.

Edward DeMarco, acting director of the FHFA, said the goal is to build a single infrastructure to support the mortgage credit business and “create something of value that could either be sold or used by policymakers as a foundational element of the mortgage market of the future.”

NYC pension funds aid Sandy rebuilding efforts Four of the five New York City pension funds have announced they’ll invest in a pair of funds — run by the Related Companies and Hudson Companies — that will help finance the rebuilding of properties damaged by Hurricane Sandy, Crain’s reported. The funds will be combined with an Sandy damage to the Rockaways additional $1 billion in loans to create or restore 3,000 units of housing and up to 200,000 square feet of commercial space over the next three years. Related, which will receive $300 million from the pensions and invest $10 million of its own money, will rebuild properties along the coast and in Lower Manhattan. Hudson is to get $200 million, 80 percent of which it will spend on properties located in city flood zones, with the goal of protecting them against future storms.

Compiled by Sanna Chu

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Pr o f i l e

The Heir Unapparent Boston Properties bypasses co-founder’s son and taps Lehman’s liquidator as its new CEO

By Guelda Voien he line of succession at Boston Properties, the $18 billion real estate investment trust, seemed clear to the real estate industry: When Mortimer Zuckerman stepped down as CEO, surely the firm’s president would take over.

But Zuckerman announced his resignation last month and his replacement is not Doug Linde, the son of his longtime friend and business partner, Ed Linde, who died in 2010. Instead, the 75-year-old Zuckerman and the company board went outside Boston Properties for its new top leader — to the financial world.

Their choice: Owen Thomas, 51, who has headed Lehman Brothers Holdings for the last year, successfully unraveling many of the bankrupt investment bank’s real estate assets, after nearly a quarter-century of top jobs at Morgan Stanley.

On April 2, Thomas started a three-year stint with Boston Properties as CEO and board member. Zuckerman, perhaps best known as publisher of the New York Daily News, will stay on as chairman until at least 2015, presumably to shepherd the transition.

“Linde seemed to be being groomed for [the CEO] role,” said Alexander Goldfarb, an analyst at investment bank Sandler O’Neill + Partners.

However, Zuckerman said the choice to bring in fresh blood was part of a plan to recreate the trio of leadership that had existed when he, Ed Linde and Doug Linde ran the firm together. He said he was attracted to Thomas’s “easy-going style,” which he felt made him an ideal member of the triumvirate.

“We did not do this casually,” Zuckerman told The Real Deal.

Neither Thomas nor Doug Linde could comment for this story.

“The team-oriented approach is very much a part of the culture at Boston Properties,” said Michael Knott, an analyst at commercial real estate research firm Green Street Advisors.

For the REIT, insiders told TRD, “slow and steady wins the race.” But they noted that Thomas is used to a quicker pace and short-term deals, the hallmarks of corporate investing.

So now the question is: What, if anything, will change under Thomas’s leadership?

The answer may be found by looking at how he ran operations at Lehman and Morgan Stanley.

“Everyone wants to learn more about Owen,” Goldfarb said. “He is very new to the street.”

T

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Interested parties should contact the following representatives of the Joint Receivers and Managers for additional information: Charlene Lewis-Small KPMG Restructuring Ltd. PO Box N 123 5th Floor, Montague Sterling Centre East Bay Street Nassau, Bahamas Telephone: 242-394-9951 Email: clewis@kpmg.com.bs

Bradley Butcher KPMG Inc. 333 Bay Street Suite 4600 Toronto, Canada M5H 2S5 Telephone: 416-777-3819 Email: bbutcher@kpmg.ca

Fresh face While Thomas is a fresh face on the REIT scene, there is no doubt that he knows real estate from the financing end.

His first job at Morgan Stanley, in 1987, was with the real estate group within the investment banking division. By 1995, he had jumped up to managing director of the firm’s real estate investing business. And from 2000 to 2008, he led Morgan Stanley Real Estate Fund. Next, Thomas wore two hats — CEO of Morgan Stanley Asia and chairman and CEO of Morgan Stanley

Owen Thomas, 51, took over as CEO of Boston Properties early last month.

Mortimer Zuckerman, chairman of the REIT.

Real Estate Investing. By the time he left the company in 2011, he was chairman of Mitsubishi UFJ Morgan Stanley Securities, a large Japanese investment bank . He is even a former chairman of the Pension Real Estate Association, a trade group.

And Thomas, with a mechanical engineering degree from the University of Virginia and an M.B.A. from Harvard Business School, has been described as “cerebral and understated,” though analysts are concerned that he still might make deals too fast for Boston Properties, known for its long view of the market — even among REITs. The company is regarded as a smart, yet careful player that has assets like the iconic GM Building and Boston’s John Hancock Tower, which seem almost immune to Continued on page 146

40 April 2013 www.TheRealDeal.com

www.TheRealDeal.com March 2010

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Š 2013 Douglas Elliman Real Estate. All material presented herein is intended for information purposes only. While, this information is believed to be correct, it is represented subject to errors, omissions, changes or withdrawal without notice. All property information, including, but not limited to square footage, room count, number of bedrooms and the school district in property listings are deemed reliable, but should be verified by your own attorney, architect or zoning expert. Equal Housing Opportunity. There will be a fee charge for use of all hotel related amenities, which will be in addition to common charges and the purchase price paid by condominium unit owners as to their respective units. All hotel related amenities may be provided by building staff or an outside third party, both at an additional cost. The complete offering terms are in an offering plan available from the sponsor. File No. CD-06-0850.

DE Real Deal-Debra Kameros-rev3.indd 1

3/29/13 11:20 AM

10

H’SE A D G O ETH S HAENNIVERSARY RE THE R EAL D EAL I SSUE

Market madness and malaise A look at the decade in real estate, from hot new neighborhoods to frozen credit and everything in between

T

BY TOM ACITELLI

he New York City real estate market has been a developing story since The Real Deal launched in 2003. When the

magazine first began publishing, New York was still recovering (emotionally

and economically) from the 2001 World Trade Center attacks. In fact, the country had gone to war in Iraq less than a month before TRD’s first issue hit the presses.

A lot has happened since then — from an unprecedented economic boom (marked by close-to-free credit and high-flying condos) to the worst economic downturn in 80 years.

Meanwhile, the first African-American president was elected, and the Internet took off in an unimagined way, with Twitter and Facebook becoming important business tools — all while hundreds of new buildings rose on the New York City skyline. While many of those projects hit major financial hurdles, foreclosures and changes in ownership along the way, most are now back on track as the recovery has gradually taken stronger hold. And today’s luxury market has seen record-high pricing to boot.

Below, TRD follows the evolution of the New York real estate market since the magazine’s inception.

An upward trajectory

I

n late 2003, things were looking rosy after a brief economic downturn before the Iraq War. The numbers, both for commercial and residential real estate, were heading in one direction: up. TRD’s November 2003 issue noted “the average sales price of a Manhattan apartment crossed the $900,000 threshold for the first time ever in the third quarter, reaching $916,000.”

The same article noted that the average price per square foot crested $700.

While those figures may seem quaint now, looking back, it’s clear that they were shepherding in a new era. (Indeed, the average Manhattan apartment price cleared the $1 million marker in 2004, and at the start of 2013 was $1.46 million, according to appraisal firm Miller Samuel.)

On the commercial side, 10 years ago real estate prices were beginning to head upward, too.

“Midtown Class A average asking rents

10 ILLUSTRATION BY GREG CULLEN

00 January 2013 www.TheRealDeal.com

When TRD first began publishing, New York was still recovering from the World Trade Center attacks. A lot has happened since then — from an unprecedented economic boom to the worst economic downturn in 80 years. got a bit of a bounce to start the year,” TRD reported in March 2004, “climbing 2.9 percent from $52.37 per square foot in December to $53.89 square foot in January.”

Again, as healthy as those numbers seemed at the time, they pale against what was in store. In the spring of 2008, those asking rents reached a record high of more than $99 a square foot, according to commercial firm Cassidy Turley. Today, these Class A Midtown rents average around $75 a foot. (Overall Manhattan asking rents, meanwhile, are just $59 a foot — see chart on page 44).

The post-Sept. 11 economic recovery

never ceased to surprise even veteran market-watchers. “[After Sept. 11], no one thought anyone would even live in a high tower,” said Dottie Herman, CEO and president of Douglas Elliman, the city’s largest brokerage. “And that’s all that’s selling — the higher the towers, the better.”

Building expectations

W

ith billionaire businessman Michael Bloomberg newly minted in City Hall, and with the memory of Sept.

11 fresh, the city was determined to build itself back up.

And that it did. The city’s recovery from the 2000-2001 recession drove the biggest New York construction boom in memory.

This expansion was embodied on the residential side by new (high-end) condos. In 2005 alone, less than four years after the attacks, some 9,000 Manhattan condos were proposed or planned — triple the number in 2003 and nearly seven times the number in 2000, according to a TRD analysis of public filings at the time. And in Brooklyn, a borough that before was not known for large-scale condo development, more than 6,300 were

www.TheRealDeal.com April 2013 43

10

H’SE A D G O E TH S HAENNIVERSARY RE THE R EAL D EAL I SSUE planned for 2004 and 2005.

The commercial side, meanwhile, was characterized by new skyscrapers, in particular the main World Trade Center redevelopment, the new New York Times headquarters at 620 Eighth Avenue and

course, were Atlantic Yards, the biggest development in modern Brooklyn history, and Hudson Yards on Manhattan’s Far West Side, which is slated to eventually include 25 million square feet of offices and 20,000 residential units.

built — despite the fact that the Downtown market (even before the attacks) was not nearly as desirable as Midtown.

“People said, ‘You’re crazy, no one’s going to want to be there,’” said Janno Lieber, who headed World Trade Center

verstein’s insistence that it could rent for higher-than-the-going-rate Downtown.

It wasn’t until several years later, however, that the area’s biggest game-changing office lease got signed. In that deal, which was finalized in 2011, media pow-

Manhattan residential sales up, but not at peak levels Year

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Number of sales

8,802

8,653

7,780

8,493

13,430

10,299

7,430

10,060

10,161

10,508

New development market share

14.3%

16.0%

27.6%

51.2%

33.5%

33.8%

28.0%

20.4%

18.3%

16.2%

Source: Miller Samuel

Manhattan office rents on upswing again Year

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Average office asking rent (PSF)

$40.53

$39.55

$40.58

$50.56

$65.08

$69.44

$55.52

$54.34

$57.23

$59.54

Vacancy Rate

12.5%

11.0%

8.4%

6.7%

5.7%

8.0%

11.1%

10.5%

9.1%

9.4%

Source: Cushman & Wakefield

the Goldman Sachs headquarters at 200 West Street.

These developments were spurred in part by government incentives, including Liberty Bonds, an $8 billion Congressional program of below-market financing created in 2002 to assist the redevelopment of Manhattan in the wake of the attacks. Goldman Sachs received around $1.6 billion through the program; the World Trade Center site got about twice as much. But Liberty Bonds proved controversial, especially when used to finance luxury residential towers, like 63 and 90 Wall Street and 2 Gold Street, three buildings where rents run higher than $4,000 a month.

Another controversial public incentive program was the 421-a tax abatement, which the city created in the 1970s to spur residential development, but which took on new significance during the economic recovery that followed Sept. 11.

The program gave developers tax breaks that they could pass on to buyers, in exchange for building in emerging areas and providing affordable housing along with their developments (though not necessarily at the same spot).

The rub was that as the improving economy transformed these previously less-desirable areas, developers suddenly became interested in building condos there and were able to tap into 421-a to subsidize their luxury projects. To prevent luxury developers from over-using the tax breaks, in July 2008 the city limited where 421-a could be used and required affordable housing to be built on-site. Developers scrambled to get projects started before the changes took effect. According to the Real Estate Board of New York, more than 17,000 units got underway in the month before the changes took hold, while barely 2,000 units did the month after.

Also controversial were several mega mixed-use projects. Among them, of

44 April 2013 www.TheRealDeal.com

5

Brokerages go for ground floors

20

29

Queen Barbara abdicates for TV

64

Buying vs. leasing office space

UWS boom: detailed map

69

Developers build bigger

22

Developers buy in their own projects

36

42

Brokers pick for president

Tax credits hit by finance woes

142

Flatiron fashion heads to B’way

176

Agents chase ambulances

18

Park Ave. office rents get hit the hardest

23

All-cash deals dominating

32

With new subway, giant eyesores

69

London market recovers faster

97

Will Madoff ’s son sell his pad?

THEREALDEAL THEREALDEAL THEREALDEAL NEW YORK R EAL E STATE

www.therealdeal.net

Vol. 3 No. 9 September 2005 $3.00

High times along the High Line

FACT Adjustable-rate mortgages that give borrowers monthly payment flexibility have quintupled nationwide in the past 12 months. During the first quarter of 2005, 70 percent of option ARM borrowers made minimum payments, adding debt back to their loans. See page 14.

New condos rise with park views

BY TOM ACITELLI An elevated promenade could be the ribbon that unwinds through Manhattan’s next hot neighborhood, changing what it means to live ‘on the park.’

The area of West Chelsea around 10th Avenue to 11th Avenue, from 16th Street north to 30th Street, could in the next few years see some of the briskest condo development of any area in Manhattan. And much of that development will happen around what’s being called the High Line, a 6.7-acre span of former elevated train track running 22 blocks ending at 34th Street that’s expected to become a park.

Groundbreaking is slated by the end of 2005, and nearly $70 million in public funds has already been allocated for development.

The pending park and a recent rezoning of the area by the city have united like weather fronts over most of West Chelsea to help rain development on a neighborhood dominated by high-rise rentals and aging manufacturing and commercial space.

“Dating back 10 or 12 years ago, it was strictly kind of a gritty, warehouse area,” said Stuart Siegel, managing director at Grubb & Ellis, which is marketing a new 20-story commercial condo building called the Chelsea Arts Tower on West 25th Street, an office and art gallery development among the many residential projects set to rise.

Siegel has worked in the area for more than a dozen years. “It was kind of a blighted area,” he said. “Not much money had been spent in the buildings.”

The site for the Chelsea Arts Tower, which is going up on a former parking lot, was bought for $9 million, said Siegel, who helped broker the land deal. The glass

AT A GLANCE Williamsburg waterfront plans emerge

How high can it go?

The best worst-case scenarios for how the b-word could play out

we examined whether interest rates, new construction, jobs and Wall Street, or tax changes would be the death knell of the current boom, and whether New York is a protected market.

We also looked at recent market numbers and why some are asking “Bubble B.S.?” (see page 3).

You’ll also find a compendium of all the major cover stories written about the bubble in the past year, representing the best efforts of top journalists to decipher the market, as well as the views of economists like Paul Krugman, Robert Shiller and some guy named Alan talking about “froth.”

BY STUART W. ELLIOTT Unless you’ve been living in your own bubble for the past year or so, you’ve FEATURE STORY probably heard and read more than enough about whether there is a real estate bubble.

Instead of asking whether there is a bubble, The Real Deal spent last month exploring the likeliest scenarios for how a bust to the current housing boom could play out, step-by-step.

Looking at a variety of factors which have arisen before to help send real estate prices spiraling down,

Continued on page 31

Brooklyn by the numbers Bests building benchmark: a look at new condos by neighborhood

BY STUART W. ELLIOTT A condo grows in Brooklyn. And grows and grows and grows...

Following up on our well-received look at the prospect of a condo glut in Manhattan, The Real Deal set out SPECIAL REPORT this month to examine the level of new residential development in Brooklyn, the borough that has boomed in the past several years, luring buyers who are priced out of Manhattan, or who are simply drawn by laid-back neighborhood vibes.

An analysis of data from the New York state Attorney General’s office, which regulates approval of new condo projects, shows that the amount of new development hitting the market in Brooklyn this year will be 25 percent higher than the number of units in 2004.

Projections show that more than 4,300 units are expected to be

Continued on page 66

Continued on page 36

Following a city rezoning earlier this year, there are already detailed plans for nearly 2,000 apartments along the Williamsburg waterfront. The largest is Douglaston Development’s 1,000-unit project The Edge, and a new subway stop and supermarkets are being planned for the area.

See page 8.

Nondisclosure agreements: Don’t even ask The use of nondisclosure agreements that prevent brokers from divulging information like purchase price, buyer’s and seller’s identity, and addresses are on the rise, perhaps by as much as 20 percent in the last two years. See page 3.

N EW YORK R EAL E STATE N EWS

www.therealdeal.com

Breaking the bull

BY ALISON GREGOR When the nation’s finance sector ended as the world knew it last month, the city’s real estate community was left slack-jawed, wonFEATURE STORY dering what it would mean for the commercial and residential markets.

With behemoth investment banks falling like dominoes, New York’s brokers and developers started getting used to the fact that the oncoming pain would be far deeper than previously expected. This month, The Real Deal breaks down the Wall Street meltdown by sector in a series of stories that look at the numbers that matter to real estate insiders.

www.TheRealDeal.net

BUBBLE ILLUSTRATION BY NATALIA TUNON

Bloomberg’s last real estate push

AT A GLANCE

An iconoclast defies gravity Dutch architect Rem Koolhaas makes his residential debut here with a dramatically cantilevered condo under construction at 23 East 22nd Street. The apartments that jut out have glass floors offering views straight to the street below. See page 32.

Job jitters scuttle home sales

BY LAUREN ELKIES, JOVANA RIZZO AND ALEX ULAM Financial news headlines about Wall Street’s meltdown are ratcheting up the fear factor for buyers and sellers, who are becoming even more cautious about plunging into the real estate market.

Industry experts anticipate price drops across the board. But certain residential neighborhoods will probably be hit harder than others by the chaos on Wall Street.

23 East 22nd Street

See stories on page 18 and 76

Racing to unload its trophy towers Broadway Partners latest to show signs of distress

BY ADAM PIORE Scott Lawlor once told a reporter he measured the success of his firm Broadway Partners largely on its ability to find new assets. Today, the survival of his firm depends on its ability to sell them.

With hundreds of millions of dollars in short-term debt coming due in January, Lawlor’s private equity firm has SPECIAL REPORT emerged as the latest poster child for over-

Fred Peters: trying to be more Zen

leveraged post-boom distress. Now that Harry Macklowe’s goose has been cooked, it’s Broadway’s effort to unload trophy office towers in the city and across the U.S. that has become the real estate saga du jour. “They came out of nowhere, buying up all these deals and reselling them,” crowed one rival investor, who asked not to be identified. “Now they’re in deep ... ”

See page 178.

See story on page 134

Rent-to-own catching on

BY GABBY WARSHAWER Brooklyn developers are trying to woo would-be buyers who may be indecisive about the market’s health with deals that allow them to rent a unit in a condo while putting their monthly rent checks toward a down payment.

Other developers are also switching to their back-up plan, changing buildings from sales to rentals, but not without costs and complications.

Should homeowner tax breaks be killed?

46

When to expect a full recovery

50

N EW YO R K R EA L E STAT E N EWS

www.TheRealDeal.com

New prominence for the old guard Exclusive co-op brokers in, flashy condo brokers out

Better deals coming for office tenants?

While Manhattan has seen a few big office deals lately, market reports show continued slippage, leaving many split on if tenants should take space or hold off for more discounts.

See page 20. Columnist Michael Stoler sees the best leasing deals in the last quarter century now. See page 49.

Big retail blocks see deals; other sites get perma pop-ups

BY CATHERINE CURAN This holiday season, the biggest sale in Manhattan might be for flagship space. Brokers say the anemic pace of large retail deals has picked up.

Still, some spaces are home to a revolving door of pop-up tenants with no permanent takers in sight.

See stories on pages 18 and 60

The latest ‘It girl’ Serena Boardman morphs from socialite to top broker

BY CANDACE TAYLOR Until recently, Serena Boardman was best known as a socialite heiress. But in the last few years she’s become one of the most successful brokers in the city, snagging sales records and a Madoff listing.

See story on page 62

Buyer market fades

Top 20 NYC new condos where purchasers want out

BY SARAH RYLEY on nearly 400 units within 20 buildings. In one case, While most developers are feeling the pain of the more than 50 percent of the buyers in a building, the downturn, some are feeling it more than others.

505 in Hell’s Kitchen, filed lawsuits in federal court This month, The Real Deal looked at the new con- asking for deposits back. With significant fortunes do buildings that have seen the most buyers trying at stake, few seem to be backing down. Buyers argue to renege on their contracts since the real that developers haven’t lived up to their FEATURE STORY estate market took a nosedive last year. side of the bargain, and developers claim The analysis — which was based on a list of disputes the litigants just changed their minds because of the from the state Attorney General’s office, published market. Now many are watching to see how these archives, court databases and interviews with attor- cases will be decided and what they will mean for neys — found buyers asking for their deposits back other projects.

See story on page 53

New rentals the 2009’s annus horribilis next battlefield Tallying up the year’s ‘lowlights’

Marketing firms migrate over from stagnant condo market

Brokers freshen up their inventory As activity slows, brokers are pulling apartments off the market to turn the stale units into “new listings” again. See page 28. In other selling news, For Sale by Owner listings are on the decline in New York City in the last 12 to 18 months, bucking a national trend. See page 52.

www.TheRealDeal.com See story on page 92 See stories on page 56 and 58 ILLUSTRATION FOR THE REAL DEAL BY YISHAI MINKIN, PHOTOGRAPH BY HUGH HARTSHORNE

See page 98.

108

Tony Malkin gets teed off

30

44

The malls are all right

A peek at the real estate bookshelf

90

Hotel biz not easy for Jay-Z

97

‘Key’ to unlocking Gramercy sales

and bottom-scraping records

Once a real estate backwater, the new development rental sector is now a hotly contested battleground with brokers migrating over from the stagnant condo market. But with the steep drop in rents, oncebulletproof rentals are no longer a surefire bet for developers either.

BY GABBY WARSHAWER Until last year, the annual accounting of real estate records was a listing of giddy peaks. Even in 2008 — before the recession tightened its stranglehold — records were toppled. But many of 2009’s records are record lows, not highs. This month, The Real Deal looked at those records and the headlines that deA few of 2009’s benchmarks fined 2009. “To quote Manhattan home prices drop record amount, Queen Elizabeth, it 25.6% Retail vacancies at two-decade high was an annus horribiBrooklyn gets tallest building Hamptons sales lis — a horrible year,” at 27-year low said one source.

See stories on pages 14 and 40

See stories beginning on page 44

BY ALISON GREGOR AND CANDACE TAYLOR

Dottie Herman on getting it in writing

FACT

According to NYU’s Furman Center, NYC saw nearly 6,000 foreclosure filings in the third quarter, the most since the center began tracking quarterly stats in the early 1990s. See page 66.

AT A GLANCE

See story on page 36

For a holiday deal, try flagship space

› ›

›

›

Brokers say the buyers’ market is beginning to fade as competition intensifies for well-priced apartments. See page 12.

200 West 72nd Street

South Beach on the Upper West Side There’s a newcomer at 72nd and Broadway that looks more like South Beach than the UWS. But the rental, 200 West, has several nearby projects to contend with. See page 30.

If you think prices are cheap today...

As NYC investors wait for better prices, we look at the best deals of the last big recession. 77 cents psf, anyone? See page 58.

www.TheRealDeal.com

ILLUSTRATION BY DAVID COLE; HERMAN PHOTOGRAPH BY MICHAEL TOOLAN

PHOTO CREDITS ARE HERE

DECEMBER 2009

OCTOBER 2008

Sizing up grad schools

Vol. 7 No. 12 December 2009 $3.00

Waging buyer mutiny

BY CANDACE TAYLOR Many of the biggest sales in the city are now handled by an exclusive cabal of Upper East Side brokers, whose names were rarely heard during the boom. Unlike “bling brokers of the condo era” these agents rely on high-society co-op contacts.

As economy slips, rents go toward down payments

PHOTO CREDITS ARE HERE

26

Finance executives were the buyers in 12 of the top 25 priciest Manhattan apartment purchases in 2007 and part of 2008, according to an analysis by The Real Deal. See page 78.

There were hopes that sales of Harry Macklowe’s former assets would revive the dormant commercial market. But Wall Street turmoil has checked any boost from the portfolio. See page 30.

See stories beginning on page 73

SEPTEMBER 2005 22

FACT

Macklowe resales fail to light a spark

Worry chills local market

High hopes in Lower Manhattan The hand-wringing over the state of the Downtown commercial market has been constant since the end of 2001, and while this summer was not the end of the doldrums, it may have been the beginning of the end. See page 6.

Vol. 6 No. 10 October 2008 $3.00

Wall Street crisis brings more pain to NYC real estate

97

Larry Silverstein: WTC builder and...cyclist?

14

TRD nabs five national awards

30

Thinking like a real estate CEO

31

Vantage digs out of distress

32

‘Pinball’ units trick buyers

105

Art bubble fueling real estate sales?

THEREALDEAL THEREALDEAL THEREALDEAL www.TheRealDeal.com

Newmark’s Class A play Firm gains on NYC rivals, but trails in global push

BY ADAM PINCUS Newmark Knight Frank has beat out rivals to lease up some of Manhattan’s highest-profile buildings, such as the Empire State Building and One Chase Manhattan Plaza. And SPECIAL REPORT it’s stepped up its international presence of late. But despite those successes, it’s still considered a small global player and there remains a nagging perception that it’s more comfortable leasing up Class B and C buildings in New York. Company CEO Barry Gosin says that image is dated and that it competes with commercial real estate’s biggest players. Is he right?

N EW YORK R E A L E S T A T E N E W S

Vol. 8 No. 11 November 2010 $3.00

Billionaires’club How have NYC’s richest real estate moguls weathered the downturn?

BY PETER KIEFER While their idea of financial pain has nothing to do with putting bread on the table, New York’s billionaire real estate moguls have had FEATURE STORY to weather the downturn, too. This month The Real Deal looked at the city’s richest property tycoons to examine their real estate holdings and investment strategies over the last few years.

Some of the moguls we looked at: Richard LeFrak, Stephen Ross, Donald Trump, Leonard Stern and Mort Zuckerman. Find out who was the most aggressive, which moguls took a more conservative approach to the market, and how their bets paid off.

See stories beginning on page 58

See story on page 54

Big tests for refis

Billions in loans soon due, but positive signs emerge

BY DAVID JONES Billions of dollars in New York commercial real estate loans are set to mature in the next few years, meaning a flood of borrowers will be looking to refinance. The fate of their loans could have a serious impact on the market. But signs of help, in the form of loosening credit, are emerging.

See story on page 14

Richard LeFrak, whom Forbes recently reported has a net worth of $4.3 billion, is the wealthiest real estate mogul in NYC.

Pullback after Park51 Fight over Islamic center could dampen Middle Eastern investment in NYC

The aging apple

BY PATRICK EGAN Oil-rich Arab investors, many of them Muslim, have long parked their cash in Manhattan’s high-end properties, commercial and residential. But some now fear that the hubbub over the Downtown mosque and cultural center could turn them off to NY real estate.

See story on page 44

See story on page 28

Cutting to Renaissance for new rentals Rental developments proliferate, and unlike the Core their condo counterparts, head more upscale

Richard Meier on warding off evil spirits

BY CANDACE TAYLOR Shaun Osher’s five-year-old brokerage, Core, could have been swallowed by the recession. Instead, it’s on a hit TV show and preparing for a hiring spree. Osher said the firm, backed by the deep-pocketed Cayre family, is at a “tipping point” where it’s not a startup, but not an established brand yet. Can it make the jump?

BY CANDACE TAYLOR While overall rents are still down from the market peak, high-end rentals are having their day. That’s partly because many wealthy New Yorkers are renting, not buying, in an uncertain market. And unlike new condos, which are getting more recession-friendly, new rental developments are getting more luxurious. Still, this new reality has upset tenants who scored concessions in buildings that hit the market a year or two ago, but can’t get similar deals now when they renew and are moving out.

See page 110.

See story on page 42

See stories beginning on page 31

PHOTO CREDITS ARE HERE

New York City lost 20% of its industrial space in the last five years. See page 16.

AT A GLANCE Trying to find that fall magic for sales The market should be busy this time of the year, but while sales rose somewhat compared to summer, the edge is off, observers say. See page 12. In a bid to keep sales alive, some developers are still prepaying brokers’ commissions. See page 24.

What’s next on the waterfront After a 2005 rezoning, possibilities for the Williamsburg waterfront seemed endless.

Then the downturn hit. But the Domino factory project isn’t the only thing stirring on the East River. See page 48.

888 Madison Avenue

N EW YORK R E A L E S T A T E N E W S

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CMBS 2.0

A look at new rules of game as sector comes back to life

Extravagant palace rises on Madison

Balance of power shifts to New York City’s wealthy buyers as lower-end market cools

BY ADAM PIORE A year and a half after the market for securitized commercial debt all but disappeared, once-shuttered CMBS desks on Wall Street are springing back to life. But this time around, the rules are different for an industry that was largely blamed for the crash.

BY CANDACE TAYLOR New York’s ultra-wealthy buyers have been diving back into the Manhattan real estate market with a vengeance. That’s a shift from last year at this time, when first-time homebuyers, spurred by federal tax credits, were the ones creating the market activity. While there are, of course, still steep discounts to be had in the luxury market, brokers have dubbed a new term they call “billionaire’s inflation” for the small percentage of triple-mint properties seeing price escalations. This month, The Real Deal looked at the shift of power in the market and broke down 2010’s closed sales at the condo tower that still most epitomizes the luxury market: 15 Central Park West.

See story on page 56

Hershco’s headaches Builder sued at project with 75% of its units in distress

BY SARAH RYLEY Yaron Hershco is no stranger to controversy. But the developer, who built several luxe Brooklyn towers, is FEATURE STORY now under fire for his alleged role in a “one-stop shop” at a Rockaways project, where a stunning 75% of units are in distress.

See story on page 34

See stories beginning on page 37

Heiberger’s next act

BY CANDACE TAYLOR Andrew Heiberger made a splash last month for hiring several highprofile agents for his new brokerage firm, Town Residential. But even for a prodigy who sold his first firm, Citi Habitats, for $49 million, there are serious risks. For starters, he needs to poach top earners from other companies to make his traditional brokerage model work. Will he be able to fill his 140 desks with top talent?

See story on page 52

A Ralph Lauren flagship store has opened inside a newly built classical palace at 72nd and Madison that seemed to arise out of nowhere. The mansion feels, critic James Gardner says, as if it had been hatched in Paris. See page 40.

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LEFRAK PHOTO BY HUGH HARTSHORNE; MEIER PHOTO BY BEN BAKER; ILLUSTRATION BY YISHAI MINKIN

NOVEMBER 2010

The Barclays Center at Atlantic Yards wasn’t the only new sports arena being pitched: Construction on both a new Yankee Stadium in the Bronx and a new stadium for the Mets in Queens got underway in 2006. Both opened in 2009, at a cost of around $1 billion each.

Meanwhile, the 52-story 7 World Trade Center, completed by Silverstein Properties in 2006, was the first of the buildings destroyed on Sept. 11 to get re-

Loan-to-own: Predatory or practical?

Some developers say it’s underhanded, but the courts haven’t been as certain

BY DAVID JONES The fallout from the commercial market collapse in New York has sparked a debate in legal and financial circles: Is loan-toSPECIAL REPORT own — the practice of lending with the intent of taking over a property — an act of bad faith or simply a smart business move? Lenders have become aggressive in foreclosing on defaulted loans, but some developers, like Joseph Moinian, are crying foul. Who’s right?

Not much good news ahead for the market, but predictions aren’t that terrible, either

Faith Hope: It’s actually her real name See page 98.

BY MELISSA DEHNCKE-MCGILL AND C.J. HUGHES Possible price erosion. No more government stimulus propping up the market. But all with the saving grace of more stability. The good news is that predictions for New York’s residential Projects to watch in’11 market aren’t dire for 2011. The bad Big bets on rentals: 440 West news is that they aren’t that awe-inspir- 42nd Street, 8 Spruce Street ing, either. To gauge the rebound’s stayNabe-changing project (that’s ing power, we looked at 10 bellwether actually starting): Hudson Yards projects in the city, from the most buzzTallest condo rising: Carnegie 57 worthy new condos to hotel developments and university expanion plans. Elevating property values: Northern High Line extension

See stories on pages 26 and 60

FACT Google paid $1.8 billion for 111 Eighth Ave. in the priciest NYC building sale of 2010.

Despite the recent downturn, the building only sold for half that in 2004. See page 20.

AT A GLANCE Hope for new listings after slow year’s end With the exception of the highend, residential brokers in Manhattan reported a sluggish end to the year. But they are bringing a bumper crop of new listings to market this month that they are hoping will gain traction.

See page 16.

Getting ‘half a loaf’ for selling a building The longstanding divide-andconquer mentality in New York’s investment sales world is loosening — well, at least a little. Commercial brokers say they’ve seen a slight rise in cobrokering. See page 42.

Setai Fifth Avenue

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Mortgage giant grows in NYC

Wells Fargo ups market share as rivals pull back

BY LEIGH KAMPING-CARDER As many banks have shied away from residential mortgage lending, Wells Fargo, the nation’s largest lender, has SPECIAL REPORT taken the opposite tack. That’s especially true in NYC where Wells is dominating, partly by lending in buildings that rivals are avoiding. But is too much market share a bad thing?

See story on page 56

Cashing in on Canal Street Big names snap up retail, hoping for a Soho spillover

BY ADAM PINCUS Retail players are beginning to bet that gritty Canal Street is on the cusp of transformation, fueled by a spillover from thriving Soho. Vornado recently purchased a property there and others are sniffing around. But the street has some unique real estate challenges.

See story on page 44

Faux pas with foreign buyers A guide to cultural pitfalls

BY KATHERINE CLARKE Call it Foreign Buyers 101. Experts weigh in on what agents need to know when dealing with global buyers — from Chinese tax law to the Russian commodities market.

See story on page 18

What to expect for 2011

Brokers grab Botox for lunch Bloomingdale’s is out and Botox is in as agents’ new lunch-hour pastime. “I’ve seen the rise in this once the market went south,” one noted. See page 108.

Vol. 9 No. 1 January 2011 $3.00

The return of the rich

Citi Habitats founder goes after ‘Ivy League’ brokers as he attempts to recreate success with new sales firm

Other cities add more new office towers

BY PETER KIEFER New York has fallen behind dozens of international cities when it comes to building new state-of-the-art office towers. Even with the more than 10 million square feet planned at the World Trade Center site, some fear that Manhattan may start losing out when it comes to wooing new corporate tenants.

Osher’s quest to go from ‘startup’ to ‘established’

FACT

See story on page 62

Behind Schrager and Rosen’s split

Duo jump to new projects, partnerships post-breakup

BY ADAM PIORE Gramercy Park Hotel partners Aby Rosen and Ian Schrager are wasting little time moving on now that their split is official. After buying Schrager out at the Gramercy, Rosen brought on restaurateur Danny Meyer last month. Meanwhile, Schrager is said to be evaluating a hotel 10 blocks away. A look at their breakup and rebound.

See story on page 28

Compromise for Gwathmey at Setai

Bracha leaves Elliman for new gig

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Seth Pinsky on life after Bloomberg See page 106.

rebuilding for Silverstein. “We not only leased it up by 2011, it was also to a very diverse group of tenants.”

Those tenants included law firm WilmerHale, which relocated from Midtown; advertising firm Omnicom; music giant BMI; and publisher Mansueto Ventures. Seven World Trade eventually commanded the highest office rents Downtown had ever seen — $70-plus a square foot — due in no small part to Sil-

FACT Multifamily buildings in the Bronx sold for an average of $90 a square foot in the first part of the year, one-fifth the price seen in Manhattan. See page 65.

AT A GLANCE Russian roulette for apartment sales

BY KATHERINE CLARKE

New development condos have been in the spotlight lately.

That’s thanks in part to Extell Development’s One57, the city’s new tallest residential tower, which has already hit $1 billion in sales and topped off last month. Extell President Gary Barnett said the lack of new construction in the last few years has FEATURE STORY boosted demand for his project. “For the next couple of years, we’re probably the only game in town — especially for that kind of quality,” Barnett claimed. But there are lots of other projects on the drawing board now. We mapped out Manhattan and Brooklyn condo buildings on the market, and looked at the new projects in the pipeline. See story on page 49

More listings with $20 millionand-higher price tags are coming on the market. But some say high-end sellers are testing their luck and being unrealistic, chasing a few record sales earlier this year. See page 16.

Finding fortunes in foreclosures A TRD analysis found a cottage industry of firms buying distressed outer borough homes and flipping them, sometimes doubling their money in the process.

See page 28.

Crunching numbers on Barclays Center As Brooklyn’s $1 billion, underconstruction Barclays Center prepares to open in September, a breakdown of the economics of the project on everything from naming rights to retail space. See page 20.

A new start for Naftali

Burger takes first place in TRD’s annual ranking of top 75 Manhattan listing agents, sets new record

Ex-Elad CEO Miki Naftali is racking up new projects

BY LEIGH KAMPING-CARDER Brown Harris Stevens broker John Burger earned the No. 1 spot on TRD’s annual ranking of Manhattan’s top listing agents for the first time. He more than doubled his volume of listings Top Manhattan brokers from a year ago to an impressive (by listing volume) $411.7 million — setting a new bar John Burger (BHS): $411.7M for the ranking. In addition, several Carrie Chiang (Corcoran): $316.2M brokers are appearing in the top 10 Paula Del Nunzio (BHS): $293.8M for the first time, partly due to some Dolly Lenz (Elliman): $255.1M extremely high-priced trophy propSerena Boardman (Sotheby’s): $198.9M erties on the market.

BY CANDACE TAYLOR Miki Naftali is in good spirits. A year after launching his own firm, the former Elad Properties CEO — and face of the controversial Plaza Hotel renovation — has already purchased eight NYC properties, including four development sites.

And he says he’s relieved to be done running a mega firm.

See story on page 34

SEESAW ILLUSTRATION BY YISHAI MINKIN; FAITH HOPE CONSOLO PHOTO BY BEN BAKER.

JANUARY 2011

Vol. 10 No. 7 July 2012 $3.00

Extell’s Gary Barnett

A close-up on the new construction projects on the market and in the pipeline

All-star agents

Charles Gwathmey’s legacy will endure. But the late architect’s condo-hotel Setai Fifth Avenue was a compromise with the developers, says critic James Gardner. See page 48.

Real estate broker Ilan Bracha, head of Elliman’s top-selling team, is striking out on his own with a franchise of Keller Williams. See page 58.

N EW YO R K R EA L E STAT E N EWS

NYC’s new condo wave

See story on page 40

Barclays Center

Biggest U.S. firms A new report ranks the largest residential real estate brokerages in the nation.

TRD looks at how some New York-area firms fared.

See page 52.

www.TheRealDeal.com

BARNETT ILLUSTRATION BY KATHRYN RATHKE; PINSKY PHOTOGRAPH BY MARC SCRIVO

JULY 2012

erhouse Condé Nast agreed to lease more than 1 million square feet in the Port Authority’s One World Trade Center (see related story on page 48).

That lease signaled not only the recovery of the Downtown office market, but its metamorphosis over the last decade into something beyond just a Financial District. While still not quite the 24-7 destination that brokers sometimes tout, the Continued on page 142

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H’SE A D G O E TH S HAENNIVERSARY RE THE R EAL D EAL I SSUE

Through the years

Following TRD’s trajectory — from its early days in a psychic’s office to its evolution into an award-winning magazine 1996 Fresh out of Boston University, Amir Korangy launches his first publication, the Gringo Gazette, a weekly newspaper that targets expats in Baja, Mexico. He later sells it and moves to Washington, D.C., where he launches the Washington Free Press. He sells that as well.

February 2004

Fall 2004

TRD opens its first office in a former psychic’s space at 36 East 23rd Street. The second-floor space was padlocked before the magazine moved in because the psychic had fallen behind on rent and was illegally using the space as a residence.

TRD hosts its first new development forum in Midtown. Panelists include Related’s David Wine, developer and architect Cary Tamarkin and Alchemy’s Ken Horn, among others. The forum is moved to Cooper Union in its second year. Both forums are filled to capacity, as brokers pack in to glean information about the wave of development sweeping the city.

Early 2004 1998 Korangy moves to New York, where he works for a year at Yahoo! before getting laid off during the dot-com bust. After selling his Brooklyn apartment, he begins flipping residential properties in Prospect Heights and Crown Heights. As an investor, he realizes that New York real estate coverage is fluffy and that there’s no sophisticated coverage for real estate professionals. An idea is born: He decides to launch a hard-hitting real estate magazine that chronicles the industry (with warts and all), from record deals and industry rainmakers to foreclosures and bankruptcies.

He drafts a mock-up magazine and turns to top industry bigwigs for feedback.

TRD publishes its first annual ranking of Manhattan’s residential brokerage firms. The ranking — along with TRD’s rankings of players and deals in all corners of New York real estate — evolves into one of TRD’s signature editorial features. In July, as residential construction ramps up at the start of the boom, the magazine runs its first comprehensive round-up of all of Manhattan’s planned new condo developments — the first such published list. The magazine’s in-depth coverage of new development becomes another of its main editorial focuses.

August 2005 TRD starts an annual summer tradition: renting a Hamptons house, where employees can veg out, meet up with East End sources and work on stories.

The first house was in Montauk; later homes were in Quogue and Bridgehampton.

January 2006 October 2003

April 2003 Korangy launches the first issue of TRD out of his Prospect Heights apartment. The 24-page issue features a profile of Corcoran CEO Pamela Liebman on the cover and has contributions from nine freelance reporters, including current editor-in-chief Stuart Elliott (pictured to the left of Korangy, above), who would take the editorial helm after the first issue. Yoav Barilan (pictured left), TRD’s current director of marketing, joins as the first salesperson and next member of the team.

46 April 2013 www.TheRealDeal.com

Late investment banker Bruce Wasserstein, who owned the business publication the Deal, sues TRD for trademark infringement, claiming the similar names were “likely to cause confusion, mistake or deception among purchasers” and that by having “Real” in its title it would suggest that the Deal was in fact not real. TRD stands by its name and prevails when a federal judge rules in its favor in 2004.

June 2003 TRD launches its website, which recently reached over 5 million page views a month and 1 million visitors a month.

TRD comes out with its first annual Data Book, a comprehensive almanac of New York City real estate. The 120-page book becomes a resource for real estate professionals, attorneys, financial experts, city officials and others to use throughout the year with stats on New York City neighborhoods, deals, players and properties. The resource was developed after TRD’s top salesman and fourth employee, Eran Evron (pictured), came up with the idea.

January 2007 TRD moves its annual new development forum to Lincoln Center, where it sells out Avery Fisher Hall, with nearly 3,000 industry players in attendance.

Featured speakers include City Planning Commission Chair Amanda Burden, Related Companies CEO Stephen Ross, Yale economics professor Robert Shiller, economist Nouriel Roubini and market guru Jonathan Miller, among others.

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H’SE A D G O E TH S HAENNIVERSARY RE THE R EAL D EAL I SSUE

April 2009 In his monthly publisher’s note, Korangy takes on the principals of two brokerage firms who suddenly banned the magazine from being distributed at their offices because, he wrote, they “didn’t like that we weren’t sugarcoating what’s going on in the market.” This was not the first time that TRD had been threatened. In one notable instance, broker Michael Shvo (pictured), who is featured on the cover of the August 2006 issue, threatens to fly to TRD’s New Jersey printing press and pay to destroy all copies of the issue.

(Shvo is upset with his spot on a ranking of the most active new development marketing firms in Manhattan.)

September 2008 TRD logs its biggest issue — 212 pages — at the tail end of the boom. (Lehman collapses roughly two weeks after the issue hits the newsstands.)

Still, TRD does not lay off any employees during the bust. In fact, since September 2008, the magazine has increased its staff by more than a third, to around 35 full-time employees (that’s not to mention the dozens of freelancers who contribute to the magazine).

April 2008 TRD celebrates its fifth anniversary.

June 2009 Korangy is named one of the 100 most powerful people in real estate by the New York Observer.

The Observer notes that TRD is a “mustread for industry insiders” and quotes Korangy saying the only industry pros not reading the magazine are those who don’t like hard news and “would prefer if we wrote about how many Girl Scout cookies brokers are buying.”

July 2009 The Los Angeles Times runs a front-page story about TRD featuring Korangy and editor-inchief Elliott. The article, which looks at TRD’s coverage of the real estate market amid the crash, calls both the magazine and Korangy a “real-life Horatio Alger story” and notes that the magazine has “done improbably well at a time when print media has lost advertisers and readers to the Web.”

May 2011 “Building Stories,” a TRD-produced documentary about the prolific architect Costas Kondylis, premieres at the Morgan Library with 750 people in attendance, made up of a Who’s Who of real estate.

Korangy is executive producer, while the script is written by Elliott and directed by Toni Comas.

February 2008 The magazine launches a South Florida print issue and website, to cover the markets in Miami-Dade, Broward and Palm Beach counties, where developers are beginning to unload massive amounts of empty condo inventory built during the boom. The magazine has an eightmonth run before ceasing publication, but continues its reporting on its South Florida website. The site has since taken off as TRD has poured more resources into building it up. South Florida website traffic currently constitutes nearly 10 percent of TRD’s total online readership.

Summer 2007 TRD more than quadruples its space and moves into its current-day, 5,000-square-foot 29th Street office.

The new office features a sound-proof production studio for the magazine’s webcasts.

April 2013

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TRD hits its 10-year anniversary with an eye on the next 10.

YEARS

February 2013 TRD picks up its first general excellence award from the Society of American Business Editors and Writers (SABEW). The award comes as part of SABEW’s 18th “Best in Business” competition, which honors excellence in business journalism. The category covers all business magazines.

January 2013 TRD launches its first issue of Luxury Listings NYC, a new glossy magazine targeting a general Manhattan audience. The publication features the most expensive and unique residential listings in the city, with stories dedicated to a cross-section of Manhattan neighborhoods.

It also serves as a cheat sheet for everything Manhattan residents need to know about their neighborhood, from what their home is worth to where the market is headed to new buildings going up on their street. The new magazine hits more than 100,000 Manhattan doorsteps.

May 2011 TRD wins an award for the first journalism contest it ever enters. The magazine, under the helm of Elliott and managing editor Jill Noonan, is awarded first prize as the nation’s top commercial real estate magazine by the National Association of Real Estate Editors. It also wins the industry award for best commercial story of 2010.

May 2011 The TRD documentary gets the green light to air on PBS. It becomes the most watched episode in the “Treasures of NY” series and will air five times a year for the next five years.

September 2011 TRD celebrates its 100th issue, the same month New York City marks the somber 10-yearanniversary of the World Trade Center attacks.

World Trade Center developer Larry Silverstein is featured in the magazine’s Closing interview.

January 2013 TRD launches its iPad app and doubles its Facebook likes at the start of the year. Social media helps drive TRD’s website traffic to its current 5 million page views a month.

Meanwhile, Korangy is named to Inman’s annual list of the 100 most influential real estate leaders in the industry.

June 2012 TRD nabs five more NAREE awards, for the magazine, website and stories by reporters Candace Taylor (now TRD’s deputy managing editor) and Adam Pincus. www.TheRealDeal.com April 2013 47

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The shifting skyline A look at the most notable new buildings in the decade since TRD launched, and how they’ve changed New York

BY EVAN BLEIER he Manhattan skyline is the Big Apple’s most iconic feature. And, much like the city itself, it’s always changing. “[It’s] so dynamic, it’s almost a barometer for what’s going on in the rest of the world,” said Eran Chen, the founder of the Manhattan-based firm Office for Design & Architecture. “Every cultural change, every economical change, every social change is being expressed in New York City’s skyline.”

In the 10 years since The Real Deal launched, the skyline has seen some particularly significant changes, with the rebuilding of the World Trade Center site after the Sept. 11 attacks and a host of starchitect-designed condos, which sprang up during the mid-2000s economic boom. The now-famed 15 Central Park West, designed by Robert A.M. Stern, is a case in point.

New York now has “more beautiful, well-designed, wellthought-of, gorgeous buildings” than in the past, Chen said.

“There are more iconic buildings.”

In particular, “on the residential side, I think there’s a revolution in Manhattan,” Chen said. “The idea of ‘build it

T

and they’ll come’ is being questioned, and developers are being challenged to do real architecture.”

And the next few years will bring even more changes to the skyline. On the West Side, Durst Fetner has broken ground on its pyramid-shaped apartment building. Occupancy at the Bjarke Ingel–designed building, which is located at 625 West 57th Street, is expected to begin by spring 2015.

Meanwhile, when completed in 2015, Harry Macklowe’s 1,396-foot-tall 432 Park Avenue, designed by Rafael Viñoly, will become the tallest residential tower in the Western Hemisphere. That is, until Extell Development Company’s new 233-unit residential building at 225 West 57th Street (which will also be home to the city’s first Nordstrom department store) comes online. That building is slated to be at least 1,550 feet tall.

This month, TRD pinpointed some of the big additions to the skyline since the magazine launched in 2003.

The IAC Building (555 West 18th Street)

T

he first Frank Gehry–designed New York City office building, the InterActiveCorp headquarters stands out not so much for its height — 160 feet — but for its distinct curved glass-curtain walls. Developed by the Georgetown Company, The 10-story, 130,000-squarefoot building, which houses 400 employees for IAC, the Internet conglomerate headed by business mogul Barry Diller, broke ground in 2004 and was completed in 2007.

New York by Gehry (Eight Spruce Street)

D

eveloped by Forest City Ratner, 8 Spruce stands 870 feet tall and (for now) is the tallest fully completed residential tower in the Western Hemisphere. The building, Gehry’s fi rst New York City residential tower, features waves of stainless steel that refl ect light differently throughout the day. As the New York Times noted, it “ripples like the Statue of Liberty’s gown.” The bottom fi ve fl oors have a brick façade designed to fi t in with the rest of the neighborhood.

“It used to be you’d get out of the subway and look for the World Trade Center to see which way was south,” said Lori Ordover, the founder of development consulting fi rm the Ordover Group. “Now you get out and there’s the [Gehry] building. You can fi gure out your way around in relation to that.”

100 11th Avenue

P

ritzker Prize–winning architect Jean Nouvel famously described this 23-story, 72-unit condo tower as a “vision machine.” Developed by Cape Advisors, with financial backing from Howard Lorber’s Vector Group, that vision includes the building’s intricate curtain wall, made from nearly 1,700 colorless windowpanes that are each tilted at a different angle and in a different direction, according to a building representative. The atrium contains suspended vegetable gardens and trees that appear to float in mid-air. Facing the IAC Building on the West Side Highway, apartments at 100 11th Avenue began selling at an average price of more than $2,700 per square foot, though the building faced financial difficulties during the downturn. All of the building’s units are either sold or in contract, a spokesperson said.

One World Trade Center

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n April 2012, the under-construction One World Trade Center, formerly known as the Freedom Tower, surpassed the Empire State Building to become the tallest building in New York City. The 104-story, 3 million-square-foot building, which topped out in August at a symbolic 1,776 feet, is slated to wrap up construction in early 2014. It was designed

by Skidmore, Owings & Merrill and is being co-developed by the Port Authority of New York and New Jersey and the Durst Organization.

48 April 2013 www.TheRealDeal.com

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H’se a d G o e TH s Haenniversary re The R eal D eal i ssue

New York Times building (620 Eighth Avenue)

Time Warner Center (10, 25 and 80 Columbus Circle)

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talian architect Renzo Piano designed this 1,046-foot-tall tower as the new headquarters of the New York Times. With its horizontal ceramic rods, the Forest City Ratner–developed building has gained fame for being easy to climb: During the summer of 2008, the year after it was finished, three men scaled the building, including “the French Spiderman,” Alain Robert.

Together with the speculative office tower 11 Times Square, which is next door, the building pushed the boundaries of Time Square further west.

W

ith two 750-foot towers and a shop shopping concourse, the massive Time Warner Center houses multimillion-dollar condos, a 59,000 square-foot Whole Foods Market, the Mandarin Oriental hotel, CNN’s studios and Jazz at Lincoln Center.

Designed by Skidmore, Owings & Merrill and co-developed by Related Companies and AREA Property Partners (formerly Apollo Real Estate Advisors), the $1.7 bil billion twin towers started construction in 2000 and opened in 2004. “Time Warner really changed the landscape,” Ordover said. “You look around and you see it. If you’re on the East Side … you see Time Warner.”

Hearst Tower (300 West 57th Street)

W

ith the original 1928 Hearst International Magazine Building as his inspiration, British architect Sir Nor Norman Foster brought Hearst Corporation’s global head headquarters into the 21st century with this progressively designed and environmentally conscious office building. Completed in 2006, this 46-story, 597-foot-tall glass-and-steel tower features diamond-shaped windows that give the appear building an angular, rippling appearance. The New Yorker hailed the building as “the most beautiful skyscraper to go up in New York since 1967.”

One57 (157 West 57th Street)

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esigned by Pritzker Architecture Prize winner Christian de Portzamparc, One57 is Extell’s latest contribution to the residential marketplace.

Located between Sixth and Seventh avenues, the nearly finished $1.5 billion, 1,050-foot-tall structure will (temporarily) be New York’s tallest residential building. The 92unit tower, which is reportedly 70 percent sold, also made headlines when a penthouse there went into contract for over $90 million.

Bank of America Tower (1 Bryant Park; 115 West 42nd Street)

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t 1,200 feet, the Bank of America Tower isn’t the tallest building in New York, but it might be the greenest. Developed by the Durst Organization and com completed in 2009, the building was designed by COOKFOX Architects and became the first skyscraper to attain LEED Platinum status. Some of the eco-friendly features of BofA’s New York headquarters include waterless urinals, an aluminum-framed curtain wall with low-emission insulating glass, and a spire with a built-in wind turbine that generates electricity. “The fact that such a big, significant building was built as a LEED Platinum is significant because it tells you that people think it has value,” Chen said.

Four World Trade Center (150 Greenwich Street)

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eveloper Larry Silverstein’s 4 World Trade Center will soon top out at 977 feet. The 72-story tower, which is slated to open at the end of this year, was designed by Maki and Associates, and one-third of its office space will house the new headquarters of the Port Authority. Maki’s “minimalist” design was implemented to “assume an understated, reverent position” opposite the World Trade Center memorial, according to the WTC’s website.

7 World Trade Center

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even World Trade Center was the first tower to be rebuilt at Ground Zero. Silverstein’s 1.7 million-square-foot, 52-story office building, which was completed in 2006, replaced his existing building of the same name, which was destroyed in the 2001 attacks. The fact that it’s now completely leased — tenants include German lender WestLB, law firm WilmerHale and investment firm MSCI — has been touted as a symbol of post–Sept. 11 recovery in the Financial District. www.TheRealDeal.com April 2013 49

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H’SE A D G O E TH S HAENNIVERSARY RE THE R EAL D EAL I SSUE

The standouts

I

BY LAUREN ELKIES SCHRAM t’s been quite a roller coaster ride for New York City’s real estate industry since The Real Deal launched a decade ago.

Between the boom, the bust and the recovery, there have been many highs and lows for the industry — from record deals like Google’s purchase of its headquarters for $1.8 billion to the now-notorious default on the loan at Stuyvesant Town and Peter Cooper Village.

That’s not to mention all of the swanky new condominiums that have gone up, and all of the megaprojects that have transformed the city, including the construction at the World Trade Center site and Hudson Yards.

In addition, because of the blustery market conditions of the past 10 years, many of the one-time highs became lows as the economy did a 180.

Below is a rundown of some of the most notable ups and downs that the industry has seen since TRD started covering it all.

Time Warner Center opens

✔

The 2004 opening of Related’s $2 billion Time Warner Center turned Columbus Cir-

ILLUSTRATION FOR THE REAL DEAL BY WARREN GILBERT

cle into a shopping mecca. High-end retailers like Whole Foods, Tourneau and Williams-Sonoma quickly snapped up space at the 2.8 million-square-foot vertical mall, which replaced the old New York Coliseum. The Mandarin Oriental hotel and Jazz at Lincoln Center were also fast success stories. And, of course, the high-priced condos have drawn celebrity buyers, while also setting new price records in 2003, 2005, 2006 and 2009, including a $43 million sale in 2003.

Average apartment price exceeds $1 million The average price of a Manhattan apartment hit more than $1 million for the first time in 2004, according to appraisal firm Miller Samuel. That average price continued to climb until it peaked at $1.59 million in 2008. But once the credit crisis took hold, the price growth began to reverse itself. In 2009, prices dropped an average of 25 percent from the market peak. Since the recovery, things have been improving: In 2012, the average price was close to $1.42 million, and the outlook for further price increases seems good.

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The highs and lows of the market’s roller coaster ride of the past 10 years

Williamsburg and Greenpoint rezoning A 2005 rezoning of Williamsburg and Greenpoint paved the way for a residential construction craze in northern Brooklyn.

Massive condo towers like the Edge and Northside Piers were built on once-industrial waterfront sites, while dozens of smaller condos were constructed inland. Enticed by shiny new developments with luxurious amenities, buyers snapped up units quickly. But when the recession hit, Williamsburg in particular was overwhelmed with half-completed condo shells. Those units are now, however, selling like hotcakes again.

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Plaza Hotel’s $400 million makeover

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Elad Properties bought the Plaza Hotel in 2005 for $675 million — a reported record $838,509 per room (at the time). But plans for the $400 million gut renovation (and the addition of 181 condos) at the landmark building were controversial. In fact, Mayor Michael Bloomberg helped negotiate a deal in 2005 that preserved nearly half the hotel rooms and a third of the jobs for employees there. But when the

Riding the roller coaster market, from left: Gary Barnett, Stephen Ross, Frank Gehry, Arthur Zeckendorf, Jerry Speyer and Kent Swig.

condos hit the market, they quickly sold out, for as much as $7,000 per square foot. Still, problems remained, with lawsuits from unsatisfied condo buyers, the closing of the Plaza’s storied Oak Room bar and retail space saddled with lawsuits and vacancies.

Priciest Manhattan townhouse sale When investor J. Christopher Flowers paid $53 million for the Harkness Mansion at 4 East 75th Street in 2006, he broke the record for the priciest townhouse sale in Manhattan. In fact, he was the first to break the $50 million mark for any type of residential property when he bought the 50-foot-wide house at the height of the market. Five years later, Flowers sold the mansion for $16.5 million less than he paid for it.

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15 Central Park West sells out As the most elite (and buzzed about) condo building of the decade, 15 Central Park West scored a major coup when it sold out in 2007 with a combined $2 billion in sales. The 61st Street building — fa-

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www.TheRealDeal.comApril April2013 2013 41 51 www.TheRealDeal.com

10

H’SE A D G O ETH S HAENNIVERSARY RE THE R EAL D EAL I SSUE mously developed by brothers Arthur and William Lie Zeckendorf and designed by starchitect Robert A.M. Stern — has attracted celebrities in entertainment, business and a slew of other industries. Building amenities include a 75-foot swimming pool, a screening room, wine cellars and an in-house chef.

in 2005, along with his dream to nab the 2012 games. But that failed bid sent elected officials back to the drawing board to figure out what to do with the Far West Side megaparcel.

nancial giant Lehman Brothers filed for bankruptcy, triggering the worst economic meltdown since the Great Depression and bringing to light the widespread subprime mortgage cri-

Record building sales volume Since TRD launched there have been some blockbuster years in terms of dollar volume of building sales — in 2007, for example, Manhattan logged a high of $48.5 billion in investment sales. During the past decade, there have also been several record-setting individual building sales. In 2007, for example, Kushner Companies closed on a deal to buy 666 Fifth Avenue from Tishman Speyer for $1.8 billion, setting a record for the most expensive office building sale in U.S. history. And in 2010, tech giant Google bought 111 Eighth Avenue, also for roughly $1.8 billion.

✔

High Line opens

Left, the Harkness Mansion set a record for priciest townhouse. Right, 15 CPW sold out in 2007.

✖

Stuy Town’s $5.4 billion purchase

Stuyvesant Town investors famously defaulted on their loans in 2010.

In 2006, MetLife sold Stuyvesant Town and Peter Cooper Village to developer Tishman Speyer and investment firm BlackRock for $5.4 billion, the largest single asset sale in U.S. history. Tishman had hoped to convert the 11,232 rent-regulated apartments into market-rate units, but ran into hurdles. The owners defaulted in January 2010 and special servicer CWCapital Asset Management soon took control of the complex. In November, a roughly $150 million settlement was reached between the tenants (whose units were determined to be illegally deregulated) and the complex’s current and former owners.

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Deadly crane collapses In March 2008, a crane collapsed at an under-construction 43-story condo at 303 East 51st Street, killing seven people and crushing an adjacent building. Two months later, another crane collapsed at 333 East 91st Street, where the Azure condo was under construction, killing another two people. Not surprisingly, the city Department of Buildings came under intense fire for a lack of oversight, and the accidents prompted a major crackdown on construction sites and crane operations citywide.

✖

Left, the Plaza. Right, 666 Fifth Avenue sold for a record $1.8 billion in 2007.

After a false start with Tishman Speyer, spawned by the rocky economy, the site’s owner, the Metropolitan Transportation Authority, selected the Related Companies to develop the 26-acre swath in May 2008. The first building of the mixed-use project broke ground in December 2012, shortly after Related announced its first anchor tenant: Coach, which will house its company offices there.

Hudson Yards breaks ground Lehman Brothers’ bankruptcy

✔

Bloomberg’s proposal to build an Olympic stadium at the Hudson Yards site was dashed

52 April April2013 2013 www.TheRealDeal.com 42 www.TheRealDeal.com

The first section of the High Line (once an abandoned, elevated rail line) opened in June 2009 as a public park running from Gansevoort to West 20th streets. The park — a pet project of celebrities like Diane von Furstenberg and Kevin Bacon — received millions of dollars in public and private funding. And, with the help of a rezoning, it’s spawned a reported $2 billion in new condos, hotels and office space in the surrounding area. The second section of the park, running from West 20th to 30th streets, opened in 2011, while construction on the third began in September.

✔

Macklowe and Swig Like father, like son-in-law. At least that’s what happened during the downturn with developer Harry Macklowe and his one-time sonin-law Kent Swig. In 2003, Macklowe was on top of the world with his $1.4 billion purchase of the General Motors Building. That was followed in 2007 by his nearly $7 billion purchase of seven Midtown office buildings from the Blackstone Group. But in February 2008, Macklowe defaulted on a $5.8 billion loan associated with the latter deal, and was later forced to sell the GM Building and three others.

Meanwhile, Swig also lost control of several projects, most notably Sheffield57, which he was converting into condos. Today, Macklowe is back in the real estate game, partnering on the conversion of 737 Park Avenue with the CIM Group as well as on 432 Park Avenue. The question now is whether his estranged son-in-law will follow suit.

contract but had not closed on units) began scrambling for exits. Many tapped an arcane federal law called the Interstate Land Sales Full Disclosure Act, or ILSA, to do so. A federal circuit court ruled in favor of the buyers at Harlem’s Fifth on the Park and at Long Island City’s One Hunters Point.

A motion to dismiss a similar ILSA suit against the Moinian Group at the W New York Downtown Hotel and Residences was also rejected. But the U.S. Court of Appeals for the Second Circuit ruled in favor of Related in an ILSA case at the Brompton on the Upper East Side.

✖

Sept. 15, 2008, was a day that went down in economic infamy.

That was the day that global fi-

sis. The fallout was global, and largely centered on real estate. That’s because banks all but stopped issuing mortgages to potential homebuyers and stopped issuing developers construction loans.

Meanwhile, foreclosures surged, New York City apartment sales plummeted, co-op boards became stricter, buyers tried to back out of their contracts (see below) and office space sat vacant.

Rise of Interstate Land Sales Full Disclosure Act lawsuits

✖

In 2009, in the wake of the financial collapse, homebuyers (especially those who were in

Park51 sparks global controversy Park51 — the proposed $100 million community center and Islamic prayer space at Park Place and Church Street — set off an international firestorm in the spring of 2010. Opponents cried foul that developer Sharif El-Gamal of Soho Properties would erect an Islamic center just blocks from the site of the 2001 World Trade Center attacks. Proponents said the center would not only promote tolerance, but that building it was also a

✖

Continued on page 138

PHOTOGRAPHS OF THE PLAZA, 666 FIFTH AND 15 CPW FOR THE REAL DEAL BY DEREK ZAHEDI

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Behind Fascitelli’s departure Did the Vornado CEO really leave of his own volition?

I

BY HITEN SAMTANI nvestors and analysts listening in on Vornado Realty Trust’s recent fourth-quarter earnings call were taken aback when, instead of hearing the raspy, Rhode Island accent of CEO Michael Fascitelli, they were greeted by the booming New York voice of chairman Steven Roth.

What followed was largely unexpected, even among the company’s closest followers. Roth announced that Fascitelli, Vornado’s longtime golden boy, would be stepping down this month.

“The board has asked that I come back for another tour as CEO,” Roth said on the late February call.

Roth was emphatic that the move was strictly personal. “Mike is family,” Roth said.

“This was entirely his decision.”

Fascitelli echoed those sentiments, saying: “Vornado has been my consuming passion for 16 years,” and that he would take “a break before doing something different.”

But some real estate insiders who follow the mega real estate investment trust were more skeptical, saying that a combination of factors — including the major financial hit Vornado took on a deal to buy hundreds of millions of dollars in JCPenney stock and Vornado’s lukewarm stock price in the last couple of years — could have been behind the CEO’s departure.

One top executive at a Vornado subsidiary, who asked to remain anonymous, told The Real Deal the decision was the result of a clash of personalities between Fascitelli and Roth. Roth has a tendency to chew on deals and over-negotiate them, while Fascitelli likes to get things done at a swifter pace, the executive said.

Fascitelli’s role as CEO, the executive added, meant that he was supposed to be running the show, but that turned out not to be the case.

In addition, an analyst at a prominent European investment bank — who also asked to remain anonymous because

54 April 2013 www.TheRealDeal.com

he regularly interacts with officials at the REIT — said that the suddenness of the announcement surprised him, though not the decision itself. The announcement, he said, was a result of Vornado’s relatively lackluster stock performance in recent years. Indeed, Vornado’s rolling five-year annualized returns (a measure analysts say is a more accurate reflection of stock performance than simple returns) have dropped from highs of over 30 percent in pre-crisis years to under 5 percent in the last two years. In addition, in the past two years, Vornado’s stock price has depreciated roughly 4.6 percent (to $81.90 at press time). By comparison, rival SL Green Realty’s stock has appreciated 18.8 percent in the same period, to $86.90.

Nonetheless, Alexander Goldfarb, an analyst with the Midtown-based investment banking firm Sandler O’Neill + Partners, said he believed it was simply a question of Fascitelli wanting to move on, a desire that may have intensified after a near-fatal car accident last year.

In August 2012, the driver of a car Fascitelli and his wife were traveling in had a heart attack, hit a truck and flipped the vehicle, leaving Fascitelli and his wife Beth trapped for over an hour. Fascitelli sustained a serious shoulder injury, while his wife suffered a concussion.

“He’s been working 24-7 for over 20 years in a pretty high-pressure environment,” Goldfarb said.

Joining forces Roth lured Fascitelli from Goldman Sachs — where he headed the real estate division — in Michael Fascitelli, right, is stepping down this month as Vornado’s CEO. Left, chairman Steven Roth will take over as CEO.

1996 for a then-mammoth compensation package of $25 million in cash and $24 million in stock options.

George Auerbach, an analyst at investment research firm ISI Group, said if the two men hadn’t had good chemistry, Fascitelli wouldn’t have lasted at the REIT for 16 years — first as president and then, starting in 2009, as CEO. But regardless of what caused Fascitelli’s departure, observers say the pressing question now is: What will it mean for the longterm health of the company?

The prevailing view is that 71-year-old Roth is only stepping in as CEO as a stopgap measure, and that he and the board will be actively seeking someone to take the reins.

Indeed, real estate insiders speculate that the search has already begun.

A private report from real estate research firm Green Street Advisors obtained

by The Real Deal dubbed Fascitelli’s departure “a succession failure,” as TRD reported online last month.

“The point is that Mr. Roth always had Mr. Fascitelli, but there is not an obvious Fascitelli 2.0 behind the original,” analyst Michael Knott wrote in the report.

Roth acknowledged during the earnings call that Vornado’s track record on corporate governance — the relationship between the board, management and stakeholders — was far from stellar.

“I can tell you we grapple,” he said, conceding that the resignation would lead to a “downtick” from analysts in Vornado’s corporate governance grade. But, Roth noted, the implications of Fascitelli’s decision have “been debated long and hard” among the board.

The Green Street report rated Fascitelli’s tenure at Vornado as mixed, marked by extreme highs such as the $437 million acqui-

sition of office landlord Mendik Co. in 1997 — “among the best M&A deals in REIT history” — to disasters such as the 2010 purchase of a 10.7 percent stake in JCPenney.

The latter decision led to a $224.9 million loss for Vornado.

Since the 2000s, the report noted, the REIT had evolved from an “industry behemoth with a perceived Midas touch” to “a company struggling to find its long-term identity.”

The report added, however, that some of Vornado’s recent big-ticket investments, such as the $140 million commitment to develop the retail space underneath the New York Marriott Marquis at 1535 Broadway in Times Square, were appropriate for its long-term plans.

ISI’s Auerbach described Fascitelli’s resignation as “a step back” in Vornado’s plan to simplify its holdings, a goal Roth announced in his annual chairman’s letter to shareholders last year. Indeed, the company sold $2 billion worth of assets over the past year, but invested in only $1.3 billion worth of assets.

(In recent years, the company was thought Continued on page 140

www.TheRealDeal.com January 2011 25

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Red Hook’s revival The storm-damaged neighborhood gets back on its feet, but other challenges await

By Alice Brennan or years, real estate insiders have been pointing to Red Hook as the next hot Brooklyn neighborhood, predicting an explosion in sale prices and activity in the long-industrial neighborhood.

But due to the real estate downturn and other factors, that never quite materialized.

And in October, when Hurricane Sandy dealt a harsh blow to the neighborhood, many real estate pros counted Red Hook down for the count.

The neighborhood is now finally recovering from Sandy: Last month, its 52,000-square-foot Fairway Market finally reopened its doors after being closed by the storm.

Some local businesses, including Steve’s Authentic Key Lime Pies and Chelsea Gar-

F

firm CEO Jonathan Miller.

Nonetheless, some developers continue to be bullish on the neighborhood.

Matthew Steer, an agent at Town Residential, said he will soon be marketing a new residential project in the area with Town colleague Mark Chin. Steer declined to name the developer, but said a groundbreaking on the 18 loft apartments and eight townhouses, which are located on Sullivan and King streets, is expected in the next year.

He said he’s hoping to lure buyers who’ve been priced out of pricier areas like Cobble Hill or Park Slope.

Meanwhile, Italian development firm Estate4, founded by Alessandro Cajrati Crivelli, purchased a 130,000-squarefoot factory space in Red Hook for $11.8

Fairway finally reopened in Red Hook last month after being shuttered by Hurricane Sandy in October.

TM

56 April 2013 www.TheRealDeal.com

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den Center, timed their own post-storm reopenings to Fairway’s debut.

“The storm was a hiccup, so to speak, and that hiccup is going to be gone soon,” said Greg O’Connell, Sr., who owns a number of buildings in the neighborhood, including the one that Fairway is located in. “No one denies it was hard, but [businesses are] more determined to make it work now.”

Christopher Havens, the director of commercial property at Brooklyn-based brokerage aptsandlofts.com, told The Real Deal that commercial sales and leasing activity in Red Hook is on pace with last year’s volume level. While he said data is thin for Red Hook, he estimated that inventory is up 10 to 15 percent because of the storm.

“There is a little more inventory available … about 10,000 square feet,” he said, adding that it “wasn’t a significant amount of space given the intense demand in Brooklyn.”

The residential market did see a slower-than-normal winter due to the storm, said Tina Fallon of the brokerage Realty Collective, though activity is now picking up.

Sales prices in Red Hook dropped 22 percent between 2011 and 2012 (that number might be skewed by the small number of sales in the neighborhood in general), according to data from Miller Samuel Appraisers, and it’s too early to measure Sandy’s full impact on the market there, said 3/29/13 2:40 PM

million in November. The developer has tapped architecture firm Adjmi & Andreoli to transform the space, which is at 202 Coffey Street, into a photography school and series of artist studios. In total, Estate4 has invested in three major properties in Red Hook, including the Coffey Street site and a property on Imlay Street, according to the company’s website. The latter property will reportedly become a 72-unit, mixed-use, condo loft building.

Estate4 couldn’t be reached for comment.

Still, some industry insiders said the neighborhood still faces a number of hurdles that must be overcome in order to achieve the kind of price appreciation now prevalent in prime Brooklyn areas.

The neighborhood doesn’t have an easily accessible subway, a fact which has long been cited as a reason for its inability to gentrify in the way so many other parts of Brooklyn have. And it’s largely zoned for industrial, manufacturing and commercial uses.

Miller said Red Hook’s new designation by the Federal Emergency Management Agency, or FEMA, as part of “flood zone A” could also hold back the neighborhood’s growth by making it harder for buyers in the neighborhood to get loans.

Continued on page 138

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Two Sotheby’s execs under state microscope DOS widens Erickson dual agent probe, opening investigation into supervisors

BY KATHERINE CLARKE athryn Korte, the president and CEO of Sotheby’s International Realty, and Ellie Johnson, the manager of the firm’s Upper East Side office, may face disciplinary action as the result of a state probe into allegations that top-producing broker Roger Erickson acted as an undisclosed dual agent, The Real Deal has learned.

The New York State Department of State opened the investigation last year, after the seller of an apartment at 812 Fifth Avenue lodged a complaint. He alleged that Erickson had breached their exclusive sale contract by clandestinely working with a prospective purchaser, effectively lowering the sale value of the home.

While brokers are permitted to represent both parties in a condominium or coop sale, they must disclose their work as a “dual agent” and sign disclosure forms to that effect.

Last month, state officials wrapped up the investigation into Erickson and referred the materials to the DOS’s litigation unit, which will determine if the broker will face a penalty or not. (It is not clear when the DOS will issue a decision.)

At the same time, the DOS revealed that it had widened the inquiry, naming Johnson — Erickson’s manager at the time of the sale — as well as Korte, who oversees the New York City franchise, as subjects of the probe.

Both brokers could face disciplinary action, though it was not clear what specific allegations they are facing.

Indeed, naming Korte, the firm’s broker of record, and Johnson, Erickson’s manager, may not be an indication of their direct culpability so much as an assumption that the duo was responsible for supervising Erickson, an industry source noted.

“A broker of record is responsible for the behavior of agents whose license they hold,” said the source, who does not work at Sotheby’s and requested anonymity in commenting on the case. “There’s the presumption of supervision and that they’ve given the broker sufficient training that they’re not going to do anything that [constitutes misconduct].”

Erickson, Korte, Johnson and Sotheby’s declined to comment on the case via a spokesperson for the firm. In a statement released after the DOS opened the investigation, Erickson and Sotheby’s asserted that the allegations had no merit.

A spokesperson for the DOS did not immediately respond to a request for comment.

In this case, a man named Harvey Schuyler retained Erickson in December 2008 to sell his Fifth Avenue co-op, originally listed for $3.65 million. Several months later, Erickson allegedly recommended Schuyler accept a $3 million offer from another one of his

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clients, Turkish businesswoman Demet Sabanci Cetindogan, whom he represented in contract negotiations. However, he allegedly did not reveal that she was his client, nor obtain Schuyler’s consent to act as a dual agent.

The two-bedroom apartment ultimately sold to another buyer for $3 million in 2010.

Separately, Schuyler sued Erickson early last year, claiming that he used “aggressive tactics, deception and sheer dishonesty” to convince him to accept Cetindogan’s offer, which allegedly caused him to take a hit on

Sotheby’s Roger Erickson allegedly failed to disclose that he was acting as a dual agent in a 2010 sale.

Kathy Korte, president and CEO of Sotheby’s

the eventual sale of the apartment.

“Having set the apartment’s purchase price below the fair market value created a false market,” the complaint said. “[Schuyler] thereafter was unable to realize a higher market value for the apartment as the false market price was widely known.”

A New York State Supreme Court judge has not yet ruled on the allegations.

In a statement to TRD, Schuyler’s attorney Evan Schieber, a partner at the law firm of Rivkin Radler, called the DOS investigation “a positive step towards curbing abuses by real estate brokers.”

Erickson, who reportedly drives a platinum Ferrari F430, is noted for his flashy lifestyle and has worked with celebrity clients such as Steve Jobs, Bono and Madonna. He was named the No. 1 broker at Sotheby’s in 2010 and has closed sales in excess of $1 billion during his 20-year real estate career, according to his agent’s page. TRD www.TheRealDeal.com March 2010

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Shoring up the shore

Seaside Heights after Hurricane Sandy

Summer-rental inventory is down on the N.J. coastline post-Sandy, and owners are dropping prices to lock in tenants

H

By Andrew Klappholz urricane Sandy may have hit in October, but the property damage it left in its wake is still wreaking havoc on the New Jersey coastline, especially when it comes to the upcoming summer-rental season.

Typically by April about half of those looking for summer Jersey Shore rentals have already signed leases, brokers said. But this year’s crop of rentals is much smaller than usual, due to the large number of homes damaged by the storm. In hard-hit towns struggling to rebuild their beaches and boardwalks, brokers said, demand has waned and owners are dropping prices to lock in any tenant who shows an interest. By contrast, towns that were largely spared

by Sandy are seeing more activity and higher-than-usual prices.

“There has been a significant impact on the rental inventory” as a result of Hurricane Sandy, said Mary Cericola, an agent at Crossroads Realty in Lavallette.

Overall inventory of Jersey Shore rental homes is down about 20 percent this year, estimated Chris Kirk, founder of the online rental exchange ShoreSummerRentals.com.

The shortage is especially acute in northern Ocean County, from Seaside Park up to Point Pleasant Beach, he said.

Kirk said some of his longtime clients cannot rent their homes this summer because they’re still dealing with storm damage. “Some have said their house has been destroyed,” he said.

The situation is particularly grim in certain towns. Kirk said data from his site shows that inventory is off 58 percent from last year in Ortley Beach, 32 percent in Point Pleasant Beach, 30 percent in Seaside Heights, 26 percent in Lavallette and 24 percent in Seaside Park.

Owners renting out their homes in these hard-hit towns have dropped their asking

60 April 2013 www.TheRealDeal.com

rents about 25 percent from last year’s levels, he said.

“There are more deals,” Kirk said. “Long Beach Island and the ones that are open in northern Ocean County are offering more discounts for people to entice them.”

Property owners are worried about the impact of the storm on the summer season, said Greg Russo, senior vice president of Iron-

an agent at Diane Turton Realtors in Sea Girt.

But even with the lower prices, many properties have yet to be claimed, Kirk said, though he’s hoping to see a boost later this spring.

“A lot of people are hesitant to go down the Shore,” he said. “I think they fear their vacation is going to be hindered. But they’ll come down once they see it’s up and running.”

Crossroads’ Cericola, too, is hoping things

Inventory declines from 2012 Ortley Beach: 58 percent Point Pleasant Beach: 32 percent Seaside Heights : 30 percent Lavallette: 26 percent Seaside Park: 24 percent Source: ShoreSummerRentals.com

state Development Company, the developer of Pier Village rental complex in Monmouth County’s Long Branch.

“With all the devastation at the Shore, some people might stay close to home this summer, or they won’t have the disposable income,” he said.

Indeed, some renters are avoiding the Jersey Shore this summer, choosing instead to rent in areas like the Hamptons.

“I have seen leases being done for people from New Jersey who are coming from areas where they can’t go [this summer],” said Ernie Cervi, a Corcoran Group broker in Bridgehampton.

In the face of these challenges, owners, including many who had to reach into their own pockets to pay for post-Sandy property fixes, “know [their] best bet is to just get it rented for the season,” said Susan O’Brien,

will improve as summer draws closer, especially since many towns are working around the clock to repair homes and infrastructure in time for the season.

“We anticipated a late start due to the storm,” she said, “and we are waiting for some properties to be repaired and made ready.”

She added: “Everyone is working tirelessly to prepare for our summer season.”

When it comes to rental rates, Cericola said, right now along the strip from Seaside Park to Point Pleasant Beach, oceanfront homes are asking $4,200 to $15,000 per week for summertime rentals. Non-beachfront houses are asking from $2,300 to $5,000 per week depending on the number of bedrooms, she said, while smaller cottages with only two bedrooms are listed for $800 to $1,500 per week.

On the sales side, O’Brien said New Jersey, like the rest of the nation, had been undergoing

a housing rebirth since the market bottomed.

Sandy, however, stopped the recovery in its tracks in many beach towns. In fact, Diane Turton offices in Beach Haven, Lavallette and Bay Head were severely damaged during Sandy and are still in the process of being repaired, with agents working from other Diane Turton locations in the area.

The rental and sales markets in towns like Seaside Heights, Sea Bright, Mantoloking, Ortley Beach and Point Pleasant Beach all have a long path back to health, O’Brien said.

Seaside Heights in particular — where a roller coaster famously plunged off a pier during Sandy, coming to rest in the ocean — “got hit harder than other towns,” said O’Brien.

“It’s going to take a long time for them.” Crews are now reportedly working overtime to rebuild the town’s mile-long boardwalk in time for Memorial Day. While the damage from the storm might be painful for some, it’s proving to be a promising opportunity for others. High-end real estate markets in Spring Lake and Sea Girt were mostly spared by Sandy, and O’Brien said those two towns are seeing a significant spike in rental and sales activity, since there are fewer options for buyers and renters in the neighboring towns.

Some homeowners in those areas “are going with higher prices this year,” O’Brien said.

And some areas are already on their feet.

For example, Long Branch now has much of its core infrastructure back to normal, after completing minor repairs to its boardwalk.

Ironstate’s Russo said Pier Village — a mostly year-round residence, with about a dozen apartments rented for the summer season each year — was without power for about a week after the storm, slowing rental activity for 2012’s fourth quarter. “There’s no question that the storm affected our rentals,” he said.

But activity there picked up early this year, he said, and rental rates are now similar to last year at this time. TRD www.TheRealDeal.com March 2012 00

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New Development

56 Leonard:Back from the brink

After nearly toppling, the “Jenga” tower is reaching new heights

I

By Katherine Clarke zak Senbahar stands in his 33rd-floor office and shows off a scale model of his latest project: the 60-story glass condo tower rising at 56 Leonard Street. The model, made of Plexiglass pieces stacked like the building’s cantilevered floor plates, occupies a prime position on the developer’s windowsill overlooking Midtown. And when the tower is complete in two years, it will occupy a similarly prime position in Tribeca.

Last month, 56 Leonard officially hit the market after a month of pre-sales, with 50 percent of its 145 units already in contract for a total of some $450 million worth of deals.

Sales have been brisk, according to Kelly Kennedy Mack, president of Corcoran Sunshine Marketing Group, the firm marketing the property. In fact, interest in the building has been so strong that Corcoran Sunshine had to hire more staff to handle the volume, she said, and attorneys drawing up contracts for buyers had to bring on extra paralegals.

But 56 Leonard’s rise has come at a heavy price for the Alexico Group, the company that Senbahar heads with Simon Elias. The financial meltdown threw the skyscraper into a tailspin, pushing it off schedule by nearly six years and leading the sponsors to bring in the national real estate firm Hines as a co-developer.

Through it all, though, the Turkish-born Senbahar has been unwavering in his commitment to the project, refusing to compromise on its scale or its distinctive design by Pritzker Prize–winning architecture firm Herzog & de Meuron.

It may have been too late to reconsider the design anyway, the developers said, since the city had already signed off on the project and the foundation had already been laid. Still, Senbahar’s dedication to that design has led some in the industry to say that 56 Leonard will become his legacy.

Senbahar and Elias “really believed full-heartedly in this project, and weren’t willing to push forward with anything less than their original vision,” Mack said.

That paid off, at least according to Tribeca broker Ryan Serhant of NestSeekers International, who is not affiliated with the project. In Serhant’s opinion, 56 Leonard “is the only new building of any architectural significance in the city.”

A “Jenga” tower Two things really set 56 Leonard apart: its height and its silhouette.

The tower will ultimately stand 830 feet high, so tall that Senbahar claims residents on the top floors will be able to see

RENDERING

BY HERZOG & DE MEURON 00 January 2013 www.TheRealDeal.com

A rendering of 56 Leonard Street

“We had this super-duper design and all our approvals, the foundations were in place, we opened our sales office and we were selling briskly. Suddenly, the world around us was coming down.”

Izak Senbahar, the Alexico Group

the Atlantic Ocean to the southeast. And its much-buzzed-about profile is jagged — and arresting. Cantilevered floors extend out from a central axis in all directions, giving each unit a one-of-a-kind floor plan. The look has residential real estate brokers referring to the building as the “Jenga” tower, after the game of wooden blocks.

From the beginning, the goal for 56 Leonard was a lofty one: Transform the New York City skyline.

New York Law School initially owned the land at 56 Leonard Street, once home to its Mendik Library. Several deals had fallen through before Senbahar became aware of the opportunity in 2006.

The site — with almost 500,000 buildable square feet as of right — falls in between the east and west historic districts in Tribeca, which both have height restrictions.

“This was an opportunity to build the biggest building in Tribeca,” Senbahar told The Real Deal. “Nothing like that had ever been built or could be built again because of the height restrictions in the surrounding historic districts.”

To capitalize on the opportunity, Alexico formed a joint partnership with Goldman Sachs and Dune Real Estate Partners, and bought the land for $140 million.

Alexico would be the developer, receiving a development fee for managing the project and overseeing construction, but taking only a third of the ownership risk.

The hunt began immediately for a top-tier architect. In the running: Pritzker Prize–winning “starchitects” Zaha Hadid, Thom Mayne and 15 Central Park West designer Robert A.M. Stern. But the winner was Herzog & de Meuron, the firm behind Beijing’s “Bird’s Nest” stadium and the Tate Modern museum in London.

Principals Jacques Herzog and Pierre de Meuron spent close to a year studying the site, weighing how to take advantage of the views and sightlines, Corcoran Sunshine’s Mack said. The design they ultimately came up with has a volumetric base that slims to a dramatic crown. The base of the building will rest on a one-of-a-kind sculpture by artist Anish Kapoor.

Richard Cantor, a principal at new development marketing firm Cantor-Pecorella, which is not involved with the project, called the building “an anomaly.”

“It will stand out in the Tribeca landscape for its design and its size,” he said.

But for a while it seemed like the project might not happen at all.

In the summer of 2008, before construction financing had even been lined

www.TheRealDeal.com April 2013 63

-

New Development up, the partners started marketing 56 Leonard. Eight to 10 units had already sold by early fall, when Lehman Brothers collapsed.

“We had this super-duper design and all our approvals, the foundations were in place, we opened our sales office and we were selling briskly,” Senbahar said.

“Suddenly, the world around us was coming down.”

The immensity of the financial crisis and its impact on Manhattan’s residential market caught the partners off guard. “[We thought] if you have a great location like Tribeca and a Herzog & De Meuron tower going up, the market didn’t have to be too strong for us to sell,” Senbahar said. “But there’s a difference between a soft market and a depression.”

When reality set in, the partners — worried about buyer confidence and the ability to get a construction loan — pulled the plug on sales. The buyers in contract got their money back.

The only thing 56 Leonard had to show at the time was a foundation.

New blood Luckily, European bank Eurohypo agreed to extend the partners’ existing land loan for three years, giving them enough wiggle room to mothball the project until the recession ran its course. For the next two years, they sat on the vacant site — paying interest on its loans and real estate taxes.

“We didn’t have a lot of alternatives,” said Dan Neidich, co-founder of Dune.

“We just had to maintain the property and control it long enough so that the financial crisis would pass, and we would be in a position to participate when the market came back.”

During the downtime, Senbahar remained resolute. He said he never entertained thoughts of walking away from the project, selling the site or choosing a less ambitious design.

“The benefits far outweighed the risks” of holding on to the site, Senbahar said.

“The dream was there, and we knew we were going to realize it. It was just a matter of time.”

When the luxury condo market began to bounce back in the summer of 2011, Dune and Goldman decided the project needed an extra push before it was ready to re-enter the market. They reached out to Hines, which signed on to co-develop the site, but took no ownership stake in the property.

“The financial crisis probably made us a little more conservative,” Neidich told TRD of the decision to bring on another partner. “We wanted more bodies thrown at this. Before the crisis, we were comfortable with the team we had and after the crisis, we just felt we should have more belts and suspenders.”

Hines — headed in New York City by Senior Managing Director Tommy Craig — is now in charge of construction and

64 April 2013 www.TheRealDeal.com

accounting, while Alexico is overseeing Corcoran Sunshine’s marketing and sales team.

The complexity of the Herzog & de Meuron design was a key reason the original partners tapped the national firm, said David Penick, a vice president at Hines.

“The building will have exposed architectural concrete,” he said. “While that will give very rich and beautiful detail to the building, it will require careful manage-

to pour the concrete for one story of a regular building is two days; at 56 Leonard, it takes a week to complete each floor.

Adding Hines to the equation initially caused some hard feelings between Alexico and its partners, an industry source told TRD. The decision to bring on Hines “was the result of discussions on how to alleviate the responsibilities of Alexico,” said the source, who asked to remain anony-

stead, all the sponsors put in extra money to pay Hines for its participation, he said.

Both Senbahar and Hines’ Penick denied any negative response to the shift in leadership.

“There was a lot of investment by Dune and Goldman,” Senbahar said. “It’s not a run-of-the-mill building, and the partnership thought that another set of eyes couldn’t hurt.”

Penick, for his part, called Senbahar “a smart and sophisticated guy.”

And Neidich told TRD that the decision to bring on Hines spoke to the partnership’s faith in the company — not to any shortcomings on the part of Alexico.

“Hines has done a lot of large buildings, and we wanted that insurance,” he said.

Of the dynamics since Hines’ involvement, Mack said: “Every once in a while, there’s a lively meeting, but the result of having so many creative people around the table is that it makes decisions that much better.”

Staging a comeback Left: Tommy Craig, regional officer and partner for Hines’ Metropolitan New York area. Right: Alexico’s Izak Senbahar.

Left: Corcoran Sunshine head Kelly Kennedy Mack. Right: Architects Jacques Herzog and Pierre de Meuron of Herzog & de Meuron.

“The financial crisis probably made us a little more conservative.

Before the crisis, we were comfortable with the team we had and after the crisis, we just felt we should have more belts and suspenders.”

Dan Neidich, Dune Real Estate Partners ment of concrete construction. The large cantilevers, which start on the seventh floor and reoccur on the upper levels … require extra care in terms of the engineering and construction methodology.”

The cantilevered floors complicate — and lengthen — the building process, Senbahar explained. The standard time

mous for fear of damaging business relationships. And Alexico will still get a share of the profits, but its ability to benefit financially from the project “has been eaten away to a certain extent by the renegotiation of the fee basis with Hines.”

Neidich said Alexico will not have to give up any of its development fee; in-

With Hines on board, the team set about securing a construction loan. In January, a consortium of several banks led by Bank of America came through with $350 million. Construction is now well underway; 56 Leonard had begun to rise at press time.

The building’s sales gallery at 75 Leonard Street officially opened last month.

The 145 homes range from 1,400 to 6,400 square feet, each with a private outdoor balcony. Asking prices range from $3.78 to $32 million. A 17,000-square-foot amenity space on the ninth and 10th floors has a 75-foot infinity pool, a landscaped outdoor sundeck and a hot tub with views of the Hudson River.

Senbahar said units have been selling for above-ask prices, though he declined to give specifics.

Many purchasers want to live in a building “synonymous with great architecture and high design,” Cantor said.

“There will be people to whom that idiosyncratic design is irresistible.”

Cantor, whose firm is marketing the El Ad Group’s nearby 250 West Street condo development, added that 56 Leonard is helping change the image of Tribeca’s east side, which has historically been seen as less desirable, and cheaper, than the west side.

“Before, that had been a less-expensive backside of Tribeca,” Cantor said. “Now, thanks to buildings like 56 Leonard, 93 Worth Street and 57 Reade Street, you have that strip becoming more vital.”

Many of the buyers are local rather than international — a surprise to Mack and her team. She said the building has been popular even with buyers who might have traditionally wanted to live Uptown, in the prime residential neighborhoods near Central Park.

“Previous to the introduction of this property,” Mack said, “these people never really considered looking Downtown.” TRD

PHOTOGRAPH OF SENBAHAR FOR THE REAL DEAL BY MARC SCRIVO; PHOTOGRAPH OF KENNEDY MACK

BY CHRIS www.TheRealDeal.com January 2013MARTIN 65

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INVESTING

IN

REAL ESTATE

Follow the money

A

BY C. J. HUGHES s the Dow Jones Industrial Average nears record-setting territory, would-be real estate investors may be tempted to embrace traditional stocks and bonds instead.

But in many ways, New York City real estate is still a more desirable play, according to financial advisers, academics and brokers.

Sure, some apartments are still selling below their mid-2000s highs, but where full buildings are concerned, prices have increased.

The average sales price for multi-family apartment buildings in Manhattan was $502 a square foot in 2012’s fourth quarter, up from $462 at the end of 2008, according to data from commercial brokerage Eastern Consolidated.

Manhattan land, hotels and retail condos have seen similar price gains. And the market for office-building sales — excluding trophy properties — has roared back, especially in 2012’s last quarter.

Meanwhile, capitalization (or “cap”) rates — which measure return on investment

For investors who have:

A

$100,000

s obvious as it may seem, $100,000 doesn’t buy a lot in New York — at least when it comes to real estate.

Yet experts identified three areas where investors with that much cash to spend could get the best returns: outer-borough co-ops and condos; building syndication deals; and stock for publicly traded real estate investment trusts, or REITs. In the first case, the money might be used to secure a mortgage on a $400,000 one-bedroom in one of Brooklyn’s many up-and-coming neighborhoods.

Prospect Lefferts Gardens is one emerging area that could see residential values quadruple in the next decade, if

ILLUSTRATION FOR THE REAL DEAL BY PETER BONO

Experts weigh in on where investors — from newbies to mega-developers — should put their cash for the best returns

— have dropped to around 4 percent, down from 7.5 percent during the depths of the recession.

Analysts said that drop shows that investors are now willing to pay more for New York City properties than they were when the economy was struggling.

Investors are bullish on New York because of some promising macroeconomic factors: Not only has the city’s population been rising, which has led to a housing shortage, but the hiring rate has increased sharply in the last year compared to other metropolitan areas.

In a city where some homes now trade for $10,000 per square foot, real estate plays may seem inaccessible for small-time investors. But analysts pointed to smaller investment opportunities, like buying in an up-and-coming area in the outer boroughs or purchasing a “piece” of a building.

This month, The Real Deal asked analysts where real estate investors at all levels — from newbies to veteran developers — should place their bets for the best returns.

Those with $1 million to burn can invest in a private equity firm specializing in real estate. That money could yield returns of more than 10 percent, experts said. one assumes the increases similarly marginal areas, like Dumbo, have experienced in the last 10 years, said David Kramer, a principal at the Hudson Companies, which is building an $80 million, 254unit rental project on Flatbush Avenue in Prospect Lefferts.

“My advice for friends who get anxious about buying into strong markets,” he said, “is to invest in transitional neighborhoods.”

Marco Lala, an associate broker at commercial firm Marcus & Millichap,

said that $100,000 could go even farther if pooled with other investors’ money in a so-called syndication deal.

While usually smaller in scale, syndication deals are similar to the Empire State Building purchase in 1961, when thousands of investors pooled together cash. And if the investment is led by an experienced real estate player, these deals also usually don’t require investors to get involved in running the buildings, he added.

Syndication is a good option for peo-

ple who want to invest in real estate but “don’t want to manage properties [and] collect rent,” Lala said.

What will they get for parting with their money?

If the money is invested in an office building in busy Midtown filled with high-credit tenants, investors can expect returns of 5 or 6 percent, Lala estimated.

But syndication investments in prime Midtown are few and far between.

Taking a chance with a syndication investment in a multi-family building in

www.TheRealDeal.com April 2013 67

INVESTING an up-and-coming neighborhood, on the other hand, is riskier, but could yield returns of 12 to 15 percent a year, he said.

And the buy-in amount can be as low as $30,000.

Syndication deals are often organized through word-of-mouth and through socalled “private placement brokers” who act as intermediaries between smaller and larger investors.

Meanwhile, the barriers to entry are also low for investing in REITs, which are trading at about 9 percent above the underlying value of their real estate, said Paul Adornato, a REIT analyst at BMO Capital Markets, a New York–based financial-services provider.

Shares of some private REITs are also available, but buying them requires an intermediary at an investment bank. Other private REITs, though — like American Realty Capital, Cole Real Estate Investment and Inland Real Estate Group — are more accessible to individual investors, sources said. Together, these types of private REITs have raised tens of billions in capital in the last few years, analysts said.

And in March, the mega-investment firm the Carlyle Group also made it easier for mom-and-pops to get in the game by sharply lowering its previous investment minimum from around $5 million to $50,000. But some analysts caution that the fees associated with those investments could sap many gains.

Andy Gerringer, a managing director at the new development firm the Marketing Directors, said REITs are a good option for investors at this level. In the last decade, he pointed out, REITS have generated about 12 percent returns. That’s better than the 4 or 5 percent that many Manhattan buildings yield these days.

Gerringer, who has personally dabbled in REIT investing, said self-storage REITs are particularly hot right now.

“The more people move into small apartments, the more they need storage,” he said, adding that self-storage companies have “very low maintenance costs.”

And self-storage REITs were trading at a 36 percent premium last month.

Another plus for small-time investors is that REITs are relatively liquid, meaning investors can get in and out quickly, unlike other types of real estate assets, said Lawrence Longua, an associate professor specializing in capital markets at the New York University’s Schack Institute of Real Estate.

For investors who have:

A

$1 million

gain, $1 million doesn’t mean what it used to.

“A million dollars might not get you more than a parking [spot] in Manhattan,” joked Eric Anton, a managing partner at Brookfield Financial.

But industry experts identified several smart investments that could yield re-

68 April 2013 www.TheRealDeal.com

spectable returns at that price.

One option is buying a modest Manhattan resale apartment. Anton said he would steer clear of investing in ultra-luxury residential properties in chic Manhattan areas, where new-construction, one-bedroom condos can sell for more than $2,000 per square foot. That doesn’t provide an investment much room to grow, he said.

Instead, he and others recommended that investors who are looking for a residential property target something older, then improve it to unlock its value.

Armed with $3 million in purchasing power — assuming a $2 million mortgage — an investor could pick up a four-bedroom unit at, say, 860 United Nations Plaza, an undervalued postwar co-op, said Donna Olshan, founder of residential brokerage Olshan Realty. The apartment could be worth around $5 million in just a few years, with a renovation, she said. “The formula has always been, you buy the thing that needs the most work in a prime building or neighborhood, and you win,” she added.

For a longer-term play, she prefers the Garment District in the West 30s. While it may be more difficult to get a loan there, Olshan predicted the area would increase in value substantially as the nearby Hudson Yards mega-project gains steam.

Some estimated that a buyer who gets in now could end up seeing their investment grow 7 to 10 times over, eventually.

Brooklyn offers tempting opportunities, too. Adam Hess of the Brooklyn-focused commercial firm Terra CRG suggested leveraging that $1 million into $3 million with a loan, and buying a small rental building in a popular area of Brooklyn, like Carroll Gardens or Park Slope.

This “super-safe investment” could generate annual returns of 5 percent, assuming monthly rents of $2,000 to $2,500, he said. He added, however, that paying a management company to oversee the building would eat into that profit.

A riskier investment would be in an up-and-coming area like Crown Heights; a bank might not approve a loan here, so an investor might only have his $1 million in equity to play with. But $1 million can buy a four-unit rental building there, Hess estimated. That building might fetch $1,773 a month for its one-bedrooms, based on data from brokerage MNS. “You’re just starting to see the restaurants coming there,” Hess said. “You want to get in before all the restaurants.” A 6 or 7 percent return isn’t unrealistic in Crown Heights, though, because the area has a ways to go before being fully gentrified.

Those hoping to strike it rich with outer-borough rental buildings may be disappointed, however.

If you were to generate $180,000 in annual rental income, that profit would evaporate quickly, said Arik Lifshitz, chief

IN

REAL ESTATE

executive of DSA Realty Services, a Manhattan-based brokerage. That’s because the debt on the $2 million loan works out to $110,000 a year based on current interest rates of 3.5 percent.

While a $70,000 profit may seem like a lot, Lifshitz said it should be socked away to cover capital repairs, like a broken boiler or flood damage in the wake of a storm like Hurricane Sandy.

For high-net-worth investors, another option is to park $1 million with a private equity firm specializing in real estate, whose minimums for investment are usu-

ally in that ballpark. Examples include the Blackstone Group, a major real estate investor, and Savanna Partners, which both invest in and operate real estate.

Those types of private equity firms may split that contribution up among several buildings, diversifying the investment and hedging risk, analysts explained. If invested properly, in well-managed buildings without debt loads, that money could yield returns of more than 10 percent, brokers said.

The firms will also charge a management fee of around 1 percent of the equity,

www.TheRealDeal.com April 2013 65

INVESTING plus another 20 percent of the profit after the investor makes their money back.

And investors might need to stick it out for a while; these types of investments often require commitments of three, five or seven years.

For investors who have:

F

$10 million

or those with $10 million to spend, experts said that private equity and distressed asset funds are a smart way to go.

Indeed, a slew of developers and institutional investors have spearheaded these

IN

REAL ESTATE

types of funds in the last few years to pool together financing for new projects and property purchases.

For example, the Related Companies last year completed fundraising for an $825 million distressed equity fund designed to purchase the debt on struggling residential and office properties both in New York and elsewhere.

According to published reports, returns of 20 percent are expected over the seven-year life of the distressed fund. If those returns are realized, a $10 million investment would grow to $12 million.

Other companies with funds include Blackstone, which raised a $6 billion fund last year, Vornado Realty Trust, the CIM Group and Savanna.

An investment of $5 million to $10 million is generally the price of admission to this exclusive club, said Dan Fasulo, managing director at research firm Real Capital Analytics.

For investors who want to play a more active role, TerraCRG’s Hess said a smart play right now would be to invest in several multi-family buildings. He said $10 million in cash could buy, for example, five rental buildings in an emerging neighborhood on the eastern side of Prospect Park.

“If your play is to buy a building and utilize its upside,” or turn apartments over to install higher-paying tenants, “you’re better off spreading it around a bit,” he said.

Of course, because tenants sometimes stay for decades, putting all your eggs in one building’s basket can be risky, he explained.

Another option would be to leverage the $10 million into a $20 million loan and buy a six-story low-rise office building in a more desirable Manhattan neighborhood like Gramercy, Lifshitz said. Investors who aren’t interested in running a building and finding tenants can hire a seasoned management company to do this for them.

And there’s always a luxury Manhattan apartment, but the high-end market in condos like 15 Central Park West or One57 appears to have topped out, with little room for short-term improvement, brokers said.

For investors who have:

I

$100 million

n nearly all cases, those with $100 million to spend are not your casual investors. They are savvy real estate players — such as sovereign wealth funds, private equity firms and pension funds — on the hunt for core assets.

And their options are relatively wide open, at least on the multi-family property front, which experts say is a solid investment, considering how consistently the city’s population has been growing and how tight the housing market is.

Plus, banks are generously opening their purse strings to these sorts of investments, brokers said, lending money at rates as low as 2.5 percent for what they consider relatively safe plays.

An investor who leverages $100 million into a $300 million loan can invest in a rental portfolio with as many as 30 properties, said Paul Massey, founding partner of commercial firm Massey Knakal Realty Services.

Those types of buildings are the midblock, walk-up variety, with between 20 and 30 units, that dot the city from the East Village to the Upper East Side.

But the money won’t flow in hand over fist; these are conservative cap rates of 4 percent. In fact, the most lucrative investment of this type in Manhattan likely offers a cap rate of just 5.5 percent, though that could rise as rents climb.

“There is a natural roll,” Massey said, “as people move, as people get older.”

But a desirable development play right now could be erecting a rental tower in Midtown East, perhaps on Second Avenue, where one-bedrooms with high-end finishes can fetch some $3,000 a month, said Steven Kohn, president of Cushman & Wakefield Sonnenblick Goldman, the debt and equity financing division at Cushman & Wakefield.

That price assumes a development price of about $800 a square foot, which factors in everything from land costs to marketing fees, Kohn explained, adding that “rentals have been much more financeable” lately.

But condo financing has not been impossible. And condos can be a good target for the $100 million investor, who can leverage the amount to $300 million.

As a rule of thumb, luxury condos make financial sense if they can sell for $1,500 a square foot or more, said Howard Michaels, CEO of the Carlton Group, a private equity firm.

The way the math works? The developer buys land for $500 a foot, and spends another $500 a foot to build, say, a 50-story, 100,000-square-foot condo with high-end finishes. If he can sell the units for $1,500 a foot, he can make $500 a square foot on the project, or about a 50 percent return.

Of course, between approvals and construction timelines, condo developers should expect it to take several years to get their money back, he explained. And sources noted, they are more exposed to the whims of the market than developers who opt for rentals.

Some investors may even be able to leverage $100 million into $1 billion in loans.

That happened just last month, when developer Joseph Chetrit paid $1.1 billion to buy the 53-story Sony Building on Madison Avenue, which he plans to convert to luxury condos, a hotel and high-end retail shops. With the help of SL Green Realty — which pulled together $925 million in financing — Chetrit was able to buy the building with a mere $100 million down payment. SL Green kicked in some of that financing, but the Bank of China provided the bulk of it and a Middle Eastern sovereign wealth fund provided a crucial line of credit.

In general, oversees investors, including sovereign wealth funds, tend to like lower-risk “core” investments, brokers said.

Pension funds tend to distribute their money more diversely, with 7 to 10 percent returns expected, Michaels said.

www.TheRealDeal.com April 2013 69

Investing

“The more people move into small apartments, the more they need storage.”

Andy Gerringer, the Marketing Directors

in

Real Estate

“My advice for friends who get anxious about buying into strong markets is ... to invest in transitional neighborhoods.”

David Kramer, the Hudson Companies

An investor that leverages that $100 million into a $300 million loan can invest in a rental portfolio with as many as 30 properties.

“No sophisticated investor is going to take [on the construction of an uber-luxury rental tower] until he sees double-digit numbers.”

Paul Massey, Massey Knakal Realty Services

Lawrence Longua, New York University’s Schack Institute of Real Estate

For instance, TIAA-CREF, which manages about $500 billion in retirement savings for teachers and others, shelled out $190 million in 2010 for 685 Third Avenue, an empty 31-story office building on East 43rd Street. The lobby was renovated, and the building was leased to tech tenants like Salesforce.com. Then in 2011, TIAA-CREF sold a 50 percent stake in the building for $100 million.

Last year, TIAA-CREF picked up a 49 percent stake in New York by Gehry, the luxury rental at 8 Spruce Street, for $250 million. Most of its funds have generated returns of up to 7 percent.

70 April 2013 www.TheRealDeal.com

For investors who have:

O

$1 billion

f course, there are only a handful of developers and investment funds that can play at the $1 billion level. Experts say the best bets in this league are portfolios of high-profile office buildings or multi-family buildings, or developing über-luxury condos like One57. Choosing which one of those options is best, of course, depends on how much risk and reward an investor is looking for.

Consider Norway’s massive oilbacked, $680 billion sovereign fund, which recently began pumping money

into New York.

Last month, the fund bought its first U.S. properties, including a pair of office buildings in the city: 470 Park Avenue South, which includes two 17-story towers, and 475 Fifth Avenue, a 280,000-square-foot building across from the New York Public Library. (The $1.2 billion deal was for majority stakes in five buildings, including those two.)

Those kinds of centrally located properties can net an annual income of $500,000 each — a 5 percent cap rate right out of the gate, according to NYU’s Longua. In a few years, with the right

tenant moves, the building could return 9 percent annually, or $900,000. While those returns might not be off the charts, they are reliable, analysts said.

A riskier but potentially more profitable option right now for a player with $1 billion, experts said, is developing high-end condos in a sought-after area of Manhattan. Extell’s One57, the 90-story high-rise on West 57th Street just a few blocks from Central Park, is a good example of that. The tower reportedly cost $1.5 billion to construct, but penthouses are reportedly selling for near $10,000 a square foot.

Of course, industry observers noted, access to prime development sites in the city is extremely rare and often takes decades of assembling adjacent plots of land. And condo development comes with inherent risks. For starters, the developer has to sell out in a short time frame to get a desirable return, Longua explained.

For every extra month that the “meter is running” and carrying costs mount, the developer will see his margins shrink.

“No sophisticated investor is going to take this on until he sees double-digit numbers,” Longua said.

Still, industry insiders noted that luxury residential projects are the easiest way for investors to recoup their money relatively quickly — assuming the market holds up.

For example, if all goes according to plan and a condo sells all its units in 18 months for its targeted price per square foot, the investor can walk away with a return of 15 percent or more.

At the under-construction One57 — where sales are ongoing — Longua said 60 percent of the construction financing is probably borrowed money, which means Barnett will need to pocket at least 15 percent of the other 40 percent, or about $90 million, to call the project a success.

While that fat sum may be attainable, the market can turn in a heartbeat, Longua said, adding that real estate cycles are getting shorter and more volatile. “I tell my students to go to dental school,” he joked.

Others suggested spreading around the $1 billion in several different investments.

Several sources said a smart strategy for investors with $1 billion is to buy distressed loans and then foreclose on them to get the underlying real estate.

But those investments tend to be “spread around the country,” said Marcus & Millichap’s Lala.

Nationally, $1 billion could buy a 300-building, multi-family portfolio with returns as high as 10 percent, given that housing markets aren’t as strong in other cities.

And in Manhattan, there doesn’t seem to be a bad neighborhood. “There’s almost nothing on the island now that isn’t worth looking at,” Lala said. TRD

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New Development

Boom-time megaprojects: Where are they now?

A status update on 10 major condo projects that hit the market just before the financial crisis

From left: The Sheffield, formerly known as Sheffield57, at 322 West 57th Street; the W Downtown at 123 Washington Street; TF Cornerstone’s 99 John Deco Lofts at 99 John Street; The Trump Soho Hotel Condominium on Spring Street.

A

By Hayley Kaplan number of New York City developers put massive new condo projects on the market in the summer of 2008, expecting the high prices and speedy sales that had become the norm. But they were in for a nasty surprise. With the collapse of Lehman Brothers, the real estate boom ended in the blink of an eye.

Fast-forward five years, and many of these developers are still struggling to sell out those projects. Others have just recently completed their sellouts, after successfully reviving their sales campaigns and avoiding the stigma of becoming “stale.”

“If a development has been on the market for a long time and hasn’t been selling units, [the developer has] to convince the public why they should buy in that development,” said Jack Levy, senior managing director of Rose Associates, the property management company now handling sales at the Sheffield condo, which recently sold out after six years on the market.

That’s particularly difficult for large projects, which take years to sell out even in the best of times.

“If you have a 200- to 300-unit building, even if you sell 10 units a month, it’s going to take you three years to sell out,” said Stephen Kliegerman, president of Halstead Property Development Marketing. For a large condo, he said, “the size of the building becomes a hurdle, as much as other market factors.”

Marketers can overcome these challenges in a number of ways, from adding services and amenities to adjusting prices and, when feasible, changing apartment layouts, Levy said.

Another popular strategy is changing the sales team. While dumping a brokerage sets tongues wagging, experts said, the shakeup often gets sales back on track.

Kliegerman knows from experience. His team has provided the fresh blood for buildings where sales had been less-than-spectacular, although he declined to name those properties.

“It’s a wise decision from a developer if they’re not getting the production out of their team that they expect,” Kliegerman said.

And, of course, the improving economy has also helped some projects — like 20 Pine the Collection, which hit the market in 2006 and is now more than 95 percent sold — bounce back.

The Sheffield’s sales manager, Sophia Cicilioni of the Marketing Directors, noted that her job has been made easier by the current shortage of available Manhattan listings.

The lack of inventory is “fueling the fast pace of sales,” Cicilioni said.

This month, The Real Deal looked at 10 of the biggest condo developments to hit the market just before the financial crisis, to see which ones are sold out or close to it, and which are still lingering on the market.

From left: The Apthorp at 390 West End Avenue; the Tempo condo at 300 East 23rd Street; Manhattan House at 200 East 66th Street; and Alexico’s the Laurel at 400 East 67th Street.

72 April 2013 www.TheRealDeal.com

PHOTOGRAPHS OF TRUMP SOHO AND MANHATTAN HOUSE BY DEREK ZAHEDI; THE LAUREL FROM PROPERTYSHARK www.TheRealDeal.com January 2011 25

New Development The Sheffield 322 W est 57 th S treet Owner: Fortress Investment Group Sales launched in: October 2006 Total number of units: 582 (including 56 rental units that have yet to be converted) Sponsor units sold: 513 Sponsor units in contract: 8 he condo conversion formerly known as Sheffield57 was one of the most visible casualties of the downturn in New York. Now, however, the 58-story tower has turned things around.

The Sheffield had a banner year in 2012, selling 102 units, according to real

T

on a significant chunk of his $640 million in loans. At that time, hedge fund Fortress Investment Group stepped in and acquired a portion of Swig’s defaulted debt. Months later, Fortress ponied up another $20 million during a foreclosure auction for the building’s mezzanine debt, giving it sole control of the Sheffield.

After Fortress took control, Swig was replaced as managing agent by Rose, which took the Sheffield off the market for a year before relisting the units with the Marketing Directors. The move gave the building a breather from a steady run of bad press.

tributed the Sheffield’s troubles to the financial collapse.

“I would say that sales were never the issue of the project,” said Swig, who added that he would not change his sales strategy if he had to do it over. “The project really got challenged when the financial markets disintegrated. Three members of our mezzanine debt stack had significant financial problems, which caused us to have problems in the project itself.”

While most news stories have portrayed Swig as getting booted from the project, he claims he struck a deal with Fortress that allowed him to retain a

listings averaged $1,128 per square foot. So far in 2013 they’ve averaged just slightly less, at $1,107 per square foot, according to StreetEasy.

“Related does a good job with everything it does,” said Daniel Boufford, an agent at Platinum Properties who has done deals at 225 Rector. “I think people are finally noticing the building.”

Part of Related’s strategy is luring in buyers’ brokers, he said, noting that the company offers a 4 percent commission on sales rather than the usual 3 percent.

Rector Square’s story is somewhat similar to the Sheffield’s — down to some of the key players.

A sales report card for 10 big boom-time projects Name/Address

Developer/Owner

First hit the markeT

Total units

Spons. units sold

Units in contract

NEWFOUND SUCCESS

The Sheffield, 322 West 57th St.

Fortress Investment Group

Oct 2006

582

513

8

Rector Square, 225 Rector Pl.

Related Companies

March 2008

289

240

N/A

W Downtown Hotel & Residences, 123 Washington St.

The Moinian Group

March 2008

223

60

8

99 John Deco Lofts, 99 John St.

TF Cornerstone

Dec 2007

442

339

17

Azure, 333 East 91st St.

DeMatteis Organization and the Mattone Group

May 2008

128

82

9

The Laurel, 400 East 67th St.

Alexico Group

Aug 2007

128

124

N/A

Tempo, 300 East 23rd St.

The Menolly Group

Sept 2008

97

92

3

The Apthorp, 390 West End Ave.

Arefin U.S. Investment

Nov 2008

152

57

12

Manhattan House, 200 East 66th St.

O’Connor Capital Partners

Oct 2007

534

249

17

Trump Soho, 246 Spring St.

Sapir Organization and Bayrock Group

Aug 2007

391

118

N/A

HOPING FOR A BURST IN SALES

Source note: Total number of units, sponsor units sold and contracts signed provided to TRD by developers.

estate data provider PropertyShark — more than any other building in Manhattan.

Only four years ago, though, the future didn’t seem nearly as bright.

The building was off the market for the majority of 2009 while transitioning between owners, Cicilioni said. When it came back, prices were cut by about 20 percent, she said. Indeed, StreetEasy shows that in 2010’s first quarter, listings there were averaging $1,656 per square

“When [Rose Associates] first came in there in 2009, there were substantial challenges to overcome,” said Levy. “It was a failed condominium with a negative reputation that was constantly in the news.”

Construction had to get going again and a host of legal actions — including tenant lawsuits against the building and a suit against Swig from former partners Yair Levy and Serge Hoyda — had to be sorted out.

“very substantial economic interest” in the development. He declined to specify exactly how much of a stake he owns.

Rector Square 225 R ector P lace Owner: Related Companies Sales launched in: March 2008 Total number of units: 289 Sponsor units sold: 240 (Related has sold 132 units of the 181 units it controls)

“If you have a 200- to 300-unit building, even if you sell 10 units a month, it’s going to take you three years to sell out.”

Stephen Kliegerman, Halstead Property Development Marketing foot, according to StreetEasy. Prices have since gradually increased to their pre-recession levels. This year, listings are averaging $1,842 per square foot, StreetEasy shows.

The backstory at the Sheffield has been well documented. Developer Kent Swig purchased the building, which at the time had 845 rental units, in 2005 from Rose Associates for $418 million.

Then in 2009, he famously defaulted

64 March 2012 www.TheRealDeal.com

At the same time, Rose began to focus on improving conditions at the Sheffield, Levy said. The company added residents to the condo board and upgraded the amenity spaces. It also changed the property’s name to simply “the Sheffield.”

And buyers responded. “Location is always going to be key, and amazing amenities will certainly [help],” Cicilioni said.

The Sheffield “never lost that.”

In an interview last month, Swig at-

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nce pegged as a failed project, Rector Square has been resurrected by the Related Companies.

Related has sold some 132 homes in the building since last May, when it took over marketing. More than half of the apartments in the 289-unit high-rise have now been sold, the company said. Available units in the building currently range from a $546,000 studio to a $2.7 million penthouse. In April 2008, Rector Square’s

Related, which developed the building as a rental, sold it in 2005 to Yair Levy, who planned to convert it to condos. He hired powerbroker Michael Shvo, who sold 108 of the building’s 289 units.

But Levy defaulted on $165 million in loans in 2010. His lender, Anglo Irish Bank (now Irish Bank Resolution), foreclosed and brought on Related as managing agent. The bank then purchased the shares of the building that it didn’t own, and sold the building to Related in early 2011.

In June 2011, a Manhattan judge found Levy had raided $7.4 million from Rector Square’s reserve fund to pay personal expenses, and ordered him to stop selling condos and co-ops statewide. Levy was ordered to repay the $7.4 million to Rector Square and was fined an additional $360,000.

Related, which controls 181 of the building’s apartments, declined to comment on the project. But the company announced in January that it had sold its 100th unit there, and unveiled model units staged by famed designer Jonathan Adler, along with individual design consultations and special offers for buyers.

W Downtown Hotel & Residences 123 W ashington S treet Developer: The Moinian Group

www.TheRealDeal.com April 2013 73

New Development Sales launched in: March 2008 Total number of units: 223 Sponsor units sold: 60 Sponsor units in contract: 8 he W Downtown Hotel & Residences is a testament to a marketing overhaul.

The project’s developer, the Moinian Group, traded its own in-house sales team in January 2012 for the Corcoran Group, and sales have since skyrocketed.

In the past 14 months, the Corcoran team has sold 60 sponsor units and currently has another eight contracts signed, a W spokeswoman said.

The W’s marketing effort stumbled from its outset in 2008, when sales started with Shvo. According to Corcoran’s team leader, Richard Nassimi, Shvo only sold 10 apartments during the first two years the project was marketed.

In 2010, Shvo sued Moinian for $3.7 million in unpaid expenses and fees — and Moinian replaced him in-house with senior managing director Jacqueline Bayer.

Meanwhile, Moinian has faced other legal actions at the W. It lost an escrow dispute with a group of buyers. Moinian officials, Bayer and Shvo did not respond to requests for comment.

When Corcoran came onto the scene, Nassimi and his team redid the W’s sale process “from A to Z,” from changing how the sales office was run — “the phone lines had messages that hadn’t been heard” — to throwing open houses for brokers.

“Every week we had a different event [for brokers],” Nassimi told TRD. “After that we had an uptick in calls, requests, showing offers and sales.”

Nassimi said the W is on track to be sold out by the end of 2013.

T

99 John Deco Lofts 99 J ohn S treet

Developer: TF Cornerstone Sales launched in: December 2007 Total number of units: 442 Sponsor units sold: 339 Sponsor units in contract: 17 hen Rockrose Development launched 99 John Deco Lofts in December 2007, sales were initially brisk. Only six months later, 70 units had sold.

By fall, though, the recession was in full force, and sales slowed. And in 2009, Rockrose split into two separate companies when its founders — brothers Henry, Thomas and Frederick Elghanayan — went their separate ways (see related story on page 170).

Today, Tom and Fred’s company, TF Cornerstone, is the developer, though Henry still has a minority stake in the project.

Sales are now moving steadily again.

The building just passed the 80 percent sold mark, said Tali Berzak of Nest Seekers International, which is handling sales at the project.

She said sales began picking up in the second half of 2010 when Nest Seekers

W

74 April 2013 www.TheRealDeal.com

Related’s Jeff Blau

Former Apthorp developer Maurice Mann

Former Sheffield developer Kent Swig

Tom Elghanayan of TF Cornerstone

Manhattan House hit the market with a splash in October 2007. But more than five years later, the building is still little more than half sold. took over marketing from the in-house sales team.

Berzak said when things slowed down during the recession, the sales team worked closely with TF Cornerstone on “revamping, rethinking and recalibrating” the project’s marketing. In fact, she said the building refreshes its marketing campaign every six months to a year by looking at who is coming to the building and what units are available.

Unlike other buildings that have slashed prices, StreetEasy shows that prices have held steady at 99 John. In 2008, listings were priced at an average of $1,089 per square foot. So far this year, they’ve clocked in at $1,001.

Berzak said only about 20 percent of 99 John’s 442 homes are still available. Sales were so brisk last year — 84 units sold — that the building ranked as the third-bestselling building in the city, behind Williamsburg’s the Edge and the Sheffield.

“It’s just a matter of rethinking your building over and over again,” Berzak said.

“You try to recreate the building through different eyes” for each fresh crop of prospective buyers.

Azure 333 E ast 91 st S treet Developers: DeMatteis Organization and the Mattone Group Sales launched in: May 2008 Number of units: 128 Sponsor units sold: 82 Sponsor units in contract: 9 fter launching sales in 2007, the Azure faced not only the economic downturn, but a fatal crane collapse on its construction site. After years of struggles, however, the project is now nearing the finish line, with more than 70 percent of its units sold or in contract.

In May 2008, a 200-foot crane collapsed at the Azure site, killing two construction workers and forcing a two-week sales shutdown.

Before the accident, sales looked promising — 17 of its 128 apartments

A

were in contract. But by 2010, that number had shrunk to just nine because some buyers had backed out of their contracts.

The project, a cond-op, was also hamstrung by its ground lease. The developers, the DeMatteis Organization and the Mattone Group, constructed the building atop city-owned land using $8.4 million worth of air rights they purchased from the city in exchange for a 75-year ground lease.

That lease requires residents to help pay for the annual ground rent, meaning the building’s maintenance fees are considerably higher than those of other nearby properties — a reality that made selling more difficult in a struggling economy, brokers said.

In 2010, the developers replaced their Brown Harris Stevens team in 2010 with Douglas Elliman, which is still marketing the project.

“We felt that the Douglas Elliman team had more to offer, more resources in [the] market, which was kind of slow at the time,” said John Caiazzo, a vice president at DeMatteis.

In addition to switching marketing teams, the project’s customizable layouts have helped sales, Caiazzo said. Buyers can request to have walls knocked down to change a unit’s layout. Although the process takes about 12 weeks and creates a lag in closing time, Caiazzo said the strategy has paid off.

“I think what gave us the ability to get as far as 70 percent [sold] was that we decided to be aggressive in our marketing, and we would customize the apartments by creating combined units,” he said.

Prices at the Azure’s remaining units currently range from a $1.42 million two-bedroom apartment to a $13 million penthouse, or an average of $1,583 per square foot, according to StreetEasy. That’s up from $1,277 per square foot in 2008.

The Laurel 400 E ast 67 th S treet Developer: Alexico Group Sales launched in: August 2007 Total number of units: 128 Sponsor units sold: 124 n February, Alexico’s Laurel condominium closed its sales office because it had only four unsold sponsor units, said Corcoran broker Scott Hustis, who is part of the sales team. But at times over the last six years, a sellout was hard to imagine.

Like the Azure, the Laurel has been challenged by accidents.

In April 2008, a construction worker fell off one of the project’s two 31-story buildings and died. The accident prompted an outcry from elected officials concerned about a lack of safety oversight by the Department of Buildings. (Before the accident, the DOB had cited the Laurel for 25 violations.)

I

Continued on page 134

PHOTOGRAPH OF BLAU BY MARC SCRIVO; PHOTOGRAPH OF ELGHANAYAN

BY BEN2011 BAKER www.TheRealDeal.com January

25

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1958: U.S. REJECTS PRIVATE BIDS FOR ELLIS ISLAND

he federal government rejected 21 bids from private investors who were interested in purchasing the famed Ellis Island, 55 years ago this month.

In 1954, the federal government stopped using the island — which served as a gateway to 12 million immigrants for 65 years as they were processed and entered into the country. Two years later it was announced that the U.S. General Services Administration would sell it. The GSA valued the 27.5-acre island at $6.3 million, but the Ellis Island, circa 1956 bids fell far short of that number.

Indeed, developer Sol Atlas submitted the highest bid, which was for a mere $201,000. His proposal called for a $55 million redevelopment of the land into what he called “Pleasure Island,” which included a 600-room hotel and a cultural center.

The federal agency tried several more times to sell Ellis Island, but never did. Then in 1965, President Lyndon Johnson added it to the Statue of Liberty National Monument. The island was opened to tourists on a limited basis from 1976 to 1984, and in 1990, the island’s main building was reopened as the Ellis Island Immigration Museum.

1923: CITY BANS CLIMBING BUILDINGS BY “HUMAN FLIES”

fter a daredevil died in a publicity stunt to promote a silent movie, New York City banned the scaling of the walls of buildings for advertising purposes, 90 years ago this month.

The city passed the ordinance just weeks after a 32-year-old professional steeplejack died while climbing to the top of the 17-story Martinique Hotel, located at 32nd Street and Broadway. At the 10th floor he lost his footing and plunged to his death to the horror of the thousands gathered in Greeley Square.

The film’s distributor, Pathé Exchange, had hired him to promote the romantic comedy “Safety Last,” starring the popular actor Harold Lloyd.

The new law banned what its chief sponsor called “human flies” from scaling the sides of buildings as a form of promotion. Violators were subject to fines of $10, 10 days in jail, or both.

In June 2008, with that ordinance long dated, two climbers scaled the side of the 52-story New York Times Building at 620 Eighth Avenue. Another climber tried a month later Harold Lloyd in “Safety Last” but only reached the 11th floor.

That September, Mayor Michael Bloomberg signed a law that banned climbing or jumping from buildings (or other structures taller than 50 feet) without the consent of the owner. Those convicted of violating the new law face up to a year in jail and a fine of up to $1,000.

A

1900: MADISON SQUARE PARK LOTS SELL FOR RECORD PRICE

popular hotel and adjacent theater near Madison Square Park broke a record for the most paid for a piece of city real estate at an auction when they were sold 113 years ago this month.

Developer William Eno purchased the Fifth Avenue Hotel and the Madison Square Theater, located between 23rd and 24th streets, for $4.225 million at a packed open-cry auction in Lower Manhattan.

Bidding started at $3 million, and after rising quickly, slowed to increments of $5,000, according to the New York Times.

Finally, when the bidding stopped, “amid perfect silence [the auctioneer] called out the largest bid that had ever been made for a piece of New York City real estate,” the publication said.

The hotel, built in 1859, was popular with U.S. presiThe Fifth Avenue Hotel dents, including Rutherford Hayes, James Garfield and Chester Arthur, who each stayed there when visiting New York. The adjacent theater was constructed in 1880.

Both buildings were demolished in 1908 to make way for 200 Fifth Avenue, which, after World War I, became known as the Toy Center. Today the building is owned by L&L Holding. Compiled by Adam Pincus

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A new era for the $6 billion Manhattan portfolio of legendary landowner Sol Goldman

S

By Adam Pincus olil Management, the company that manages the assets of late real estate mogul Sol Goldman, has been sitting for decades on a huge but largely static portfolio of New York City properties. But a new day is dawning for the company, which has become more active in recent years as economic conditions have improved.

Since Goldman’s death in 1987, the enigmatic firm — which has Manhattan holdings estimated to be worth some $6 billion — has been headed by Goldman’s notoriously under-the-radar children, Jane and Allan, and has seen little change.

Between 2003 and 2007, the Goldman estate did only about one major groundlease deal a year, according to an analysis

by The Real Deal of city and state records.

The company is known for holding onto its properties and rarely selling, instead signing tenants to long-term ground leases, typically 99 years or more.

The tenants pay an annual rent to Goldman, but are responsible for taxes and upkeep of buildings on the properties.

For years, developers and brokers have drooled over the estate’s more than 240 Manhattan properties, particularly a handful of partially assembled development sites, which insiders say are ripe for deal-making.

The family patriarch “was ahead of his time,” said Ira Nesenoff, a partner with the law firm Nesenoff & Miltenberg, who has represented several ground tenants in cases involving the Goldman estate. “He was truly a genius, head and shoulders above many developers.”

The Goldman estate declined to comment for this piece. But TRD’s analysis revealed that the firm has recently accelerated its pace of deals, signing at least five significant new, long-term leases over the past two years. The estate last year inked a deal with retail investor Jeff Sutton for a 49-year lease in a century-old loft building at 313 West 125th Street in Harlem, which sources said Sutton’s Wharton Properties will redevelop. And in November, city property records show, Gary Barnett of Extell Development signed a 99-year lease worth $35.14 million to rent eight Goldman-owned properties across the street from Stuyvesant Town, including 516 East 14th Street, 530 East 14th Street and 222 Avenue A. In fact, with a new generation of Goldmans preparing to enter the business, the company may for the first time delve into developing properties rather than just leasing and managing them.

Until now, the Goldmans have never

78 April 2013 www.TheRealDeal.com

developed their properties themselves, “but that will very likely change with the next generation,” said a company employee who declined to be identified.

Still, Solil’s relations with its tenants haven’t always been easy, in part because the company has a number of long-term, low-paying ground leases inked decades ago. In the past decade, Solil has hit nearly two-thirds of its 29 Manhattan groundlease tenants with threats to terminate their agreements, which industry insiders say may be part of a strategy to wrest more money from tenants.

That strategy, however, has led to a number of lawsuits. Since 2003, the Goldman estate has been sued by 18 of its ground-lease holders, who all alleged that the firm threatened to terminate their long-term leases over trivial property violations, according to state court records.

Building an empire

Above, Sol Goldman’s daughter, Jane, who now heads the family company. Below, a portrait of the late real estate mogul Sol Goldman.

In the past year and a half, the Goldman estate has done a number of major deals, such as leasing a 120,000-square-foot site at 18-22 West 56th street to the British company Firmdale Hotels, which plans to build a hotel there.

In addition to Extell’s 14th Street site — which has some 200,000 square feet of development rights, according to the real estate data website PropertyShark — Barnett’s firm in January filed plans to develop a 52-story residential tower at 551 10th Avenue, on a Goldman-owned site it leased in a 2011 deal valued at $28.6 million.

One Solil insider said the Goldmans’ recent activity is largely a result of market conditions. “The uptick in net-lease activity in 2012 reflects improved market conditions from the tight lending environment from 2008 to 2010,” the source said, “and new opportunities that surfaced.”

That marks a change from previous years, when the massive Goldman empire stayed largely quiet, doing retail deals but few large ground-lease agreements.

Sol Goldman, a Brooklyn-born grocer’s son, bought his first properties at age 16, scooping up foreclosures by offering $500 cash per building, his daughter Jane told TRD in a 2008 interview.

“He got most of the money from going around the neighborhood, getting $50 from this one and $50 from that one,” she said. “That’s how he started.”

In the 1950s, Goldman started buying properties with partner and friend Alex DiLorenzo, Jr. Together, the pair rode the city’s postwar economic boom, snapping up iconic structures like the Chrysler Continued on page 80

www.TheRealDeal.com January 2011 25

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Pr o f i l e Building, which they bought in 1960.

Goldman is legendary in industry circles for being a tough negotiator and a decisive investor.

“He was the ultimate deal guy,” recalled Barry Hersh, clinical associate professor at New York University’s Schack Institute of Real Estate, who once worked with Goldman on a deal. “He was very quick with a decision and knew the market intimately.”

Goldman and DiLorenzo had a voracious appetite for acquisitions, which led brokers to bring them even more potential transactions, said George Ross, their attorney for about 10 years in the 1960s.

“They were active buyers,” he said.

“They built an empire, that is what they did, and they did it very well.”

Their strategy was to buy properties, lease them out and almost never sell, Ross said.

Goldman “knew the value of what he owned, knew that in many instances it was irreplaceable and had the vision to have his family own it forever,” Nesenoff said.

But the 1970s were more difficult.

Foreclosure proceedings began on the Chrysler Building in 1975, and DiLorenzo died that same year. Despite these setbacks, Goldman continued buying properties on his own. Indeed, in 1983 he made a stunning 23 individual building purchases, and topped that in 1986 with 24, according to TRD’s research.

In total, Goldman snapped up more than 600 New York City properties in the three decades before his death, including well-known buildings such as the Stanhope Hotel.

That strategy paid off handsomely.

Solil now has at least 245 buildings in Manhattan and at least 100 more in the outer boroughs. And according to TRD’s analysis of city Department of Finance records and court filings, the company’s Manhattan properties alone generate at least $150 million annually before taxes.

According to TRD’s calculations, based on a 2.5 percent capitalization rate, the firm’s Manhattan holdings are worth some $6 billion.

After Goldman’s death, Allan and Jane took over the company, which by then was called Solil Management — the combined names of Goldman and their mother, Lillian. (After a dramatic battle over his fortune — the estate was reportedly the largest ever brought before the New York Surrogate’s Court — it was settled out of court. Lillian died in 2002.) Two other children, Amy and Diane, are not actively involved in managing the company.

Allan is now 70, and Jane is in her mid50s. The two led the company together after their father’s death, but Allan now suffers from Parkinson’s disease and is less active. Jane now heads the company on a day-to-day basis, with Allan working “closely with her in an advisory capacity,”

80 April 2013 www.TheRealDeal.com

The Goldman estate’s largest Manhattan ground leases

Address

Ground tenant

Property type

Square feet

500 and 512 Seventh Ave.

Chetrit Group

Office

1.16 million

1407 Broadway

Lightstone Group

Office

1.1 million

151 West 54th St. (the London NYC)

Blackstone Group

Hotel

576,278

Olympic Tower complex

Olympic Tower Associates

Office and retail

518,775

475 Park Ave. South

Cohen Brothers

Office

449,437

Source: ACRIS, CoStar Group, The Real Deal research

Largest potential development sites Location

Existing use

Buildable square feet

140 East 46th St., 465 Lexington Ave., 146 East 46th St. and 131-133 East 45th St.

Residential

337,509

22 West 34th St.

Commercial

219,690

686 to 696 Third Ave.

Residential

187,920

1435 Broadway and 145 West 40th St.

Commercial

126,075

914-918 Third Ave., 159 East 55th St. and 922 Third Ave.

Residential

107,550

Source: PropertyShark, The Real Deal reporting. Properties included are owned by the Goldman estate.

The Goldman estate’s most profitable properties Address

Property type

SquaRE feet

Estimated 2013 NOI

598 Madison Ave.

Retail/office

76,656

$6.95 million

145 East 16th St.

Residential

236,064

$5.15 million

20 Fifth Ave.

Residential

132,420

$4.39 million

22 West 34th St.

Retail/office

67,911

$4.10 million

92-96 Fifth Ave.

Residential

180,000

$4.08 million

Source: New York City Department of Finance, PropertyShark, The Real Deal research. Estimated NOI (net operating income) is pre-tax. Buildings included are managed by Goldman and do not have ground leases.

From left: The Chrysler Building, which Sol Goldman and a partner bought in 1960 and lost to foreclosure in 1975; 30 Broad Street, where Gotham Realty Holdings pays only $430,000 for its ground lease; Lloyd Goldman, founder of BLDG Management; Lightstone Group’s 1407 Broadway, an office tower built on land owned by the Goldman estate; and the Chetrit Group’s 512 Seventh Avenue.

an inside source said.

After the patriarch’s death, the firm’s acquisitions slowed significantly. The estate has only bought 11 properties since Goldman’s death, TRD found, and did only a few major lease deals in the 2000s.

“They are a private enterprise, and they are happy with running their assets like they have historically run them,” said Sol Goldman’s nephew Lloyd, who runs another commercial real estate company, BLDG Management. “They are not looking to change things a whole lot.”

But the Goldmans also “have a reputation of not being conducive to doing deals,” said veteran New York assemblage broker Robert Shapiro, echoing an opinion shared by many in the industry.

Shapiro recalled approaching the Goldmans in the late 1990s with hopes of striking a deal. His client, a partnership of Benenson Capital Partners and Rose Associates, wanted to buy some of the Goldmans’ Third Avenue buildings, which were adjacent to the 44th Street site where they were developing a large apartment tower.

But Shapiro said the Goldmans “were completely unresponsive to any overture that was made to them.” A deal never materialized, so the partners developed a 42-story apartment building instead of the larger tower they’d originally envisioned.

From the Goldmans’ perspective, a company insider said, a “slow but steady”

approach to development, plus low debt levels, have allowed the family “to be selective in the timing and quality of the deals they consider.”

But when it comes to leasing out retail space in buildings the Goldmans manage themselves, brokers who work with the family said Solil can turn around a deal quickly — as long as they get their target number.

“They are very direct and they want what they want,” said Jason Pruger, executive managing director at Newmark Grubb Knight Frank, a retail broker who has represented many Solil properties over the past decade.

While the Goldmans haven’t bought Continued on page 136

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Technology

Behind ‘big data’ M

The push is on by start-ups to fill real estate’s information needs

By Hiten Samtani industry players testing the potential be- “illegal conversions,” properties that ayor Michael Bloomberg tween the spreadsheets. landlords break into smaller-than-alwill no doubt go down in lowable spaces and illegally pack in history as the city’s numThe information mother lode: tenants (the city receives 25,000 such City Hall bers-cruncher-in-chief. complaints every year). By cross-tab“In God we trust. Everyone else, bring loomberg’s fervor for quantifying ulating those complaints with fire dedata,” he once tweeted. information has translated into in- partment incident reports, the city But he is far from alone. Big Data — creased transparency for the real estate found that these properties had highthe ability to analyze massive amounts community, Michael Flowers, the city’s er rates of fire-related injuries and of information in a high-tech and chief data analytics officer, told TRD. deaths. sophisticated way — has become a new buzz phrase. Indeed, it’s being touted as a game changer in politics, healthcare and every industry in between.

Both Bloomberg and President Barack Obama poured extensive resources (and cash) into creating number-crunching operations that helped them target voters. Now experts say it’s time for the real estate industry to tap into Big Data.

Just last month, New York University’s Schack Institute of Real Estate held a conference focusing on the phenomenon. The title of the symposium: “Big Data and Disruptive Innovation: Is the Real Estate Industry Next?”

But already, Big Data has begun to shape New York’s real estate industry. On the public side, for example, the Bloomberg Administration has brought a host of dusty tomes of public real estate records online and made them easily searchable for brokers, developers and private real estate companies. In the private sector, Trulia and Zillow have sprouted up to fill the information void for real estate agents.

Their online databases provide a treasure trove of knowledge — everything from information about whether consumers are prequalified for mortgages to home-pur- From left: Jason Griffith and Ross Goldenberg, co-founders of SiteCompli chasing intent gauged by analyzing onAnd while the data has clear public line search patterns, said Stephen Rossi, “We go back to the DOB (Departpolicy consequences, it also provides a ment of Buildings), and we prioritize Trulia’s director of agent marketing.

For Stan Humphries, Zillow’s chief wealth of insight for private-sector real inspections,” Flowers said, adding that economist, the rise of Big Data means estate players, he said. the system has helped the DOB imbrokers are no longer the gatekeepers of Flowers, whose position was only prove its rate of finding high-risk coninformation.

“The ubiquity of what we’ve introduced,” Humphries said, “does mean that consumers are comAndrew ing to agents with a lot,” Barrocas ANDREW BARROCAS, MNS including knowledge of average home prices in a market and an created in 2009, singled out the year- ditions from 13 percent to 82 percent. understanding of long-term future value. old Local Law 4, which requires a lend- “They’re very happy, because they save Now a new crop of real estate start- er to file an electronic report with the a lot of man hours.”

And the city has plans to eventualups is following their lead. Companies city within 15 days of initiating a forely use the data as a catalyst for updatsuch as CompStak, a commercial leas- closure. ing database, and BlockAvenue, which Foreclosure data is key for helping ing “archaic laws,”such as the ban on collects lifestyle data on micro-neigh- the city flag properties that might be the use of residential apartments as borhoods, are finding enough interest in in violation of health and safety laws, short-term rentals (offered by compawhat they’re doing to attract investors.

Flowers said. nies such as Airbnb and Smart ApartThis month, The Real Deal looked at Another key metric, he said, was ments), data team member Chris

B

“A developer will ask what to build.

We can show him we could get $65 a square foot rents if we build studios.”

Corcoran said at the Schack conference.

Now it’s time for the private sector to follow the Bloomberg Administration’s lead on big data, Flowers said.

“It’s all about cross-checking outcomes with whatever intelligence you can collect,” he said. “If I’m in construction, I want to gather as much as I can about where I can build.”

J

The compliance police: SiteCompli

ason Griffith and Ross Goldenberg are among the clutch of entrepreneurs who have seized on the white space in the real estate data universe.

In 2008, the two launched SiteCompli, which allows property managers to track their compliance with city laws, and today have several high-profile real estate clients.

The company aggregates data from more than a dozen city agencies, including the Department Of Buildings, Department of Sanitation and the Environmental Control Board. It’s handling a portfolio that includes major commercial and residential firms such as Vornado Realty Trust, Silverstein Properties, Tishman Speyer, Related Companies and CooperSquare Management, Griffith said.

PHOTOGRAPH OF BARROCAS FOR THE REAL DEAL BY CHRIS MARTIN

82 April 2013 www.TheRealDeal.com

www.TheRealDeal.com January 2011 25

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Technology SiteCompli emails landlords about city violations on their properties, and landlords can also log on to the site and track violations across their building portfolios.

“It really doesn’t matter what type of owner you are,” Griffith said, noting that tightening regulations and stiffer penalties affect all owners.

Until now, he said, landlords spent much of their time tracking down violations rather than addressing them.

The company, Griffith said, had been “profitable from very early on.”

Clients are charged $1 per month for each residential apartment in their portfolios, with discounts for owners of larger portfolios. Since the company monitors nearly half a million residential units, TRD estimates its annual revenue from its residential business to be $3 million.

Commercial landlords are charged $1 per month per 1,000 square feet, with larger portfolios paying a lower rate. Since SiteCompli claims to cater to more than half of the city’s office buildings, or roughly 225 million square feet of office space, TRD estimates its annual revenue from commercial clients could be up to $2.2 million.

Griffith declined to disclose specific numbers, but said the estimate isn’t far off. He added the company is rapidly growing, with its team of 20 employees expected to double by the end of the year.

Korel Oktar, director of engineering and product, leads a discussion with colleagues at View the Space. CEO and founder Nick Romito, in the red shirt, is all ears.

The neighborhood newbie: BlockAvenue

B

lockAvenue takes Big Data and gives out information about little areas.

The company assigns a letter grade to every 300-square-foot space in the country based on publicly available and crowdsourced information about parks, restaurants, pubs, schools, transit stops, crime and other lifestyle indicators. Though the service is free, founder Tony Longo envisions revenue from premium memberships as well as data licensing and advertising income in the near future.

Longo said the service, which rolled out in beta in September but will officially launch this month, gives developers detailed information about potential customers in a given area, which can help them decide where to locate a project.

And BlockAvenue helps brokers better target homebuyers and renters. For example, a broker armed with information about school enrollment and ratings can better sell to homeowners looking to move into a top school district.

Longo, who sold his Boston-based online brokerage CondoDomain to Better Homes Realty last year for an undisclosed amount, has already signed on New York–based clients such as

684 April 2013 www.TheRealDeal.com

Halstead Property’s luxury marketing division as well as apartment ratings start-up Rentenna. He said the companies use BlockAvenue data to zero in on differences within neighborhoods.

“Not like Tribeca versus the Upper East Side — that’s two different cities.

More like Murray [Street] and Greenwich [Street] versus Murray and West Broadway.”

The company will soon be able to harness data from social networks such as Twitter and Facebook, Longo said, to give users an even more granular picture of the perks and pitfalls of living in a particular micro-neighborhood.

The commercial cloud: View the Space

S

ince launching in 2011, View the Space has signed on commercial behemoths such as SL Green Realty, Vornado and Silverstein Properties.

The real estate technology firm creates online video tours of Manhattan office spaces. Landlords and their brokers can share the video with potential tenants, and then track how those videos are viewed and shared. (View the Space informs users in advance that their activity will be monitored, according to the company’s privacy policy.)

“If a prospective tenant shares a

link between three to five times, 95 percent of the time the tenant will end up coming to the building,” said founder Nick Romito, a professional surfboarder-turned-commercial broker who worked at Murray Hill Properties and Titan Global Advisors.

“We can show brokers that it takes you exactly these many tours and calls to get to a tour, to get to a proposal, to get to a lease,” he said.

A large number of Manhattan’s Class A and B buildings are signed up for the service, and Romito expects to hit the 50 percent mark by the end of June.

Continued on page 144

PHOTOGRAPH OF VIEW THENovember SPACE BY JAMES LEONZIO www.TheRealDeal.com 2012 51

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Greenpoint’s“Girls”effect

An uptick in the economy, plus exposure from the hit show, leads to more activity for North Brooklyn nabe

G

By Claire Wilson reenpoint has received a lot of attention lately for its role as the setting for the HBO mega-hitseries “Girls.” That exposure, brokers say, has boosted the neighborhood’s rental market. “We get more and more calls there for rentals every day,” said David Behin of the brokerage MNS. And while the twenty-something crowd at Grumpy’s Café — the Meserole Avenue hangout featured on the show — probably can’t afford to buy real estate, the Greenpoint residential sales market is also seeing an uptick.

Sometimes referred to as “Little Poland” due to its large population of Polish immigrants, Greenpoint’s housing stock is composed mostly of low-rise brownstones and attached single-family houses. The area has virtually no co-ops, noted Jonathan Miller, CEO of appraisal firm Miller Samuel.

Along with Williamsburg, the Greenpoint waterfront was rezoned in 2005 from industrial to mixed-use, but the downturn halted much of the planned residential development there. Now that the economy is improving, however, a slew of new residential buildings are popping up, including two massive rental projects: Park Tower Group’s 5,000-unit Greenpoint Landing and a 210unit project by the Domain Companies.

The two are the first large-scale residential projects in Greenpoint since the rezoning.

Plans for two other large residential developments — one by the Chetrit Group and another by Red Sky Capital — have not been made public, and neither developer returned calls for comment.

The neighborhood also has nearly a dozen boutique condo buildings on the market or in the works. And the units in those projects are selling quickly amid high demand and low inventory, said David Maundrell, president of the brokerage aptsandlofts.com, which is marketing several new buildings in the neighborhood, including 145 McGuinness Boulevard, 287299 McGuinness Boulevard, 141 Dupont Street and 98 Clay Street.

Prices are on the rise, too.

The average price per square foot for a

1133 Manhattan Avenue Developer: The Domain Companies Units: 210 rentals Status: Opening August 2014 his 270,000-square-foot, $67 million project will start leasing units this summer. A joint venture between the city, Goldman Sachs and Domain, it’s the only 5020-30 mixed-use project in Greenpoint’s latest wave of new development, and involves the remediation of a brownfield site.

T

88 April 2013 www.TheRealDeal.com

Matthew Schwartz, left, and Chris Papamichael, both principals at the Domain Companies, which is building a 210-unit rental at 1133 Manhattan Avenue

From left: 48 Box Street, a recently sold-out six-unit condo building; “Girls” star Lena Dunham at Grumpy’s Café, the Meserole Avenue hangout featured on the hit HBO show; and 58 Kent Street, which is being renovated by crowd-funding website Kickstarter to house its headquarters.

The average price per square foot for a condo in Greenpoint jumped 22.2 percent in 2012’s fourth quarter from the same period the year before.

Greenpoint condo was $739 in the fourth quarter of 2012, jumping 22.2 percent from $605 per square foot in the same quarter of 2011, according to data from Miller Samuel.

The average condo sales price, meanwhile, grew slightly to $610,048 in the fourth quarter, up from $601,070 in the same period of the previous year.

Meanwhile, rents in existing buildings are skyrocketing, brokers said.

Bram Lefevere, vice president with bro-

kerage Miron Properties, estimated that Greenpoint rents increased by more than 30 percent in 2012, and said he expects a similar increase in 2013.

“A decent two-bedroom two years ago rented for $1,900,” Lefevere said. “Last year, it went up to $2,400, and this year it’s going to be $2,800.”

Still, Greenpoint’s lack of subway access will likely limit price growth.

It currently takes two subways or a ferry

to get to Manhattan, and many area residents walk over the Pulaski Bridge to Long Island City to catch the 7 subway line, Behin said.

The city is looking into adding stops to the G line, but for now, “Greenpoint is getting rents of $45 to $50 a foot, and I think landlords would get 20 to 25 percent more if you had better transportation,” Behin said.

This month, The Real Deal looked at some of the residential, commercial and retail newcomers to Greenpoint.

According to Matthew Schwartz, a principal at Domain, one-bedroom units will range in size from 650 to 700 square feet, while two-bedroom units will measure 900 to 1,000 square feet. The modern and rustic design is informed by the warehouse architecture of the surrounding area, Schwartz said. Amenities will include a fitness center, a business center/conference room aimed at tenants who work from home, a residents’ lounge, a landscaped outdoor space

and a roof deck. There’s also a 123-car parking garage and 8,000 square feet of groundfloor retail space.

Landing project will finally break ground in early 2014, with construction beginning on the first of 11 rental buildings, said Alfred Bradshaw, executive vice president of the Park Tower Group. All of the buildings will be between 20 and 40 stories, he noted, adding that the first building will include 350 units. The project will also contain a waterfront promenade, public parks, a marina and a public school. Handel Architects

Greenpoint Landing (Franklin and Commercial streets) Developer: Park Tower Group Units: 5,000 rentals Status: Groundbreaking early 2014 talled for years during the downturn, the 22-acre waterfront Greenpoint

S

Continued on page 132

www.TheRealDeal.com March 2012 00

VITAL STATS NAME: Michael Shah AGE: 35 TITLE AND COMPANY:

Principal, DelShah Capital HOMETOWN:

Brookville, N.Y. CURRENTLY LIVES AT:

15 Union Square West

BUILDING BLOCKS How many buildings does DelShah Capital own?

We own 25 but we’ll be closing on another four shortly, bringing it to 29. Twenty-four of the 29 are rental buildings with a total of 1,750 units.

What are the biggest challenges of being a landlord in the city?

The constant rises in real estate taxes as well as dealing with landlord and tenant court. For us, real estate taxes have gone up something between 5 and 12 percent a year over the last four years, which is huge because rents [don’t match up]. And when tenants don’t pay and you have to take them to court, it’s a very lengthy process. In Manhattan, it’s not that bad. In Brooklyn and the Bronx, it can be years.

How did you get into real estate?

I was 28 or 29 and was very unhappy being a bankruptcy, mergers and acquisitions lawyer, so I decided to quit. My parents had done some investing in affordable housing and I needed something to do, so I started [helping them].

When did you start your company?

In 2006. The first two buildings were affordable housing on Staten Island. Then I started buying in Brooklyn and Manhattan.

LANDLORD LIFE What’s been your strangest tenant experience?

When I was converting 403 East 90th Street into for-sale co-ops — the building had been turned into co-ops in the 1980s, although the owner kept all the shares and ran it as a rental — one tenant claimed that the [first] coop conversion had been done fraudulently. He had only moved into a free-market apartment in the building about a year and a half previously.

He tried to claim that he was entitled to stay there permanently at the rent from [the 1980s]. He litigated that out for two years but ultimately the judge evicted him and gave us a judgment for two years rent.

Have you got a tenant horror story?

There was a tenant, a single-room-occupancy tenant, who constantly used the sink as their toilet. They would defecate in the sink and then call the super to say that the sink was blocked. That building has since been sold.

What do you like most about the job?

We do a lot of renovation and redevelopment. It’s very creative to think about how to best position a property for a neighborhood, especially for one that’s undergoing a cultural shift. We recently repositioned a property at the corner of 126th Street and Lenox Avenue in a part of South Harlem that was gentrifying. We [renovated] and increased the rent roll by almost 40 percent. We also installed a bar in the retail space, which became a popular neighborhood watering hole.

90 April 2013 www.TheRealDeal.com

What are the tools of the trade you couldn’t live without?

I would say our LexisNexis database. For our rent-stabilized tenants, we search it to make sure that they’re who they’re supposed to be. You’d be surprised what we find. If you’re in a rent-stabilized apartment, it’s supposed to be your primary residence. A tenant in one of our buildings on Chrystie Street had just bought a new home and was continuing to keep his $300-a-month apartment, for instance.

BOTTOM LINE You’re well known for buying troubled debt. Did that expertise come from being an attorney?

It did. [That expertise is] less of an advantage now than it was for the last four years. Now the market is very strong so there aren’t as many properties in distressed situations.

How did the recession impact your business?

It was phenomenal. I bought a lot all throughout 2009 and 2010. We were very active buying non-performing notes.

Are you getting more interested in condo projects with your involvement in 22 Renwick Street? [Last year, DelShah acquired the mortgage debt on No. 22 Renwick, a boutique condominium in the Hudson Square neighborhood.] We are only invested in condos for things that have a two-year, in-and-out period.

With 22 Renwick, for example, it was 70 percent complete [when we came in].

We’re going to start sales this month.

That’s a very short window.

You recently bought a package of three-family homes in East New York. What made that deal attractive to you?

I wasn’t thrilled about buying those.

We were following the bankruptcy of a large office building called Cross Island Plaza in Queens. [The homes] had the same creditors and so we became familiar with them. We ended up not getting Cross Island Plaza, but these houses were going up for auction, and we said we’d take them at a certain price. They sort of fell into our lap at that price. I was kind of hoping that they wouldn’t. It’s going to be a challenge operationally, and it’s not really what we do. Our exit is also very dependent on the housing market as opposed to the rental market.

What do you have in the pipeline?

We’ll be closing shortly on the Pop Burger building at 58-60 Ninth Avenue and 69 Gansevoort Street. Pop Burger is leaving the space so there’s a possibility to re-lease. We feel very bullish about that leasing market. By Katherine Clarke

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Brooklyn brownstones bringing bigger bucks

Short supply is leading to whopping price tags, as more Manhattanites switch boroughs

By Zachary Kussin esides kid-friendly restaurants and baby strollers, Brownstone Brooklyn neighborhoods — think Park Slope, Boerum Hill — are amassing something else: more townhouse listings and sales over $3 million.

The uptick has been staggering — and Park Slope exemplifies it. Right now, for example, the neighborhood has 10 townhouses above $3 million on the market.

This year’s first quarter is building on 2012’s final quarter, when the market had eight townhouse listings in the $3 million-plus category.

By comparison, 2011’s fourth quarter had only one townhouse listing above $3 million.

Park Slope’s rash of expensive listings means the average closed sales price for all the neighborhood’s townhouses is up considerably, too.

That number skyrocketed 40 percent to $1.7 million in the fourth quarter of last year, up from $1.2 million in the same period of 2011, according to data provided by appraiser Jonathan Miller. By contrast, the average sale price for Manhattan townhouses increased 6 percent year over

B

In my younger and more vulnerable years my father gave me some advice that I’ve been turning over in my mindever since.‘Whenever you feel like criticizing any one,’ he told me,‘just remember that all the people in this world haven’t had the advantages that you’ve had.’ He didn’t say any more but we’ve always been unusually communicative in a reserved way, and I understood that he meant a great deal more than that. In consequence I’m inclined to reserve all judgments, a habit that has opened up many curious natures to me and also made me the victim of not a few veteran bores. The abnormal mind is quick to detect and attach itself to this quality when it appears in a normal person, and so it came about that in college I was unjustly accused of being a politician, because I was privy to the secret griefs of wild, unknown men. Most of the confidences were unsought—frequently I have feigned sleep, preoccupation, or a hostile levity when I realized by some unmistakable sign that an intimate revelation was quivering on the horizon—for the intimate revelations of young men or at least the terms in which they express them are usually plagiaristic and marred by obvious suppressions. Reserving judgments is a matter of infinite hope. I am still a little afraid of missing something if I forget that, as my father snobbishly suggested, and I snobbishly repeat a sense of the fundamental decencies is parcelled out unequally at birth. And, after boasting this way of my tolerance, I come to the admission that it has a limit. Conduct may be founded on the hard rock or the wet marshes but after a certain point I don’t care what it’s founded on. When I came back from the East last autumn I felt that I wanted the world to be in uniform and at a sort of moral attention forever; I wanted no more riotous excursions with privileged glimpses into the human heart. Only Gatsby, the man who gives his name to this book, was exempt from my reaction—Gatsby who represented everything for which I have an unaffected scorn. If personality is an unbroken series of successful gestures, then there was something gorgeous about him, some heightened sensitivity to the promises of life, as if he were related to one of those intricate machines that register earthquakes ten thousand miles away.

This responsiveness had nothing to do with that flabby impressionability which is dignified under the name of the ‘creative temperament’— it was an extraordinary gift for hope, a romantic readiness such as I have never found in any other person and which it is not likely I shall ever find again. No—Gatsby turned out all right at the end; it is what preyed on Gatsby, what foul dust floated in the wake of his dreams that temporarily closed out my interest in the abortive sorrows and shortwinded elations of men. My family have been prominent, well-to-do people in this middle-western city for three generations.

The Carraways are something of a clan and we have a tradition that we’re descended from the Dukes of Buccleuch, but the actual founder of my line was my grandfather’s brother who came here in fifty-one, sent a substitute to the Civil War and started the wholesale hardware business that my father carries on today. I never saw this great-uncle but I’m supposed to look like him—with special reference to the rather hard-boiled painting that hangs in Father’s office. I graduated from New Haven in 1915, just a quarter of a century after my father, and a little later I participated in that delayed Teutonic migration known as the Great War. I enjoyed the counter-raid so thoroughly that I came back restless. Instead of being the warm center of the world the middle-west now seemed like the ragged edge of the universe—so I decided to go east and learn the bond business. Everybody I knew was in the bond business so I supposed it could support one more single man. All my aunts and uncles talked it over as if they were choosing a prep-school for me and finally said, ‘Why—yees’ with very grave, hesitant faces. Father agreed to finance me for a year and after various delays I came east, permanently, I thought, in the spring of twenty-two. The practical thing was to find rooms in the city but it was a warm season and I had just left a country of wide lawns and friendly trees, so when a young man at the office suggested that we take a house together in a commuting town it sounded like a great idea. He found the house, a weather beaten cardboard bungalow at eighty a month, but at the last minute the firm ordered him to Washington and I went out to the country alone. I had a dog, at least I had him for a few days until he ran away, and an old Dodge and aFinnish woman who made my bed and cooked breakfast and muttered Finnish wisdom to herself over the electric stove. It was lonely for a day or so until one morning some man, more recently arrived than I, stopped me on the road. ‘How do you get to West Egg village?’ he asked helplessly. I told him. And as I walked on I was lonely no longer. I was a guide, a pathfinder, an original settler. He had casually conferred on me the freedom of the neighborhood. And so with the sunshine and the great bursts of leaves growing on the trees—just as things grow in fast movies—I had that familiar conviction that life was beginning over again with the summer. There was so much to read for one thing and so much fine health to be pulled down out of the young breath-giving air. I bought a dozen volumes on banking and credit and investment securities and they stood on my shelf in red and gold like new money from the mint, promising to unfold the shining secrets that only Midas and Morgan and Maecenas knew. And I had the high intention of reading many other books besides. I was rather literary in college—one year I wrote a series of very solemn and obvious editorials for the ‘Yale News’—and now I was going to bring back all such things into my life and become again that most limited of all specialists, the ‘well-rounded man.’ This isn’t just an epigram—life is much more successfully looked at from a single window, after all. It was a matter of chance that I should have rented a house in one of the strangest communities in North America. It was on that slender riotous island which extends itself due east of New York and where there are, among other natural curiosities, two unusual formations of land. Twenty miles from the city a pair of enormous eggs, identical in contour and separated only by a courtesy bay, jut out into the most domesticated body of salt water in the Western Hemisphere, the great wet barnyard of Long Island Sound. They are not perfect ovals—like the egg in the Columbus story they are both crushed flat at the contact end—but their physical resemblance must be a source of perpetual confusion to the gulls that fly overhead. To the wingless a more arresting phenomenon is their dissimilarity in every particular except shape and size. I lived at West Egg, the—well, the less fashionable of the two, though this is a most superficial tag to express the bizarre and not a little sinister contrast between them.

My house was at the very tip of the egg, only fifty yards from the Sound, and squeezed between two huge places that rented for twelve or fifteen thousand a season. The one on my right was a colossal affair by any standard—it was a factual imitation of some Hôtel de Ville in Normandy, with a tower on one side, spanking new under a thin beard of raw ivy, and a marble swimming pool and more than forty acres of lawn and garden. It was Gatsby’s mansion. Or rather, as I didn’t know Mr. Gatsby it was a mansion inhabited by a gentleman of that name. My own house was an eye-sore, but it was a small eye-sore, and it had been overlooked, so I had a The Great Gatsby view of the water, a partial view of my neighbor’s lawn, and the consoling proximity of millionaires—all for eighty dollars a month. Across the courtesy bay the white palaces of fashionable East Egg glittered along the water, and the history of the summer really begins on the evening I drove over there to have dinner with the Tom Buchanans. Daisy was my second cousin once removed and I’d known Tom in college. And just after the war I spent two days with them in Chicago. Her husband, among various physical accomplishments, had been one of the most powerful ends that ever played football at New Haven—a national figure in a way, one of those men who reach such an acute limited excellence at twenty-one that everything afterward savors of anti-climax. His family were enormously wealthy—even in college his freedom with money was a matter for reproach—but now he’d left Chicago and come east in a fashion that rather took your breath away: for instance he’d brought down a string of polo ponies from Lake Forest. It was hard to realize that a man in my own generation was wealthy enough to do that. Why they came east I don’t know. They had spent a year in France, for no particular reason, and then drifted here and there unrestfully wherever

92 April 2013 www.TheRealDeal.com

year in 2012 to $5.3 million, according to the Douglas Elliman townhouse report.

Brokers attribute the price hikes to a tight inventory.

“In Brooklyn, townhouses [are particularly] hot right now,” said Jennifer Johnsen, executive director of sales at MNS. The supply of Brooklyn and Manhattan townhouses is at a seven-year low right now, she said. In Manhattan, townhouses make up a small portion of housing — 3 percent of sales, which drives many buyers to look in Brooklyn, she added.

“Brooklyn offers the best of all worlds when you are out-priced from Manhattan townhome purchasing,” Johnsen said.

The short supply of homes coupled with the pull of the Brownstone Brooklyn neighborhoods explain the price increases, according to Patricia Neinast, a senior vice president at the Corcoran Group’s Park Slope office.

“There’s not enough inventory to handle the amount of buyers,” said Neinast, who recently received a full-price offer for 113 Prospect Park West, a townhouse she’d listed for $4.75 million with her daughters, Kelly and Kristin Neinast.

And as I walked on I was lonely no longer. I was a guide, a pathfinder, an original settler. He had c a s u a l l y conferred on me the freedom of t h e neighborhood. And so with the sunshine and the great bursts of leaves growing on the trees—just as things grow in fast movies—I had that familiar conviction that life was beginning over again with the summer. There was so much to read for one thing and so much fine health to be pulled down out of the young breath-giving air. I bought a dozen volumes on banking and credit and investment securities and they stood on my shelf in red and gold like new money from the mint, promising to unfold the shining secrets that only Midas and Morgan and Maecenas knew.

And I had the high intention of reading many other books besides. I was rather literary in college—one year I wrote a series of very solemn and obvious editorials for the ‘Yale News’—and now I was going to bring back all such things into my life and become again that most limited of all specialists, the ‘well-rounded man.’ This isn’t just an epigram—life is much more successfully looked at from a single window, after all. It was a matter of chance that I should have rented a house in one of the strangest communities in North America. It was on that slender riotous island which extends itself due east of New York and where there are, among other natural curiosities, two unusual formations of land. Twenty miles from the city a pair of enormous eggs, identical in contour and separated only by a courtesy bay, jut out into the most domesticated body of salt water in the Western Hemisphere, the great wet barnyard of Long Island Sound. They are not perfect ovals—like the egg in the Columbus story they are both crushed flat at the contact end—but their physical resemblance must be a source of perpetual confusion to the gulls that fly overhead. To the wingless a more arresting phenomenon is their dissimilarity in every particular except shape and size. I lived at West Egg, the—well, the less fashionable of the two, though this is a most superficial tag to express the bizarre and not a little sinister contrast between them. My house was at the very tip of the egg, only fifty yards from the Sound, and squeezed between two huge places that rented for twelve or fifteen thousand a season.

The one on my right was a colossal affair by any standard—it was a factual imitation of some Hôtel de Ville in Normandy, with a tower on one side, spanking new under a thin beard of raw ivy, and a marble swimming pool and more than forty acres of lawn and garden. It was Gatsby’s mansion. Or rather, as I didn’t know Mr. Gatsby it was a mansion inhabited by a gentleman of that name. My own house was an eye-sore, but it was a small eye-sore, and it had been overlooked, so I had a The Great Gatsby view of the water, a partial view of my neighbor’s lawn, and the consoling proximity of millionaires—all for eighty dollars a month. Across the courtesy bay the white palaces of fashionable East Egg glittered along the water, and the history of the summer really begins on the evening I drove over there to have dinner with the Tom Buchanans. Daisy was my second cousin once removed and I’d known Tom in college. And just after the war I spent two days with them in Chicago. Her husband, among various physical accomplishments, had been one of the most powerful ends that ever played football at New Haven—a national figure in a way, one of those men who reach such an acute limited excellence at twenty-one that everything afterward savors of anti-climax. His family were enormously wealthy—even in college his freedom with money was a matter for reproach—but now he’d left Chicago and come east in a fashion that rather took your breath away: for instance he’d brought down a string of polo ponies from Lake Forest. It was hard to realize that a man in my own generation was wealthy enough to do that. Why they came east I don’t know. They had spent a year in France, for no particular reason, and then drifted here and there unrestfully wherever

Buyers realize they can get more space for fewer dollars than in Manhattan.

“You get more bang for your buck here,” said Jackie Lew, an executive vice president at Halstead Property’s Park

Park Slope’s 50-foot-wide Tracy Mansion, at 105 Eighth Avenue, is listed for $18 million.

Slope office.

The sales trend is strongest in Park Slope, she said, but high-priced sales are picking up in other Brownstone Brooklyn neighborhoods, such as Cobble Hill, Boerum Hill and Brooklyn Heights.

In Cobble Hill, for example, the average price of townhouse sales in last year’s fourth quarter hit $2.4 million, up from $1.2 million in the same period in 2011 — a whopping 108 percent. In Brooklyn Heights, the

average sales price was $3.6 million, still well over that pricey $3 million benchmark, but a dip of 22 percent from $4.7 million the year prior. (It’s worth noting that the generally small number of townhouse sales in each neighborhood may exaggerate percentage change figures).

Lew, with Park Slope co-executive vice president Marc Wisotsky, sold a townhouse in January at 848 Carroll Street for $3.6 million.

Now the duo has the 50-foot-wide Tracy Mansion at 105 Eighth Avenue on the market, asking a sky-high $18 million.

While value is a strong pull, an even bigger group of Manhattanites are being charmed by Park Slope’s “small-town feel” than before, said Peter Grazioli, a Park Slope–based Halstead agent, who listed a $3.8 million single-family townhouse at 43 Eighth Avenue in January and sold it within 48 hours — at asking price.

“It’s always been an active townhouse market,” Grazioli said. “But in the past year, the Brooklyn inventory has dried up.”

Now, he added, when a home in Park Slope hits the market, “it’s high on people’s radar.” TRD

.com Every building tells a story...

The younger of the two was a stranger to me. She was extended full length at her end of the divan, completely motionless and with her chin raised a little as if she were balancing something on it which was quite likely to fall. If she saw me out of the corner of her eyes she gave no hint of it—indeed, I was almost surprised into murmuring an apology for having disturbed her by coming in. The other girl, Daisy, made an attempt to rise—she leaned slightly forward with a conscientious expression— then she laughed, an absurd, charming little laugh, and I laughed too and came forward into the room.

‘I’m p-paralyzed with happiness.’ She laughed again, as if she said something very witty, and held my hand for a moment, looking up into my face, promising that there was no one in the world she so much wanted to see. That was a way she had. She hinted in a murmur that the surname of the balancing girl was Baker. (I’ve heard it said that Daisy’s murmur was only to make people lean toward her; an irrelevant criticism that made it no less charming.) At any rate Miss Baker’s lips fluttered, she nodded at me almost imperceptibly and then quickly tipped her head back again—the object she was balancing had obviously tottered a little and given her something of a fright.

Again a sort of apology arose to my lips. Almost any exhibition of complete self sufficiency draws a stunned tribute from me. I looked back at my cousin who began to ask me questions in her low, thrilling voice. It was the kind of voice that the ear follows up and down as if each speech is an arrangement of notes that will never be played again. Her face was sad and lovely with bright things in it, bright eyes and a bright passionate mouth—but there was an excitement in her voice that men who had cared for her found difficult to forget: a singing compulsion, a whispered ‘Listen,’ a promise that she had done gay, exciting things just a while since and that there were gay, exciting things hovering in the next hour. I told her how I had stopped off in Chicago for a day on my way east and how a dozen people had sent their love through me. ‘Do they miss me?’

She laughed again, as if she said something very witty, and held my hand for a moment, looking up into my face, promising that there was no one in the world she so much wanted to see. That was a way she had. She hinted in a murmur that the surname of the balancing girl was Baker. (I’ve heard it said that Daisy’s murmur was only to make people lean toward her; an irrelevant criticism that made it no less charming.) At any rate Miss Baker’s lips fluttered, she nodded at me almost imperceptibly and then quickly tipped her head back again—the object she was balancing had obviously tottered a little and given her something of a fright.

Again a sort of apology arose to my lips.

Almost any exhibition of complete self sufficiency draws a stunned tribute from me. I looked back at my cousin who began to ask me questions in her low, thrilling voice. It was the kind of voice that the ear follows up and down as if each speech is an arrangement of notes that will never be played again. Her face was sad and lovely with bright things in it, bright eyes and a bright passionate mouth—but there was an excitement in her voice that men who had cared for her found difficult to forget: a singing compulsion, a whispered ‘Listen,’ a promise that she had done gay, exciting things just a while since and that there were gay, exciting things hovering in the next hour. I told her how I had stopped off in Chicago for a day on my way east and how a dozen people had sent their love through me. ‘Do they miss me?’

“ T h e whole town is desolate. All the cars have the left rear wheel painted black as a mourning wreath, and there’s a persistent wail all night along the north shore.” “How gorgeous! Let’s go back, Tom. To-morrow!”

Then she added irrelevantly: “You ought to see the baby.” “I’d like to.” “She’s asleep.

She’s three years old. Haven’t you ever seen her?” “Never.” “Well, you ought to see her.

She’s ——” Tom Buchanan, who had been hovering restlessly about the room, stopped and rested his hand on my shoulder “What you doing, Nick?” “I’m a bond man.” “Who with?” I told him.

“Never heard of them,” he remarked decisively This annoyed me. “You will,” I answered shortly.“You will if you stay in the East.” “Oh, I’ll stay in the East, don’t you worry,” he said, glancing at Daisy and then back at me, as if he were alert for something more. “I’d be a God damned fool to live anywhere else.”

At this point Miss Baker said: “Absolutely!” with such suddenness that I started — it was the first word she uttered since I came into the room. Evidently it surprised her as much as it did me, for she yawned and with a series of rapid, deft movements stood up into the room. “I’m stiff,” she complained, “I’ve been lying on that sofa for as long as I can remember.” “Don’t look at me,” Daisy retorted, “I’ve been trying to get you to New York all afternoon.” “No, thanks,” said Miss Baker to the four cocktails just in from the pantry, “I’m absolutely in training.”

Her host looked at her incredulously.

“You are!” He took down his drink as if it were a drop in the bottom of a glass. “How you ever get anything done is beyond me.”

I looked at Miss Baker, wondering what it was she “got done.” I enjoyed looking at her. She was a slender, small-breasted girl, with an erect carriage, which she accentuated by throwing her body backward at the shoulders like a young cadet. Her gray sun-strained eyes looked back at me with polite reciprocal curiosity out of a wan, charming, discontented face.

It occurred to me now that I had seen her, or a picture of her, somewhere before.

“ Yo u live in W e s t Egg,” s h e r e marked contemptuously. “I know somebody there.”

“I don’t know a single ——”“You must know Gatsby.” “Gatsby?” demanded Daisy. “What Gatsby?” Before I could reply that he was my neighbor dinner was announced; wedging his tense arm imperatively under mine, Tom Buchanan compelled me from the room as though he were moving a checker to another square. Slenderly, languidly, their hands set lightly on their hips, the two young women preceded us out onto a rosy-colored porch, open toward the sunset, where four candles flickered on the table in the diminished wind. “Why candles?” objected Daisy, frowning. She snapped them out with her fingers. “In two weeks it’ll be the longest day in the year.” She looked at us all radiantly. “Do you always watch for the longest day of the year and then miss it?

I always watch for the longest day in the year and then miss it.”

“We ought to plan something,” yawned Miss Baker, sitting down at the table as if she were getting into bed.

“All right,” said Daisy. “What’ll we plan?” She turned to me helplessly: “What do people p l a n ? ” Before I could answer her eyes fastened with an awed expression on her little finger.

“Look!”

she

complained; “I

hurt

it.”

We all looked — the knuckle was black and b l u e .

“You did it, Tom,” she said accusingly.“I know you didn’t mean to, but you did do it. That’s what I get for marrying a brute of a man, a great, big, hulking physical specimen of a ——” “I hate that word hulking,” objected Tom crossly, “even in kidding.” “Hulking,” insisted Daisy. Sometimes she and Miss Baker talked at once, unobtrusively and with a bantering inconsequence that was never quite chatter, that was as cool as their white dresses and their impersonal eyes in the absence of all desire. They were here, and t h

unexpected w a y .

“Civilization’s going to pieces,” broke out Tom violently. “I’ve gotten to be a terrible pessimist about things. Have you read ‘The Rise of the Colored Empires’ by this man Goddard?” “Why, no,” I answered, rather surprised by his tone. “Well, it’s a fine book, and everybody ought to read it. The idea is if we don’t look out the white race will be — will be utterly submerged. It’s all scientific stuff; it’s been proved.”

“Tom’s getting very profound,” said Daisy, with an t expression of unthoughtful sadness. “He reads deep books with long words in them. What was that he word we ——” “Well, these books are all scientific,” y insisted Tom, glancing at her impatiently. “This a c fellow has worked out the whole thing. It’s up to us, ceptwho are the dominant race, to watch out or these ed Tom other races will have control of things.” and me, “We’ve got to beat them down,” whispered Daisy, making winking ferociously toward the fervent sun. only a “You ought to live in California —” began Miss p o l i t e Baker, but Tom interrupted her by shifting heavily in pleasant his chair.“This idea is that we’re Nordics. I am, and effort to e n - you are, and you are, and ——” After an tertain or to be infinitesimal hesitation he included Daisy with a entertained. They knew slight nod, and she winked at me again. “— And that presently dinner we’ve produced all the things that go to make would be over and a little civilization — oh, science and art, and all that. Do later the evening too you see?”There was something pathetic in his would be over and concentration, as if his complacency, more acute casually put away. It was than of old, was not enough to him any more. When, sharply different from almost immediately, the telephone rang inside and the West, where an the butler left the porch Daisy seized upon the evening was hurried momentary interruption and leaned toward me from phase to phase “I’ll tell you a family secret,” she whispered toward its close, in a enthusiastically. “It’s about the butler’s nose. Do you continually disappointed want to hear about the butler’s nose?”“That’s why I anticipation or else in came over to-night.”“Well, he wasn’t always a sheer nervous dread of butler; he used to be the silver polisher for some the moment itself. people in New York that had a silver service for two “You make me feel hundred people. He had to polish it from morning uncivilized, Daisy,” I till night, until finally it began to affect his nose confessed on my second ——”“Things went from bad to worse,” suggested glass of corky but rather Miss Baker.“Yes. Things went from bad to worse, impressive claret. “Can’t until finally he had to give up his position.” you talk about crops or For a moment the last sunshine fell with romantic something?” I meant affection upon her glowing face; her voice nothing in particular by compelled me forward breathlessly as I listened — this remark, but it was then the glow faded, each light deserting her with taken up in an lingering regret, like children leaving a pleasant street at dusk.

?

The butler came back and murmured something close to Tom’s ear, whereupon Tom frowned, pushed back his chair, and without a word went inside. As if his absence quickened something within her, Daisy leaned forward again, her voice glowing and singing.

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ARCHITECTURE REVIEW

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JA M E S G A R D N E R

All clear on 42nd Street

With the glass Cubes, another victory for Moed de Armas & Shannon

U

pon its completion in the next few months, the Cubes at 120 West 42nd Street will represent one of the most decisive modifications of 42nd Street since Mayor Rudy Giuliani shut down the porn palaces nearly two decades ago.

Developed by Equity Office, an affiliate of the Blackstone Group, and designed by the architectural firm of Moed de Armas & Shannon, 120 West 42nd Street is located on 42nd Street between Sixth Avenue and Broadway. The 75,000-square-foot glass and steel structure consists entirely of retail space, and announces its mercantile intentions

with flashing LED screens and boldly protruding blocks that define its architectural form. Just as crucially, 120 West 42nd Street does not inhabit the street itself, but extends back from it at a right angle, occupying a publicly owned, private space. (The Cubes looks from the street like two separate buildings, but the two sides are actually united underground.)

To anyone paying close attention to the New York architectural scene, it will come as no surprise that 120 West 42nd Street is the handiwork of MdeAS, a 22-year-old firm that has done more of late to improve the look of New York City — especially Midtown — than any other firm. As conceived by the firm’s principles, Leon Moed, Raul de Armas and Dan Shannon, all of its recent projects have been exemplary illustrations of what is best in Neo-Modernism, a stylistic development that adds sophistication and elegance to the functionalist vocabulary of Modernism, even as it preserves the earlier movement’s insistent right angles and glass curtain walls.

MdeAS’s finesse is very much in evidence at 120 West 42nd Street. The build-

94 April 2013 www.TheRealDeal.com

ing is a departure from the firm’s work in the five boroughs, which has been mostly high-rises. Rather, the Cubes should be seen as a commercial addendum to nearby 1095 Sixth Avenue, a 1974 office building that MdeAS transformed from a hulking, nearly windowless eyesore into the translucent wonder that you see today.

contiguous to 1095 Sixth Avenue, and has been conceived in a more regular and conventional massing that recalls MdeAS’s General Motors Building at Fifth Avenue and 59th Street, while the western building displays more volumetric pyrotechnics.

The two structures flank a 15,000-square-foot, privately owned public space formed by a through-block lot that stretches from 42nd to 41st streets. Landscape architect Abel Bainnson Butz is designing the exterior space.

In total, the project will contain 23,000 square feet of retail space above grade, 55,200 below grade in the cellar

Above, a rendering of 120 West 42nd Street.

Top inset, MdeAS principles Leon Moed, Raul de Armas and Dan Shannon. Bottom inset, a detail of the building.

The Cubes is a bold exercise in shifting volumes that manipulates its building block masses to create an effect like that of the New Museum on the Bowery, but turned on its side. Because of this shift, the project’s two building masses — a fairly regular one-story, glass-enclosed strip to the east, and to the west a more dramatic, four-story structure — are spread out lengthwise rather than rising into the air. The more easterly building is

and sub-cellar, and 4,300 square feet of accessible exterior space. The project will be 85 feet tall at its highest point and occupy three floors (though the rendering makes it look like four). It is also possible that the façade will be enhanced by massive LED screens along 42nd Street itself, such as abound in Times Square, if the eventual tenant requires it. I fear, however, that such screens could distract, as they invariably do, from the architectural integrity of the structure.

The Cubes epitomizes what I have spoken of before as MdeAS’s “house style,” and, indeed, there are few firms whose handiwork is so easily recognized.

Foremost among the firm’s defining qualities, apart from geometric and structural purity, is the cleanness of its use of glass — the way it sits in its frame, the perfect flatness of it and of the surface as a whole, all of which are exemplified at 120 West 42nd Street.

Who would suppose that the straight-forward employment of a grid could yield such variety or such individuality? There is rarely a curve in the works of MdeAS, one eminent exception being the Gotham Center in Queens. Instead, the firm’s architects invoke the grid to form pure, regularized patterns, often enlivened and varied by colored infill of gray

or green. That is not the case at 120 West 42nd, however, where the glass walls have all the transparent clarity of spring water in crystal. With the Cubes, MdeAS has managed, yet again, to wring considerable variety, originality and beauty out of their grids, notwithstanding the severe reduction of their terms.

Both through the artisanal excellence of its manufacture and through the boldness of its forms, the Cubes is likely to fundamentally alter this stretch of 42nd Street, which has none of the classical beauty or greenery that you find between Fifth and Sixth avenues, with the library and Bryant Park, nor the pulsating drama of Times Square and the brilliantly lit theaters between Seventh and Eighth avenues. Instead it has been distinguished, to date, by high-rises like the Condé Nast Building at 4 Times Square and One Bryant Park, some of them quite dreary. Other than that, it was a throughway rather than a destination.

But when this new, beautiful and vibrant retail space is finally completed, visitors to this block will finally have a reason to linger. TRD

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Q&A

An East End sales surge Hamptons activity is on the rise heading into summer

BY MELISSA DEHNCKE-MCGILL ong Island’s East End was hit hard by the real estate downturn, but not by Hurricane Sandy, which largely bypassed the area. Thanks to that stroke of good luck — coupled with the improving economy — the popular vacation spots in the Hamptons and North Fork are now seeing a definite rebound from the post-financial crisis slump.

This month, The Real Deal asked residential brokers for the lay of the land on the East End. Hamptons sales activity leaped 29 percent between 2011 and 2012, according to the Corcoran Group, and brokers said they are now seeing bidding wars as the number of homes on the market dwindles. In another positive sign, developers are once again building multimillion-dollar spec homes. Sales prices have now stabilized, brokers said,

L

Ernie Cervi

executive managing director in Bridgehampton, the Corcoran Group How is overall residential sales volume in the Hamptons right now, and how does that compare to a year ago, two years ago and during the boom?

The market is reminiscent of the boom in terms of activity. In the fourth quarter of 2012, sales volume was up 29 percent over 2011. There was a rush to close before the end of the year, so there was heavy activity in December, which is unusual. This year I can tell you that brokers have been involved in bidding wars and well-priced properties coming on to the market are selling.

What’s going on with Hamptons rentals for this upcoming summer? Is the market more or less active than last year at this time?

What new and different trends are you seeing this season?

There is a trend of people going farther east, heading toward Amagansett and Montauk, more than in the past. The new venues attract people. People also feel that they can get more for their money the farther out they go, and that is sometimes true. We have seen an increase on the North Fork as well.

Are sales prices up or down compared to a year ago, two years ago and during the boom?

The median price in the Hamptons for the fourth quarter of 2012 was up 7 percent over 2011 to $1.81 million. But [more notably], there was a 28 percent increase in sales activity in 2012 over 2011.

How are residential sales prices on the North Fork, and how does that compare to the boom?

The median sales price for 2008 on the North Fork was $460,000; the median sales price for 2012 was $415,000.

“Within the next two years we can expect that prices will drift higher again. But for now I think everyone is quite satisfied with the fact that it is possible to sell a house. For a long time, it was very difficult to sell a house.”

PETER TURINO, BROWN HARRIS STEVENS OF THE HAMPTONS More active. I can tell you our [number of ] rentals is up 20 percent just for January and February. There will be another rush of rental activity coming up in early April.

Are rental prices higher or lower than last year at this time?

They are about the same, and we have encouraged landlords that rented with us last year to keep prices the same. We are not in a discount phase, so things are renting at listing price, for the most part. For the things that are not priced properly, there will be a discount, but it’s too early on to talk about that. The rental season is far from over.

76 January 2013 www.TheRealDeal.com

Which price ranges and housing types in the Hamptons are performing best right now?

We have more activity in the $2 to 5 million price range than we had seen in a while. That was probably where most of the inventory was sitting, and that inventory seems to be moving. We have a lot of new developments. For example, in Bridgehampton, a developer is doing 22 homes [priced] from $3.5 to $4 million.

There is another investor about to break ground on 30 homes in the mid-$2 million range. And there are other builders doing high-end, luxury homes. That tells

though they are still off 15 to 20 percent from their boom-time highs. The median price in the Hamptons for the fourth quarter of 2012 climbed slightly from 2011 to $1.81 million, according to Corcoran.

As for the upcoming summer season, brokers said rates for rental homes are roughly on par with last year, and would-be vacationers started looking earlier than usual. But not to worry — “there still are plenty of great homes available for rent” this summer, said Timothy Haftel, a broker in Halstead Property’s Southampton office.

On the retail front, brokers said trendy new hot spots in Montauk — such as the Surf Lodge, Ruschmeyer’s hotel and the Sloppy Tuna restaurant — are prompting home seekers to look farther east for summer vacation locales, among other factors.

For more on the upcoming rental season and more, we turn to our panel of experts.

you that there is confidence in that market and it is selling.

Which price ranges and housing types in the Hamptons are struggling right now?

[Homes in] the $15 million-plus range that are not on the water are not moving fast. But the high end of the market is off to a good start this year, and it was last year as well. At the end of the fourth quarter of 2012, luxury-sales volume was up 13 percent over 2011.

What was the impact of Hurricane Sandy on the Hamptons sales and rental markets?

We were lucky. We didn’t have a lot of damage. There were waterfront homes that had docks that had to be repaired.

But we were not devastated the way other beach communities were. People were looking at waterfront property right after the storm. We are seeing people who would have rented in those affected beach communities coming here to rent. They are test-driving the Hamptons, and that can only bring good things.

What other factors do you think are going to have a big impact on the East End market now or in the near future?

Hedge funds are adding Hamptons properties and commercial properties to their portfolios. So that says something.

What areas of the Hamptons are the strongest for retail? What buzz-worthy new restaurants or stores are debuting this season?

Typically the larger towns like Easthampton and Southampton attract anchor-type stores like Ralph Lauren, Tiffany’s and Michael Kors. There is talk about a Pottery Barn coming to Southampton. We get excited about new restaurants, so it does draw people in.

What is the inventory of available residential homes on the East End and how does that compare to a year ago, two

years ago and during the boom?

At the end of the fourth quarter there were 8,088 units available. At the end of 2011 there were 8,271. So we are seeing a steady decline in inventory. At the low point in 2007, the inventory was down to around 6,200.

Beate Moore

senior vice president, Sotheby’s International Realty What’s going on with Hamptons rentals for this summer?

The activity level is about the same.

Prices are slightly up from last year, but within reason.

Which price ranges and housing types in the Hamptons are performing best right now?

Entry-level homes are being snapped up, but all price ranges are active provided [homes] are priced realistically.

What is the impact of new nightlife destinations in Montauk — such as Surf Lodge, Ruschmeyer’s and the Sloppy Tuna — on the residential market?

The Montauk nightlife attracts the young, hip crowd, but that has not yet translated into more sales.

Diane Saatchi

senior vice president, Saunders & Associates How is overall sales volume in the Hamptons right now?

First-quarter 2013 sales volume is up compared to last year and way, way up compared to prior years. Last year was not bad but was spotty. In some segments www.TheRealDeal.com April 2013 97

Q&A now we are short on inventory and are seeing signs of a seller’s market.

Which price ranges and housing types in the Hamptons are performing best right now?

Seems like most buyers want new construction. I’m not sure if those $3 to $4 million [homes] north of the Montauk Highway and $6 to $15 million [homes] south of the highway are popular because of demand, or because that is the available supply. The under–$2 million [market] is also strong, mainly for resales.

Which towns on the East End are the strongest right now, and which are struggling the most?

Bridgehampton, Sagaponack and Water Mill — south of the highway — are the current center of gravity and have been for the past few years.

What are the most surprising trends you’re seeing in the Hamptons market?

I did not think the market would rebound as quickly as it has. I have even begun to hear about sellers who are considering increasing prices of long-listed, unsold properties.

What are the biggest challenges to selling or renting homes in the Hamptons today?

Managing expectations is the hardest part of this work. It is especially challenging in a transitioning market, when both buyers and sellers have some cause for hope.

Peter Turino

president, Brown Harris Stevens of the Hamptons How is overall residential sales volume in the Hamptons right now?

There is a lot more volume and bidding wars and less inventory. It’s different from the previous three years — it started in the middle of 2012.

What’s going on with Hamptons rentals for this upcoming year?

Rentals have been good every year for the last five years, so they are doing very nicely. Rental prices are slightly higher, maybe 5 percent higher.

What new trends are you seeing this season?

In general there are more short-term rentals than there used to be. I always used to say that about 80 percent of the rental business was full season [from Memorial Day to Labor Day], and 20 percent was shorter-term — one- or two-month rentals.

I think we are seeing more two-, three- and four-week rentals than we used to. So the full-season percentage is probably 70 to 75.

98 April 2013 www.TheRealDeal.com

When did renters start inquiring about properties this year — earlier or later than usual?

They started in November, earlier than usual. That’s a trend — that happened last year, too. A significant number of people shopped for rentals before the New Year.

What’s going on with residential sales prices in the Hamptons?

We know the market is cyclical, but the prices are not going up yet. Prices are stable, and more sellers are getting their price than they did the three to four previous years. So the first thing we need to establish is that kind of stability, and then we will probably see higher prices. I think within the next two years we can expect that prices will drift higher again. But for now I think everyone is quite satisfied with the fact that it is possible to sell a house. For a long time it was very difficult to sell a house at a realistic price, with the weak demand and fear of buying. But that has been alleviated.

Which price ranges and housing types in the Hamptons are performing best right now?

There is a hot market under $1 million.

That is largely for people who are moving to the area, leaving the city or the suburbs for the Hamptons to live and work. That has been a good market for the last few years and continues to do well. Another busy area is houses that are selling for between $2 and $3 million. That had been rather quiet during the last four years but has revived nicely. Then you have the high-end market, which is above $5 million, and that is also reviving nicely. We’ve had a lot of sales lately in the $6 to $8 million range, where previously that had been up and down.

Are there any other factors that you think are going to have a big impact on the East End market now or in the near future?

Each year there are more people who choose the area as a permanent residence.

What used to be a 5 percent share of the market is easily 15 percent, and that will grow in the next 10 years to be 20 to 25 percent of people buying to live permanently. We need that. That adds a whole other dimension of permanence and stability to the marketplace.

Where are prices and sales volume of spec homes right now in the Hamptons?

I think the spec homes are a lot more realistically priced now than they have been — a lot of them were overpriced. There are spec houses in every category, from under $1 million to $30 million, in all shapes and sizes, in all neighborhoods. In the recovering market, these houses are going to sell more quickly than they did during the recession, when it wasn’t uncommon to wait two and a half years to sell a house.

How long are homes staying on the market in the Hamptons overall?

They are definitely staying on the market for a shorter period of time. The average house will sell in less than a year’s time.

Previously, it was more than a year’s time.

Timothy Haftel

associate broker, Halstead Property How is overall residential sales volume in the Hamptons right now?

There was a definite uptick in sales volume in 2012 in the Hamptons compared to 2011 and 2010. This could be attributed to a very strong fourth quarter. Owners were looking to close before the year-end to avoid the increase in capital gains in 2013. The first quarter of this year has continued to be very strong. The milder weather in January and February, along with the positive economic outlook and Wall Street’s strong showing, have certainly helped. Also, the continued interest from foreign investors and the return of developers and speculative builders have added to the positive momentum.

However, sales volume is still off 25 percent from the sales volume in the boom periods of the mid-2000’s.

What’s going on with Hamptons rentals for this upcoming summer?

This year’s rental season started early and has been strong. Much of the inventory in key areas has been depleted and many tenants are resecuring their rentals from last season.

Where are home sale prices in the Hamptons?

Prices have remained steady since 2011.

Overall sales prices are off 15 to 20 percent from their highs.

Which price ranges and housing types in the Hamptons are performing best?

The under-$1 million market is performing well, in large part due to continued low interest rates and investors looking to enter the market. The $3 million–plus market is still going strong as foreign investors and Wall Streeters are looking for places to invest their money.

What type of Hamptons home is struggling the most?

Most buyers are looking for properties that don’t need a lot of work. In a second-home market, they don’t want to spend a lot of time on renovations.

What has been the impact of Hurricane Sandy on the Hamptons sales and rental markets?

Sandy didn’t have nearly the impact in

the Hamptons as it had up island. It has had only minimal influence on sales and rental inventory. There are some instances where people are not renting while doing repairs, or are taking their own rentals while repairs are happening to their homes.

What other factors will impact the East End market now or in the near future?

Wall Street’s success means a healthy Hamptons market. If mortgage rates remain low, demand will remain strong for the lower end of the market.

What areas of the Hamptons are the strongest for retail? What new restaurants, stores or other retail are debuting this season that you think will generate attention?

East Hampton continues its strong retail presence. Most retailers have renewed their leases for this season. Southampton should benefit from the introduction of Pottery Barn in the old Saks Fifth Avenue location. Also, Delmonico’s is taking over the old Savanna’s location by the train station.

What are the most surprising trends you’re seeing in the Hamptons residential market right now?

A renewed interest in the modern home.

The cedar-sided traditional still rules, but requests for the sleek styling of modern designs are definitely on the rise.

Judi Desiderio

CEO, Town & Country Real Estate How is overall residential sales volume in the Hamptons right now?

Real estate sales in the Hamptons are at levels not seen in the past five years.

[But] we are not near the levels of 2005, which had the highest number of home sales, or 2007, the biggest year for highend sales.

What’s going on with Hamptons rentals for this upcoming summer?

We are seeing visitors who might otherwise rent on the Jersey Shore or Fire Island coming to the East End for the summer. Also, during the Great Recession, tenants curtailed their stay. Sometimes two families split a rental. Now it’s back to full terms and one family [per] house. Prices remain steady for the most part.

What is the impact of Hurricane Sandy on the Hamptons sales and rental markets?

We dodged a bullet with Sandy, and won by default when it comes to rentals. TRD www.TheRealDeal.com January 2013 79

CONGRATULATES

AMIR KORANGY AND THE REAL DEAL TEAM FOR 10 YEARS OF VISION AND EXCELLENCE

TRI-STATE BRIEFS CONNECTICUT

UConn moves closer to Hartford campus The University of Connecticut drew 13 submissions from property owners in its hunt for a new campus in Downtown Hartford by last month’s deadline, the Hartford Courant reported. The university, which is planning to relocate its West Hartford campus to the city, is looking for 150,000 square feet of space for classrooms, laboratories, offices, conference rooms and

150 Windsor Street in Hartford

other uses. One of the proposals came from the City of Hartford, which proposed leasing a threeacre, vacant city-owned lot in the “Downtown North” neighborhood to the school for $1 a year. The city’s

goal is to spur development in the area. According to the Courant, other property owners submitted proposals for a former bank data processing center at 150 Windsor Street, north of Hartford’s central business district; for One Talcott Plaza on Main Street; for an area on Front Street that includes the former Hartford Times Building; and for the former Broadcast House on Hartford’s Constitution Plaza. The campus will be home to roughly 3,100 students and 300 faculty members. The university has not said when it would make a decision.

WESTCHESTER

Building buyers may be required to hire property employees Union officials at 32BJ SEIU— the largest union of property service employees in the country — has thrown its support behind a proposed Westchester bill to protect workers if their building changes hands, LoHud Real Estate, a blog on the Journal News, reported. Dozens of supporters showed up at a meeting of the Westchester Board of Legislators last month to urge lawmakers to pass the measure, which would require owners who buy or take

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control over a building to keep workers employed for 60 days — unless there is an overstaffing issue or employee misconduct.

After that period, the new employer would be required to officially rehire all workers who’ve had satisfactory evaluations. The bill would affect janitors, security guards, maintenance workers and other service workers in larger residential and commercial buildings such as concert halls, private schools and colleges.

However, some building owners believe such a bill is unfair. The legislation will likely be revised before a decision can be made.

LONG ISLAND

Nassau’s housing market looking up; Suffolk’s down Nassau County’s housing market showed improvement in February, but Suffolk County’s disappointed. In Nassau, home prices and sales activity rose compared to February 2012, but in Suffolk prices remained stagnant and sales fell, Newsday reported, citing a report by the Multiple Listing Service of Long Island last month. Indeed, Nassau had 589 home sales for February (a 1.6 percent year-over-year increase) and a median sales price of $383,200

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100 April 2013 www.TheRealDeal.com

Above, 20 Plum Beach Point Road in Nassau County’s Sands Point, on the market for $12.8 million. Below, a sixbedroom home in Sands Point, on the market with Daniel Gale Real Estate for $15.49 million.

(a 2.2 percent increase). By comparison, Suffolk had 615 sales, but that was down 3 percent from last February, and Suffolk’s median price of $298,700 came in just 0.3 percent higher than the year before. There was some allaround good news, though. Both counties saw pending sales rise — by 14 percent in Nassau and 11 percent in Suffolk. Inventory also tightened. In Nassau there were 6,480 homes for sale in February, 27 percent fewer than last February, while in Suffolk there were 9,068 homes for sale, 22 percent fewer.

Compiled by Sanna Chu

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Commercial and residential real estate news briefs from around the U.S.

NATIONAL MARKET REPORT

The South Boston waterfront

Faena House

Miami A five-bedroom, seven-

bathroom penthouse at Faena House, a condo development designed by Foster + Partners, hit the market last month for $50 million, the Wall Street Journal reported. If it sells for that price, it will be the most expensive residential sale in South Florida’s history.

The 8,273-square-foot penthouse boasts a 30-foot-long pool, outdoor kitchen and cabana.

Boston The South Boston waterfront will soon be home to the $800 mil-

lina, Virginia, Florida, New Jersey, Pennsylvania, Maryland and Georgia.

lion, 1.1 million-square-foot headquarters of Vertex Pharmaceu-

San Francisco

ticals, Bloomberg News reported. The two-building site — the

Africa Israel USA last month sold the historic Rialto Building in

nation’s largest privately funded office-construction project — is

San Francisco’s South Financial District to Hines and Invesco

slated for completion later this year, and is part of a wave of new

for $57 million, the San Francisco Business Times reported.

development in Boston’s Seaport district. Some 3 million square

The two companies paid about $425 per square foot for the

feet of commercial and residential space is currently under con-

135,000-square-foot office and retail property, which houses

struction in the area. Work is also planned or already underway on

tenants like Trulia and the public relations firm LaunchSquad

the $620 million redevelopment of the original Filene’s depart-

(there’s a Chipotle restaurant, too). Seventeen offers were sub-

ment store in Downtown Crossing, a $200 million office tower for

mitted for the building, which is 85 percent leased, and it sold six

State Street Corp., and a 360,000-square-foot office for law firm

weeks after hitting the market. Africa Israel acquired the Rialto

Goodwin Procter. Construction spending in Boston for the year

in 2007 for $21 million. Designed by architects Meyer & O’Brien,

ending June 30 was at $3.83 billion, its highest point since 2008

the Renaissance Revival building was constructed in 1902 but

and an increase of 37 percent from the previous year, Bloomberg

its interiors were completely redone after the Great 1906 Earth-

reported. Boston’s office vacancy rate in the fourth quarter of

quake. Hines is planning a multi-million-dollar renovation of

2012 was 10.9 percent, substantially lower than the 15.4 percent

the building.

nationwide average, according to brokerage CBRE Group, while the city saw a 2012 net absorption rate of 2.8 percent, higher than

Beverly Hills

the U.S. average of 1 percent.

The so-called “Beverly House” mansion is now available on the

Raleigh

rental market for $600,000 per month, making it the most expensive rental listing in the country, the blog Curbed reported.

National Financial Realty and Oaktree Capital Management

The 28-bedroom, 40-bathroom house, built in 1927, is also listed

last month paid First States Investors $240 million for 40 of-

for sale at $115 million. Once the home of publisher William Ran-

fice properties in eight states, Commercial Property Executive

dolph Hearst, the house served as the honeymoon destination of

reported. The deal includes a total of 3.4 million square feet

John F. Kennedy and Jacqueline Kennedy Onassis, and was also

of office space, 90 percent of which is occupied by the bank

featured in “The Godfather,” serving as the backdrop for the fa-

Wells Fargo through a long-term master lease. The portfolio

mous horse head scene. Located on three and a half acres of land,

is heavily concentrated in North Carolina, where eight prop-

the house is currently owned by attorney and investor Leonard

erties account for 1.2 million square feet. One of those is Wells

Ross, who filed for bankruptcy in 2010. It has been on the sales

Fargo’s 450,000-square-foot regional operation center in

market since 2007, when it was listed for $165 million.

Raleigh. The remaining 32 assets are located in South Caro-

Compiled by Evan Bleier

102 April 2013 www.TheRealDeal.com

The “Nightmare on Elm Street” house

Los Angeles An anonymous

buyer last month paid $2.1 million for a house featured in the classic 1984 horror film “A Nightmare on Elm Street,” the Los Angeles Times reported. The three-bedroom, three-and-a-halfbathroom house still bears the iconic red door showcased in the film. Built in 1919, the two-story home has 2,700 square feet of living space. It last sold in 2006 for $1.15 million and boasts a guest house and swimming pool.

The South Florida Home of Ray Lewis

West Palm Beach After winning

his second Super Bowl as a member of the Baltimore Ravens, retired linebacker Ray Lewis has listed his oceanfront home in South Florida for $5 million, Realtor.com reported. He will be heading north to Bristol, Conn., to work as an analyst for ESPN. Lewis bought the four-story mansion in 2004 for a little over $5.2 million.

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ON THE MARKET

Commercial properties recently placed on the market

Carlyle puts 650 Madison Avenue on market

Aby Rosen’s RFR lists 980 Madison

Queens new-construction building for sale

The Carlyle Group has put a Midtown office tower on the market. The sale could yield more than $1 billion for the investment behemoth, according to a report seen by Crain’s. The 27-story tower is located at 650 Madison Avenue between East 59th and 60th streets and totals roughly 600,000 square feet, making it a shade smaller than the nearby Sony Building, which was acquired by the Chetrit Group for $1.1 billion earlier this year. Eastdil Secured will handle the marketing, according to Crain’s, 650 Madison Avenue which also noted that plans for the building could include a conversion to residential and hotel space.

Aby Rosen’s RFR Realty has listed its block-long commercial property at 980 Madison Avenue, Crain’s reported. The sale 980 Madison Avenue could fetch $100 million or more, brokers told the publication. The 100,000-squarefoot building runs between East 76th and 77th streets and includes both office and retail space. Rosen had previously wanted to erect a residential tower, which drew community opposition and led the developer to scale back his plans.

Later, Rosen appeared to shelve his development efforts when the recession struck. Darcy Stacom and William Shanahan of CBRE Group are handling the sale.

A six-story building that was originally built as a new-construction condo at 89-16 175th Street in Queens’ Jamaica neighborhood is on the market with an asking price of $16.25 million. Located between 89th and 90th avenues, the corner elevator building, which was erected in 2008, is currently operating as a rental building with 55 two-bedroom units. The fully rented building also has approximately 12,000 square feet of office space and a 28-car parking garage. A 15-year, 421-a tax abatement is in place. Amenities in the apartments include hardwood floors, in-unit laundry and fully equipped kitchens. Ben Weiss of Besen & Associates is 89-16 175th Street handling the assignment.

Rare UWS development site hits the market As nonprofits continue to struggle, many are liquidating real estate assets. The latest is 206-210 West 77th Street, which the Jewish Board of Family and Children’s Services put on the market. The building, between Broadway and Amsterdam Avenue, is currently a parking garage, but could accommodate a building 185 feet tall and up to 100,000 square feet in size. Experts told Crain’s the site could fetch as much as $45 million. “The seller is taking advantage of an extraordinarily hot land market,” said Bob Knakal, chairman of Massey Knakal Realty Services, which is representing the seller. “There haven’t been many development sites to hit the market on the Upper West Side in recent years.”

St. John’s Tribeca building on the block St. John’s University has put its 10-story, 150,000-squarefoot building at 101 Murray Street on the market. The sale could generate between $150 million and $200 million, published reports said. The property, located between West and Greenwich streets, can support a residential development of over 300,000 square feet. Several prospective buyers have expressed interest in the building, including developer Edward Minskoff, who built a residential tower at nearby 101 Warren Street in 2007. Cushman & Wakefield is marketing the property, the New York Observer reported.

UES multi-family package on the block Two five-story, multi-family buildings located on the Upper East Side are for sale with an asking price of $10.75 million. The walk-up buildings are located at 330 East 73rd Street and 309 East 93rd Street; both are between First and Second avenues. The former is 12,150 square feet and contains 19 residential units, one retail unit and four storage rooms, while the latter is 10,500 square feet and contains 10 apartments and four storage rooms. An Ariel Property Advisors team consisting of Jesse Deutch, Randy Modell, Howard Raber and Shimon Shkury is marketing the package.

Compiled by Linden Lim

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THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE FROM SPONSOR: 101W87 OWNER LLC. FILE NO. CD 12-0039.

106 April 2013 www.TheRealDeal.com Real-Deal-Print-05.indd 1

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Deal Sheet summary

The Deal Sheet, on pages 110 to 124, covers transactions from 2/11/13 through 3/10/13.

Please submit future deals to deals@therealdeal.com.

Sales

Overview

By type

Property sales Deals Dollars

38 $1,543,640,000

Financing Buildings Aggregate value

Development

11

Development

Hotel

0

Hotel

Industrial

4

Industrial

73.28

3

Mixed-Use

20.57

Multi-family

88.47

Mixed-Use Multi-family

Transactions

By dollar volume (in millions)

12

319.69 0

10

Office

4

Office

976.48

10

Retail

4

Retail

65.15

$32,050,000

Leases Office

48

Retail

35

Total

83

Leases square feet Office

1,403,071

Retail

310,421

Total

1,713,492

Office leases Office leases by industry Industry

Office leases sf by industry Leases

Industry

Top tenant reps for office leasing by sf

Square feet leased

Tenant representative

Square feet leased

Advertising & Marketing

3

Advertising & Marketing

Architecture & Design

2

Architecture & Design

Education

1

Education

20,000

Colliers International

80,101

Fashion*

3

Fashion*

25,100

Newmark Grubb Knight Frank

40,428

Financial

8

Financial

229,513

Jones Lang LaSalle

16,000

Health & Beauty

2

Health & Beauty

Human Resources

1

Jewelry

1

Legal

4

Legal

Medical

3

NGO

3

Other / n/a

73,806 2,700

CBRE Group

904,587

Cresa Partners

195,020

5,930

Cushman & Wakefield

13,135

Human Resources

3,375

Handler Real Estate

12,205

Jewelry

5,063

Avison Young

11,923

19,277

Isaacs & Co.

10,000

Medical

41,335

AC Lawrence

8,363

NGO

36,705

Concept One Associates

7,900

9

Other / n/a

24,719

Savitt Partners

7,200

Real Estate

1

Real Estate

54,991

East Egg Realty

6,100

Research

2

Research

80,617

Studley

5,597

Retail

1

Retail

643,000

VIZA Group

5,337

Science & Technology

4

Science & Technology

136,940

UGL Equis

5,117

Retail leases Top tenant reps for leasing by sf

Retail leases by industry

Broker

Department Store

1

Department Store

Square feet leased

Retail leases sf by industry 124,000

Ripco Real Estate

36,102

Discount

3

Discount

29,802

SCG Retail

23,900

Fashion

7

Fashion

63,900

McDevitt Co.

21,000

Food & Beverage

10

Food & Beverage

49,478

Lee & Associates

18,247

Health & Beauty

3

Health & Beauty

10,374

Newmark Grubb Knight Frank

17,000

Other

11

Other

32,867

RKF

10,950

CBRE Group

9,509

Okada & Co.

8,600

Colliers International

7,600

City Realty Services

1,985

JTRE

1,500

Besen Retail

1,420

Town Residential (*includes showroom space)

550 www.www.TheRealDeal.com April 2013 109

Deal Sheet

Commercial deals in New York City Deals are listed from largest to smallest in square feet leased or bought.

The Deal Sheet covers transactions from 2/11/13 to 3/10/13. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

11 Penn Plaza

643,000

Macy’s / S. Gottlieb, M. Laginestra, M. Wellen, K. Meyerson, P. Nelson, CBRE

Vornado / n/a

The department store operator signed a lease renewal through 2035 for office space, the New York Post reported.

55 Water St

120,000

Liberty Mutual / Robert Shulman, Cresa Partners

New Water Street Corp. / M. Tighe, B. Gerla, CBRE

The life insurance and financial services firm signed a 10-year lease, Crain’s reported. The deal doubles the tenant’s footprint in the building.

75 Ninth Ave

83,523

Google / D. Hollander, K. Rapp, D. Lehman, CBRE

GfK; Jamestown / M. Jaccom, Cresa Partners; R. Plehn, Colliers International; D. Falk, Newmark Grubb Knight Frank

The online search giant signed a sublease for 58,523 square feet on the fifth floor and took 25,000 square feet on the sixth and seventh floors in a direct lease with the landlord, Jamestown.

200 Liberty St

75,020

GfK / M. Jaccom, Cresa Partners; R. Plehn, Colliers International

Brookfield Office Properties / J. Wheeler, P. Glickman, C. Kline, Jones Lang LaSalle

The global research company signed a 16-year lease for the entire fourth floor.

The tenant is relocating from Chelsea Market at 75 Ninth Avenue.

579 Fifth Ave

60,000

Bank Leumi USA / Brian Gell, CBRE

Axel Stawski / S. Seiler, S. Eynon, E. Goldman, CBRE

The American branch of the Israeli bank signed a 20-year lease for five floors, the New York Observer reported. The asking rent was in the $60-per-squarefoot range, according to the paper. The tenant is relocating from the Graybar Building at 420 Lexington Avenue.

200 Vesey St

54,991

Regus / M. Ravesloot, S. Sloves, CBRE

Brookfield Office Properties / J. Wheeler, P. Glickman, C. Kline, Jones Lang LaSalle

The flexible-workspace provider signed a 16-year lease for another office. The tenant will occupy the entire 24th floor.

11 Times Sq

53,573

eMarketer / R. Griswold, T. Dempsey, G. Maurer-Hollaender, CBRE

SJP Properties; Prudential Financial Inc. / M. Konsker, P. Glickman, D. Bisotti, Jones Lang LaSalle

The digital marketing data provider signed a lease, the New York Post reported. The tenant is relocating from 75 Broad Street.

401 Park Ave South

42,200

Vitech Corporation / Himmel + Meringoff Properties

Dennis Someck, Lee & Associates / M. Stein, J. Vacker, Himmel + Meringoff Properties

The technology company signed a 10-year lease renewal on the 12th and fourth floors. The tenant converted a sublease to a direct lease on the fourth floor, and extended its existing, direct lease with the landlord on the 12th floor.

1775 Grand Concourse (The Bronx)

38,000

Bronx Lebanon Hospital Center / Represented in-house

JJ Operating Inc.; Houlihan Parnes Realtors / Represented in-house

The medical office signed a lease for the full sixth floor.

1775 Grand Concourse (The Bronx)

25,000

Abbott House / Represented in-house

JJ Operating Inc.; Houlihan Parnes Realtors / Represented in-house

The nonprofit signed a lease for part of the seventh floor.

136 Madison Ave

20,000

Syracuse University / James Kuhn, Newmark Grubb Knight Frank

n/a / A. Roos, M. Cohen, Colliers International

The university signed a 10-year lease for the entire second floor. The space will be used for academic programs, internship opportunities and other educational initiatives.

452 Fifth Ave

16,428

KLS Diversified / Jones Lang LaSalle; Newmark Grubb Knight Frank

PCB USA Real Estate / CBRE

The hedge fund signed a 10-year lease for the entire 22nd floor, the New York Post reported.

1500 Broadway

16,000

Videology Inc. / J. Wenk, R. Miller, Jones Lang LaSalle

Zapco 1500 Investment / P. Amrich, P. Meagher, D. Bodner, CBRE

The digital advertising provider signed a 10-year lease for part of the fourth floor. The tenant is relocating from the building’s 11th floor.

825 Third Ave

11,923

Focus Financial Partners / G. Kraut, D. Trulis, P. Massey III, Avison Young

The Durst Organization / n/a

The partnership of independent wealth management firms signed a new lease for a full floor. The company is relocating from 7,400 square feet at 909 Third Avenue.

650 Fifth Ave

11,280

TGM Associates / n/a

n/a / R. Stillman, P. Haskin, Z. Freeman, CBRE

The investment advisory firm signed a lease renewal on the 28th floor.

477 Broome St

10,000

Kima Zabete / David Baker, Isaacs & Co.

JC Dwight / David Barreto, Cast Iron Real Estate

The fashion designer signed a 12-year lease, the New York Observer reported.

263 West 38th St

10,000

Underground Visuals Inc. / Peter Newman, Handler Real Estate

Handler Real Estate / n/a

The digital printing company signed a new 10-year expansion lease on the third floor. The tenant is relocating from 307 West 38th Street.

55 Broadway

9,500

Excess Line Association of New York / Richard Levine, CBRE

Broad Street Development / Represented in-house

The nonprofit signed a lease on the 29th floor.

61 Broadway

8,135

Rosner Nocera & Ragone LLP / Frank Cento, C&W

Broad Street Development / Represented in-house

The law firm signed a new lease on the 19th floor.

32 West 39th St

7,900

Concept One Accessories / Brett Maslin, Concept One Accessories

CARE Inc. / Susan Kahaner, CBRE

The fashion accessories firm signed a new seven-year sublease. The reported asking rent was $34 per square foot. Building owner 32 West 39th Midtown Properties LLC was represented by Michael Berger of Colliers International.

148 West 37th St

7,200

Bernard Chaus Inc. / Savitt Partners

Fashion Associates / James Buslik, Adams & Co.

The fashion accessories firm signed a 10-year lease. The reported asking rent was $35 per square foot.

30 West 22nd St

6,100

Chasin Music / Leslie French, East Egg Realty

Van Alen Institute / Gabe Isaacs, Lee & Associates

The technology and media firm signed a five-year lease. The reported asking rent was $42 per square foot.

411 Fifth Ave

5,597

Cognolink Inc. / Evan Margolin, Studley

411 Fifth Avenue Associates / David Levy, Adams & Co.

The research firm signed a new, seven-year lease. The reported asking rent was $42 per square foot.

61 Broadway

5,117

Integral Consulting / Peter Trivelas, UGL Equis

Broad Street Development / Represented in-house

The environmental health and engineering firm signed a lease on the 16th floor.

55 Broadway

5,081

Covala / Eric Ferriello, Colliers International

Broad Street Development / Represented in-house

The administrator of supplemental disability benefits signed a new lease on the seventh floor.

590 Fifth Ave

5,063

Andiamond LLC / Lily Lin, AC Lawrence

Thor Fifth Ave LLC; 588-590 Fifth Ave LLC / Eric Cagner, Newmark Grubb Knight Frank

The diamond company signed a 10-year, six-month lease on the 11th floor.

61 Broadway

5,000

Vincenti & Vincenti PC / M. Burgio, D. Organ, C&W

Broad Street Development / Represented in-house

The law firm signed a new lease on the 13th floor.

61 Broadway

4,233

87AM / Theodora Livadiotis, Cassidy Turley

Broad Street Development / Represented in-house

The creative agency signed a new lease on the 10th floor.

61 Broadway

4,000

Law Offices of Lauren Baum / Todd Hershman, Newmark Grubb Knight Frank

Broad Street Development / Represented in-house

The law firm signed a new lease on the 10th floor.

110 April 2013 www.TheRealDeal.com

www.TheRealDeal.net December 200

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Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

61 Broadway

3,841

MT2 Network Inc. / Fran Pollero, Brentler

Broad Street Development / Represented in-house

The creative consulting firm signed a new lease on the 19th floor.

Industry City (Brooklyn)

3,600

Wireless Digital Group / n/a

Industry City Associates / n/a

The cell phone company signed a five-year lease for office space at Building 10 of the Industry City at Bush Terminal mixed-use complex.

35 West 36th St

3,430

Aesop / D. Regal, E. Algier, ABS Partners

3536 Associates LLC / Robert Kaplan, Hidrock Realty

The beauty products company signed a seven-year lease. The reported asking rent was $39 per square foot.

35 West 36th St

3,375

SBH Fashion / J. Buslik, B. Harvey, Adams & Co.

3536 Associates LLC / Robert Kaplan, Hidrock Realty

The staffing agency signed an eight-year lease. The reported asking rent was $39 per square foot.

1040 Sixth Ave

3,300

Charles River Development / Brian Bey, AC Lawrence

1040 Sixth Ave / Ryan Kass, Newmark Grubb Knight Frank

The financial technology firm signed a lease on the ninth floor. The reported asking rent was $52 per square foot.

55 Broadway

2,800

DEM Jets / M. Rouzenrouch, M. Jotkowitz, Miyad Realty

Broad Street Development / Represented in-house

The private jet charter service signed a new lease on the 19th floor.

206 Spring St

2,500

Dellaria Salon / Evan Sheftal, Urban Apartments

n/a / n/a

The salon and spa signed a 10-year lease on the fourth floor of the office building. The reported asking rent was $65 per square foot.

341 West 38th St

2,205

Creutzfeldt-Jakob Foundation / P. Newman, R. Lucarelli, Handler Real Estate

Central Properties LLC / Ian Weiss, ABS Partners

The nonprofit signed a five-year lease. The company is relocating from Akron, Ohio.

61 Broadway

2,142

Morelli Gerrard & Lassalle LLP / n/a

Broad Street Development / Represented in-house

The law firm signed a lease on the fifth floor.

61 Broadway

1,950

New York City Osteopathy PLLC / Gregg Slotnick, Helmsley Spear

Broad Street Development / Represented in-house

The medical office signed a lease on the ninth floor.

315 East 91st St

1,700

Fractal Construction LLC / Margaret Galey, Red Real Estate

315 Realty Associates LLC / Joshua Salon, Salon Realty

The architecture firm signed a three-year lease for part of the fourth floor.

233 Broadway

1,501

Frank Rimerman & Co. LLP / Max Vizgalin, VIZA Group

233 Broadway Owners / Thomas Hettler, Lawrence Group

The accounting firm signed a five-year lease. The reported asking rent was $40 per square foot.

1270 Broadway

1,500

Sadaq Group / J. Famularo, R. Idnani, NYCRS

n/a / Jacey Park, CNA Cornerstone

The tenant signed a lease. The reported asking rent was $50 per square foot.

150 Broadway

1,385

Family Medicine PC / Max Vizgalin, VIZA Group

JEMB Realty / F. Cento, J. Fein, C. Suarez, C&W

The family medical practice signed a 10-year lease. The reported asking rent was $35 per square foot.

850 Seventh Ave

1,110

United Tours Corp. / Nancy Washburn, Jonathan Barry Associates

DAK Commercial Realty / David Kahane, DAK Commercial Realty

The travel company signed a new five-year lease on the sixth floor. The reported asking rent was $39 per square foot.

214 West 39th St

1,000

Rene Ruiz Wholesale / Marie Hammoudi, VIZA Group

Granite Management / Ernie Vallorano, Granite Management

The designer signed a lease.

274 Madison Ave

990

Private Label Manufacturers Association / Max Vizgalin, VIZA Group

Abramson Brothers / Billie Jean Hamel, Abramson Brothers

The private label manufacturers association signed a lease.

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112 April 2013 www.TheRealDeal.com

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

1133 Broadway

461

Civilian Military Combine / Alex Saharov, VIZA Group

Kew Management / Represented inhouse

The event planners signed a lease.

238 East 58th St

417

Baranzelli Silk Surplus / Dean Valentino, ABS Partners

n/a / n/a

The textiles company signed a lease.

Retail leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

Gateway II (Brooklyn)

124,000

JCPenney / n/a

Related Companies / n/a

The department store signed a 20-year lease for a new location in Brooklyn’s East New York neighborhood. The deal gives the retailer 11 options to renew the lease term for five-year periods.

180 Broadway

21,000

Urban Outfitters / S. Plourde, Wade McDevitt, McDevitt Co.

Jeff Sutton; SL Green; Harel Insurance / Represented in-house

The fashion retailer signed a 15-year lease for multilevel space, the New York Post reported. The space consists of 1,500 square feet on the ground floor, 6,000 square feet on the lower level and 6,700 square feet on each of the second and third floors.

11 Times Square

21,000

Señor Frogs / J. Cohn, B. Shepard, SCG Retail

SJP Properties; Prudential Financial Inc. / R. Futterman, J. Strauss, A. Connolly, RKF

The Mexican-themed restaurant signed a lease.

50 Broadway

17,000

City Sports / J. Pruger, K. Ota, A. Cukier, Newmark Grubb Knight Frank

UFT / n/a

The sportswear retailer signed a lease.

28 Debevoise St (Brooklyn)

11,000

Deal$ by Dollar Tree / R. Senior, M. Mahony, E. Bukai, Ripco Real Estate

Reva Holding Corp. / R. Senior, M. Mahony, E. Bukai, Ripco Real Estate

The discount retailer signed a seven-year lease for another location.

147-149 West 46th St

10,872

T.G.I. Friday’s; The Riese Organization / Brad Schwarz, Lee & Associates

SBP 46th Street LLC / n/a

The chain restaurant signed a 15-year lease. It is relocating from 1552 Broadway.

345 Adams St (Brooklyn)

10,000

Hill Country / n/a

Muss Development / A. Schuster, B. Segal, RKF

The barbecue restaurant signed a long-term lease for another location.

1362 Jerome Ave (The Bronx)

9,513

Deal$ by Dollar Tree / M. Mahony, E. Bukai, R. Senior, Ripco Real Estate

1362 Jerome Heights LLC / M. Mahony, E. Bukai, R. Senior, Ripco Real Estate

The discount retailer signed a 10-year lease for another location.

100 Broadway

9,509

TD Ameritrade Inc. / Annette Healey, CBRE

Madison Capital / G. Spiegelman, M. O’Neill, C&W

The financial services company signed a retail lease.

114 April 2013 www.TheRealDeal.com

www

Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

2182 Third Ave

9,289

Deal$ by Dollar Tree / E. Bukai, R. Senior, M. Mahony, Ripco Real Estate

Muss Development / David Hochberg, SRS Real Estate

The discount retailer signed a 10-year lease for another location.

52 Cooper Square

8,600

MUJI / Naomi Okada, Okada & Co.

52/54 CSQ Realty LLC / H. Goldfarb, S. Lindenfeld, Lee & Associates

The Japanese home accessories retailer signed a lease for another location.

100 West 125th St

8,500

American Eagle / n/a

Jeff Sutton / n/a

The apparel retailer signed a lease for ground-floor and mezzanine-level space in a retail project that will also be tenanted by Burlington Coat Factory and Whole Foods, the New York Post reported. The asking rent on the ground floor was $160 per square foot, according to the Post.

245 West 29th St

7,600

Wardrobe Supply Inc. / Perry Mesmer, Colliers International

245 W 29 LLC / Michael Moorin, Newmark Grubb Knight Frank

The fashion accessories retailer signed a seven-year lease renewal.

2094 Rockaway Pkwy (Brooklyn)

6,300

AutoZone / E. Bukai, R. Senior, J. Howard, Ripco Real Estate

2000 Rockaway Parkway Associates / E. Bukai, R. Senior, J. Howard, Ripco Real Estate

The automotive retailer signed a lease.

244 East 84th St

6,289

Jodi’s Gym / Gabe Isaacs, Lee & Associates

1615 Corp. / Gabe Isaacs, Lee & Associates

The gym signed a 10-year lease for second-floor retail space. The reported asking rent was $41 per square foot.

532 Broadway

5,100

Club Monaco / Robert Cohen, RKF

Thor Equities / Represented in-house

The fashion retailer signed a 15-year lease for space on the ground floor and lower level, the New York Post reported. The tenant is relocating from 14,500 square feet at 520 Broadway.

40-28 College Point Blvd (Queens)

4,000

Carter’s / n/a

Onex Real Estate / n/a

The children’s apparel retailer signed a lease at the Sky View Center shopping mall.

11 Times Square

2,500

Off the Wall / J. Strauss, Z. Winkler, RKF

SJP Properties; Prudential Financial Inc. / R. Futterman, J. Strauss, A. Connolly, RKF

The frozen yogurt chain signed a lease for another location.

302 Canal St

2,100

GNC / A. Schuster, G. Covey, RKF

Charbern Management Group / Mark Tergesen, ABS Real Estate

The health and wellness retailer signed a lease for another location.

35 West 36th St

1,985

Kings Thai Boxing / Dominique Alexander, City Realty Services

3536 Associates LLC / Steven Hidary, Hidrock Realty

The boxing gym signed a 10-year lease. The reported asking rent was $65 per square foot.

55 Broadway

1,923

FedEx / Broad Street Development

Broad Street Development / Represented in-house

The shipping and business services company renewed its retail lease.

241 Bleecker St

1,530

Carré d’Artistes / n/a

n/a / Brendan Gotch, Massey Knakal

The European art gallery signed a lease for its first U.S. location.

784 Lexington Ave

1,500

Baked by Melissa / J. Terzi, J. Jemal, JTRE

n/a / n/a

The cupcake shop signed a 15-year lease for another location, the New York Post reported.

1053 Second Ave

1,250

Off the Wall / J. Strauss, Z. Winkler, RKF

Buchbinder & Warren / n/a

The frozen yogurt chain signed a lease for another location.

345 East 69th St

1,200

Papyrus / Jacqueline Klinger, SCG Retail

345 East 69th Street Owners Corporation / n/a

The gift purveyor signed a lease for another location.

116 April 2013 www.TheRealDeal.com

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Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

27 Prince St

1,000

Dannijo / Bertrand de Soultrait, SCG Retail

n/a / n/a

The wholesale jeweler signed a lease for its first retail location.

764 Burkle Ave (The Bronx)

830

n/a / Mary-Jo Spina, Regal Homes

BLDG Beacon Bronx / M. Mager, E. Dweck, Besen Retail

A pharmacy signed a lease.

55A Leroy St

775

n/a / n/a

n/a / Brendan Gotch, Massey Knakal

A laundry drop-off service leased retail space.

4710 White Plains Rd (The Bronx)

720

Cofi-Café / Elliott Dweck, Besen Retail

4710 JERO Realty Corp. / Matt Mager, Besen Retail

The café signed a lease.

319 Bleecker St

700

Saint James / Bertrand de Soultrait, SCG Retail

n/a / n/a

The French fashion brand signed a retail lease.

226 Atlantic Ave (Brooklyn)

700

Elite Optique / Elliott Dweck, Besen Retail

Dermot Company / Matt Mager, Besen Retail

The optical store signed a lease.

1615 Second Ave

686

Two Boots / Gabe Isaacs, Lee & Associates

1615 Corp. / Gabe Isaacs, Lee & Associates

The pizza chain signed a seven-year lease renewal. The reported asking rent was $225 per square foot.

167 Seventh Ave South

550

Press Tea Inc. / T. Brady, V. Martins, Town Residential

HM Village Realty / T. Brady, V. Martins, Town Residential

The café signed a seven-year lease.

1218 Lexington Ave

500

Grand Bazaar / R. Idnani, J. Famularo, NYCRS

Time Equities / S. Klatsky, N. Galloway, Time Equities

The tenant signed a 10-year retail lease.

Brookfield Place (World Financial Center)

400

Sprinkles Cupcakes / P. Braus, P. Levitan, Lee & Associates

Brookfield Office Properties / E. Hogan, Brookfield Office Properties; K. Dee, Charles Dunn Co.

The cupcake shop signed a 10-year lease.

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

237 Park Ave

21-story, 1.2 million sf office bldg

RXR Realty; Walton Street Capital / n/a

Lehman Brothers Holdings / n/a

The property sold for $800 million, Crain’s reported. The buyer plans to renovate the building.

616 First Ave

880,000 buildable sf development site

JDS Development Group / n/a

Solow Residential / Woody Heller, Studley

The full block sold for $172.13 million. The buyers plan to build two apartment towers totaling 800 units.

24-28 West 25th St and 40 West 25th St

2 office bldgs, 270,000 sf total

Brickman Associates; DivcoWest / Represented in-house

Yeshiva University / M. Cohen, L. Prisco, M. O’Keeffe, Colliers International

The properties sold for $114 million.

12-20 West 40th St

Development site

n/a / n/a

Ziel Feldman / n/a

A Ziel Feldman–led joint venture sold the development site for $83 million, the New York Post reported. However, Feldman will remain in the deal to build a condo-hotel with the new partnership.

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Real Deal - April 2013 - Anniversary Issue - V2.indd 1

3/21/13 9:20 AM

Buys continued Address

Size

Buyer / Representative

Seller / Representative

Notes

211 East 43rd St

25-story, 177,000 sf office bldg

Meadow Partners / n/a

Eastgate Realty / n/a

The property sold for $61 million. The building is about 90 percent leased to approximately 125 tenants.

47-25 34th St (Queens)

322,290 sf industrial bldg

BLDG Management / n/a

601W Companies / n/a

The property sold for $40.73 million.

520 Park Ave

70,000 sf of air rights

William and Arthur Zeckendorf / n/a

Christ Church / n/a

The air rights sold for more than $40 million, the New York Times reported.

The buyers plan to develop a 51-story apartment building with 30 units that are expected to sell for upward of $8,000 per square foot.

1565 Broadway

4-story retail bldg

Jeff Sutton / J. Valensi, J. Sinai, Valensi Realty

n/a / n/a

The property sold for about $30 million, the New York Post reported.

East Village portfolio

55 res. units and 5 retail units

Kushner Cos. / n/a

Icon Realty Management / n/a

The properties sold for $28.75 million, the New York Post reported. The buildings are located at 325 East 10th Street and 329, 331, 333 and 335 East 9th Street.

235 Central Park North

6-story, 86,124 sf apt. bldg, 91 units total

L&M Development Partners / n/a

Tahl Propp Equities / n/a

The property sold for $27.5 million. The seller purchased the building for just $47,000 in 1981.

350 West Broadway

11,115 sf retail condo

350 West Broadway Retail LLC / n/a

AH 350 Retail LLC / Jason Gold, Jones Lang LaSalle

The retail condo sold for $25.5 million.

39-53 Jay St (Brooklyn)

80,000 sf industrial bldg

n/a / n/a

n/a / S. Palmese, W. Clifford, Massey Knakal

The property sold for $25 million. The site has approximately 30,000 square feet of air rights.

1685 Third Ave

6,648 sf mixed-use bldg

Extell Development / n/a

Ogrin Associates / n/a

The property sold for $8.63 million.

281 St. Nicholas Ave

6-story mixed-use bldg

281 St. Nicholas Partners / L. Sternhell, P. Vanderpool, Cignature Realty Associates

Harrjoy Realty Corporation / L. Sternhell, P. Vanderpool, Cignature Realty Associates

The property sold for $8.14 million.

Brooklyn portfolio

5 apt. bldgs, 63 units total

The Mann Group / n/a

n/a / Michael Amirkhanian, Massey Knakal

The multi-family package sold for $7.6 million. The properties are located at 257 Quincy Street, 570 Jefferson Street, 308 Stuyvesant Street, 788 Madison Street and 790 Madison Street.

130 Seventh Ave South

3,100 sf retail bldg

Erez Itzhaki, Keystone Group / Alex Frants, Besen & Associates

n/a / Glenn Raff, Besen & Associates

The property sold for $6.15 million, or $1,983 per square foot.

74 Grand St

12,500 buildable sf development site

n/a / n/a

n/a / Robert Burton, Massey Knakal

The property sold for $4.95 million, or about $396 per buildable square foot.

374-386 Johnson Ave (Brooklyn)

10,625 sf industrial bldg

IBK Construction Group LLC / Hillel Galosher, Sholom & Zuckerbrot Realty

Johnson Avenue Corp. / Rob Gitto, Reliant Realty Group

The property sold for $4.9 million.

497 Broome St

4-story, 5,000 sf comm. bldg

Waterbridge Capital / n/a

n/a / Nick Spanos, Bapple Real Estate

The building sold for $4.9 million.

52 West 21st St

5-story, 5,291 sf apt. bldg

n/a / n/a

n/a / B. Emmetsberger, J. Ciraulo, C. Waggner, Massey Knakal

The property sold for $4.3 million, or about $812 per square foot.

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120 April 2013 www.TheRealDeal.com

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Buys continued Address

Size

Buyer/ Representative

Seller / Representative

Notes

442 Grand St (Brooklyn)

45,000 buildable sf development site

Ideal Development / J. Dario, F. Rufrano, Kalmon Dolgin Affiliates

Keap Grand LLC / J. Dario, F. Rufrano, Kalmon Dolgin Affiliates

The site of a former gas station sold for $4.2 million. The buyer plans to develop an apartment building with ground-floor retail.

60 East 196th St

5-story, 62,548 sf apt. bldg, 46 units total

The Morgan Group / Aaron Jungreis, Rosewood Realty

60 East 196 LLC / Aaron Jungreis, Rosewood Realty

The property sold for $4.02 million. The price represents a gross rent multiple of 7.

602 44th St and 4405-4409 Sixth Ave (Brooklyn)

3 apt. bldgs, 28 units total

Private investor / P. Von Der Ahe, M. Fotis, J. Hollingsworth, Marcus & Millichap

Private investor / P. Von Der Ahe, M. Fotis, J. Hollingsworth, Marcus & Millichap

The buildings sold for $3.85 million.

127 West 94th St

4-story, 3,900 sf school bldg

n/a / n/a

n/a / Hall Oster, Massey Knakal

The property sold for $3.8 million, or $974 per square foot.

5959 Broadway

Development site

Affordable housing group / V. Sozio, S. Hirschfield, J. Deutch, Ariel Property Advisors

Real estate investment firm / V. Sozio, S. Hirschfield, J. Deutch, Ariel Property Advisors

The vacant lot sold for $3.63 million.

56 Pine St

Retail condo

Rugby Realty / Randall Liberman, Newmark Grubb Knight Frank

Rosen Partners / Kenji Ota, Newmark Grubb Knight Frank

The retail condo sold for $3.5 million.

253 East 181st St (Brooklyn)

38-unit apt. bldg

n/a / Amit Doshi, Besen & Associates

n/a / Amit Doshi, Besen & Associates

The property sold for $3.2 million.

605 West 161st St

9,610 sf religious bldg

Local developer / M. Tortorici, S. Shkury, V. Sozio, D. Tropp, Ariel Property Advisors

n/a / M. Tortorici, S. Shkury, V. Sozio, Ariel Property Advisors

The property sold for $3 million. The site offers 46,167 buildable square feet for residential use, or up to 49,849 buildable square feet for community use.

105 Apollo St (Brooklyn)

18,000 sf industrial bldg

n/a / n/a

Wolkow-Braker Roofing Corporation / Jeffrey Unger, Kalmon Dolgin Affiliates

The property sold for $2.65 million.

719 and 721 St. Nicholas Ave

Two 5-story multifamily townhouses

719/721 Sna Realty LLC / Daisy Okas, Besen & Associates

n/a / Daisy Okas, Besen & Associates

The property sold for $2.55 million.

125 Concord Ave

3-story apt. bldg, 2 units total

203 Jay St Associates LLC / B. Weiss, J. Cirolli-Quinones, Besen & Associates

Burris Family / B. Weiss, J. Cirolli-Quinones, Besen & Associates

The walk-up building sold for $2.15 million.

277 East 7th St

7,461 buildable sf development site

n/a / n/a

n/a / J. Nelson, M. Nickerson, Massey Knakal

The property sold for $1.85 million, or about $248 per buildable square foot.

2255-57 Adam Clayton Powell Blvd

7,242 sf apt. bldg

n/a / V. Sozio, S. Shkury, M. Tortorici, Ariel Property Advisors

n/a / V. Sozio, S. Shkury, M. Tortorici, Ariel Property Advisors

The property sold for $1.8 million.

280 West 231st St (The Bronx)

1-story, 7,866 sf office bldg

n/a / n/a

n/a / R. Shapiro, K. Brumback, Massey Knakal

The property sold for $1.48 million, or about $188 per square foot.

1130-36 President St (Brooklyn)

8,100 sf apt. bldg

Private investor / Michael Vitale, Royal Associates Realty

Private investor / J. Berman, M. Tortorici, V. Sozio, Ariel Property Advisors

The property sold for $1.4 million.

827 Nostrand Ave (Brooklyn)

4-story, 7,165 sf apt. bldg, 10 units total

Barry Nathan III LLC / David Scheer, Rosewood Realty

827 Nostrand LLC / Samuel Kooris, Rosewood Realty

The walk-up building sold for $1.35 million. The price represents a gross rent multiple of 9.5.

2424 Ocean Ave (Brooklyn)

Development site

n/a / Pascal Levy, Besen & Associates

n/a / Pascal Levy, Besen & Associates

The property sold for $1.03 million.

71-73 East 110th St

13,455 buildable sf development site

n/a / Eugene Conway (independent broker)

n/a / M. Tortorici, V. Sozio, S. Shkury, Ariel Property Advisors

The vacant lot sold for $1 million.

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

8 East 83rd St

81-unit apt. bldg

83rd Street Tenants Inc. / n/a

NCB / n/a

An $8.8 million first mortgage and a $500,000 line of credit were arranged for the building.

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122 April 2013 www.TheRealDeal.com

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Notes

315 West 86th St

91-unit apt. bldg

315 West 86 Apartments Corp. / n/a

NCB / n/a

A $4.5 million first mortgage and a $500,000 line of credit were arranged for the building.

131 Riverside Dr

56-unit apt. bldg

131 Riverside Apartments Corporation / n/a

NCB / n/a

A $3.6 million first mortgage and a $500,000 line of credit were arranged for the building.

1326 Madison Ave

39-unit apt. bldg

1326 Apartments Corp. / n/a

NCB / n/a

A $2.5 million first mortgage and a $500,000 line of credit were arranged for the building.

66-10 Yellow Stone Blvd (Queens)

58-unit apt. bldg

66-10 Yellowstone Owners Corp. / n/a

NCB / n/a

A $1.9 million first mortgage and a $500,000 line of credit were arranged for the building.

640 West 231st St

61-unit apt. bldg

Fairfield Owners Corp. / n/a

NCB / n/a

A $1.8 million first mortgage and a $250,000 line of credit were arranged for the building.

13-19 White St

13-unit apt. bldg

13-19 White Street Corp. / n/a

NCB / n/a

A $1.5 million first mortgage and a $500,000 line of credit were arranged for the building.

4499 Henry Hudson Pkwy (The Bronx)

57-unit apt. bldg

Fountain Gardens Owners Corp. / n/a

NCB / n/a

A $1.6 million first mortgage and a $250,000 line of credit were arranged for the building.

3311 Giles Pl (The Bronx)

7-story apt. bldg, 99 units total

n/a / Jerry Houlihan, HoulihanParnes Realtors

n/a / n/a

A $1.35 million underlying first mortgage was placed for the postwar elevator building. The 10-year loan has a fixed rate of 3.88 percent on a 30-year amortization schedule.

255 West 90th St

38-unit apt. bldg

The West 90th Owners Corporation / n/a

NCB / n/a

A $1 million line of credit was arranged for the building.

Other Deals Milford Hotel land sells for $325 million

Clinton Hill warehouse in contract for $26M

Brooklyn gas terminal sells for $27M

A partnership between David Werner and Deutsche Asset & Wealth Management’s real estate investment business has bought the leased fee interest in the Milford Hotel in Times Square for about $325 million, Real Estate Weekly reported. The sellers, Rockpoint Group and hotel operator Highgate, bought the entire property in 2010 for about $200 million. They are planning on selling the remaining two pieces of the property — a retail condominium and the 1,300-room hotel — separately, as previously reported.

The deal was an off-market transaction. (The deal was announced after the deadline for the Deal Sheet.)

A Brooklyn company is in contract to purchase an eightstory warehouse building and adjacent one-story structure in Clinton Hill, a stone’s throw from the Brooklyn Navy Yard, for $26.25 million, and convert it to hotel, retail and offices uses, sources familiar with the transaction said.

The buyer, an entity called Ryerson Equity with an address in Borough Park, plans to acquire the 192,000-squarefoot structure at 29 Ryerson Street, as well as the lot next door at 256-266 Flushing Avenue, which includes an 8,070-square-foot building, the sources said. (The deal was announced after the deadline for the Deal Sheet.)

Motiva Enterprises, a Texas-based oil refiner and distributor, has sold a refined petroleum products terminal in Greenpoint for $27.4 million, according to records filed last month with the city. The sale to Arc Terminals, a Texas company that both receives and distributes petroleum, closed on Feb. 26, according to the deed. The Greenpoint terminal, at 25 Paidge Avenue near the Pulaski Bridge, is a key supply point for gas distribution throughout the Greater New York area, according to a February Arc announcement of the deal. (The deal was announced after the deadline for the Deal Sheet.)

Rosen closes on 350 Madison for $261.5M

WeWork lands lease at 222 Broadway

Aby Rosen’s RFR Realty has closed on 350 Madison Avenue for $261.5 million, following reports that the firm had been weighing a $350 million purchase, the New York Observer confirmed last month. The deal with Kenisco Properties, run by Nabil and Fouad Chartouni, includes an adjacent retail property at 10 East 45th Street. RFR, however, declined to comment further to the Observer.

Kenisco purchased the building for $194.5 million in 2005 from Monday Properties and Landis Group. (The deal was announced after the deadline for the Deal Sheet.)

WeWork, the rapidly expanding collaborative workspace provider, has nailed down a 16-year lease for 120,537 square feet at 222 Broadway, the New York Observer reported. The firm had been scouting the Financial District since early this year for its largest space yet — roughly 125,000 square feet, according to previous reports. Asking rents for the 32-story, 750,000-square-foot office building are in the mid-$50s per square foot. The deal was handled by David Berkey and Andrew Wiener, who work for building owner, L&L Holding Company. Mark Lapidus of WeWork and Sean Black of Jones Lang LaSalle represented the tenant. (The deal was announced after the deadline for the Deal Sheet.)

Extell sells International Gem Tower’s retail condo to Turkish jeweler Gulaylar Group

Sterne Agee leases another floor at 277 Park Financial services company Sterne Agee has increased its New York office space at 277 Park Avenue by 50 percent, Crain’s reported. Stern Agee initially leased space at the 50-story tower in August 2011. It will now lease the building’s 26th floor for about 10 years. Rents in the building, which is largely occupied by JPMorgan Chase, are roughly in the $60s and $70s per square foot, Crain’s reported. “At this point, we’re doing everything we can to grow,” William Holbrook, the chief operating officer of the Birmingham, Ala.-based firm told Crain’s.

“This opportunity came up and we took it.” (The deal was announced after the deadline for the Deal Sheet.)

Gaming firm Alloy Digital inks Midtown lease Gaming and entertainment provider Alloy Digital has inked a 29,416-square-foot lease in Midtown on the 19th floor at 498 Seventh Avenue, according to the New York Observer. The company was expected to finalize the deal in February, as The Real Deal previously reported, and will relocate from its current Chelsea headquarters at 151 West 26th Street. The 936,611-square-foot office building is owned by George Comfort & Sons and is located at West 37th Street, far to the north of Silicon Alley. (The deal was announced after the deadline for the Deal Sheet.)

Gulaylar Group, a Turkish jeweler and property management company, has purchased the retail condominium on the West 47th Street side of Extell Development’s International Gem Tower, the New York Post reported. The storefront at the three-story, 12,000-square-foot retail condo, located between Fifth and Sixth Avenues, is valued at $6,000 per square foot.

Gulaylar plans to use the space to create a “world-class jewelry exchange,” Mehmet Gulay, the company’s vice president, told the Post. (The deal was announced after the deadline for the Deal Sheet.)

Dumbo building sale could change retail landscape Dumbo could soon see a massive new retail center along Jay Street, after last month’s $25 million sale of a blockwide warehouse to Silverstone Property Group, the Brooklyn Paper reported. The nearly football field–size building, located between Water and Plymouth streets in Dumbo’s historic district, could suit a major commercial development, according to a spokesperson for Massey Knakal Realty Services, which handled the sale of the building. (The deal was announced after the deadline for the Deal Sheet.) TRD

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Midtown Baccarat Hotel & Residences 20 West 53rd Street Sales have launched at the 50-story, 61unit hotel condominium, developed by Starwood Capital Group and Tribeca Associates. One- to five-bedroom homes range from 932 to 7,381 square feet and list for $3.5 to $60 million. Building amenities include 24-hour concierge, spa and fitness center with pool. Corcoran Sunshine Marketing Group is the agent.

Contact: www.baccaratresidencesny.com.

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Leasing has started at the 12-story rental building, developed by JDS Development Group. Studio apartments rent for $2,475 per month, one-bedrooms start at $2,950, two-bedrooms begin at $3,600 and three-bedrooms start at $8,500. Building amenities include private courtyard, residents’ lounge, gym, bike storage room and part-time doorman. Aptsandlofts.com is the agent. Contact: www.aptsandlofts.com.

to $42 million. Building amenities include a 24-hour doorman, concierge, spa and fitness center. Zeckendorf Marketing is the agent. Contact: www.18gramercypark.com.

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The six-story, 13-unit condominium, developed by Kane Ventures, is 100 percent sold. The one- and two-bedroom homes, ranging from 698 to 1,027 square feet, were listed for $425,000 to $689,000.

Building amenities include a virtual doorman, fitness center, package room and common roof deck. Halstead Property Development Marketing is the agent.

Contact: www.5westcondos.com.

Chelsea Walker Tower 212 West 18th Street The 24-story, 50-unit condominium, developed by Property Markets Group and JDS Development Group, is more than 50 percent sold with some $200 million in units under contract. The oneto five-bedroom homes range from 1,350 to 6,500 square feet. Building amenities include a 24-hour doorman, residents’ lounge, playroom, fitness center (with yoga room) and roof deck. CORE is the agent.

Contact: walker-tower.com.

Park Union 910 Union Street The seven-story, 15-unit condominium, developed by American Development Group, is 70 percent sold with four units remaining. The remaining one-, two- and three-bedroom units range from 735 to 1,505 square feet and list for $799,000 to $2.15 million. Building amenities include attended lobby, on-call superintendent, common roof terrace, playroom, fitness center and bicycle storage. Halstead Property Development Marketing is the agent.

Contact: www.parkunionps.com.

Tribeca Laight House 52 Laight Street The eight-story, six-unit condominium, developed by Kengo Watanabe, has only one unit remaining: a 2,761 square-foot penthouse, listed for $5.99 million. Building amenities include a storage room, virtual doorman and outdoor patio space.

Fox Residential is the agent. Contact: www.laighthouse.com.

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The Cammeyer 650 Sixth Avenue The seven-story, 67-unit condo conversion, developed by Kumkang Housing Co., is 94 percent sold. Available units are 700 square feet and start at $899,000. Building amenities include a 24-hour doorman, concierge, porter, gym and common roof deck. Prime NYC is the agent. Contact: www.primenyc.com.

Gramercy Park 18 Gramercy Park Zeckendorf Development’s 18-story, 16unit building is now 50 percent sold. The four- and five-bedroom homes range from 4,207 to 6,329 square feet and list for $14.7

126 April 2013 www.TheRealDeal.com

421 Hudson Street Sales have launched at the eight-story, 183unit condo conversion, developed by Myles Horn, Belvedere Capital Management and Angelo, Gordon & Co. The one- to four-bedroom homes, ranging in size from 900 to 3,000 square feet, list for $1.5 to $7 million.

Building amenities include a 24-hour doorman and on-site super. Corcoran Sunshine Marketing Group is the agent. Contact: www.printinghousewestvillage.com.

Compiled by Andrea Cetra

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Three-bedroom, two-bath, 1,450-squarefoot co-op unit in a postwar elevator building, the Crystal House; apartment has renovated kitchen, stainless steel appliances, washer/dryer; building has full-time doorman, roof deck and storage; common charges $2,753 per month; asking price $1.29 million; 13 weeks on the market.

(Brokers: Elaine Mayers and Carol Nemeroff, Citi Habitats) “The sellers were a family with two children. The suburbs were calling, and they answered. The buyers were friends of another client I sold an apartment to in the very same building. They liked the size of the apartment and the fact that it was in move-in condition. Since it was a cash deal, everyone expected to close a lot sooner than we did, but the board approval process was lengthy. The buyer wasn’t familiar with the co-op board process and could not understand why so much information was necessary for a cash deal. The managing agent kept requesting more information that the buyer did not really want to share, so it was an exercise in educating the buyer on the board application process. Additionally, when everything was finally submitted, we had issues with availability in scheduling the interview because of travel plans.”

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128 April 2013 www.TheRealDeal.com

Four-bedroom, three-and-a-half-bath, 2,950-square-foot condo in a prewar elevator building; apartment has five terraces, wood-burning fireplace, water purification system and built-in stereo surround sound; building has concierge; common charges $3,649 per month; taxes $2,582 per month; asking price $8.75 million; 22 weeks on the market. (Brokers: Richard Steinberg, Warburg Realty; Matthew Gros-Werter, Platinum Realty Group)

The seller came [to me] through a referral. The apartment was empty when we got the listing.

The building had been surrounded with scaffolding for quite a long time. This really hurt showings, because the apartment is designed around the view. If a buyer couldn’t see past the scaffolding, which most couldn’t, then it hurt the deal. The buyer was one of the first to see the apartment when the scaffolding started to come down. We were in the process of having the apartment staged when negotiations started. [They were] slow-moving and complicated. The seller had a number in mind and we weren’t making a deal unless the buyer met that number. It took [them] a while, but they eventually did.”

Richard Steinberg, Warburg Realty

Upper West Side $9 million 2150 Broadway, PH 4C

Six-bedroom, five-and-a-half-bath, 3,852-square-foot condo in a new-construction elevator building, the Laureate; apartment has chef ’s kitchen, walnut flooring and washer/dryer; building has doorman, concierge, gym, children’s playroom and roof deck; common charges $4,414 per month; taxes $1,971 per month; asking price $10.6 million; 13 weeks on the market. (Brokers: Shlomi Reuveni, Brown Harris Stevens; Maria Elena Scotto, Brown Harris Stevens) “My client has always lived on the Upper West Side and was very excited about the prospect of a high-end condo going up on 76th Street and Broadway — the Laureate. We discussed the project before there was even a sales office. I put us on a waitlist to assure he would be one of the first to view the project. We visited the site in October 2010 when it was still under construction, hardhats and all. He fell in love with the project but just wasn’t ready to pull the trigger. In December 2012, my client decided he wanted to take another look at the building. At that point there was only one apartment left. The apartment had originally been a part of a duplex, but the developer reworked it and put it back on the market. Luckily we got in just as it hit the market. We saw it in early January, and he signed the contract within two weeks. [We] closed two weeks later.

[The deal] was all-cash.”

MariaElena Scotto, Brown Harris Stevens

Compiled by Evan Bleier

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Greenpoint

from page 88

is designing the complex; a foot bridge linking the North Brooklyn and Queens waterfronts is to be designed by famed Spanish architect Santiago Calatrava.

48 Box Street Developer: HM Ventures Group LLC Units: 6 condos Status: All units in contract, closings to start soon This new-construction condo changed owners during the downturn. But when sales launched in January — four years after the project was initially envisioned — all of the homes were snapped up within 24 hours at an average price of $690 per square foot, according to Maundrell, who handled the marketing. He noted that there were 30 offers on the one-, two- and three-bedroom condos. Asking prices in the building ranged from $635,000 to $899,000, and each unit sold for above asking price, he said.

145 McGuinness Boulevard Developer: Pillar Pro Units: 10 condos Status: Sales launch this month When sales at this new-construction, five-story condo start this month, asking prices will begin at $750 per square foot, said Maundrell. The developer, Pillar Pro, is a Williamsburg-based investment group that bought a number of properties in 2009 and 2010, during the downturn.

287-299 McGuinness Boulevard Developer: Chaim Lefkowitz Units: 40 condos Status: Opening summer 2013 Also located on busy McGuinness Boulevard, this project broke ground more than three years ago and then stalled.

But active local developer Chaim Lefkowitz has restarted construction, and sales are slated to launch this summer, according to Maundrell. He said the units will also be priced at around $750 per square foot, lower than similar units on quieter side streets, where prices hover around $800 per square foot.

141 Dupont Street and 98 Clay Street Developer: Chaim Lefkowitz Units: 8 condos each Status: Opening summer 2013 These two new-construction projects, also developed by Lefkowitz, are both four stories. When completed this summer, each building will have eight one- and two-bedroom units, with an estimated price per square foot of around $800, Maundrell said.

Park, but a bit of a hike from the planned waterfront residential towers.

Kickstarter headquarters (58 Kent Street) Owner: Kickstarter Commercial: Office space Status: Renovation under way Work continues apace on the new 29,000-square-foot headquarters for crowd-funding site Kickstarter in the former Eberhard Faber Pencil Co. factory. Company principals are mum on the status of the building renovation, which is being designed by architect Ole Sondresen. But according to news reports, the headquarters will have a green roof, theater, glass-enclosed courtyard and a library, in addition to the offices. The company is currently located at 139 Norfolk Street on the Lower East Side. TRD

Tørst (615 Manhattan Avenue) Owners: Jeppe Jarnit-Bjergsø and Daniel Burns Retail: Beer bar and restaurant Status: Opened last month Jeppe Jarnit-Bjergsø, a Danish brewer, has teamed up with Daniel Burns, the former head of the Momofuku test kitchen, to open an 80-seat beer bar with a 26-seat restaurant at the rear of the venue. The bar will be called Tørst, which means “thirst,” while the restaurant will go by Luksus, meaning “luxury.” There will be 20 beers on tap, many new to the United States, and a Scandinavian-influenced American menu. Partners Oliver and Evan Haslegrave of hOmE, the hip design firm that also did trendy pizza joint Paulie Gee’s and the Manhattan Inn, both in Greenpoint, have designed a modern interior with white marble, reclaimed lumber and dark oak floors, according to Haslegrave. The venue is steps from the G train and McCarren

C O R R E C T I O N S A N D C L A R I F I C AT I O N S In the March issue story, “Stacking up sales brokers,” The Real Deal mistakenly excluded several firms from its ranking. Those firms are: Westwood Realty Associates, which did 10 deals worth $368 million; ABS Partners Real Estate, which did six deals totaling $186 million; Portman Realty Group, which did one deal worth $95 million; MNS, which did four deals valued at $84 million; and Barcel Group, which did 18 deals valued at $50 million.

In the March issue story, “Can Mitchell, Maxwell & Jackson survive?” The Real Deal incorrectly stated that the Home Valuation Code of Conduct required a lender to use an appraisal management company to select an appraiser. The code left the selection up to the lender or a third party, such as an appraisal management company.

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132 April 2013 www.TheRealDeal.com

www.TheRealDeal.com January 2012 00

Pre-crash

from page 74

Eight months later, a piece of building material fell from the 26th floor onto an adjacent school. This time, the DOB temporarily halted construction on the project.

The following year — 2009 — was troubled, too. Buyers slapped Alexico with five escrow lawsuits and sales remained lackluster.

But in December 2009, the developer lowered asking prices from $1,800 to $1,600 per square foot. The drop did the trick: Within a week, 11 contracts were reportedly signed. That same year, marketing powerhouse Louise Sunshine also personally purchased a $3.2 million condo in the building.

And prices are now back up. StreetEasy shows that in 2008 the developer was asking an average of $1,861 per square foot. In 2013, listings have averaged almost the same, at $1,852 per square foot.

Corcoran Sunshine was the exclusive marketing team on the project, but the Corcoran Group partnered with Corcoran Sunshine to sell the last of the condo’s units, Hustis said.

Alexico declined to comment.

Tempo, 300 East 23rd Street Developer: Menolly Group Sales launched in: September 2008 Total number of units: 97 Sponsor units sold: 92 Sponsor units in contract: 3 Talk about terrible timing: Tempo went on the market Sept.

18, 2008 — three days after Lehman filed for bankruptcy.

“We had a huge press party that was catered, with orchids everywhere,” said Elliman’s Deanna Raida, who’s been handling the Tempo’s sales since it hit the market. “We started selling during the worst possible week.”

Tempo started out as a joint project between Irish homebuilder the Menolly Group and real estate investor Quantum Partners. But two years after construction began, Menolly sued Quantum for allegedly making false statements about work done on the 19-story luxury tower.

In 2009, a judge ruled in Menolly’s favor and allowed the developer to fire Quantum.

Quantum did not respond to requests for comment.

Raida attributed Tempo’s slow sales during the downturn to the difficulty that the project had in securing a construction loan. Buyers, she explained, were simply hesitant to purchase condos in an unfinished building.

In addition, after the real estate slowdown, Raida said, banks were not issuing mortgages to those looking to buy in projects that hadn’t sold at least half of their apartments.

But eventually the project secured a construction loan, and shortly after construction was complete, around October 2011, sales started to pick up, Raida said.

“We sold very quickly once we were in the building and doing sales,” Raida said. “People just wanted to make sure we finished, because times were so uncertain.”

Raida said Tempo never saw a shakeup in marketing teams or a drop in prices. In fact, prices have increased.

In 2010, the Tempo’s listings were priced at an average of $1,317 per square foot; so far this year they’re at $1,536, StreetEasy shows.

The Apthorp, 390 West End Avenue Owner: Arefin U.S. Investment Sales launched in: November 2008 Number of units: 152 (including 68 rental units that have yet to be converted) Sponsor units sold: 57 Sponsor units in contract: 12 Maurice Mann doesn’t try to hide how bitter he is about the Apthorp.

In 2005, Mann partnered with real estate investor Afri134 April 2013 www.TheRealDeal.com

ca Israel to buy the famed Upper West Side rental building for $426 million and convert it into luxury condos. Four years later — amid slow sales and a lawsuit from rental tenants trying to block the building’s conversion — Mann said Africa Israel began shutting him out of meetings. Mann, who told TRD that he voluntarily stepped aside as a managing partner, was soon replaced by the Feil Organization.

Mann cited the collapse of Lehman as the point when the project began going south. “You have a great, iconic building that we wanted to put at the top of the pinnacle,” he said last month. But “greed, lack of patience and no foresight,” along with “lousy management and ego” by his one-time partners, made that impossible.

If it were up to him, Mann said he would have taken the building off the market for two or three years and kept the units as rentals until the market picked up.

The project did see a brief halt in sales in 2011, when Attorney General Eric Schneiderman shut down its sales office to investigate whether Africa Israel had made misleading statements regarding a possible sale of the Apthorp’s $385 million mortgage by lender Anglo Irish. The AG’s investigation was never finalized because the building went into foreclosure, however.

Last year as part of the foreclosure, Africa Israel lost control of the Apthorp to Arefin U.S. Investment — an affiliate of Area Property Partners — one of the project’s original two lenders. Corcoran Sunshine took over marketing at the property in October 2010, replacing Douglas Elliman powerbroker Dolly Lenz.

In a statement, Corcoran Sunshine attributed the slow sell-out to a combination of factors, including the rocky economy, the ownership disagreement and the complicated nature of converting a landmark building to condos.

And recently, the Apthorp’s sales have picked up.

Corcoran Sunshine said the building has done 15 sales worth a combined $90 million since September, and currently has only 15 of its condo units left to sell.

According to StreetEasy, there was a significant drop in listing prices in 2010, when listing prices fell from $4,206 to $3,843 per square foot. But asking prices this year are back up to $4,433, StreetEasy shows.

Africa Israel and Feil did not respond to requests for comment.

Manhattan House, 200 East 66th Street Developer: O’Connor Capital Partners Sales launched in: October 2007 Total number of units: 534 (including 35 yet-to-beconverted rentals) Sponsor units sold: 249 Sponsor units in contract: 17 Manhattan House — one of the most high-profile condo conversions of the real estate boom — hit the market with a splash in October 2007. But more than five years later, the building is still little more than half sold.

The landmarked building — which was designed in 1950 by Pritzker Prize–winning architect Gordon Bunshaft of Skidmore, Owings & Merrill — was once home to actress Grace Kelly, jazz musician Benny Goodman and former New York Governor Hugh Carey.

The late Jeremiah O’Connor of O’Connor Capital Partners and real estate mogul Richard Kalikow purchased the building in 2005 for $623 million — reportedly the most expensive price ever paid for a rental building at the time.

Elliman’s Lenz was hired to handle sales.

But converting the historic building from rentals to condos was rocky from the start. O’Connor sued Richard Kalikow in 2007, citing “numerous disagreements.” That dispute played out in court just as the conversion was getting underway, and was ultimately resolved with Kalikow selling his stake in the building to O’Connor.

Elliman retail broker Joseph Aquino was one of Manhattan House’s first buyers, signing a contract in October 2007. He said the development’s biggest challenge from the beginning has been the credit crunch. When units started to close at the 21-story tower around November 2008, Lehman had just collapsed and several banks refused to finance prospective buyers. The hard line on financing forced nearly 90 buyers to back out of contracts, estimated Aquino, who said he loves living there.

“We would have been up to 350 units [sold] now had it not been for the banks and then the people that dropped out,” said Aquino, who noted that the issue appears to be resolved now that large banks are more willing to approve mortgage loans.

Manhattan House had its most successful year to date in 2012 with more than $154 million in sales, Brian Fallon, a partner at O’Connor Capital Partners, told TRD in a statement.

“Manhattan House has been selling at a steady pace since launching in 2008, and on average has represented a greater than 20 percent market share of all Upper East Side new development condominium sales annually,” Fallon said.

According to Aquino, prices at Manhattan House dropped by about 10 percent during the recession, but have since increased to their pre-recession levels. According to StreetEasy, in 2008, listings in the building were priced at an average of $1,637 per square foot. So far, in 2013, they’ve averaged $1,763.

But the biggest difficulties for the building may still lie ahead: O’Connor’s $750 million construction loan on the project matures in December.

Trump Soho Hotel Condominium, 246 Spring Street Developer: Sapir Organization, Bayrock Group Sales launched in: August 2007 Total number of units: 391 Sponsor units sold: 118 Billionaire developer Tamir Sapir’s Trump Soho has struggled with debt and foreclosure for years.

At one point, Trump Soho owed $295 million to commercial real estate investor iStar Financial. In 2010, the CIM Group provided a bailout for $85 million on the iStar loan.

Then, in 2011, 10 buyers sued Trump Soho for misrepresenting sales figures. In a settlement, they received 90 percent of their deposits back.

The building is a hotel/condominium, which means owners can use their units for up to 120 days a year. When the units are not in use, they are used as hotel suites. However, the net rental revenue accrued for each room goes to the unit owner, a Trump Soho spokeswoman explained.

Today, Douglas Elliman and Prodigy International are handling sales at the building, where the prices have gradually decreased over time, according to StreetEasy.

In December 2007 — the first month Trump Soho listed its units — the building’s units were priced at an average of $2,908 per square foot. So far this year, listing prices have averaged $2,349 per square foot.

As of last month, Trump Soho had sold 118 units, according to a building spokesperson. That’s only about a third of the building’s apartments.

Magda Dvir of Barkin and Associates, who has several re-sale listings in the building, said buyers find the building attractive because “somebody’s taking care of [the unit] for you, somebody’s collecting the money for you.”

Today, all of the unsold condos in the 42-story high-rise are doing double duty as hotel rooms and generating income for the sponsors. In a statement to TRD, Trump Soho said it was “pleased and encouraged by the tremendous success of the hotel.” TRD www.TheRealDeal.com January 2012 00

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Mortgage contingency

from page 22

In other price ranges, “I am still doing loans with plenty of buyers getting mortgage contingencies.”

For buyers in all price ranges, the decision to possibly lose their down payment — at least 10 percent of the price and, in many instances, 20 percent or more — should not be taken lightly, Makow said.

Binder warned that buyers who can’t pay cash or don’t have an airtight guarantee of a mortgage should not agree to a non-contingent deal.

“I wouldn’t do it unless I had certain assurances that I didn’t have a problem getting [a mortgage],” he said. “If I didn’t have the funds, I would never put myself at risk.”

Makow said most buyers who waive the mortgage contingency are fairly confident they have financing. But they can still get burned, she said, since banks today often refuse

to finance certain buildings due to their financial health or compliance with Fannie Mae/Freddie Mac guidelines. Other times, the property is appraised too low.

At the very least, buyers should consult a mortgage banker or a real estate attorney before they relinquish their mortgage contingency, advised Shnayder, who is H.O.M.E.’s director of new development lending.

“You’re taking a gamble,” he said. “You should never do that without taking great care and reviewing your income assets with a professional mortgage loan officer to make sure that you’re not going to have an issue.”

To keep buyers from losing their deposits, some brokers have developed their own strategies for protecting their clients while still relinquishing the mortgage contingency clause.

Elliman’s Frances Katzen, for example, said she puts a

funding contingency on the “back end” of some purchase contracts, so that the buyers only forfeit the deposit if the bank finds something wrong with the building or considers the appraisal too low, as opposed to the buyer’s personal qualifications.

But Makow said many sellers’ attorneys won’t allow the tweaking of mortgage contingencies.

“That’s very hard to do,” she said, “because you have to get the seller to agree. If I’m a seller’s attorney and it’s a non-contingent deal, there’s no back door.”

As unpleasant as losing a bidding war is, Burkhardt is adamant about his pro-mortgage contingency stance.

“It’s almost something that should potentially be legislated,” he said. “Buyers should have that protection.

There’s just too much at risk.” TRD

man portfolio. That includes the Lightstone Group’s 1407 Broadway, an office tower that is built on land owned by the Goldman estate. There’s also the Chetrit Group’s 500 Seventh Avenue and 512 Seventh Avenue, and the Cohen Brothers’ 475 Park Avenue South.

“Sol Goldman liked land leases,” Hersh said. “That was sort of his specialty.”

The Goldmans have at least 29 different ground-lease tenants (covering 65 individual parcels) on their Manhattan properties. And some of those tenants locked in very low rents decades ago.

For example, David Ishay’s Gotham Realty Holdings has a ground lease, originally signed by Sol Goldman in 1969, for the 370,000-square-foot office building 30 Broad Street in Lower Manhattan. According to city records, the current annual rent through 2035 is only $430,000, just a fraction of the building’s estimated pretax net operating income of $8.7 million.

But other ground leases yield significant rents. Blackstone Group, the ground lease tenants for the London NYC hotel at 151 West 54th Street, pays the Goldman estate some $3.7 million per year in rent, court records show.

Perhaps due to this vast disparity in rents, the estate’s relations with its tenants lately have been fraught. The friction often starts, court records show, when ground tenants need basic things like an estoppel certificate — typically given with little drama to certify that a lease is in good order. Ground-lease tenants generally need estoppel certificates when applying for a mortgage or attempting to sell the leasehold to another company.

But instead of simply handing over the certificate, the estate has, in a number of cases, sent notices threatening to terminate the ground lease if outstanding violations are not cured quickly, according to court documents. Many of the estate’s tenants, including the Blackstone Group, Extell, Cohen Brothers, Chetrit and others, have cried foul at these threats, suing to block the lease terminations.

Some of these suits allege that the estate is using these hard-ball tactics to extract additional payments from tenants, or even take back control of the leases.

For example, in 2010, El Fassi Realty — which has a ground-lease that runs through 2086 at 31 West 34th Street — needed a document from the Goldmans in order to ink a lucrative deal with the trendy clothing retailer Uniqlo. But Goldman balked, and instead issued notices threatening to terminate the ground lease. El Fassi sued, claiming that the move was “a bad faith effort, to oppress

and harass plaintiff so that plaintiff would agree to pay defendant $7,000,000 not required under the ground lease,” the complaint said. An attorney for El Fassi declined to comment, but a Goldman insider said the lawsuit was settled amicably. Uniqlo eventually moved in to the space, and El Fassi has since approached Goldman to sign a net lease deal in another property.

In another lawsuit, involving the ground lease at 587 Fifth Avenue, the tenant claimed in court documents that the Goldman estate “continues to engage in a consistent pattern of harassment … so that [the estate] can oust the [ground tenant] and regain control of its building.”

TRD did not find a single instance where the estate prevailed and won a lease termination. A Goldman source said the firm is simply attempting to keep its properties in good condition.

Investors interested in working with the Goldmans may want to take a cue from Extell, which has done at least seven major deals on Goldman properties over the last eight years — far more than any other developer.

In addition to the recent deals on 14th Street and the Far West Side, Extell purchased air rights for Goldman’s 200 West 58th Street for $3.7 million in 2007, and in 2006 paid George Comfort & Sons $17.5 million for a ground lease at the estate’s 18 East 48th Street.

Extell also developed a residential condominium, the Lucida, on Goldman land at 151 East 85th Street. And in 2005, Barnett took over the ground lease at the former Stanhope Hotel at 995 Sixth Avenue, which Extell redeveloped as a luxury cond-op.

In fact, TRD found that Extell is the only firm to have done more than two large development deals with Goldman — or on a Goldman property — in the last 20 years.

Industry sources said Extell may have an in with the Goldmans because the firm has successfully completed deals on the estate’s property in the past, and because Barnett is often willing to pay handsomely for ground leases, with the expectation that he’ll sell out at a high price.

If economic conditions continue to improve, brokers said Solil may be looking to sign more ground leases, especially since it owns properties with more than 3 million square feet of unused development rights.

Regardless of what the family decides to do, Sol Goldman’s legacy continues to impact the real estate landscape in myriad ways.

“When you think about the strong New York City real estate families — the Dursts, the Rudins, the Milsteins,” Nesenoff said, “you must include the Goldmans.” TRD

Goldman from page 80 many properties since their father’s death, they have made some strategic acquisitions to fill out potential assemblage sites. The most notable are two small buildings they bought in 2005 and 2007, which could be added to an assemblage of three properties they already owned on Third Avenue between 55th and 56th streets.

And in 2007, the firm bought a building to add to another potential assemblage of five parcels at 686 through 696 Third Avenue, between 43rd and 44th streets.

These almost-complete assemblages are among the most valuable of the properties owned by the Goldman estate because of their potential to become development sites, brokers said.

While many of the estate’s smaller buildings are locked between taller towers and would be difficult to redevelop, others are ripe to be demolished and replaced with new towers, brokers said. TRD found 12 locations where the estate owns two or more adjacent buildings, each with total development rights of 93,000 square feet or more.

For example, the estate owns a commercial building at 22 West 34th Street, on a busy retail strip next to the Empire State Building. According to PropertyShark, the building occupies roughly 68,000 square feet, but could be developed into a property of almost 220,000 square feet, on a block where retail asking rents have surged by 42 percent over the last year to $683 per square foot.

By now, most competing firms would have moved aggressively to sell, lease or redevelop many of the buildings in the Goldman portfolio, noted Dan Fasulo, a managing director at real estate data firm Real Capital Analytics.

Anyone else “would knock them down and build a new building,” Fasulo said.

While the Goldmans have no immediate plans to develop the properties, that may change now that a third generation is set to join the family business.

Allan’s son is expected to join the firm next month after graduating from college, and Jane’s son will likely join the firm next year, sources said.

“The Goldmans hope that the next generation will further develop the real estate holdings,” said one insider.

Sitting on a goldmine

Much of the Goldmans’ massive Manhattan portfolio — which encompasses more than 13 million square feet of commercial and residential space — is controlled by others through ground leases.

According to TRD’s research, ground leases account for 8.5 million square feet, or 65 percent, of the Gold-

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Highs and lows

from page 52

matter of freedom of religion. El-Gamal ended up opening a community center at the site in 2011. It’s unclear what his long-term plan is for the site.

The race to the sky It’s been a race to the sky since TRD started. Indeed, the 870-foot New York

by Gehry, which opened in 2011 at 8 Spruce Street, currently holds the title for tallest residential building in the city, but when complete, Extell’s 1,050foot, under-construction One57 at 157 West 57th will take that honor. But that tower won’t hang on to its designation for long. Indeed, developers CIM Group and Macklowe Properties are planning a nearly 1,400-foot, 84-story building with 150 luxury condos at 432 Park Avenue, the site of the former Drake Hotel. The building, which is set to open in 2016, is just one of a slew of exceptionally tall towers in Manhattan’s pipeline.

✔

One57’s $90 million sale The duplex penthouse at Extell Development’s One57 sold in May 2012 to an undisclosed buyer for upwards of $90 million, setting a record for the most expensive New York apartment sale ever. The price for the 10,923-squarefoot condo trumps a record set only months earlier when Russian billionaire Dmitry Rybolovlev paid $88 million for a penthouse at 15 Central Park West. The under-construction One57 is slated to be finished in early 2014.

✔

One World Trade Center tops out The centerpiece building of the World Trade Center site topped out at a symbolic 1,776 feet at the end of last year, marking an important milestone in the rebuilding effort at the site, and making it the tallest overall tower in the city. Formerly called the Freedom Tower, 1 World Trade Center began construction in 2006 and is scheduled to be completed in 2014. Its anchor tenant, publishing giant Condé Nast, will occupy 1.2 million square feet in the building.

✔

Atlantic Yards Brooklyn’s Atlantic Yards site has been one of the most controversial big projects of the last decade. The $4.9 billion project, which was first announced in 2003, not only divided a community and led to protracted court battles between the developer Forest City Ratner and opponents, it also got hit by the tanking economy. Still, after years of delay, Ratner finally opened the centerpiece of the project — the Barclays Center, home to the Brooklyn Nets — in September. And in December, the company began work on its first residential building, set to be the world’s tallest modular tower. It’s unclear what the timeline is for the remaining buildings planned for the site, which are supposed to include 2,250 units of affordable housing.

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Superstorm Sandy When Superstorm Sandy touched down on Oct. 29, 2012, it damaged and destroyed nearly 400,000 tri-state-area homes, with the Rockaways and Staten Island getting hit hardest in the city. Meanwhile, Lower Manhattan commercial and residential buildings saw severe destruction, and several major hospitals, including NYU Langone Medical Center, were forced to shut down for as long as two months. And in one of the most visually dramatic storm-related events, a crane partially collapsed at One57, forcing neighboring residents and office workers to evacuate for almost a week. TRD

✖

Red Hook

STAY ON TOP OF NEW YORK

from page 56

“I don’t think it takes away from the future potential of Red Hook, but it may just restrain the pace of growth,” Miller said.

Steer and Chin said they aren’t concerned about the possible change, however.

“We will just have to take the regulations into account in our selection of materials and in the way we design the building,” Steer said. “There is such a demand for space that if one buyer is discouraged because of the zoning, then another will just take it.”

The new map specifies that properties in Zone A should be constructed three feet above the so-called “base flood elevation” or face higher insurance premiums. (FEMA’s guidelines indicate that the owner of a property four feet below that level could face annual premiums as high as $9,500, versus the $427 they would pay at three feet.)

Chin said the only property he’s seen change hands in the last month achieved the same asking price the seller had been asking before the storm.

“It’s the only data point I have, but it’s good; they didn’t lose a cent on that sale,” he said.

Tim King of CPEX Real Estate said the neighborhood has had “great momentum” and he doesn’t expect it to stop now.

“I suspect that by the end of the year the hurricane will be a footnote in history,” he said. TRD www.TheRealDeal.com March 2012 00

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from page 28

because they had been around longer.

“Landlords see they have many options for tenants, and it seemed they go for the more mature entities,” Schwartz said.

The landlord at 286 Fifth Avenue, Ab & Sons Group, was represented in-house by managing director Omid Pouratian, who declined to comment on the deal. CoStar Group’s database shows that the asking rent for Datadog’s space was $42 per foot, but a source said the company is paying just under $40 per foot.

The average asking rent in Midtown South was $49.77 per square foot last month, a slight increase from $49.44 in the fourth quarter, according to DTZ. The availability rate, meanwhile, grew to 9.4 percent from 9 percent.

Downtown This fall, Merrill Lynch & Company will give up 3 million

Michael Fascitelli

square feet of space it has occupied since 1984 at Lower Manhattan’s Brookfield Place, a move that has many Downtown brokers buzzing.

And a nearby space with a similar history hit the market last month. Also, in 1984, Prudential-Bache Securities signed a deal for 340,000 square feet at 199 Water Street, a 1.1 million-square-foot tower built by Jack Resnick & Sons.

Following several mergers, Prudential-Bache is now part of lender Wells Fargo, and has subleased its space at 199 Water to firms including BGC Partners and Allied World Assurance.

But that lease is set to expire in December of 2014, and last month Resnick hired Cushman & Wakefield’s John Cefaly, Robert Constable and Andrew Peretz to market the space.

Like many other buildings on the East River waterfront, 199 Water was damaged by Hurricane Sandy, but reopened

after five weeks. To mitigate any future damage, all critical equipment is being relocated from the basement to higher floors, the company said.

There was no asking rent included in the listing for the space, but brokers said they expect it to rent in the low $40s per foot.

Brett Greenberg, a managing director with Resnick, said the recent growth in the Downtown market should help lure tenants to 199 Water.

Lower Manhattan is “dynamic, multidimensional, with tenants from all three major sub-markets relocating there and continued interest from the creative industry,” he said.

Average asking rents Downtown rose to $41.75 per foot over the last quarter from $41.45 at the end of 2012, according to DTZ. The availability rate rose 0.1 points to 13.1 percent during the same period. TRD

likely driven by Roth.

There are several names being floated around as possible replacements. Internally, Vornado’s 60-year-old David Greenbaum and 53-year-old Mitchell Schear, heads of the REIT’s New York and Washington, D.C., units respectively, are front-runners, according to the Green Street report.

Outside of the firm, the aforementioned real estate player named SL Green’s CEO Marc Holliday, who he called “one of the greatest geniuses in our industry,” a possible candidate. The source also cited General Growth Properties CEO (a former Vornado retail chief) Sandeep Mathrani.

But Sandler O’Neill’s Goldfarb said that Holliday, who has been lionized for growing SL Green into the city’s top office

landlord since he took over as CEO in 2004, would be loath to leave his current job. “Holliday has taken [SL Green] from being in the shadow to being a dominant player,” Goldfarb said.

But jumping ship could be a lucrative move for Holliday — his total compensation in 2012 was $15 million, while Fascitelli’s was $64.4 million, according to Forbes.

A spokesman for Vornado declined to comment on Fascitelli’s resignation, deferring instead to the earnings call.

Fascitelli, meanwhile, is signing a one-year noncompete clause, Roth said. Joseph Macnow, Vornado’s chief financial officer, added that there would be no severance package.

After the year, Fascitelli would probably take over a large real estate company, the executive at the Vornado subsidiary said. TRD

from page 54

to have strayed too far from its core retail business, the Green Street report said.)

Next in line Some have speculated that the JCPenney debacle led to Fascitelli being nudged out. A major real estate player interviewed by TRD, who’s done a number of marquee deals with Vornado, dismissed that, saying losses, even if that size, were simply par for the course.

“It’s a pimple on their ass,” he said of the JCPenney deal.

“Mike was a real driver of progress,” he added, noting that Fascitelli was adept at implementing Roth’s big-ticket ideas.

In fact, both the Green Street report and the executive at the Vornado subsidiary believed that the JCPenney deal was

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Market madness and malaise area has seen the addition of at least 12,000 residential units, according to the Alliance for Downtown New York, and the population below Chambers Street has more than doubled since 2001 to nearly 60,000.

“Who would have thought after Sept. 11 that [Downtown] would be what it is now?” said Herman of Douglas Elliman.

Selling lifestyle

O

ther developments have been similarly reflective of the big shifts — geographic and otherwise — of the last decade. Luxury condo projects like the new 15 Central Park West and the conversion of much of the Plaza, both completed in 2008, spawned the priciest condo sales in the city’s history up to that point.

New condos also became more about lavish lifestyles than about basics like a decent laundry room.

The conversion at 20 Pine Street in Downtown was one of the first of this breed. Development firm Leviev Boymelgreen teamed with Giorgio Armani to design the swanky condo interiors, and broker Michael Shvo added flourishes like New York’s first 24-hour sales office in 2006.

“It not only changed real estate marketing, but the full real estate experience,” Shvo, founder of the Shvo Group, told TRD last month. “It reshaped the mind of the consumer, who was no longer interested in buying just four walls, a kitchen and a bathroom. After that, people started seeing themselves as an extension of the brand of the building that they live in.”

And with the new approach to marketing new construction condos, developers began attempting to one-up each other with over-the-top amenities and lavish marketing parties.

On a single night in 2005, for example, John Legend sang at a party for 20 Pine, while further uptown, on Riverside Drive, Seal serenaded at a party for the Aldyn, a then-new rental developed by Gary Barnett’s Extell Development.

At the same time, more prospective buyers were turning to the Internet to search for New York real estate. The Corcoran Group estimates that as many as 90 percent of home searches commence online today, whereas 10 years ago, perhaps 10 percent did.

Moreover, property records became decidedly more transparent because of the Internet. The city launched its popular ACRIS database in 2003, to allow searches of property deeds and taxes, and even introduced an iPhone app in 2009 for the same purposes.

It wasn’t just the condos that shifted New Yorkers’ real estate perceptions. Office buildings developed since 2003 have uniformly striven to be airier, sunnier and environmentally friendlier through LEED certification, a term that hadn’t even entered into the industry lexicon a decade ago.

The Durst Organization’s One Bryant Park, the first skyscraper in the U.S. to be certified Platinum LEED, for instance, has a system that captures rainwater for reuse, and insulation and a glaze that automatically dims the windows during daylight to keep the tower cooler.

Mary Ann Tighe, the Tri-State CEO of the CBRE Group, also noted that new commercial construction — including the World Trade Center towers and Boston Properties’ 38-story 250 West 55th Street — generally favors more open floor plans rather than rows of individual offices off hallways.

Along with the design changes, of course, there’s been a new emphasis on technological infrastructure, according to Tighe. To put it simply, few were thinking much about Wi-Fi in buildings in 2003. Now it’s de rigueur — just as the technology industry itself has become a greater player in the Manhattan office leasing market, especially in Midtown South.

Rezonings and reshapings

I

t’s impossible to look at the evolution of the city’s real estate industry over the last 10 years without accounting for

142 April 2013 www.TheRealDeal.com

from page 44

the massive rezonings that have paved the way for all kinds of new projects — and lucrative building opportunities for developers.

Indeed, Bloomberg’s push to rezone large neighborhoods, while controversial, has opened up many previously off-limits areas to residential development. Indeed, those rezonings have reportedly touched about a fifth of the city.

One of the biggest, of course, was the 2005 rezoning of the Williamsburg-Greenpoint waterfront, which spanned 175 blocks and paved the way for thousands of condo and rental units, including the 570-unit Edge and the 450-unit Northside Piers.

The deal — which was negotiated for several years with the City Council, and involved incentives for developers to include affordable housing — transformed the north Brooklyn waterfront from an industrial noman’s-land to a trendy hipster hangout, not to mention a lucrative location for developers.

according to the Brooklyn-based commercial firm CPEX Real Estate.

Bust and Boom II?

A

s high as the real estate market climbed, the credit crunch brought it crashing back down to Earth.

The subprime mortgage crisis prompted the collapse of financial giants Bear Stearns and Lehman Brothers, which plunged the nation into the so-called Great Recession.

As some buyers attempted to back out of condo contracts, others couldn’t get mortgages because banks put a vise on lending. That, in turn, led to something of a freeze in the New York City residential market.

At the same time, many developers were locked out of loans to buy and construct new buildings.

Harry Macklowe became the poster child of the downturn when, after putting up only $50 million of his own money in the easy-credit boom market, he defaulted on billions in loans he took out to buy seven Manhattan skyscrapers from the Blackstone Group for $7 billion.

Macklowe was also forced to sell the GM Building to Manhattan investment sales volume Boston Properties in 2008, in a deal that valued the tower at $2.8 billion — the most ever paid for a U.S. building (see related story on page 51).

The tighter credit market also contributed to Tishman Speyer losing Stuyvesant Town and Peter Cooper Village, the 110-building apartment complex it acquired with investors in 2006 for $5.4 billion, the biggest real estate deal in modern history. In 2010, Tishman Speyer defaulted on $4.4 billion in financing and entered foreclosure.

On a more micro level, New York home sales dropped in 2009 — there were 1,195 co-op and condo sales in the first quarter of 2009, down starkly from the 2,282 sales in 2008’s first quarter, according to Miller Samuel.

“What I think has really changed is the financing piece of it,” Herman said. “[Before the crisis hit] Since TRD launched, the areas of Brooklyn closest people really weren’t aware of their credit scores so much.” to Manhattan have gone from a residential destination While New York real estate has gradually heated up for struggling artists and pioneers to an internationally again, it now exists against the backdrop of stricter lending known culinary and residential mecca. guidelines and more economically savvy buyers.

Yet Manhattan has not been left out. It’s also had its Real estate soirées, especially the over-the-top events share of rezonings, resulting in a blurring of the lines be- thrown to sell swanky condos, ceased to exist. tween previously established neighborhoods.

“Now the events have been more property-centric,” said For example, the rezoning surrounding the one-mile Tresa Hall, sales director at Corcoran.

High Line — which runs from Gansevoort to West 30th Still, the recovery has been seen on several fronts, perhaps streets — sparked brisk development in the area. Roughly most notably in the rental market, where rents rose even 30 new developments have been built or are being built through the downturn. This was due to the softer sales maralong the elevated park, including a new site for the Whit- ket, coupled with a low inventory of new rentals and the Fedney Museum and high-end condos designed by starchi- eral Reserve’s commitment to keep interest rates low through tects like Jean Nouvel and Annabelle Selldorf.

2014 (thus prompting buyers who might otherwise jump into In total, the park spurred more than $2 billion in pri- the sales market to capture the low rates to hold off). The vate development between 2003 and 2011, and residential average Manhattan apartment rent hit a record of $3,461 property values spiked by a stunning 103 percent during in September 2012, according to brokerage Citi Habitats. that time, the New York Times reported.

These gains have been made despite some very real and “I think it’s actually extraordinary, the extent to which looming economic struggles — including the European all that planning and rezoning led to new development debt crisis of the last few years — that have depressed in places all across the city, despite the recession,” said global investment.

More recently, the industry held its collective breath Vishaan Chakrabarti, director of Columbia’s Center for Urban Real Estate, who headed the Manhattan office of as the White House and Congress tried to stave off the sothe City Planning Department from 2002 to 2005. “When called fiscal cliff, a combination of massive spending cuts we started to do the planning for the rezoning around the and tax increases. (Negotiations led to a post-deadline High Line, I don’t think anyone anticipated the breakneck deal that resulted in moderate capital-gains-tax increases pace at which development was going to occur.” pushed by President Barack Obama.)

Columbia’s 17-acre expansion, approved in 2007, promAnd yet, New York’s enduring popularity — the city’s ises to do the same for a largely industrial area of West Har- population reached an all-time high of 8.34 million this lem. And Atlantic Yards — where the Barclays Center finally year — continues to bring fresh tenants and owners for opened in late 2012 after years of legal battles — has already both residential and commercial spaces. boosted retail rents in Downtown Brooklyn, pushing rates “It stayed competitive,” said Herman of New York in from around $50 a square foot annually to more than $100, the last 10 years. “It got better.” TRD Source note: Data from Cushman & Wakefield’s Capital Markets Group. Preliminary sales data based on transactions greater than $10 million, representing those deals that were known to have closed or were recorded as closed in 2012.

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from page 84

Romito said firms such as his are “trying to put commercial real estate in the cloud,” where the leasing game shifts from broker intuition about potential tenants to actual real-time interest in a building.

Also, a single report shows a landlord’s entire building portfolio, which can help an owner make decisions about how best to position available office space, he added.

“We can show the landlord, let’s say, that 61 percent of people look at spaces below 10,000 square feet, and only 1 percent look at spaces above 50,000 square feet,” he said. “This is helpful to say, ‘maybe we should divide the floor.’”

Landlords pay $500 a month per building, which includes unlimited access to analytics and a video for every vacancy in the space.

Since its launch, View the Space has earned revenues in the “low single millions,” though Romito declined to give specifics. He said the company plans to seek its first round of venture capital funding soon.

C

The comp creator: CompStak

ommercial leasing database CompStak is using the “it takes a village” model to bring greater transparency to the Manhattan commercial leasing market.

The company, launched in January 2012, has created an online database of rent prices, square footage, building income, tenants and other information that had been scattered across several online (and offline) sources or clandestinely traded among brokers.

Founded by former Grubb & Ellis broker Michael Mandel and programmer Vadim Belobrovka, the company gives access to information when brokers and landlords give up their own data.

“We want to encourage our community of users to participate as much as possible,” Danny Shachar, CompStak’s director of operations and marketing, told TRD. “Sometimes it’s easier for people to pay for information, but that would mean we’d have less comps to work with.”

The twist has already attracted investors. So far, the company has received roughly $1.25 million from companies such as Expansion VC, the venture-capital arm of the Melohn family; Ryan Slack, co-founder of PropertyShark; and 500 Startups, a start-up incubator.

The company’s revenue, projected by Mandel at roughly $1 million this year, comes primarily from enterprise licenses — a license to access proprietary information — for private equity firms and institutional investors that use the comps data to make investment decisions, Mandel said.

The data that CompStak is providing has been historically hard to get, Peter Kozel, chief economist at Colliers International Tri-State, said: “Landlords and tenants are protective of what they have,” he said.

Mandel claims to have comps on roughly half of Manhattan’s commercial leases over the past decade and 99 percent of comps from the past year. However, a TRD analysis of 2012’s deals (based on CoStar Group data) from some of the city’s biggest brokerages shows a large number of deals that are not represented in CompStak’s database.

Mandel responded that CompStak’s record of total deals closed for the year is greater in terms of square footage than the total square footage estimated by the major commercial brokerages, though he believed that some smaller deals were missing.

Mandel said he has clients who are brokers at top firms, including Cushman & Wakefield and Newmark Grubb Knight Frank, as well as several prominent office landlords, though he would name only Tishman Speyer.

M

A Brokerage by the Numbers: MNS

NS is a residential brokerage marketing itself as not just data-savvy, but capable of crunching valuable numbers for developers.

The biggest financial opportunity, said CEO Andrew Barrocas, lies in being involved from the pre-construction stage.

“A developer will ask us what to build, how big it should be, all before there is even a shovel in the ground,” he said. Depending on the size and scope of the project, the developer would pay MNS a consulting fee beginning in the tens of thousands of dollars, though Barrocas said that for regular clients the pre-construction consulting was just “part of the deal.”

Through an internal database (aggregated from public and proprietary sources), MNS analyzes metrics such as price per square foot, unit mix and average time on market to determine what kind of project would work best in a given area.

“For example, right now you bring a large project to the Brooklyn Heights markets, it’s hungry for that,” Barrocas said.

Clients include RAL Companies’ Robert Levine, the developer of One Brooklyn Bridge Park, and Jeffrey Levine of Douglaston Development.

“Most of the companies that we compete with,” Barrocas said, “will tell the developer, ‘you give me this, you’ll get this.’ We can tell him a 950-square-foot two-bedroom in a rental may yield him $55 per square foot, but I can show him that we could get $65 dollars per square foot if we build studios.” TRD

144 April 2013 www.TheRealDeal.com

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“We want to congratulate and thank

for creating a source of interesting and diverse topics for the real estate professional.

Looking forward to the next 10!�

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from page 40

market fluctuations, and a low risk-tolerance that consistently serves its investors well. When it bought the GM building in 2008, Boston Properties paid the highest price ever for an American office building: $2.8 billion. But in 2012, the REIT was quiet — not closing a single transaction. Zuckerman had always left the dayto-day deal making to Ed Linde; he stepped into a more hands-on role only after his friend’s passing.

“They keep it simple, limit themselves to a few markets,” Knott said. “They basically own high-quality properties … in markets where demand is good in good times, and doesn’t fall off in bad times, and where it’s hard to add supply.”

By contrast, Morgan Stanley Real Estate Fund — widely known in the industry as MSREF — is a private equity fund, which inherently makes it more aggressive and more willing to take chances.

“The private equity approach is ‘go wherever, get the timing right,’” Knott said. “But what we’ve found in the 15 years that REITs have been around is that lower leverage is connected to higher returns.”

During Thomas’s tenure, MSREF performed well.

But it stumbled after his 2005 departure, reports show.

Indeed, in 2007, MSREF bought Crescent Real Estate Equities for $6.5 billion in an ill-advised leveraged buyout at the market’s peak. And in the fourth quarter of 2008, it posted a $1.2 billion pre-tax loss — all under the direction of John Carrafiell and Jay Mantz, who sources told TRD were handpicked by Thomas to succeed him. Finally, in 2009, Morgan Stanley brought Thomas back to patch things up for the deeply troubled fund, according to reports.

Lionized at Lehman For the past year, Thomas has been overseeing the liquidation of Lehman’s vast portfolio of real estate assets.

That included the sale of the massive Archstone portfolio to Sam Zell’s Equity Residential and AvalonBay Communities for $6.5 billion in cash and stock.

The complicated Archstone deal was a reversal from Lehman’s earlier bid to take Archstone — the nation’s 11th largest landlord and a massive residential apartment owner — public in order to raise cash. Industry observers lauded the deal as an aggressive but very effective play.

Lehman had wrested control of Archstone away from Zell before, outbidding him for the final stake in the portfolio last June, when it bought out Barclays and Bank of America so that it could sell the sprawling portfolio intact later. When Lehman finally sold Archstone in November, it netted 17 percent more than the asset had been appraised at just six months earlier, according to reports, and ended up the largest investor in both Equity and AvalonBay because part of the payout came in stock.

Analysts consider the deal an overwhelming success — and told TRD that it gives them confidence that Thomas can successfully tackle his new role at Boston Properties.

In that new role, Thomas will earn an annual salary of $750,000 and an annual target bonus of 230 percent of his base pay, which should work out to roughly $2.5 million. (The median pay for a REIT CEO is $3 million, according to Green Street.) He will also get $4.5 million in grants and options, according to public documents.

By comparison, Doug Linde, 48, earned $4 million

in 2011 as head of the company’s office in Boston and owns about $30 million of company stock. But in the last month Linde has sold off shares, according to one analyst, who asked not to be identified for fear of damaging his relationship with the company. The sale has led analysts to speculate that Linde is getting ready to walk because he lost out to Thomas.

Linde, though, told the source that he unloaded the share for personal tax reasons, not because of any bad will toward Boston Properties.

“A knee-jerk reaction is to believe this is a hard punch to the gut, and that he will soon be out the door,” a report on Boston Properties by Green Street said, “but deeper consideration suggests that a departure may not be that likely.”

How Thomas will work with Linde and acquisitions head Ray Ritchie, both considered more analytical than their faster-paced new boss, has the industry’s attention. Their different styles and knowledge bases could either complement one another or clash.

“There is a sense of uncertainty as to whether the company’s strategy and culture will change, how [executives] will mesh,” Knott said.

Still, analysts remain confident that Boston Properties will not waver from its signature long-term strategic buys and holds.

“Boston Properties is one of those companies that you give the benefit of the doubt,” Knott said. “They have executed over a very long time frame a strategy that has worked out very well.” TRD

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Downtown surpasses Uptown Luxury buyers are paying more for Lower Manhattan apartments than they are farther north

BY KATHERINE CLARKE t’s conventional wisdom that “blue chip” apartments surrounding Central Park command the highest prices in New York City, beating out trendier Downtown towers on a price-per-square-foot basis. But for the first time, the asking prices for luxury Downtown apartments have outpaced those in Midtown and Uptown, new data show, as projects in Tribeca, Soho and Chelsea demand in excess of $7,000 per square foot.

The average asking price for a Downtown luxury apartment rose to $2,777 per square foot in 2012’s fourth quarter, surpassing comparable units in Midtown and Uptown, where the collective average price was $2,685 per square foot, according to data from Corcoran Sunshine Marketing Group provided to The Real Deal.

The data, which the firm has been tracking for 10 years, is based on a survey of 140 Manhattan condo and co-op buildings that have asking prices averaging more than $1,700 per square foot. The collective Uptown and Midtown neighborhood is defined by the firm as north of 34th Street and south of 110th Street, while the Downtown neighborhood is defined as south of 34th Street, not including the Fi-

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nancial District or Battery Park City.

The trend is the result of a bevy of new luxury towers hitting the market Downtown, as well as buyers seeking out homes far afield of Central Park. And while this trend has been on the rise for years, the pace has escalated in the last 12 months. In fact, prices for Downtown units have risen a dramatic 28 percent compared to the same period in 2011, marking a 30 percent jump over the previous peak in 2007’s fourth quarter. Uptown prices have not seen the same dramatic uptick, despite the introduction of luxury towers such as Extell’s One57.

“Uptown is tried-and-true — if you list something prewar Uptown, you’re going to sell — but Downtown really has the buzz right now,” said Michele Kleier, whose brokerage Kleier Residential is based on the Upper East Side. “People are much more open about location now. It used to be they would have a 10-block radius in which they wanted to live [on the Upper East Side].”

The evolution of the Downtown market has been in the making since the mid-1990s, said Jonathan Miller, an appraiser at Miller Samuel.

More recently, the debut of several luxury Downtown skyscrapers — which have pushed the envelope in the last 18 months with ask-

ing prices in excess of $6,000 and $7,000 per square foot — are shifting the market even further. Recent examples include 56 Leonard (see related story on page 63), and 150 Charles Street. Last year, sales also launched at pricey new developments such as Chelsea’s Walker Tower and 18 Gramercy Park South.

While Corcoran Sunshine’s data provides an insight into the luxury market through the lens of particular buildings, it may not be conclusive for the luxury market as a whole, said Kirk Henckels of Stribling & Associates.

For one thing, there are far fewer new luxury developments on Fifth Avenue and Central Park West than Downtown, Henckels noted.

(New developments tend to command higher prices than resales.)

For another, the Upper East Side and Upper West Side can still command top dollar. Last year, the city’s priciest home sales all took place in Midtown and Uptown, including the largest co-op deal (the $54 million sale of media mogul David Geffen’s apartment at 785 Fifth Avenue), the largest townhouse deal (the $49 million sale of the Stanford White Mansion at 973 Fifth Avenue) and the largest condo deal (the $88 million sale of a penthouse at 15 Cen-

tral Park West), according to a market report prepared by Henckels.

Still, Mara Flash Blum, a luxury Downtown broker at Sotheby’s International Realty, said it’s not just new condos seeing price hikes in Lower Manhattan.

“I’m seeing record numbers in co-ops Downtown,” Blum said. “The average price in the co-op market Downtown has been somewhere between $1,200 and $1,300 a square foot. When you start to see $1,500 to $1,900 a square foot, as we’re seeing now, that’s pretty outrageous.”

These are not the first Downtown properties toachieverecordnumbers.Lastyear,forinstance, a pair of penthouses at Superior Ink on West 12th Street sold separately for $16.9 million and $10.5 million. Several years ago, a penthouse co-op at 40 Fifth Avenue sold for $11 million.

“If that came on the market right now, would it come on at $25 million?” Blum wondered.

To that end, brokers who have traditionally stuck to selling prewar Upper East Side coops to well-heeled Manhattanites may need to learn mobility as demand for properties farther south ramps up, Kleier said.

“We need to be in a car or on roller skates [to keep up],” she joked. TRD

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Manhattan’s most distressed properties

Troubled debt on office towers, rental complexes tops $4 billion

BY KATHERINE CLARKE istressed opportunities in Manhattan have become much harder to find in recent months. Of the $29.9 billion in distressed assets identified in Manhattan after the financial crisis, 74 percent have been worked out, according to data from Real Capital Analytics. But there is still debt to be found in Manhattan. The borough’s 10 most distressed properties account for more than $4 billion in debt, according to data provided to The Real Deal by analytics firm Trepp. Among those properties are longtime distressed apartment complexes, such as Stuyvesant Town and Harlem’s Riverton Apartments, but the list also includes owners whose portfolios are usually associated with profit, such as Gary Barnett of Extell Development. Read on to find out which properties have the most debt.

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Stuyvesant Town-Peter Cooper Village: $3 billion in debt One distressed first mortgage at Stuyvesant Town-Peter Cooper Village on its own accounts for a significant chunk of Manhattan’s distressed property debt. Holders of the senior mortgage at the rental complex, formerly owned by Tishman Speyer and now controlled by CWCapital Asset Man-

agement, are owed $3 billion, according to Trepp’s data, while another $1.4 billion is owed to the holders of the mezzanine debt.

Tishman paid a record $5.4 billion to Metlife for the complex in 2007, and defaulted on the mortgage in 2010.

The Belnord at 2360 Broadway: $375 million in debt Extell’s 215-unit rental property has been in financial trouble since the company stopped making loan payments on the building in May 2011. The $375 million loan on the Upper West Side property was more than 90 days delinquent as of last month, according to Trepp.

The building’s problems stem from a decision made by Extell in 2006 to consolidate the property’s existing debt into a $375 million interest-only loan, which was then sold to investors as part of a package of commercial mortgage-backed securities. Extell’s debt service soon far outpaced the building’s revenue.

In response to an email from The Real Deal, Barnett said only that he was “hopeful that [the company] will have a mutually satisfactory conclusion with the lender.”

Riverton Apartments at 2171-2200 Madison Avenue: $225 million in debt

When a joint venture between Laurence Gluck’s Stellar Management and private equity giant the Rockpoint Group bought this Harlem apartment complex in 2005 for $132 million, they secured a $105 million mortgage. When they refinanced that mortgage in 2006 — with an eye toward renovating the complex — they more than The Belnord

doubled the debt on the property to $250 million. Despite converting more than half of the units from rent-stabilized to market-rate rentals, the owners struggled to match their rental income to debt service payments, ultimately defaulting on the loan. Deutsche Bank then sold the loan as part of a CMBS package. CWCapital took over ownership of the complex in 2010.

The delinquent loan currently totals $225 million, Trepp’s data show.

119 West 40th Street: $160 million in debt This 340,000-square-foot office building, known as Mendelssohn Hall, has been in financial difficulty since December 2009, when CWCapital filed to foreclose on a $160 million senior mortgage on the property held by the owner, billionaire Leon Charney. L.H. Charney Associates acquired the property for $182 million in 2007 in partnership with George Comfort & Sons and Fortis Property Group, with plans to renovate the building and sign on new tenants at higher rates. But things went awry in 2008, when the company failed to make payments towards an unpaid mechanic’s lien, and construction work on the building stalled. The $160 million loan on the property was more than 90 days delinquent as of last month, according to Trepp. TRD

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NYC developer beats $2 million judgment

Nevada State Supreme Court rules in Halpern’s favor in case over failed Las Vegas W Hotel

luxury condos and 75,000 square

By Hiten Samtani ew York developer Jason feet of gaming space. Halpern was Halpern has escaped hav- developing the complex with the ing to pay more than $2 Dallas-based Edge Group. million to his former partner in the Brian Roche, a former tight development of a failed W Hotel in end for the Dallas Cowboys, filed Las Vegas, following a ruling from suit against Edge in 2006, allegNevada’s highest court. ing his group was pushed out of The thorny legal battle — which the original development team. has continued for nearly seven Edge ultimately settled the case years across two states — origi- for $550,000, and incurred annates in a dispute over the canceled other $1.3 million in legal fees. In $2.5 billion project, which would December 2010, a Nevada judge Real Deal border:Layout 1 3/28/13 PMthat Page 1 have2013 included 3,000 hotel rooms, 12:56 ruled Halpern and other in-

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vestors had agreed to indemnify Edge against such litigation, leaving him on the hook for the $2.08 million payment.

Subsequently, in July 2011, Edge sued Halpern in New York State Supreme Court, alleging he fraudulently shielded his assets — including a $3 million apartment at 166 Perry Street in the West Village — to avoid coughing up the payment.

Last month, however, the Nevada State Supreme Court over-

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turned the judgment in the indemnification case, effectively letting

The thorny legal battle — which has continued for nearly seven years across two states — originates in a dispute over the canceled $2.5 billion W Hotel Las Vegas project.

Halpern off the hook in New York as well.

“We agree and conclude that the indemnity provision here does

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not explicitly state Halpern’s intent to indemnify Edge for its own

wrongdoing,” the ruling said.

The decision also reversed an award of attorney fees, costs and interest awarded to Edge.

“Mr. Halpern is gratified that the Nevada [Supreme Court] properly vacated a clearly erroneous decision,” William Fried, a partner at Herrick Feinstein, who represented Halpern, told The Real Deal last month. “Edge has used that erroneous decision to harass Mr. Halpern by filing multiple lawsuits containing wild, false and outrageous allegations accusing him of, among other things, fraudulent conveyances.”

The decision, Fried added,

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166 Perry Street

would be the “first step in repairing the damage done to Mr. Halpern’s reputation.”

“I expect that in light of this judgment the actions here will be resolved,” said Scott Ziluck, an attorney at the law firm Halperin Battaglia Raicht, who represented Edge in the New York case.

Halpern is the developer of 184 Kent Avenue, a converted Williamsburg rental building, among other projects. In September 2011, Halpern’s company, JMH Development, was named in a separate racketeering suit by two local unions. That suit was also dismissed in February of this year, Fried said.

Executives from Edge did not respond to requests for comment. TRD

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Manhattan landlords convert apartments to retail space Some building owners stand to reap far higher rents per square foot

By Adam Pincus or some time now, coveted neighborhoods such as Soho and the West Village have commanded some of the highest residential rents in Manhattan.

But some landlords — most recently Stone Street Properties and SMA Equities — have found that converting ground-floor apartments into retail space is far more lucrative.

Last month, Stone Street filed plans to convert a first-floor apartment at 101 MacDougal Street, between Bleecker Street and Minetta Lane, to a store, while SMA Equities did the same at 22 Spring Street,

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Russell C. Murawski First Senior Vice President

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staggering,” Kaye said.

Other firms that have filed plans or already transformed apartments include Midtown-based the Jackson Group, which filed in 2011 to convert space at 407 Bleecker Street in the West Village to retail, then leased it to luxury shoe retailer Jimmy Choo.

(In fact, DOB records show that the space was originally retail. A certificate of occupancy from 1941 identifies the building’s first floor as store space. That was changed at some point before 1978, when a new certificate of occupancy said

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“The amount of interest in retail … in the West Village is staggering.” Kaye said.

• Mixed-use Properties

• Apartment Financing

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Robert Morgenstern, left, and Jeffrey Kaye of Stone Street Properties

records filed with the city’s Department of Buildings show.

Such conversions are not an easy process, requiring city approvals and tenant negotiations. Indeed, a review of DOB records shows that they are still rare: In the past two years, landlords have moved to convert apartments to retail in about 12 Manhattan buildings. (The Real Deal looked at DOB applications to convert ground-floor residences to retail space filed between Jan. 1, 2011 and late March 2013.)

But for landlords willing to take on these projects, the payout can be an exponential increase in rent per square foot. This is particularly true in hot retail areas like Greenwich Village, Nolita and Soho, where shoppers are streaming into once sleepy streets.

At 101 MacDougal, the most lucrative use for the ground floor was retail, said Jeffrey Kaye, managing principal at Stone Street. Kaye and fellow Stone Street principal Robert Morgenstern purchased 101 MacDougal this past November as part of a $73 million portfolio of 16 buildings.

The property “is the only building on that block that does not have groundfloor retail, and the amount of interest in retail on that block in the West Village is 3/28/13 11:35 AM

it was residential.)

Also in 2011, First Atlantic Real Estate filed to convert 156 Prince Street in Soho to retail. The space is now occupied by the health food chain Juice Press.

By following this strategy, owners may be able to increase revenue per square foot tenfold.

On Bleecker Street in the West Village, for example, “ground-floor residential units that rented for $50 to $75 [per square foot] are increasingly being converted to retail space that commands $500 per square foot,” said Jared Epstein, vice president at Aurora Capital Associates.

And there are likely more conversions to come, retail experts said, even though the complicated process sometimes involves buying out or relocating rent-regulated tenants.

“In a neighborhood that has been gentrifying, where retail has been creeping in, it is much better to get retail rents,” said Albert Laboz, a principal at United American Land, which owns properties in Soho, among other areas. “Especially if you buy out rent-controlled or rent-stabilized tenants, you are really increasing your net income exponentially.” TRD www.TheRealDeal.com March 2010

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The Real Estate Lenders Association hosts a “RELA NYC Breakfast Meeting.” Robert Stuckey, managing director of the Carlyle Group, is the featured speaker. The Yale Club, 50 Vanderbilt Avenue. 8 to 9:30 a.m. Fee: Free for members, $50 for nonmembers. Information and registration: www.rela.org.

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NYU Furman Center’s Moelis Institute for Affordable Housing Policy presents “Big Ideas for the Big Apple: NYC Mayoral Forum on Affordable Housing,” moderated

by Brian Lehrer, host of “the Brian Lehrer Show.”

The forum will be preceded by panel discussions focusing on the successes and failures of former Mayor Ed Koch’s housing plan for New York City.

New York University School of Law, 40 Washington Square South and 108 West 3rd Street. 1 p.m. panel discussion, 4:30 p.m. forum, 6 p.m. Q&A and reception. Free.

Tickets available to the public on a first-come, first-serve basis. Information and registration: www.furmancenter.org.

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The New York Building Congress hosts a “Construction Industry Breakfast Forum” with guest speaker Seth Pinsky, president of New York City Economic Development Corporation. Hilton New York hotel, 1335 Avenue of the Americas.

8:30 a.m. Fee: $85 for members, $150 for nonmembers. Information and registration: www.buildingcongress.com.

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Massey Knakal Realty Services presents the Massey Knakal Commercial Real Estate Investment Summit with keynote speaker Jeff Sutton, founder and president of Wharton Properties.

Other speakers include Chris Albanese, principal at the Albanese Organization; Michael Albert, president and chief financial officer at Capital Properties; Haim Chera, chief financial officer at Crown Properties; David Firestein, a partner at the Shopping Center Group; Dennis Friedrich, CEO of Brookfield Office Properties; Andrew Kimball, CEO and president of the Brooklyn Navy Yards; Robert Knakal, chairman of Massey Knakal; Robert Lapidus, chief operating officer of L&L Holdings; and Christopher Schlank, a managing partner at Savanna. McGraw-Hill Conference Center, 1221 Sixth Avenue. 7:30 a.m. to 4:30 p.m. Fee: $395. Information and registration: www.mkcresummit.com.

The Real Estate Board of New York presents the “Most Ingenious Deal of the Year Awards,” recognizing 2012’s most creative commercial deals. A panel of industry leaders will judge 19 entries in the categories of finance, leasing and sales.

101 Club, 101 Park Avenue. 5:30 to 7:30 p.m. Fee: $60. Information and registration: www.rebny.com.

The Young Men/Women’s Real Estate Association of New York hosts a luncheon with guest speaker Joseph Sitt, CEO of Thor Equities. The University Club, 1 West 54th Street. Noon. Fee: Free for members, $80 for nonmembers. Information and registration: www.ymwrea.org.

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The New York Institute of Technology School of Architecture and Design presents a lecture, “Language of Architecture,” featuring architect Daniel Libeskind in conversation with Judith DiMaio, dean of the School of Architecture. NYIT, 1871 Broadway. 6:30 to 8:30 p.m.

Free. Information and registration: www.nyit.edu.

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The New York Chapter of the American Institute of Architects presents “What to Expect When You’re Renovating,” a two-hour class about the process of renovating a New York City apartment from start to finish.

Speakers include architect Carol Gretter and Attorney Melissa Billig, a partner in the Construction & Design Practice at law firm Ingram Yuzek Gainen Carroll & Bertolotti.

The two-hour session will provide an overview of the process as well as code and legal issues. The Center for Architecture, 536 LaGuardia Place. 6 to 8 p.m. Fee: $35. Information and registration: cfa.aiany.org.

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The Council of New York Cooperatives & Condominiums hosts “Condo Strategies: Improving Value, Condition, & Quality of Life.” Condominiums are the fastest-growing segment of New York City’s housing stock, but new unit owners often do not know one another and have little experience in operating a building. Attorney Stuart Saft, chairman of the board of CNYC, will provide guidance on priorities and responsibilities for unit owners, sponsors and condo boards. Location TBA. 7 p.m. Fee: Free for members, $35 for nonmembers. Information and registration: www.cnyc.com.

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The New York Chapter of Professional Women in Construction hosts an awards reception honoring 7 Bryant Park, the new 43-story Midtown condo project. The Yale Club, 50 Vanderbilt Avenue. 5:30 to 8 p.m. Information and registration: www.pwcusa.org.

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160 April 2013 www.TheRealDeal.com

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COMINGS & GOINGS Sierra launches construction division, hires former Swig executive as head

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anhattan-based Sierra Real Estate has launched a construction division headed by a Swig Equities alum, the firm said last month.

The newly formed entity, called Sierra Development Associates, will handle major capital improvements and tenant build-outs at residential and commercial properties, according to Director of Construction Darren Schumer, head of the new division.

Schumer was director of construction at Swig Equities until the firm’s financially strapped founder, Kent Swig, wound down operations a few years ago. Previous to that, Schumer worked at Jones Lang LaSalle, where he coordinated tenant build-outs for Bank of America.

Sierra chose to expand now, Schumer said, because the improving economy has prompted landlords to renovate and reposition buildings in hopes of attracting higher rents and better tenants.

The new division is already at work on a slew of new projects, including revamping the retail spaces at 72-76 Greene Street in Soho, which is owned by Darren Schumer ASB Capital Management and Chicago-based L3 Capital. Sierra is also doing façade restoration work at commercial buildings 12 East 46th Street and 875 Sixth Avenue, Schumer said.

Schumer said the new division consists only of himself and an administrator for now, but will likely expand in the next year.

Miron opens its second Union Square office

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he fast-growing brokerage Miron Properties is opening a new office, bringing its total number of New York City outposts to four.

But instead of staking out a spot in a new neighborhood, the hipster firm decided to lease space just down the street from its headquarters at 90 East 10th Street near Union Square. The new office, opening next month at 84 East 10th Street, will house Miron’s residential rentals team.

The firm considered a west-side office, Miron Properties Managing Director Jeffrey Schleider told The Real Deal, but decided against it in order to keep intact a close group of agents who’d worked together at 90 East 10th Street. Moving some agents to a different neighborhood would mean “we’d have to break up this core of agents,” he said. “By keeping it close to home, Miron’s 90 East 10th Street headquarters we can keep that tight-knit culture.” Plus, he added, Union Square is centrally located, providing easy access to many parts of Manhattan and Brooklyn.

The new storefront office is 2,000 square feet, slightly larger than the 90 East 10th Street space. But the jury is still out, Schleider said, on whether the new office will have a foosball table, a central feature of the firm’s headquarters. The new office will hold a total of 50 people, including about 20 currently housed at 90 East 10th Street. The firm’s residential sales, property management and commercial agents will remain in the original space. “We’re bursting at the seams in our current space,” Schleider said.

Miron, which launched in 2009, now has 68 agents, and Schleider said he is constantly fielding calls from prospective new agents. The firm also has offices in Teaneck, N.J., and Greenpoint, Brooklyn.

Porzio nabs Wagner Davis attorneys

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ew Jersey–based law firm Porzio, Bromberg & Newman is diving into the New York City real estate game with the addition of attorneys from Wagner Davis, a Manhattan real estate law firm that will now close up shop after 28 years.

Steven Wagner, who founded Wagner Davis in 1984, is joining Porzio as a principal. He and five other attorneys from Wagner Davis joined Porzio’s New York City office at 156 West 56th Street last month, Wagner said, and will help establish Porzio’s first New York City real estate practice.

Porzio, which has some 90 lawyers in four offices, had been searching for experienced city real estate lawyers to complement its large New Jersey real estate group, managing principal Jeffrey Campbell told TRD. “We have been looking for a good real estate group in the city for a number of years,” Campbell said, and Wagner Davis’s “diversified practice” seemed like a good fit.

Wagner said Porzio appealed to him, meanwhile, because of the breadth of its litigation practice.

The timing of the marriage also worked out “for real estate reasons,” Wagner said. When a subletter moved out of Wagner Davis’s 99 Madison Avenue office space, he decided to return the The Wagner Group whole space to the landlord rather than spending money to get it ready for a new tenant. With only a year and a half left on the lease in a neighborhood with rising rents, he was able to return the space without any financial penalty, he said.

At Porzio, Wagner’s team will represent landlords and tenants in lease deals, buyers and sellers in sales, and co-ops and condo associations in land-use issues, Campbell said. All stories by Guelda Voien

164 April 2013 www.TheRealDeal.com

BROKER EXCHANGE Residential Bond New York Lilia Berzon was hired as an agent from Elegran Real Estate; Timothy Van Wie and Gregory Van Raalte joined the firm from Platinum Properties; Cyrus Alizadeh was hired from AC Lawrence; Mark Wright joined from the Corcoran Group; Eric Volat was hired from Bellmarc Realty; Joshua Plant joined from Anchor; and Asia Caldwell was hired from Keller Williams.

The Corcoran Group Stephen Larkin, principal of Larkin PR and formerly the firm’s vice president of public relations, is now a sales associate. Joanie Schumacher, a seven-year Corcoran Sunshine veteran, has been named the new sales director for 515 East 72nd Street. She previously oversaw sales at the Laurel condominium.

CORE Ryan Fitzpatrick was promoted to director of sales at the Chelsea office, taking over from Reba Miller, who will now head the firm’s new Madison Avenue office.

Stribling & Associates Charles Russell, Jr., joined the firm as executive vice president and director of marketing and new business development. He was previously a vice president at Douglas Elliman Developments.

Town & Country Real Estate Marina Martielli and Erich Knabbe joined the firm’s Westhampton Beach office as agents. Anton Nesterov was hired as an agent in the Southampton office. Christine Piacente joined the firm’s Mattituck office as an agent.

Commercial Brickman Steve Klein, formerly a managing partner of JOSS Realty Partners, was hired as chief investment officer.

Greenberg Traurig Steven Russo, formerly deputy commissioner and general counsel to the New York State Department of Environmental Conservation, joined the firm as chair of the New York Environmental Practice.

Real Estate Board of New York Paimaan Lodhi, previously assistant vice president of government affairs, has been named vice president of urban planning. Ali Ruth Davis was hired from the New York City Economic Development Corporation as assistant vice president of government affairs.

Ryan Baxter was hired as policy analyst, and Liliya Magid joined the research department.

Thor Equities Richard Farley was hired as vice president of office leasing. He was previously executive managing director and director of leasing at ABS Partners Real Estate.

Compiled by Sanna Chu

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OneFi r m.

Real estate unplugged For some real estate

pros, the latest tech is simply a distraction

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anonymity said while he does do business over email, he hasn’t yet figured out how to send or receive attachments.

Adelaide Polsinelli, a senior director at Eastern Consolidated, said she devotes entire sections of her address book to New York building owners who can only be reached by phone or fax, while others “only embrace technology as much as their secretaries can do it.”

But avoiding technology doesn’t hurt them much in business, she said: In the face of New York City’s perpetual housing shortage, the onus is on brokers to get in touch with them. And for certain elements of real estate, “there’s nothing better than a face-to-face meeting,” said Edward Minskoff of Edward J. Minskoff Equities, developer of the under-construction office building 51 Astor Place. Things like assessing a building’s physical condition or visualizing an architect’s design, he said, simply can’t be done over email.

Minskoff does carry a BlackBerry, but said he deletes 70 percent of his email without opening it, because he can tell

Who got served? Tekserve ad campaign

features On-Line Residential sales director

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oseph Ben-Zvi, the director of sales at real estate software development company On-Line Residential, never pictured himself as a model.

But he couldn’t resist when Tekserve, the Apple-product superstore where he’s been a loyal customer, approached him to appear in a new marketing campaign.

Now he’s pictured in a nearly six-foot-high Tekserve ad posted in the F/M subway station at 23rd Street.

Ben-Zvi is one of 20 Tekserve customers and employees featured in similar ads posted throughout the city and running in publications like New York magazine and the New York Times. Each one shows an individual using an Apple product that Tekserve customized for them. In Ben-Zvi’s case, it’s an iPad. In the ad, Ben-Zvi wears a miniature model of Manhattan on his head, and is quoted as saying: “NYC real estate is on my mind. My customized iPads encourage insight at a glance.”

MEIER, the marketing firm that created the campaign

A Tekserve ad featuring OLR’s Joseph Ben-Zvi

Style and the City Solow and others opt for

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hese days, a bewildering array of new real estate — related technologies, from iPads to “virtual staging,” are all but essential to doing business in New York.

Or are they?

Some successful real estate pros have just said “no” to all this technology, claiming it distracts them from the business at hand. Landlord Frank Ring, who owns some 15 office buildings, famously does not use email and prefers to be contacted by fax. Famed architect Robert A.M. Stern once told The Real Deal: “I don’t even know how to turn a computer on and I don’t want to.” And one New York landlord who requested

just from the subject line that it’s a “waste of time.”

The real estate industry overall tends to embrace technology less than other fields, said Doug Perlson, founder of the online brokerage RealDirect. Perlson, a former real estate lawyer and one-time CEO of the online advertising company Targetspot, said he started RealDirect in part because he felt brokers and developers were failing to capitalize on the Internet. “I felt like the best practices that we built in online advertising should be used in real estate,” he said.

And by skipping out on technology and especially social media, these players may be missing out on business opportunities, said David Maundrell, president of the brokerage aptsandlofts.com. Maundrell said that he frequently gets online queries for people who want to rent apartments, sight unseen.

“Social media is a great way to informally contact your target market,” he said. By Yasmeen Qureshi

for Tekserve, used customers and employees instead of models because “we wanted the chance to tell real stories,” said Diane Meier, the campaign’s creative director. “They’re compelling and instructive.”

Ben-Zvi first became involved with Tekserve about a year ago, when the Apple specialist helped make sure OLR.com functioned smoothly on all Apple devices. The two companies “have been collaborating with services and discounts for OLR subscribers ever since,” Ben-Zvi said.

The Tekserve salesperson managing OLR’s account recommended Ben-Zvi for the ad spot, and it seemed like the perfect match.

Ben-Zvi is “articulate, he’s an advocate and he is so very attractive,” Meier quipped. “And his willingness to wear NYC on his head — I mean, we couldn’t have asked for more.”

The campaign launched just before Christmas and has resulted in “an uptick in foot traffic” and new customers at the store, Meier said. A second wave of similar Tekserve ads will appear after a shoot scheduled to take place over the summer, she said.

Eventually, the campaign will expand to include online interviews on Tekserve’s website highlighting everyone featured in the ads. By Evan Bleier

The new uniform worn by doormen at Solow Residential buildings

custom-made uniforms to match building personas

T

hey say clothes make the man. It turns out that may be true for buildings as well.

Many New York City apartment buildings order custom-made uniforms for their doormen to make sure the staff ’s attire matches the building’s style, said Jennifer Busch, CEO of the 122-year-old Manhattan uniform company I. Buss & Allan.

“We usually do custom-made uniforms for doorman buildings,” she said, “because they’re all unique and have their own personalities.”

For example, her company just supplied the uniforms for doormen and concierges at developer Sheldon Solow’s four residential rental buildings on the Upper East Side, including 1 Sutton Place North and 1 East River Place.

Busch called the uniform’s design “classic elegance,” which she said is in keeping with the buildings’ prestigious reputation. The uniforms consist of double-breasted

166 April 2013 www.TheRealDeal.com

charcoal suits with black velvet cuff trims and collars, and black braids on the sleeves in the shape of the firm’s reverse diamond logo. Bright red lettering matches the design accents throughout the buildings’ lobbies, said Busch, whose company also designed the uniforms for employees at the Empire State Building.

And at the Langham, a prewar rental building at 135 Central Park West, Busch recently designed “ornate and traditional” uniforms: a black three-button suit with antique gold trim, plus a matching hat and overcoat.

Newer buildings, by contrast, usually want chicer, more contemporary uniforms, she said.

For example, the Langham’s owners, the Manocherian Brothers, opted for more modern uniforms at two of their newer rental buildings, Empire House at 71st Street and Third Avenue and Windsor 400 at 400 East 71st Street.

At both of these properties, Busch designed slim-cut

suits with narrow lapels and chunky white embroidery.

Custom-making uniforms is no small undertaking: It involves sending a tailor to measure every doorman and concierge.

But many landlords and developers evidently feel it’s worth it: Buss’s client roster reads like a Who’s Who of New York City real estate: Rose Associates, Jack Resnick & Sons, Equity Residential and Malkin Properties.

And for the time being, at least, Bush said she doesn’t see buildings doing away with custom-made uniforms.

“There are some things about New York that they’re not changing,” she said. By Sanna Chu www.TheRealDeal.com January 2013 113

REWARD YOUR CLIENTS AND REWARD YOURSELF

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The Time Warner Cable “Lead the Way” program lets real estate professionals refer customers to sign up for discounted concierge services in their new home. Your clients will be happy because you’re saving them time and money, and you’ll stand out from your competition.

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Call 212-420-5530 and mention code 5-B to learn how to enroll. Once you enroll, you can begin submitting customer leads right away…and watch the rewards roll in.

Compensation paid quarterly. Marketing Agent Program is available in limited Time Warner Cable service areas. Owners of buildings with 50 or more units may contact Time Warner Cable’s New Market Development/MDU Department to discuss eligibility and program requirements. Some restrictions apply. Time Warner Cable and the eye/ear logo are trademarks of Time Warner Inc. © 2013 All rights reserved.

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have children for 10 years. It was really nice, but very upsetting for my father. In his tradition, it’s very important to have a son.

What did she see in you?

One of the first things she asked me when I met her was, “What do you want to do with your life?” I said, “I want to be a businessman. I want to make money.” Her immediate reaction was, “That’s not a valid profession.

What do you want to do?” To her, that was terrible. She was kind of a hippie.

Is she still a hippie?

I took her once to buy a mink coat. I knew she didn’t want one — not because of animal rights, it just wasn’t her. My sister-in-law was buying one, so I said, “Let’s go along with her just to see it.” We went to the store. The sister-in-law was trying on the coat, so I said [to my wife], “You put it on so we can see what it looks like.” She put it on and started to laugh. She considered it funny that she could ever wear a mink coat. Now she has two.

Times have changed.

Where do you live?

I’m about to move into one of my own buildings in Tribeca because we’re doing some work in my apartment on the Upper East Side. I’d rather not say which one. If we really like it, maybe we’ll stay.

Do you have any other homes?

We have a house in Upstate New York. When the children were young, we were there all the time. Since they’ve grown up, we go there a lot less.

Tell me about your kids. You have three?

My oldest son Adam teaches psychology at Princeton.

Justin [president of Rockrose] is my second son. My third son, Ben, is a law student at Harvard. I consider them all brighter than me. I also have two grandkids.

Charlotte is two and three-quarters, and David was just born. They’re both Adam’s children.

Has Justin’s recent promotion to president changed your relationship at all?

It was a natural progression. I was hoping and expecting that it would happen someday, and it’s happened.

He’s earned it.

Why did you initiate the 2009 division of the company?

I’m the oldest of the brothers, and Justin was the oldest child [to be involved in the business.] He was working at the old Rockrose before the break-up, and my brothers’ children were getting older and starting to work occasionally at the company. I looked to the future and said, “There’s going to be some conflict as to who the ultimate successor would be.” I wanted to sidestep that whole thing. I didn’t want that whole confrontation going on when I was gone. [My brothers] were a bit upset at the time. I think they’ve accepted it now.

Were you and your brothers close growing up?

I was away at boarding school. The physical distance between us no doubt created more emotional distance than any of us would have preferred. Once the physical distance was eliminated, we grew closer, eventually deciding to work together.

Are you on good terms now?

It’s not like it used to be. We used to have lunch every Wednesday. That was a bonding experience. We don’t do that now. We’ll have a lunch or dinner occasionally.

PHOTOGRAPH FOR2013 THE REAL DEAL BY MARC SCRIVO 122 March www.TheRealDeal.com

“I have an unnaturally optimistic view on life — it’s a sickness.”

Henry Elghanayan, Rockrose There’s some tension, but if you think of all the divisions that have happened in the real estate industry, this was a rather smooth one.

What would your late father have thought of you splitting up?

He would have hated it.

Do you need to have a certain amount of ego to be a successful developer in New York City?

You must not only have an ego, you must have a super-optimistic view of life. I have an unnaturally optimistic view on life — it’s a sickness. If you understood the real dangers involved in doing a project, you would never do one.

Who have been your mentors?

I don’t know if I’d call him a mentor, but Bernie Spitzer, Eliot Spitzer’s father. He’s probably in his 80s or 90s by now. When I first started my career, he was in business doing what I wanted to be doing, so I watched him very carefully and copied some of the things he did. I eventually got to meet him and we became tennis partners.

I read that you collect art. Which artists do you particularly like?

Toulouse Lautrec, and I have a few Matisses. I wish I could do more of it, but we’re so busy.

How do you measure success?

I won’t have really made it until I [can] come to work in sandals. That’s tongue-in-cheek to some extent, but it’s true also. By Katherine Clarke

www.TheRealDeal.com April 2013 169

THE CLOSING WITH HENRY

ELGHANAYAN Henry Elghanayan is the CEO of Rockrose Development, the Manhattan investment and development firm he founded in 1970. Elghanayan and his two brothers famously split the company in 2009 with Henry taking the Rockrose name, and his brothers, K. Thomas and Frederick Elghanayan, forming TF Cornerstone. At the time of the split, Rockrose owned 8,000 New York City apartments, nine development sites and nine office buildings. Rockrose kept a third of those assets in the split, and the company currently has $1 billion invested in the Court Square area of Long Island City, where it’s building a 700-unit rental tower called the Linc LIC. Rockrose also has plans to develop three other sites in Long Island City, including another 700-unit rental building at the former Electric Eagle building at 4322 Queens Street, and a 945-unit rental building at 43-25 Hunter Street. Last year, Rockrose also acquired a nearly 20,000-square-foot commercial development site near Hudson Yards, bringing to completion a decade-long plan to acquire an entire block of Manhattan’s Far West Side.

What is your full name?

Henry Elghanayan. Henry is my middle name. My first name is actually Houchang.

What’s your date of birth?

August 2, 1940.

What were you like as a kid?

Hardworking, as I still am, and athletic. This is an embarrassing question. You’re really asking me to be self-aggrandizing.

Your family moved here from Iran. Have you ever been there since?

I was there once before the [1979 Iranian] Revolution, on a business trip.

How come you haven’t been back?

I can’t. We’re Jewish and that doesn’t work there so well since the Revolution.

Why did your family originally move here?

When I was five years old, my father — who was in the import-export business — traveled to New York for the first time. He landed at the airport in the middle of the night, took a taxi into the city and was amazed when the cabbie stopped at all the red lights even though there wasn’t any traffic. He was so impressed by the civility and orderliness of the American system that he made an on-the-spot decision to emigrate. He called my mother in Iran, told her he wanted to move the family to New York and instructed her to put their house up for sale.

Shortly after, our family flew to New York and moved to a house he bought on Rockrose Place in Forest Hills, Queens — hence the [company] name.

Where did you go to school?

When I was five, I went to a private all-boys sleep-away school in Nyack, N.Y. My parents wanted to ensure that I learned English quickly.

170 April 2013 www.TheRealDeal.com

“There’s some tension, but if you think of all the divisions that have happened in the real estate industry, this was a rather smooth one.”

Henry Elghanayan, Rockrose Did you enjoy boarding school?

I was a five-year-old on my own. I didn’t speak any English. [But] my big advantage was that I was very strong — physically — and amongst five- and six-year-old boys that means a lot.

an attaché case full of greenbacks and would go to each apartment to talk to the tenants. I would bring them flowers and gifts and make friends with them. Bit by bit I convinced them to move out. I carried the hundred dollar bills with me so that when they said they were willing to leave, I could give them the money.

Where did you go to college?

I went to Hamilton College, Columbia Business School and then to law school [at NYU]. I was a matrimonial attorney initially, unfortunately. It was a rather unpleasant experience. Often the litigants aren’t really looking for justice — they’re looking for revenge. I decided I couldn’t do it anymore and I switched to a law firm that happened to do real estate.

Did you get them all out?

I got everyone out. [The last one] was an elderly lady who lived on the fifth floor. I carried all [her] boxes down five flights of stairs, packed her into my Ford convertible, and took her to the new apartment. I installed her, gave her the rest of the cash, and said goodbye. That was the start of the business.

Is that how you got interested in owning your own real estate firm?

I was working very hard for all these real estate clients [and] … I could see they were making a lot of money. I naively said to myself, “I’m doing all the work, and they’re making all the money.” So I switched to real estate.

You’ve been married to your wife, Nancy, for 45 years.

How did you meet?

When I was in law school, I worked weekends as a rental real estate agent, and she rented an apartment from us.

After we went on that first date, it never ended. We’re still on that first date.

What was your first property acquisition?

It was a five-story brownstone at 31 West 16th Street. I bought it for practically nothing because it had a lot of tenants in it. On Saturdays and Sundays, I would have

When did you get married?

After about three or four months. I was 25. We didn’t Continued on page 169

PHOTOGRAPH FOR THE REAL DEAL July

BY MARC SCRIVO www.TheRealDeal.com 2006 00

LOOKING FORWARD TO

THE NEXT 10 YEARS

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