Page 1


Evolution of East River waterfront


Teeing off with TRD


Time to abandon timeshares in NYC?


Manhattan brokers flood into Florida


Toronto towers copy NYC names


From distress back to health


Vol. 9 No. 8 August 2011 $3.00

The summer issue!

Five projects, five distinct ‘Hedgehampton’ to Jersey Shore show gains, while NYC buyers take break pathways to stability BY ADAM PINCUS For owners of distressed properties, it’s a harrowing journey to regain financial footing. While the NY market is imSPECIAL REPORT proving, billions have been lost since the financial crisis began. Inside: five deals and how they went from distress to health — all in different ways.

Uncle Sam scales back on office space As government agencies tighten their belts amid budget wrangling, brokers say they’re reducing their office-space needs and putting off growth plans in NYC. Some are selling buildings outright; others are in consolidation mode. See page 16.

Sternlicht’s next stop: New York Barry Sternlicht’s Starwood Capital goes on Big Apple tear

Brooklyn’s Fourth Ave. back from dead

BY DAVID JONES Starwood Capital Group has been one of the country’s most active downturn players. But since the start of 2011, it’s turned more attention to Manhattan deal-making.

Fourth Avenue is still not the ‘Park Avenue of Brooklyn’ that some predicted, but new residential towers on the oncefloundering strip are seeing a spike in activity. See page 32.

See story on page 52

Cyber- wars

Rendering of One 57

Website “squatting” is on rise for NYC brokers

See story on page 26

Catsimatidis: This grocer bags big buildings See page 98.

A Greenwich estate sold for $39.5 million, the highest ever paid for waterfront property there and the priciest Greenwich sale since 2004. See page 64.


See story on page 36

BY SARABETH SANDERS Cyber-squatting, or buying a URL in someone else’s name, isn’t new. But it’s on the rise in NYC’s real estate industry as brokers snap up rivals’ domain names. Even nasty URLs are being created to poke fun at competitors. The lawsuits are already flying.


BY CANDACE TAYLOR AND JAKE MOONEY New Yorkers are fleeing the city in the scorching summer heat, trading subway cars for the Jitney and business casual for beachwear. The Real Deal heads to the Hamptons, where we look at hedge funders’

impact on the market and inter- in New York, brokers are divided on view mega-developer Joe Farrell. whether it makes sense to list forWe also talk to Jersale properties during sey Shore brokers FEATURE STORY the dog days of summer. about how Snooki Still, it’s not dead, with and the ‘Situation’ are impacting the rental market sizzling. the improving market there. Back See pages 14, 20, 24, 48 and 62

Rental firms rule

Inn fashion

Shakeup in rankings for new development marketers

NYC hotel sector heats up; investors come out in force

BY SARABETH SANDERS The recession has vastly shrunk the number of new residential developments in New York City. And the buildings that are coming online tend to be a new breed of ultra-luxury rentals, rather than condos. For new development marketers, these changes have drastically altered the play- New development marketers selling the most units, 2010-11 ing field. In The Real Deal’s rank2,966 ing of new development firms, Citi Habitats 2,651 Corcoran is still the city’s top Corcoran company by number of projects, 1,705 but rental giant Citi Habitats has Rose Associates 1,264 more units than any other firm.

BY C.J. HUGHES For the last few years, investing in hotels was like scoring the Presidential suite at the Plaza — an experience reserved only for a select few, primarily public REITs. But recently other investors—from high-profile names, like Tommy Hilfiger and Ron Burkle, to hedge funds—have been tripping over themselves to get into the NYC hotel market.

See story on page 78

Douglas Elliman


See story on page 44

NYC’s tallest condo gets soaring design One 57, the Christian de Portzamparc-designed tower rising on West 57th St., could forever change Midtown’s skyline. Critic James Gardner says the city’s soon-to-be-tallest residential tower could have the same impact that Rockefeller Center’s 30 Rock once did. See page 58.

City, U.S. gap widens It’s been a slog, but Manhattan’s market is swinging back faster than the nation’s. See page 34.


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Highlights A U G U S T

2 0 1 1


Uncle Sam pulls back


Remaking East River waterfront


At the desk of Joe Farrell

Government, nonprofits shrink NYC office space amid fiscal belt-tightening.


Towers are rising, esplanades are opening and new parks are in the works. The East End builder spares no expense on his Bridgehampton headquarters.

Hamptons developer Joe Farrell

words... 24 InThistheir month’s funniest and most


insightful comments.

estate’s cyber-wars 26 Real Website “squatting” is on the rise as brokers steal each other’s URLs.


Teeing off with TRD

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Industry professionals donned their plaid for the magazine’s first golf tournament at Hampton Hills Country Club in Westhampton Beach.

At the driving range

the big banks 30 Challenging Homeowners go after lenders for


yanking credit lines with no warning.

Avenue gets footing 32 Fourth After tough stretch, Brooklyn’s ugly duckling finally sees boost in activity.

A look down Brooklyn’s Fourth Avenue


The race to a market recovery


Dealing with distress


Ranking new development firms

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Manhattan leads the way as other cities play real estate catch-up.


From hostile takeovers to friendly foreclosures, a look at the myriad ways distressed projects get healthy.

Citi Habitats comes out on top as rentals edge out condos in the world of new construction marketing.


month in real estate history 42 This Artist Alice Austen nearly gets evicted from her 250-year-old home.

Inn fashion again 44 Hotels: REITs aren’t the only ones investing in ���������� ����� ����� ������ ����� ���������� ������ ��������� �������

4 August 2011

NoMad Hotel investor Ron Burkle


NYC hospitality properties anymore.

To list or not to list? Brokers debate putting properties on market in dog days of summer.

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Highlights continued

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zeros in on NYC 52 Sternlicht Already active elsewhere, Barry

Starwood Capital’s Barry Sternlicht

Sternlicht’s Starwood Capital is ramping up its Big Apple activity.


State says no to quid pro quo Title insurance industry deals with fallout from referral rules.

New York’s timeshares 56 Timing While some say the market for shared apartments will expand, others say they’re too costly to develop now. A rendering of One 57


One 57: The new 30 Rock Even partially complete, the Portzamparc-designed tower represents a breathtaking change to the Central Park South skyline, critic James Gardner says. �������� ����� ����� �� ��� ���� �� ��� ������ � ���� �� ��� ����� ���������� ���� ������� �������� �� ��� ������ ���� ���� ������� ������� ������ ������������ ������ ������� � ������ ��� ������� �� ������ � ���������� ���� ����� ����� ������ ���� ��� ���� ������ �� ���� ��������� ���������� ���������� ����� ����� ������ �������� ������ ������ ��� ������ ������ �������� ��� �� ������� ���������������� �������� ���� ����� ��� �� ��� �������� ������ �������� � ���� ��� ����� ��� ���� �� ������� ��� � ������ ��� ����� ��� ���� �� ������ ������� �������� ����������� ������� ���� ��� ������� �������� �� �������� ��� ��������� �� ���� �� �������� ������������ � ��� ����� ����� ���� ���� ���� ��� ���������� ���� ������ ��� �����

60 Some NYC attorneys enter murky Looking for new loopholes

ethical area, adding riders to home sales contracts to bypass banks.

62 Snooki and friend may embarrass

The Jersey Shore’s ‘Situation’ the real estate pros, but they haven’t hurt the Jersey Shore market.

6 August 2011


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

Reports from around the country on significant developments and trends.


The Deal Sheet A roundup of office and retail leases, building buys and financing. “Jersey Shore” cast members the Situation, left, and Snooki


Toronto’s NYC tribute The city sees batch of new buildings named after Gotham landmarks.

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

National Market Report

Residences of the World Trade Centre in Toronto ��������� �� Metals in Construction ��� � �� �� � ��� �� ����� � ������������ � ������������

Residential Market Report


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Closing: John Catsimatidis 98 The The real estate mogul and supermarket magnate put in his hours behind the cash register.


Calendar of Events Check out this month’s activities.


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


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


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THE REAL DEAL N E W YO R K R E A L E S T A T E N E W S PUBLISHER Amir Korangy EDITOR-IN-CHIEF Stuart W. Elliott MANAGING EDITOR Jill Noonan DEPUTY MANAGING EDITOR Candace Taylor WEB EDITOR Lauren Elkies ART DIRECTORS Ronald Gross, Derek Zahedi SENIOR REPORTER Adam Pincus REPORTER Sarabeth Sanders WRITERS Catherine Curan, Melissa DehnckeMcGill, Ken Harney, C.J. Hughes, David Jones, Adam Piore PRODUCTION MANAGER & RESEARCHER Linden Lim EDITORIAL ASSISTANTS Adam Fusfeld, Katherine Clarke, Miranda Neubauer

The sun. The hottest thing in the NYC commercial property market. ���� ��� ���� �������� ������ ��� ������� �� ����� �� ����� ��� ����� �� ����� ���������� ���������� ����� ��� ���������� ����� ����� � ������� ���������� ��� ���������� ����� ����� ������� �� ���������� ��������� �� ��� ��� ���������

PHOTOGRAPHERS Max Dworkin, Michael Toolan DIRECTOR OF MARKETING OPERATIONS Yoav Barilan DIRECTOR OF ADVERTISING Sean Ryan ADVERTISING SALES Eran Evron, Robert Stearns, Abi Laoshe, Ross Fox, Casey Donlin, Jon Patterson WEBMASTER Nima Negahban

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The Real Deal is a registered trademark of Korangy Publishing Inc. Copyright © 2011. Call 212-2601332 or e-mail 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.



Fun with freakonomics



eporters are suckers for statistics. They help ground our stories and present more evidence than mere anecdotal reports. They also make us sound official. You can see the importance of good data in many of the cover stories in this issue, of course. We researched which brokerages are marketing the most new residential development units, in order to judge who’s leading the pack following the downturn (page 78); we looked at the dollar value of hotel purchases to show how that sector has grown red hot for investors again (page 44); and so on. That said, some stats are easier to get than others. Taking a page from “Freakonomics” — the book by “rogue” economists Steven Levitt and Stephen Dubner on subjects usually not covered by traditional economists — as well as from author Malcolm Gladwell, I’ve put together a list of stats that haven’t been compiled by anyone, but that would really capture what’s going on in the market. Hey, in a tenuous market like this, anything that can explain what’s happening helps. • Everyone has summer on the brain come August. Our story on whether it makes sense to list properties during the summer, while so many people are away, raises a bunch of questions (see page 48). How much net worth disappears from New York City every summer when the rich head to the Hamptons and other vacation spots, anyway? And by extension, how much does the spending power of the city decline

A wish list of stats for an enterprising real estate junkie during the dog days of summer? By half? Twenty-five percent? If so, maybe it’s better to wait until fall to list after all. • On the flip side of the economic spectrum, it would have been nice to have uncovered a stat showing the impact the “Jersey Shore” reality TV show has had on the Seaside Heights real estate market, where it was filmed. Did the area see prices buffered (or did they decline faster) compared to other towns (page 62)? Does lowclass make for lower prices? • Then there is this summer’s record heat. When the thermostat hit 104 degrees in Manhattan last month (the highest temperature recorded since 1977 and just two degrees shy of the record), what happened to residential activity in terms of open houses and sales? What is the historical correlation between heat waves and home sales? Sounds like a project for über-appraiser Jonathan Miller. • Next, our piece on the remaking of the East River waterfront (page 18) tells part of the story of how New York has gentrified over the past two decades. From ferry service to bike paths to miles of walkways planned or underway, it’s amazing how the once-neglected waterfront is being reborn. What really would have shown the transition? A chart showing the number of dead bodies floating in the East River (and the endless number of TV talk show jokes about those bodies as a sign of New York’s decay) in the 1990s, versus the square feet of esplanades constructed in the 2000s. Morbid, I know. But statistically significant. The former has dropped off as the latter has increased, and continues to rise. • Though the market has improved here in New York relative to the rest of the country, it’s hard to make heads or tails of what’s next (see story on page 34). One leading indicator might come from the big real estate gatherings around town, and the decibel levels of the crowds. The higher that spirits are running, the more likely it is that deals are being discussed. The less the speakers or performers can be heard, and the more elevated the volume, it stands to reason, the better the market. Someone should track that ratio. (Case in point: 2004’s opening of the Time Warner Center, when comedian Jon Stewart and the musician Jewel were effectively shut down by real estate machers refusing to be quiet. That was a high-water mark when the easy-credit boom was beginning.) Of course, there are plenty of non-numbers-focused stories in the issue, too, that are worth a close read. Starting on page 36, we explain the myriad ways that properties can go from distressed to “healthy” as the market stabilizes — everything from hostile takeovers to negotiated loans. We also take a look at the rise in “cyberwarfare” in the industry — where brokerages are sneakily buying up the domain names of rival firms in order to get more website traffic (page 26). Enjoy the issue and enjoy the rest of summer.

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Stuart Elliott August 2011 11

Manhattan rentals sizzle in heat wave

Even as New Yorkers exit city en masse for vacations, residential leasing approaches boom-time highs BY CANDACE TAYLOR ew Yorkers are fleeing the city in the scorching summer heat, trading subway cars for the Hamptons Jitney and business casual for bathing suits. Even so, the residential rental mar-


RESIDENTIAL MARKET R EPORT ket is as sizzling-hot as the temperature, brokers say. According to a market report released by the brokerage Citi Habitats, the average second-quarter rent for a Manhattan apartment jumped around 10 percent from the same period of 2010. Taking into consideration landlord concessions like a month of free rent, the median net-effective monthly rent paid by Manhattan tenants grew to $2,888 in the second quarter, up from $2,700 in the prior-year quarter, according to a report from Prudential Douglas Elliman. “The rental market is going absolutely

“This summer’s activity has been brisk, and the market is tight and competitive,” said Gary Posylkin, director of leasing at Miron Properties. “This summer has a lot more in common with 2006 than 2009 or 2010.” Posylkin said several of his agents have recently broken their records for deal volume and gross revenue. “Rents are noticeably up from the past two summers,” said Ildiko Gugan, a senior associate salesperson at Citi Habitats. “Even areas such as the Financial District, where renters at one point felt [landlords] were giving apartments away, are up several hundred dollars a month, and no concessions.” Ironically, this rental frenzy is due in part to the lukewarm sales market, industry experts say. “The reason rentals are so busy is that people don’t have a ton of confidence in the sales market,” Ricciotti said. He added: “A lot of buyers are nervous to commit with all the economic uncertainty in the world,

“This summer has a lot more in common with 2006 than 2009 or 2010.” Gary Posylkin, Miron Properties

crazy,” said Bruno Ricciotti, a principal at Bond New York Real Estate. In some desirable neighborhoods, he said, apartments are renting for higher prices than they did during the peak of the real estate boom. For example, Bond last month rented a studio in a West Village prewar doorman building for $3,100 per month, Ricciotti said. That’s an increase from February 2009, when the same apartment had rented for $2,200, and even from the summer of 2007, when it rented for $2,950. In some buildings at least, “rents are at an all-time, historic high,” Ricciotti said. When adjusted for inflation, though, the average Manhattan rent of $3,455 per month (with concessions included) in the second quarter is still far below the 10-year peak of $4,793, reached in the fourth quarter of 2006, according to Miller Samuel CEO Jonathan Miller, the author of Elliman’s report. Still, it’s clear that for now, “the rental market is white-hot,” said Mike Akerly of the Akerly Real Estate Team at Rutenberg Realty. The rental market is always strong during the summer, with recent college graduates swarming the city and families looking to settle in before school starts. But brokers said this summer’s rental market is considerably busier — and pricier — than those of the last two years. 14 August 2011

and many are renting while they play ‘waitand-see.’” The still-strict lending market continues to limit buyers’ ability to get a mortgage, and Wall Street layoffs loom on the horizon. Goldman Sachs, for example, last month announced that it is looking to cut $1.2 billion in costs, and could lay off some 1,000 people company-wide. In contrast to booming rentals, “the sales market has largely been moving sideways,” Akerly noted. According to Bond New York sales associate Kevin Ryan-Young, “buyers are concerned about overpaying. Their fear is that the value of the apartment will decrease after the purchase.” Elliman’s second-quarter market report showed that the median Manhattan sales price had fallen 5 percent from the same period of 2010. Sales activity, meanwhile, dropped 3.8 percent from last year but rose from the first quarter. The presence of would-be buyers in the rental market is also shrinking the city’s stock of rental apartments. According to Citi Habitats’ report, the vacancy rate for rentals in the second quarter was 0.72 percent, the lowest quarterly vacancy rate the brokerage has reported since it began tracking data in 2002. (Rental inventory is notoriously difficult to track, however, with reliable numbers scarce.) Continued on page 84

Uncle Sam pulls back Government and nonprofits look to shrink office space in NYC amid fiscal belt-tightening BY JAKE MOONEY ureaucrats may soon find that their bureaus are just a little bit smaller. As the city, state and federal governments tighten their belts, brokers are seeing them reduce the amount of office space they lease. And with several prominent government agencies studying ways to reduce their footprints further,


some insiders are beginning to worry about the impact that those cuts are going to have on Manhattan’s commercial leasing market. The uncertainty extends to some nonprofit organizations that depend on government funding, commercial agents said. As of June 30, government, education and social services accounted for 7.6 percent of office

space usage in Manhattan and 11.8 percent of new leasing, according to Cushman & Wakefield. While the numbers were largely stable from a year earlier, both the city and state are cutting jobs, and big tenants like the Metropolitan Transportation Authority are involved in high-profile consolidation efforts. Brokers say government agen-

cies are now putting every square foot in their portfolios under a magnifying glass. “They’re so publicly scrutinized, especially today with all the budget issues and people being so sensitive with taxes and money in general,” said Janet Woods, an executive vice president at Jones Lang LaSalle. “I think that they are really looking more closely at their portfolios.” Woods, who has worked with both the city and state government in New York, said agencies are analyzing their portfolios to see where they can backfill empty space — though that strategy can be a challenge because of the

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tricky logistics of shifting workers between offices. The uneasiness has spread to some government-funded nonprofit groups as well, said David Lebenstein, the head of the notfor-profit group at Cassidy Turley. “There’s always an issue of government funding. It’s worse now,” he said. He explained that the problem is especially acute for social-service groups that rely on Medicare reimbursements, as well as housing, child care, English as a second language, and energy conservation organizations — areas that are a perennial focus in the annual city and state budget wrangling. “We’re seeing a lot of that uncertainty, and it makes it difficult for groups to make long-term commitments, and difficult for groups to make any kind of decisions,” Lebenstein said. “Sometimes they’re paralyzed.” Lebenstein said that between a third and one-half of the organizations his group deals with are putting off growth plans, and either stalling by renewing their existing leases, or negotiating with landlords to shrink their square footage. Lebenstein said many landlords have been offering perks and concessions — including months of free rent as well as facilities upgrades, such as new windows and air-conditioning — to their more stable nonprofit tenants. For a landlord renting to nonprofits, he said, the aim is to identify which tenants have reliable funding, and to keep them happy. “[A landlord is] going to do that for a group that can demonstrate that they have a good balance sheet, that they’re reasonably well-funded, and that they’re going to be around for more than a couple of years,” Lebenstein said. “And I think that’s the challenge.” Such stable nonprofits, in fact, can be highly desirable tenants for landlords, said Jon Denham, a principal at Denham Wolf. When an organization has a solid mission and an identified revenue stream, he said, “That’s a better fiscal base than many forprofits can demonstrate, that are out there struggling from day to day and week to week with no guaranteed revenue.” Denham said government cuts will eventually trickle down to nonprofit leasing — but he predicted that the impact on the market overall would be marginal. “Unless you believe that we’re Continued on page 80

V deo Doorm

16 August 2011 www

Bulletin Board

Remaking the East River waterfront Compiled by Russell Steinberg

Excellent esplanade:

The first phase of a project to revitalize Manhattan’s East River waterfront opened last month. The three-block stretch (from Maiden Lane to Wall Street) is part of Mayor Bloomberg’s larger $165.9 million plan to make better use of New York City’s 500-plus miles of shoreline.

Wasting time:

Longer than the High Line:

According to the city ’s website, the esplanade will extend two miles from the Financial District past the Brooklyn Bridge when completed in 2013. That’s longer than the total length of the soon-to-be-finished Hig h Line, which w ill eventually stretch 1.5 miles.

Upper East Side residents are battling to stop the city from reactivating a waste transfer station on the East River at 91st Street. Construction on the 63,521-square-foot facility is slated to begin next year. Neighbors argue that the area is far more populated than when the facility first closed in the 1990s. Supporters say the station is cost-effective and environmentally friendly. (New York Times)

United front:

Gov. Cuomo approved a plan last month to allow the UN to build a new office tower adjacent to its Secretariat building in Robert Moses Park. The tower could be as big as 900,000 square feet and cost between $370 and $475 million. The city is also studying the development of a park in the area — on the river between East 38th and 60th streets.

18 August 2011

Merry ferry:

The city opened a new ferry stop at Wall Street’s Pier 11 in June, part of an effort

to increase ferry usage. Operators of the East River Ferry expect to attract about 400,000 passengers per year. (New York Times)

East vs. West:

A bike path that opened last month, running from Battery Park to roughly the Williamsburg Bridge, inches the East Side’s waterfront a little closer to its more dominant West Side waterfront rival. While Manhattan’s West Side currently boasts 13 miles of open bike paths, bikers on the East Side still have had to deal with narrow, poorly maintained paths, according to the Daily News.

Science on the waterfront:

The newly constructed Alexandria Center opened last year along the river at 29th Street as part of the first phase of the $700 million East River Science Park. Construction on a second tower is set to begin in the next two years, with a third slated for 2014. The final campus will hold 1.1 million square feet of office, research and event space. (Crain’s)

Solow’s site:

Developer Sheldon Solow sold a chunk of land along the East River at 35th Street to the city’s School Construction Authority for $33.2 million in 2009. The city is expected to open a 630-seat school there in 2013. Meanwhile, Solow is still planning to build six apartment buildings and an office tower on his section of the parcel.

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20 August 2011


A rendering of the Polo Club, a six-unit townhome-style project he’s building in Southampton. It’s the first condo Farrell has done in the Hamptons. He bought the distressed note from People’s Bank in April for a modest $1.1 million.

A photo of Farrell with “The Donald” around Easter. Farrell says Trump, a friend, was assuring him he was going to run for president. That was before NBC offered him $60 million to stay with the hit TV show “The Apprentice.”

ridgehampton denizens have probably noticed a handsome new building on the edge of town. The structure, which went up last May, serves as central command for prolific East End residential developer Joe Farrell, whose “Sandcastle” estate made international headlines when it rented for two weeks last summer for a stunning $500,000. Farrell is renting it again this summer, but he also has a host of other projects in the works. He says he has delivered 18 homes in the $3.5 to $10 million range so far this summer, and that by the end of the season he’ll have completed 30. Plus, he said, his new, more visible office — which has an employee barber shop in the basement and an upstairs apartment for his personal pilot — has been a “boon for business.” B y J ill N ooNaN



Farrell says he’s “not a computer guy,” noting that his desktop “hasn’t been on in three months.”



Plans for a Sagaponack North house that Farrell is “getting ready to dig the hole on,” which will likely have an asking price of $3.5 million. Pre-recession, most of the homes he built were in the $8 million to $20 million range. Now, the sweet spot is between $3.5 million and $14 million, he says.

“The trader in me never leaves,” says Farrell, which is why he always has this flatscreen TV tuned to market news. Plus, the price of oil, 10-year bonds and other commodities impact the Wall Street crowd he regularly builds homes for.

A Newsday story about the Farrell family’s Sandcastle home. The house, which Farrell’s company built and currently has on the market, has a bowling alley and baseball diamond. Last month, Farrell dropped the listing price to $43.5 million from $49.5 million.

A photo of Farrell’s three kids: Jack, 6; Kate, 7; and Joey, 10, who on a sunny day last month were hanging out at their dad’s office. Joe’s wife, Kristen, was at home packing the two older kids for overnight camp, which they were off to the next day.

This NY Mercantile Exchange badge is the one Farrell used to identify himself when he was a trader from 1988 to 1995. The name tags are a NYMEX trademark. “I had friends for five years whose last names I didn’t know because I knew them from their badges,” Farrell says.

When Farrell was building one of his first houses, a client gave him this mezuzah for luck. “I’ve sold about 150 homes since,” he says. He’s currently partnering with CBRE’s Bob Alexander on a home at 311 Further Lane, which is listed for $7.995 million, and another on Cross Highway in East Hampton.

Joe fArrell

A replica of the private plane, a Beechcraft King Air 350, Farrell bought in April. In May, he used it to fly with friend (and client) Rudy Giuliani to Joe Torre’s annual charity golf outing in Westchester.



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Office leasing tightens — but for how long? Economic uncertainty could soon derail progress E BY ADAM PINCUS Midtown conomic clouds gathered on the ho- The American Red Cross put its entire rizon last month, amid legislative 126,000-square-foot New York headquarbattles over the country’s debt ceil- ters at 520 West 49th Street, between 10th ing and talks of layoffs at major financial and 11th Avenues, on the market for lease firms. Still, Manhattan office leasing con- late last month. Listing brokers Janet Woods and Ellen tinued to tighten. July brought no eye-popping deals, Herman, executive vice presidents at propunlike June, which saw erty firm Jones Lang Condé Nast ink a 1 milLaSalle, declined to OMMERCIAL lion-square-foot lease at comment on the deal, ARKET EPORT One World Trade Center as did the Red Cross. Downtown, and Nomura Holding America Asking rents were not published. taking 900,000 square feet at Worldwide The nonprofit organization may have Plaza in Midtown. Still, the overall market difficulty attracting a tenant, however. Delast month did see a decline in the amount mand for Far West Side office space has of space available for lease. dipped since the downturn, said Lance, The availability rate for Manhattan office properties — measuring space that is vacant or will become available over the Availability Average next 12 months — fell 0.2 points to 11.5 perrate asking rent Manhattan cent in July, according to data from comJul ’11 11.5% $48.90 mercial brokerage Cassidy Turley. Jun ’11 11.7% $49.12 “There is certainly a lot of vitality right now in the market, and we see employers Midtown particularly in [technology], media and Jul ’11 11.9% $55.45 fashion companies adding some people,” Jun ’11 12.0% $56.10 Andrew Lance, a partner in the real estate department of law firm Gibson, Dunn & Midtown South Crutcher, said. He noted that these employJul ’11 10.1% $40.87 ers are “locking in additional capacity for Jun ’11 10.4% $40.48 further expansion, even if they are not presDowntown ently populating that space.”



Pricing in parts of Midtown is still enough of a discount from the peak to attract tenants from the outer boroughs. For example, in mid-June, Jacmel Jewelry leased 23,500 square feet at 1385 Broadway, at 38th Street, taking the entire eighth floor, and moving its executive offices and showroom from Long Island City. The asking rent was $40 per foot, Michael Beyda, of Benchmark Properties, said. Beyda, along with Matthew Dweck of the Manhattan-based Dweck Group, represented Jacmel. Cushman & Wakefield’s Jonathan Serko, Gary Greenspan, Diana Gaines and Larry Lazerwitz represented building owner Bloomingdale Properties. Cushman’s research department has

Manhattan office stats

But troubling economic news suggests this uptick may stall. Globally, Swiss banking giant UBS could cut as many as 5,000 jobs and Credit Suisse as many as 2,000, reports late last month said. Meanwhile, at the end of June, Goldman Sachs made a filing with New York State that said it may lay off as many as 230 employees locally. In addition, the rancorous negotiations to lift the debt ceiling further unsettled companies and investors. “Without a doubt, the news from UBS and the uncertainty from the debt deal will curb office leasing and rents,” said Barbara Byrne Denham, chief economist for investment sales firm Eastern Consolidated. “Wall Street hiring and layoff announcements have a huge impact on commercial leasing activity, disproportionate to their 20 percent employment share of the total employment base.” Indeed, the average asking rent for Manhattan fell by $0.22 per square foot last month, Cassidy Turley reported. Lance took a more bullish view on the large financial firms’ future leasing needs. “The institutional-grade clients that we work with are managing real estate commitments for 10 and 15 years, and in a way a short-term mandate to trim headcount in this or that area is not so significant in the long-term planning,” Lance said. 22 August 2011

Jul ’11 Jun ’11

10 Hudson Square

ket in the country, according to Cushman statistics. And it’s getting tighter. “We have felt really strong demand recently,” said Marc Packman, a senior vice president and director of leasing at Trinity Real Estate, which owns about 7 million square feet of office space concentrated in the Hudson Square area of Midtown South. In response, his firm has raised its asking rents 10 to 15 percent over the past two months, he said. Last month, Trinity signed the contracting firm Michilli Construction + Consulting to take about 11,000 square feet on the 11th floor of 10 Hudson Square. Asking rents for a similar space would be about $48 per 900 Third Avenue

11.9% $37.74 12.0% $37.46

Source: Cassidy Turley

“Without a doubt, the news from UBS and the uncertainty from the debt deal will curb office leasing and rents.” Barbara Byrne Denham, Eastern Consolidated who is not the broker on the Red Cross building. “In the current climate, there are a lot more established buildings [in the center of Midtown] with attractive pricing,” he said. “That reduces the incentive for people to lease over there.” Theodore Koltis, a senior vice president at the Paramount Group, said that in the firm’s large portfolio of office buildings in Manhattan, rents are up but have not equaled the peak years. He pointed to a deal last month at Paramount’s 515,000-square-foot building at 900 Third Avenue, where Shiseido Cosmetics America took additional space in the lower portion of the building priced “in the low $50s” per square foot. “Six months ago, you would have been struggling to break $50 [per foot],” Koltis said. On the upper floors of the building, the firm is now negotiating in the mid-$60s per foot, he said, but that’s still shy of the market’s peak of roughly $80.

become increasingly optimistic about the market since the end of 2010. In January, it revised its projections for 2015’s net effective rents in Class A buildings, raising them from earlier estimates by 11.6 percent to $92.65. Then last month, Cushman bumped that number up again, to $97.81 per square foot. That’s more than $13 per square foot higher than 2007, the record year for net effective rents in Midtown. Cassidy Turley showed the availability rate for Midtown properties falling by 0.1 points in July from June, indicating a continued tightening of the market, while asking rents, which have been rising in recent months, fell. The average price dropped by $0.65 to $55.45 per square foot in July. The firm noted, however, that the decline was likely not a directional change in the market, but rather the result of relatively more expensive space being leased.

Midtown South Midtown South is the tightest office mar-

square foot, according to Trinity. “Tenants are requesting information on Hudson Square,” Packman said. “In the past, it’s been a place to stay on the island of Manhattan with a reasonable rent. Now, tenants want to be here.” The availability rate in Midtown South dropped more than any other Manhattan market last month, falling 0.3 points to 10.1 percent, Cassidy Turley figures showed. Average asking rents rose by $0.39 to $40.87 per foot.

Downtown While not able to keep up the same level of momentum as June, July was still a pretty good month for Downtown. The most significant deal in Lower Manhattan last month was financial services firm Oppenheimer & Company leasing 270,000 square feet in MetLife’s 1.1 million-square-foot tower at 85 Broad Street, formerly Goldman Sachs’ headquarters. Continued on page 82 BUILDING PHOTOGRAPHS FROM THE COSTAR GROUP

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Skyline Restorat

In their words...

The month’s funniest and most insightful comments from real estate pros “People’s appetite for music is probably more insatiable than ever before, but they just don’t want to pay for it. [But the art business] will never be at its end. You can’t download [original works of art].”

“Another big-box retailer with the same boring merchandise at the same boring prices everyone else is charging. Nothing exciting happens in large spaces anymore.” Barbara Corcoran, on who will take over Borders’ high-profile city locations. (AM New York)

Former Sony Music Entertainment head Tommy Mottola, on the opening of his new East Hampton art gallery. (Wall Street Journal)

“We spent our 40 days in the desert. Now we are back on the market.” Eamon Roche from Broad Mill Development Group, on working out a deal with the company’s lender after being foreclosed on at the Chelsea Carriage House, a condo on West 24th Street. (Wall Street Journal)

“James, I enjoy your writing enormously, but you were expecting perhaps a Burj al Arab on the Bowery?” “There’s no obligation. This is sort of a prenup. We’re going to live together a little while and they’ll see if we snore and we’ll see where they keep their toothbrush, and if we still love each other, we’ll stay together.” Nobu managing partner Richie Notar on opening the sushi restaurant in the Hamptons’ Capri Hotel. (Wall Street Journal)

“They should call it Hedgehampton out here. The market is holding because all of the hedge-funders are out here this summer — and they’re buying everything.” Prudential Douglas Elliman agent Lori Barbaria, on news that sales in the Hamptons soared 59 percent from the first to the second quarter. (New York Post) 24 August 2011

Reporter Steve Cuozzo of the New York Post in response to a review by TRD architecture critic James Gardner of the Wyndham Garden Hotel going up at the intersection of the Bowery and Hester Street in Chinatown. (Twitter)

“We may have made an illegal U-turn. And officers may have managed to get us. And we may have managed to get a ticket.” Donald Trump Jr. after getting a ticket on his way to an event to celebrate the fact that Trump Plaza Residences in New Jersey is 75 percent sold. (Daily News)

“We feel Downtown is more simpatico with the energy of the brand.” Ivanka Trump on the decision to move her jewelry shop to Soho and sublease her former Madison Avenue flagship spot to jeweler Aaron Basha. (New York Post)

“It doesn’t concern me because we’ve limited our own activities to Washington and New York, Boston and San Francisco, and these are the best markets to be in. And we’re in the best kind of real estate within those markets. … But in the smaller towns, they’re still having a much more difficult time.” Mort Zuckerman, head of Boston Properties, when asked whether he was concerned about the bifurcated national commercial market. (CNBC)

“Complete strangers often stop Michael on the streets of NYC, just to let him know he looks like Tom Cruise.” Personal website of Bond New York’s Michael Chadwick. Chadwick is on Country Music Television’s new dating reality show, “Sweet Home Alabama,” which premiered last month.

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The Real Deal Yoav Barilan

Real estate’s cyber-wars Website ‘squatting’ has been on the rise, industry observers say BY SARABETH SANDERS ate last month, Heddings Property Group broker David Innocenzi logged on to domain registry Go to renew his ownership of The No such luck — it was already taken. He said agents from Prudential Douglas Elliman had purchased the domain name, and ostensibly set up the Innocenzi website so that it would redirect traffic to their own. “It was a total shock,” Innocenzi said. “For maybe 30 seconds it was even flattering that someone would consider our domain worth taking over. [But] of course I was also extremely upset.” If that story sounds familiar, it’s probably because Elliman itself made headlines in June when it sued Hamptons brokerage Saunders & Associates for doing almost exactly the same thing. In its complaint, Elliman called Saunders’ purchase of Mi and — which the firm allegedly set up to redirect to its own website — “nefarious, anti-competitive and illegal.” Michaela Keszler and Lori Barbaria are top producers in Elliman’s eastern Long Island branch, and the firm accused Saunders of “exploiting the identity and goodwill earned by its competitors.” This so-called cyber-squatting — purchasing the URL of someone else’s name in order to profit from it in some way — isn’t exactly a new concept. Madonna, Julia Roberts and countless other brand names have been among the famous targets over the years. But with more and more New York real estate clients now coming from search engines rather than personal referrals, a variety of creative and occasionally underhanded tactics for driving web traffic are catching on in the industry. “Desperate times call for desperate measures, and there’s huge competition for traffic on the web,” said Burke Smith, the founder of real estate web strategy firm YourNet Coach, who has worked with New York brokers like Elliman’s Jacky Teplitzky. Smith advises clients that there’s much more value in optimizing their own sites for search engine traffic than in stealing traffic from rivals. But attempts to do the latter are common in real estate, both in New York and across the country, he said. “Apparently, [domain-name-stealing] is a lot more prevalent than a lot of people realize,” said Douglas Heddings, who runs his eponymous brokerage as well as the real estate blog True Gotham. He and Innocenzi both declined to name the Elliman agents involved in the episode, but said that once confronted, they relinquished the URL immediately and claimed they hadn’t realized that their search-engine optimization strategist had purchased the domain name on their be-


26 August 2011

This is a tactic that some of the city’s real estate developers have apparently discovered. A recent Google search for “Setai New York” turned up paid advertisements for the Upper East Side’s 515 East 72nd Street, the condo formerly known as Miraval Living. Meanwhile, Manhattan Skyline’s 55 Thompson Street rental apartment building in Soho is advertising on searches for “The Corner at 200 West,” the Upper West Side rental around the same price point, and a search for “Azure New York City” produces paid advertisements for the Robert A.M. Stern-designed condos at 1280 Fifth Avenue in East Harlem at the top of the page. But these paid advertisements don’t generate nearly as many clicks as web pages that show up in free search results, Smith explained. So brokers are better off buying a domain name for a geographical area or niche market. Saunders & Associates’ website, for example, is HamptonsRealEstate .com. “As popular as [Elliman powerbroker] Dolly Lenz is, she’s nowhere near as popular as searching for terms like ‘Upper East Side,’” Smith said. While Smith isn’t a proponent of cyber-squatting, he emphasized that it’s important for top real estate brokers to buy their own domain names before someone else does. “If a top producer isn’t smart enough to buy their own domain name, they don’t deserve it,” he quipped. Elliman CEO Dottie Herman, for example, issued a statement to The Real Deal saying that she purchased DottieHerman .com “in order to protect my name both personally and professionally.” It bears noting that of New York City’s top five brokers as ranked by The Real Deal in June, only Lenz actually owns and operates the URL that matches her name. The domains, Shlo and are all up for grabs. Meanwhile, the domain name is owned by Gawker’s editor in chief, Remy Stern, who told The Real Deal that he bought it along with several hundred other domain names — including, HowardLorber .com, and JosephMoin — when he ran the New York City

“Desperate times call for desperate measures, and there’s huge competition for traffic on the web.” Burke Smith, YourNetCoach half. A spokesperson for Elliman said the firm had no knowledge of any such incident. Saunders has also since given up the Elliman agents’ domain names, as well as that of the Corcoran Group’s Susan Breitenbach, who had threatened to sue earlier this year over Saunders’ ownership of Susan Andrew Saunders, the firm’s founder and president, didn’t respond to a request for comment, though as of press time the Elliman suit was still pending. Elliman would not comment on the case because the litigation is ongoing. Heddings said he believes much of the cyber-squatting that goes on is initiated by SEO consultants rather than real estate brokers. “I really don’t believe that Andrew Saunders or anyone at Prudential Douglas Elliman would intentionally do this,” Heddings said. “You ask [consultants] to make sure your site is way up on the Google [rank-

ings], but you don’t know what they’re doing behind the scenes to get that effect.” As far as the legal ramifications of this type of behavior, Smith said, “it’s still unknown territory.” But Heddings suggested that trade organizations like the Real Estate Board of New York and the Manhattan Association of Realtors should step up to the plate to develop regulations within their codes of ethics in order to combat cyber-warfare in the industry. “We need to police [it] better,” he said. The Internet is full of other murky practices, so it’s no wonder that the often cutthroat world of New York real estate is getting on board. Another, less egregious method of poaching web traffic from competitors is buying up advertising spots on their keyword searches. “It’s like if Pepsi buys the keyword ‘Coca-Cola,’ so anytime somebody searches for Coke, they see an ad for Pepsi,” Smith explained.


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Four! Real estate pros tee off at TRD’s Hamptons golf outing The Real Deal and guests hit the links last month for the magazine’s first annual Invitational Golf Tournament. Some 31 industry professionals donned their plaid pants and headed to Hampton Hills Country Club in Westhampton Beach

to try their luck in the scramble-style tournament. Other guests stopped by for lunch on the patio and post-golf cocktails. The winning team included Harry Zapiti and John Bennardo of Manhattan-based Legacy Builders, who partnered with ERG

Property Advisors’ Michael Guarino Jr. and Jason Au of JG Capital . The team was awarded a trophy, and each team member received a $75 gift certificate to the Hampton Hills pro shop. Other guests included Bob Knakal of

Massey Knakal Realty Services; Georgia Malone of Georgia Malone & Company, Michael Duckfield of Israel Berger & Associates; A.C. Lawrence & Company cofounders Anthony DeGrotta and Larry Friedman, and chairman Marc Lewis.

The awards ceremony Shawn Steinmuller

The driving range

The first-place team Lenny Steigman (left) and friend

Amir Korangy (left) and Bob Knakal Bob Knakal

Yoav Barilan

Shawn Steinmuller (left) and Jason Auerbach

Michael Helpern

From left: Sean Ryan, Jon Patterson and Ross Fox

Tamir Shemesh

28 August 2011

Michael Duckfield and Bruce Miller

From left: Anthony Rinaldi, Jason Auerbach, Shawn Steinmuller and Tamir Shemesh

From left: Robert Stearns, Ross Fox and Amir Korangy


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For leasing information, please contact: Paul N. Glickman | Vice Chairman | 212. 418. 2646 Diana L. Biasotti | Senior Vice President | 212. 812. 5751

Massive lawsuit fights bank’s yanking of home equity lines BY KENNETH HARNEY icture this nightmare financial scenario: You’ve taken out a $150,000 home-equity credit line to remodel your house, you’ve already pulled out thousands to pay contractors and owe thousands more, when suddenly you get a curt letter from the bank. Effective yesterday, it says, we’ve shut down access to your credit line. Although we haven’t physically appraised your property, an automated valuation indicates it is now worth significantly


the bank’s motion to dismiss the case, clearing the way for a possible giant class action. The litigation pulls together eight separate suits seeking class certification filed by homeowners in California, Minnesota, Illinois, Texas, Arizona and Ohio. It is considered a bellwether test of the rights homeowners enjoy under the Truth in Lending Act and state consumer protection statutes when they take out equity lines of credit. But it also shines light on the controversial computerized tools

Computer valuations used by JPMorgan Chase were found to be “grossly in error,” based on subsequent physical appraisals. less than when we approved your application. If you wish to hire an appraiser, chosen by us but at your own expense, you can appeal our decision. You’re in shock. You can’t pay bills you’ve already contracted for, you can’t touch the money you confidently believed you had. Plus, you know that house prices in your area have been relatively stable since you took out the credit line. How could a bank effectively devalue your real estate using nothing more than a computer program? Welcome to the world of what class-action attorneys estimate to be massive numbers of homeowners — 1 million customers at one national bank alone — who had their credit lines reduced, frozen or canceled without appraisals during 2009 in the tense months following the near-collapse of the capital marketplace. Now a federal district court in Chicago has given the green light to clients of JPMorgan Chase Bank to proceed with a consolidated suit alleging that their equity lines were yanked or reduced illegally, costing them billions of dollars in lost borrowing power. Judge Rebecca Pallmeyer rejected

many lenders use to make quick, inexpensive assessments of property values in lieu of more costly professional appraisals. Suits on similar grounds are pending against other major lenders, including Wells Fargo, GMAC Mortgage and Citibank, according to attorneys. The plaintiffs’ lawyers not only are challenging JPMorgan Chase’s legal right to rescind or limit credit lines without adequate documentation that property values have dropped “significantly” — as required by the Truth in Lending law — but are also mounting a side attack against automated valuation models (AVMs) that they claim are frequently inaccurate and unreliable. Steven Lezell Woodrow, a partner with Edelson McGuire LLC, the Chicago law firm representing the plaintiffs, said in an interview that the computer valuations used by JPMorgan Chase were found to be “grossly in error,” based on subsequent physical appraisals. A spokesman for JPMorgan Chase, Tom Kelly, said the bank does not comment on ongoing litigation. However, the bank’s filings in court argued that federal law

does not specify the type of valuation technique lenders may use in reviewing equity line collateral, and that the homeowners did not demonstrate that the AVM values were incorrect. The allegations in the consolidated suit include a credit line suspension on a house in Mountain View, Calif. Originally valued at $1 million and devalued to $826,000, a subsequent physical appraisal found that the house had actually increased in value to $1.07 million. The bank later reinstated the owner’s credit line. On a house in Arlington, Tex., originally valued at $172,000, an AVM lowered that to $151,000. On appeal, the owner presented a physical appraisal completed 10 days before the bank’s action that put its market value at $165,000. Nonetheless, the bank refused to reinstate the credit line, based on a revised requirement lowering maximum loan-to-value ratios on total debt to 70 percent from the previous 80 percent. Though the litigation will be contested primarily on the grounds of alleged violations of Truth in Lending procedures and state consumer protection laws, the accuracy and use of automated valuations will be hovering in the background. Leaders in the AVM field such as Tim Grace, senior vice president of CoreLogic, say “commercial-grade AVMs have proven over decades of testing to provide accurate, independent and consistently reliable estimations of property value.” But lawyers for the homeowners say nothing should distract attention from the context surrounding JPMorgan Chase’s mass freezing of credit lines shortly after accepting $25 billion in emergency liquidity funds from the Treasury, which the bank has since repaid. “They took the government’s money, which was supposed to help them to lend to people who needed credit,” said Woodrow, “but instead they cut them back.” Ken Harney is a syndicated real estate columnist.

Follow The Real Deal on Twitter: /trdny 30 August 2011

GOVERNMENT BRIEFS Property tax cap becomes a reality Governor Andrew Cuomo has signed into law the first property tax cap in state history. The product of years of discussion in Albany, the cap limits property tax increases to 2 percent or the rate of inflation, whichever is less. Municipalities can only overturn the rule with 60 percent voter support. According to Cuomo, who campaigned on a promise of enacting the tax cap, Cuomo signs the property tax cap bill. the legislation’s ultimate goal is to keep families and businesses in New York. Currently, the state has the highest property taxes in the country, with a median annual property tax bill of $3,755, which is 96 percent higher than the national average of $1,917.

Harlem affordable housing gets a makeover Some 447 rental units in 14 Harlem residential buildings will stay affordable for the next 30 years and receive a much-needed renovation, Crain’s reported. In a $75 million deal, L+M Development Partners and Harlem Congregations for Community Improvement will recapitalize the properties, located between West 145th and West 153rd streets, using low-income housing tax credits, bonds and subsidies from the city Department of Housing Preservation and Development, the city Housing Development Corp. and the New York State Homes and Community Renewal. Goldman Sachs Urban Investment Group is also an investor in the deal. L+M will manage the buildings and handle the renovations, which will include energy efficiency upgrades. “HCCI had foresight and knew that they needed help making the buildings — which had started to suffer — better,” said Ron Moelis, cofounder and CEO of L+M. “We stepped in to help.”

President Obama postpones foreclosures for the unemployed The Obama administration announced last month that unemployed homeowners with mortgages backed by the Federal Housing Administration will now have up to a year of forbearance on their mortgage payments, according to Reuters. The plan is intended to give borrowers more time to find a job without having to leave their houses, and could benefit tens of thousands of homeowners, according to Shaun Donovan, secretary for the Department of Housing and Urban Development. The administra- President Obama tion hopes the decision will encourage other loan services, including Fannie Mae and Freddie Mac, to extend the period that unemployed borrowers can delay foreclosure, he said.

United Nations gets OK to build office tower The New York State Legislature gave the United Nations the green light to build an office tower on a playground near its headquarters, Crain’s reported. The bill, which the governor is expected to sign, gives city and state officials until Oct. 10 to work out a memorandum of understanding for construction to proceed. The tower will be built on top of the present RobRobert Moses playground ert Moses playground on 42nd Street and First Avenue and will house U.N. staff from two city-owned buildings and from the U. N. complex, which is currently undergoing renovations, according to the Wall Street Journal. The new building would be built on the 29,000-square-foot playground at the First Avenue end of the park, but basketball courts and a dog run would not be affected, officials said. Although the plan has been approved, obstacles remain. The deal would require finding substitute Manhattan parkland to make up for the lost playground space. Compiled by Russell Steinberg


Fourth Avenue finds footing

After tough stretch, Brooklyn’s ugly-duckling thoroughfare sees boost in activity BY JANE C. TIMM ourth Avenue — a wide boulevard wending its way from downtown Brooklyn to Bay Ridge — is still a far cry from the “Park Avenue of Brooklyn” that politicians predicted during its mid-2000s rezoning. Development on Fourth Avenue, especially the section that skirts the western edge of Park Slope, did indeed take off during the real estate boom. Pioneering condo projects in


the area, like Novo and the Crest, are now sold out. But as The Real Deal and others have reported, the area saw a number of projects stall mid-construction during the downturn. Plus, the notoriously unattractive area — known for garages and empty lots — still has more auto shops than doormen.

The Arias: 150 Fourth Avenue


riginally built by the Iconic Group as a luxury condo during the market’s peak, this 95-unit building was reincarnated as a rental in 2010 to adapt to the less-than-stellar market and the glut of inventory and planned units on Fourth Avenue. That seems to have been the right move, because the building is now 60 percent leased after only three months on the

32 August 2011

Recently, however, brokers say demand for residential properties on Fourth Avenue has spiked, with the help of post-downturn price cuts. And even more new construction is on the way, now that the worst of the downturn appears to be over. The Marketing Directors’ Jackie Urgo, who is handling sales at the Arias at 150 Fourth Avenue, said she knows of three soon-to-beannounced projects within 10 blocks of the Arias. To help Fourth Avenue come into its own, the city is trying to encourage more retail and commercial development along the

market, according to the Marketing Directors’ Urgo. Move-ins began June 27; studios are renting for roughly $2,150, one-bedrooms for $2,900, and two-bedrooms for $3,800. That’s significantly higher than Park Slope’s rental averages of studios at $1,657, one-bedrooms at $2,214, and two-bedrooms at $2,646, according to a July 2011 report from the brokerage MNS. Arias, a full-service building with a gym, a pet spa and a rooftop fire pit, seems to appeal to Brooklyners looking for amenities that are rare in the area, Urgo said. “As opposed to being in the typical brownstone environment of Park Slope, [the Arias has] a 24-hour doorman and the amenities,” Urgo said. In fact, that seems to be the allure of Fourth Avenue overall. “New construction is the name of the game,” she said. Arias’ ground floor has almost 6,000 square feet of retail, and FasTracKids, an early childhood learning center, has already signed a lease. Another tenant is currently negotiating for space, according to the retail agent for the building, Ryan Condren of CPEX Real Estate Services.

strip with yet another new zoning proposal. The surge of housing, housing and more housing — without enough retail to accompany it — in the last few years has been criticized for making Fourth Avenue “less inviting, less pedestrian-oriented” than it should be, said Craig Hammerman, Brooklyn’s Community Board 6 district manager. But City Planning Commission Chair Amanda Burden’s recently unveiled plan aims to make the area more pedestrian-friendly, with more storefront retail space and fewer garages. The rezoning, which still

C560: 560 Carroll Street


he once-stalled condo at the corner of Carroll Street and Fourth Avenue is almost sold out after roughly three months on the market, with 27 units closed and 12 in contract, according to listing agent Deborah Rieders, a Corcoran Group senior vice president. Apartments in the 44-unit building are selling for $700 to $900 per square foot, she said. By comparison, the average price per square foot for a new condominium in Brooklyn is $640, according to Prudential Douglas Elliman’s second-quarter market report. The building’s current developer, Astoria-based Mega Contracting, bought the site and completed the project in 2009, after construction had been stopped for a few months, Rieders said. Most one-bedroom buyers are coming from Manhattan, she

needs city council approval, will address issues that were “overlooked” during the earlier rezoning, Hammerman said. This month, TRD took a stroll down Fourth Avenue to assess the state of residential and retail development in the area.

noted, while two- and three-bedroom buyers are often Brooklyners looking for more space. “There was never anything on Fourth Avenue, but now there are a tremendous amount of new places opening up every day,” Rieders said.

NEW DEVELOPMENT Maria’s Mexican Bistro: 669 Union Street (now closed)

Ivy Garden: 244 Fourth Avenue

ll the activity on Fourth Avenue has resulted in rising retail rents on the strip. Maria’s Mexican Bistro left its 669 Union Street location at the corner of Fourth Avenue last year, after the rent rose from $9,000 to $12,000 per month, according to restaurant owner Eduardo Nacipucha, reached at his new Downing Street eatery in Manhattan, La Camelia. “For that kind of money, we could move to the city,” he said, adding “we’re paying less here.” Nacipucha said Fourth Avenue “is a beautiful neighborhood for business, but the rent is too high.” When The Real Deal checked out the now-empty space at 669 Union, a person on the premises who identified himself as the building owner (but declined to give his name) said a new bar-lounge will be opening in the space shortly.

his upscale deli-grocery opened in June on the corner of Fourth Avenue and President Street, after a $10,000 renovation of the previous ground-floor office space. The market sells gelato, fresh produce, organic beauty products and food, vitamins and flowers. With its namesake ivy painted on the store’s redbrick exterior and a counter made from an old Volkswagen van, the market caters to both newly minted Fourth Avenue residents and longtime locals. “We live around here and we didn’t see anybody around here doing organic stuff,” store manager Paul Kim said. “We wanted to make the area better.”



385-393 Fourth Avenue


eveloper Baruch Singer once planned to build an 11-story, Enrique Nortondesigned condo on this 12,340-square-foot parcel. But the long-stalled site is currently a vacant lot bounded by an unkempt construction fence, which neighbors complain is unlocked and falling down. The city’s Department of Buildings recently issued a stop-work order at the site (to the satisfaction of a few local residents, who scribbled “thank you” on the order posted on the fence). But it looks like the site may soon see some activity, since it traded hands in June for $6.5 million. Public records listed the buyer as 278 6th Street LLC and the seller as 6th Street Development LLC. According to Sean Kelly, a CPEX agent involved in the deal, the developer has asked to remain anonymous, but is planning to build an all-rental residential project. According to a buildings department spokesperson, the stop-work order was lifted in mid-July, when a new contractor was hired: Red Hook-based Arc Electrical and Mechanical Contractors. Arc Electrical was founded by the Rigas family, suggesting that the developer is Greg Rigas, who has built several projects in the area, including the 80-unit rental tower 574 Fourth Avenue, near 16th Street. Rigas did not return messages left for him at Arc Electrical’s office.

The Argyle: 251 Seventh Street


his 60-unit condo building hit the market in October 2007. Three years and one price cut later, it finally hit the 100 percent sold mark in June, according to Rafa Maciejak, a senior associate broker at Corcoran. Maciejak said the building lost momentum in late 2009, prompting a five-month stretch without any sales. A 10 percent price cut in March of 2010 helped get things going again. “This price cut, combined with the federal incentive being offered to first-time buyers, attracted a new pool of buyers and led to a surge in sales,” Maciejak said. Per-square-foot prices in the Argyle ranged from $550 to nearly $900, he said. One three-bedroom apartment in the building, Unit #4D, closed in April for $725,000, or around $549 per square foot, according to StreetEasy. A one-bedroom resale in the building, listed at $770 per square foot, is in contract.

500 Fourth Avenue 202 Eighth Street


uring the boom, plans were filed for a 12-story, 43-unit condo building at 202 Eighth Street. But the project, to be designed by architects at DJ Associates, fizzled during the downturn. Now, after a long stint on the buildings department’s list of stalled building projects, construction work began this spring on this L-shaped lot. DJ Associates still has renderings of the project on its website, but company representatives told The Real Deal by phone that as far as they were concerned, “the project has been killed.” It’s unclear if designs for the project have changed, or who the new architect is. The buildings department is similarly baffled: A spokesperson said the department is currently trying to contact the owner (listed in city documents as 202 8TH LLC) to update the site’s status. The current permits for the building, issued in June 2008, are valid until 2012, the spokesperson added.


ne of the largest condominiums in Park Slope, 500 Fourth Avenue hit the market more than two years ago with 156 units. After a price cut, 35 units are still on the market, according to exclusive listing agent Joyce Kafati-Batarse, an executive vice president at Prudential Douglas Elliman. Units in the building are selling at an average of roughly $700 per square foot, Kafati-Batarse said. She also said the developer, Matri Holdings, is negotiating with a potential tenant for the building’s 7,300 square feet of ground-fl oor retail space. TRD August 2011 33

NYC leads way in recovery race Manhattan market stabilizes, while rest of country plays catch-up BY PETER KIEFER he gulf between New York City’s real estate market and the rest of the country has always been wide. But that disconnect appears to be growing. “Manhattan seems to be one of the lucky ones,” said Jonathan Miller, president and CEO of Miller Samuel, who called the Big Apple one of “the best housing markets in the country, relatively.” For example, Manhattan’s median residential sale price in the second quarter was only 17 percent below the market peak in 2008, according to the most recent report from brokerage Prudential Douglas Elliman, which is prepared by Miller. That’s an improvement from the worst depths of the downturn, when Manhattan prices were 25 to 30 percent below the high, said Miller, who also does market research for Las Vegas, Washington, D.C., Baltimore and Miami. By contrast, homes in Las Vegas, one of the hardest-hit markets in the country, have lost around 60 percent of their value over the past few years, Miller said. And, the nationwide average decline from the peak of the market is currently around 30 percent. Unpleasant housing statistics have also abounded elsewhere outside New York City, leading many experts to conclude that a “double dip” in house prices has already begun nationally. According to the Standard & Poor’s Case-Shiller Index, national housing prices dropped to a “new crisis low” in March, though they did bounce back slightly in April — jumping 0.7 percent for the 20city data set that was studied. Meanwhile, the index found that the number of existing home sales rose in May nationally, but is still roughly 15 percent below last year’s volume. Here in Gotham, by comparison, residential prices have remained stable. In the second quarter, the Manhattan median sale price dropped 5.5 percent to $850,000 from $899,000 in the same period last year, but rose 8.7 percent from the previous quarter. And, sales volume, while down 3.8 percent from last year’s second quarter, jumped 10.7 percent between the first and second quarters of 2011. In the commercial sphere, Manhattan is also rebounding faster than the rest of the country. According to data from the CoStar Group, the price per square foot for commercial office rents has been increasing here since the second quarter of 2010, while the average price per square foot nationally for urban markets declined over the same


34 August 2011

period (with the exception of 2010’s fourth quarter, when there was a slight uptick). Indeed, the average asking rent peaked in the Big Apple in the second quarter of 2008 at $63.82 per square foot. While rents dropped to a low of $42.63 last year, they’ve since risen 8 percent to $46.05, according to the CoStar data, which includes all building types. Nationally, however, office rents are moving in the opposite direction. While asking office rents for urban markets peaked nationally at an average of $24 a square foot in the first quarter of 2008,

tan is rebounding faster than the nation as a whole, it also fell harder because there was a much bigger run-up here during the boom. Indeed, that seemed to bear out on the investment sales side, too, where the most recent figures show that Manhattan saw three times as much growth as the rest of the country. According to preliminary numbers, Macke said Manhattan saw about $8.4 billion in building sales for the second quarter of 2011 — a 189 percent increase from the $2.9 billion it logged during the same time

than the national average and the region,” Miller added. “And then you have total Wall Street compensation, which is up, and a much lower market share of distressed sales in foreclosure activity.” Manhattan obviously has not been immune to this downturn (during the darkest days of 2009, residential sales volume dropped almost 50 percent). Still, Robert Sammons, vice president of research services at Cassidy Turley, agreed that employment is one of the key reasons Manhattan hasn’t been hit as hard as the rest of the country.

“In New York we have had incredibly good job growth in 2010 and year-to-date in 2011, and that really surprised a lot of people.” Robert Sammons, Cassidy Turley they dropped to a new low in 2011’s second quarter, to $21.34. CoStar’s senior real estate strategist, Chris Macke, said when compared solely to the country’s 10 “major” office markets, Manhattan also outpaces its counterparts. While some of those cities, such as San Francisco, are performing strongly and seeing rent increases, others, like Phoenix and Philadelphia, are clearly struggling. But on the bright side for the nation overall, Macke noted that the rate of decline is slowing down and the amount of office space being taken by tenants (also known as the net absorption) saw a big boost in the second quarter. Plus, Macke noted that while Manhat-

in 2010. By comparison, nationally there was $73 billion in building sales for the second quarter — only a 65 percent increase from the $44.5 billion registered during the same quarter in 2010.

Defying history Explanations for New York’s relative strength range from the obvious (ties between the Manhattan economy and Wall Street) to the more esoteric (the condo and co-op conversions of the 1990s strengthened lending standards and decreased financial exposure here). “We have been buoyed by foreign buyers, and the weak dollar is certainly helping, and Manhattan employment is better

“The key to this has been job growth, and in New York we have had incredibly good job growth in 2010 and year-to-date in 2011, and that really surprised a lot of people,” he said. “We gained jobs, and [more] important for commercial real estate, we gained office jobs.” In May 2010, the unemployment rate in Manhattan stood at 8 percent. A year later, that figure dropped to 7.1 percent, significantly below the national average of 8.7 percent, according to the New York State Department of Labor. Some of that has to do with the fact that Wall Street firms were bailed out during the recession, insiders said. But it’s also is a testament to ManhatContinued on page 84 ILLUSTRATION FOR THE REAL DEAL BY DAVID COLE

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The food chain of distress A step-by-step breakdown of how five troubled NYC deals came back to life

Hal Fetner last month at Durst Fetner Residential’s offices at One Bryant Park



to continue, at least for the foreseeable future.

or the owners of distressed properties, it’s a harrowing ride to stabilization.

“I think [notes] will continue coming to the market in steady fashion through the rest of the

Note sale, foreclosure, bankruptcy or recapitalization, there is no easy path

year and into next year,” said Robert Knakal, chairman of Massey Knakal, although, he added,

from fi nancial trouble to stable footing. And while some savvy investors have

“The rate is certainly slowing.”

seized control of valuable New York City properties, many owners and lenders have

This month, The Real Deal provides a step-by-step breakdown of five once-distressed deals

lost billions of dollars through distressed real estate sales and restructurings since

that made the journey back to solid ground — all in very different ways. While there are hundreds

the financial crisis began. Manhattan’s investment sales market has recently improved, but the

of different methods for a property to regain its footing, these five examples vividly illustrate

volume of losses here is staggering.

the kinds of creative workouts currently taking place in New York.

Commercial real estate firm Massey Knakal Realty Services estimates that from the start

In several cases, weakened owners lost out to well-capitalized, opportunistic investors using

of 2010 through June of this year, there have been about $9 billion in note sales in New York

hostile strategies to take control. In other situations, owners managed to hang on (just barely).

City. From those transactions alone, lenders have lost $2.1 billion in debt and owners about

In one case, an investor grabbed control of a 200-plus-unit apartment building by purchasing

$3.6 billion in equity. That estimate does not take into account restructurings or other recapi-

the owner’s line of credit. In another, a developer bought the note on a distressed property,


then quietly also bought the mezzanine loan, making it nearly impossible for the owner to stay

And the pain isn’t yet over. While pricing has improved for buildings and land, and the volume of note sales has eased up, it still remains high. And experts expect these transactions

involved in the parcel. Here’s a closer look at how each of these deals played out.

The setup


Foreclosing on the equity, not the real estate


In a strategy that many insiders say was highly unusual (and very creative), the Bluestone Group wrested control of a 200-plus-unit apartment building in Jamaica, Queens, by getting its hands on the owner’s line of credit. The property owner had taken out both a first mortgage and a revolving line of credit from a regional community bank. While the owner never stopped making payments on its mortgage, it defaulted on the line of credit about a year and a half ago. Bluestone agreed to discuss the transaction on the condition that the identities of the owner and the bank, and the exact address, were withheld, because the ownership structure is still being finalized. City property records, which will identify the parties, ultimately must be filed. Jamaica streetscape

Dealing with distress

Identifying the deal

To recoup the money it was owed on the line of credit, the regional bank sued in State Supreme Court, and won a judgment against the borrower earlier this year. Because the line of credit was secured by the owner’s 51 percent stake in the Jamaica apartment building, the bank could have taken control of the property. But banks are often reluctant to engage in messy real estate battles. So when Bluestone got wind of the judgment, it approached the bank to buy the line of credit.

Gaining control of a property through the line of credit is “unusual,” explained Lowell Dansker, chairman and CEO of Midtown-based regional bank Intervest Bancshares, which is not involved in the deal. Eli Tabak, a principal with Bluestone, said he first learned of the defaulted line of credit through the special assets department at the community bank. Tabak noted that one advantage to purchasing an equity interest is that competing investors are less keen on doing the same, since it’s considered a risky play. “People are afraid to buy high in the capital stack, so the paper is not worth that much,” Tabak said.

The Bluestone Group’s Eli Tabak

Taking control In addition to dealing with those liens, getting control of a majority interest in a property this way means jumping into bed with a stranger, so to speak. It requires dealing with the minority owners, who may not be thrilled with the prospect of a new owner they had no role in selecting. Late last month, Tabak was negotiating with the minority owners as to who would take control of the property.

36 August 2011

Attorney Edward Harris

Lowell Dansker of Intervest Bancshares

Closing the deal In early May, Bluestone officially bought the defaulted line of credit from the unnamed bank. Tabak declined to disclose how much he paid. But once he had the line of credit in hand, he was able to foreclose on the equity (rather than the real estate, as most foreclosures do). Bluestone was also able to foreclose much faster than a standard property foreclosure. In mid-June, Tabak held a nonjudicial foreclosure sale in his attorney’s office. Such a foreclosure provides fewer protections for the borrower and is less regulated than a standard foreclosure. There were no other bidders. And, as the new owner, Tabak will be responsible for paying the in-place mortgage. The whole process, from buying the debt to foreclosing, took him only about a month. “It’s actually much simpler,” said Edward Harris, an attorney in the real estate department at law firm Cozen O’Connor. Still, there are downsides to a mezzanine or other equity foreclosures. “You have all the warts, all of the mechanic’s liens [and other liens], but when you foreclose on the first mortgage you extinguish most liens and other encumbrances. Some things, like unpaid taxes, survive foreclosure, of course,” Harris said.





Partner in, owner takes haircut The setup


Many struggling owners rescue distressed deals by bringing in a new partner. Although known euphemistically as a “recapitalization,” such a deal is often tantamount to a sale, and can be painful for the original owner. At 230 Park Avenue, which had a particularly opaque capital stack, one owner hung on (with a significantly reduced stake), while another lost hundreds of millions of dollars and limped away. In 2007, at the height of the market, Monday Properties, headed by Anthony Westreich, partnered with one of Goldman Sachs’ Whitehall Street funds to pay $1.15 billion for the 1.2 million-squarefoot office tower 230 Park, just north of Grand Central Terminal. Court records show that Monday Properties bought a 25 percent stake, while Goldman took 75 percent. GE Capital put in more than $200 million in senior preferred equity, and Lehman Brothers contributed an unknown amount of equity. There was also debt, including $278 million in a securitized first mortgage issued by Credit Suisse.


230 Park Avenue was rescued in June when Invesco Institutional and a Korean fund took a 95 percent share of the property.

Dealing with distress

Holding on

But by the end of 2010, the value of the building had plummeted. Whitehall assessed the 34-story tower at about $300 million less than its peak value. At some point, Whitehall decided to walk away from the venture. Sources said if GE lost money, Whitehall would be on the hook to cover some or all of those losses. “If GE did not get paid back, Whitehall would have to fill that,” one source said. Funds like Whitehall often have only a limited amount of money available to invest in capital expenditures, explained Howard Michaels, chairman and CEO of advisory firm the Carlton Group. So when a deal goes sour, they sometimes prefer to take their losses rather than putting in more money, “Oftentimes the existing partner may not want to, or may not have the ability to, invest fresh capital in the deal,” said Michaels, who did not have inside knowledge of the situation at 230 Park.

By early 2011, it was clear that GE, too, wanted to get its investment out of the deal, as Eastdil Secured brokers Doug Harmon and Adam Spies began to market the company’s equity piece. It was a move that could pave the way for someone else to buy GE’s slice at a discount and then foreclose. That could have had devastating consequences for the other owners, particularly Monday Properties, which wanted to stay in the deal. One insider called the GE Capital piece of the capital stack the “fulcrum” because it was in the middle between Goldman, Lehman and Monday on one side, and the more seThe Carlton’s Group’s Howard Michaels cure debt on the other. Forcing GE’s hand were financial reserves at the building that were drying up, which could have pushed the debt into default. The chance of that happening created a pressure cooker for all of the players. Yet one unusual aspect of this distressed deal is that the securitized first mortgage never appeared to be in danger of a default, according to data from loan-tracking firm Trepp. GE’s equity position was never sold, but it was partially paid back, according to sources, though it’s unclear by whom.

Doug Harmon of Eastdil Secured

Adam Spies of Eastdil Secured

Anthony Westreich of Monday Properties

In 2007, 230 Park traded for $1.15 billion. Three years later, it was valued at $300 million less.

New money The building was ultimately rescued this past June 9. That’s when Dallas-based Invesco Institutional and a Korean fund took a 95 percent share of the property, now priced at $760 million — $390 million less than the December 2007 purchase price. Monday Properties remained the operating partner, but its share sank from a 25 percent stake to a 5 percent stake. Of the 95 percent share, Invesco controls 51 percent and the Korea-based National Pension Service took a 49 percent stake. It’s unclear exactly how much money Monday lost and how much of a hit the other investors, who all exited the deal, took.





Fighting a hostile takeover The setup

Dealing with distress

Court installs referee

Some owners fight to the bitter end, but ultimately don’t have enough money to hold on during a hostile takeover. That’s what happened to Tessler Developments and the Chetrit Group at 855 Sixth Avenue, a development site just a few blocks south of Herald Square, when Durst Fetner Residential stepped in. In March 2007, Yitzhak Tessler of Tessler Developments partnered with Meyer and Joe Chetrit of the Chetrit Group to shell out $140 million to a group led by Baruch Singer for six of eight parcels that ultimately made up the development site at 855 Sixth Avenue. A year later, they paid another owner $12.3 million for a seventh parcel. The partners planned to build a 355,000-square-foot condo tower on a retail base at a pricey cost of about $402 per square foot for the land.

The developers had started demolition, but before they even poured a foundation, they ran into trouble and couldn’t repay their $105.3 million loan when it came due just 19 months later in October 2008. The next month, their lender (then iStar Financial) filed a lawsuit to begin to foreclose on the loan. That was a signal to potential buyers that iStar might want to unload the note.

But far from selling, iStar continued to battle the owners in court. In November 2009, the lender won a significant victory when the court ordered the appointment of a referee to determine the value of the parcel and the best way to sell it.


Hal Fetner had been eyeing 855 Sixth Avenue since 2003 before he bought it last year.

Identifying the deal Unlike some lenders around that time, iStar was not marketing the note. Indeed, Durst Fetner Residential president and CEO Hal Fetner, who had been eyeing the site since 2003, said he approached the firm several times and “got nowhere.” Then fortune stepped in. Fetner and his COO, Damon Pazzaglini, were at a party at their residential tower, the Victory, when they met a top iStar executive who happened to live in the building. That contact, plus a personal friend of Fetner’s, got him a meeting with iStar CEO Jay Surgarman in the fall of 2009.


Snapping up the note

Winning the property But Durst Fetner still didn’t control the land, so it continued the foreclosure process in iStar’s place while Tessler and the Chetrits fought to hold on. The court imposed a deadline for the owners to either pay off the loan or lose the property at an auction set for Dec. 22, 2010. At the auction, Durst Fetner had a major advantage because it owned the debt, valued at $136 million — $105.3 million in principal, plus about $30 million in late payments, default interest and other penalties. Any competing bidder would have to pay more than that $136 million credit bid to win. On the other hand, Durst Fetner could have sold it for less, leaving Tessler and the Chetrits on the hook for the difference between the sale price and the credit bid (plus any additional accrued expenses). That difference is known as the “deficiency.” Having an auction would have put Tessler and the Chetrits in a vulnerable position because they were responsible for covering the deficiency through personal guarantees for up to $19 million. That put pressure on them to accept a deal to

hand over the title to Durst Fetner. But what really forced their hand was that in late 2010, Durst Fetner had also quietly bought $39 million in mezzanine loans on the property from RCG Longview and Metropolitan Life for a steep discount. That meant the owners had virtually no chance of keeping the property. In order to stay afloat, they (or any new buyer) would have had to pay the first mortgage and the mezz loan. When Joe Chetrit found out that Durst Fetner had bought the mezz loan, he knew he was finished, one insider said. “He was amazed when he found out [Durst 855 Sixth Avenue Fetner] bought the mezz,” the source said. The auction was scrapped, and the parties negotiated to transfer the title.

Closing the deal

New project

A day before the scheduled auction, Durst Fetner took over the title in a discounted sale. It also scored another bonus when M&T Bank lent it approximately $101 million and the firm was able to pull its money out of the deal, giving it equity to buy other properties. Still, additional debt and equity will be used to construct its 855 Sixth Avenue project, which has a total price tag of about $350 million, according to published reports.

The company is now preparing to erect a 500,000-square-foot building — 300,000 of which will be devoted to 350 rental units (80 percent market rate and 20 percent “affordable”). There will also be a 325-key, 130,000-squarefoot hotel, and 90,000 square feet of retail. The land price basis for the project was about $208 per square foot — nearly half of where it started in 2007. Construction is expected to begin in April 2012.

38 August 2011

Landlord Baruch Singer

Negotiations between iStar and Durst Fetner heated up in late 2009 and became “serious” in February 2010. Over the course of five weeks, “we kept offering,” Fetner said. “Finally we just simply said ‘Okay’ [to Sugarman’s price].” Fetner signed an agreement to buy the note for about $104 million in March 2010, and closed that May. He was able to pay near par for the loan, and said the firm prevailed “because we took an aggressive stance.” It also didn’t hurt that they offered all cash, and were able to close quickly. Yitzhak Tessler of Tessler Development

Douglas Durst of the Durst Organization





Owners (try to) give back keys The setup Some owners know when it’s time to walk away from a distressed property, but it’s not always easy to do. It took Ocelot Capital Group three exasperating years to get rid of a portfolio of prewar Bronx apartment buildings. Thanks to political pressure and a severely discounted loan, former Major League Baseball slugger Maurice “Mo” Vaughn and his partner (backed by an investment firm) were finally able to take over. The saga started in 2006, when Ocelot bought this 14-property portfolio — including the 56-unit 621 Manida Street in Hunts Point and the 16-unit 1271 Morris Avenue in East Concourse — and took out loans for $23.8 million. The firm, which was founded in 2005 by Manhattan attorney Rachel Arfa and her husband, Alexander Shpigel, partnered on the project with Israel-based real estate and development firm Eldan-Tech. Ocelot would be a minority partner, with the promise of a percentage of the upside if the buildings later sold above a certain target price. They expected to smoothly rehabilitate the rent-regulated units and raise rents, but the sinking economy changed all that.

Partners Eugene Schneur (left) and former Major League Baseball player Maurice “Mo” Vaughn of Ocelet Capital Group last month in the Bronx

Dealing with distress


Even before the financial crisis, in late 2007, Eldan and Ocelot wanted to sell — in part because of staggering maintenance costs at the aging buildings, Ocelot’s attorney David Katz said. A year later, controversial real estate operator Sam Suzuki signed a contract to buy the portfolio along with other Ocelot-owned properties. A condition of the sale, which was expected to close by the end of 2008, was that lender Fannie Mae would have to accept or reject Suzuki’s group as the new borrowers. It looked like it was going to be an easy out for Ocelot and Eldan. But Fannie Mae dragged its heels on a decision for months as the properties deteriorated, Katz said. Meanwhile, Suzuki had taken over management of the portfolio in anticipation of owning it and fell behind on mortgage payments. That prompted Fannie Mae and the other lender on the portfolio, Deutsche Bank, to initiate the foreclosure process against Ocelot (which still technically owned the property) in March 2009. The move blindsided Ocelot, which was in a Catch-22, unable to sell and unable to walk away, according to Katz.


Batter up In early April, Fannie Mae rejected Suzuki as a buyer, but Ocelot, which was being pilloried in the press for allowing conditions at the properties to deteriorate, was still unable to sell because of the foreclosure. That summer, court receivers were installed in each of the 14 properties. And in August, Fannie sought to sell the notes through an online auction site, DebtX. That’s when Omni New York, the firm led by Mo Vaughn and Eugene Schneur, first heard about the portfolio. But the DebtX auction was aborted after sharp criticism from housing advocates, who worried that an irresponsible highest bidder would swoop in and then neglect the properties. Making matters worse, Ocelot’s Arfa was personally named in a criminal contempt case that claimed the properties were not being well maintained.

Identifying the deal A chastened Fannie Mae arranged a second auction, this one with the bidders vetted both by the city’s Department of Housing Preservation and Development and by housing advocates. This time, Omni stepped in. The firm, which was cofounded by Vaughn and Schneur in 2004, owns about 5,200 mostly outer-borough residential units. And it has had a good track record with the city and a reputation for keeping housing affordable. So, it figured it would have a far better chance of winning this bid than the online debt auction.

Home run 1271 Morris Avenue in the Bronx

621 Manida Street in the Bronx

New project Omni pledged to maintain the units as affordable, and complete nearly $40 million in rehabilitations. Work on the 410 units started in January 2011 and is scheduled to finish in September 2012. When the firm took over, “some of the units looked like a third-world country,” Schneur said. The rehab is complex and expensive, with Omni putting 30 to 50 families of residents in hotels at any given time while their apartments are being worked on. “When the Yankees are in town, we find [the hotels] get booked up,” Schneur said. The process is further complicated by trying to keep residents in their same school districts and finding accommodations for residents with pets. One tenant had two dogs, a turtle, a bird and a gecko.


In December 2009, Omni was picked to take over the portfolio with a bid of approximately $5 million plus an agreement to spend $1 million in emergency repairs — a discount of some 75 percent off the $23.8 million note. Omni supporters lauded the steep discount, which came after political pressure from elected officials and housing advocates, noting that the low price would leave Omni with enough money to rehab the buildings. Yet some real estate brokers and owners said Fannie Mae accepted too little.

Closing the deal What Ocelot had hoped would be a straightforward process to unload the buildings had become a multiyear ordeal. Furthermore, in order to actually transfer the portfolio deeds to Omni, they needed to go through a foreclosure auction. That was held at the Bronx Courthouse in July 2010. Omni easily won with its credit bid, although several bidders sought to buy a few of the properties independently. Omni closed on the deal in November 2010.

Bronx landlord Sam Suzuki August 2011 39




Tapping bankruptcy court for protection The setup

Dealing with distress

One of the most aggressive strategies for holding on to a distressed property is bankruptcy. But while a bankruptcy filing temporarily stops the foreclosure process, there are no guarantees that it will ultimately halt it. Kaish & Taub Development Group found that out the hard way when they lost their Gramercy Park assemblage to Toll Brothers. Builders Norman Kaish and Leonard Taub put together a complex assemblage in 2006 and 2007 with the intention of building a 20-story condo at 276-280 Third Avenue and 266 Third Avenue, at 22nd Street. The planned 144,000-square-foot glassand-steel structure would vault over a three-story walk-up (whose owner refused to sell to the developers) and connect the two separate parcels. It was expected to cost $105 million. Swiss bank UBS lent the developers $30.5 million secured by the 276280 Third Avenue site, which had 105,000 square feet of development rights. (A different lender financed the other site.) But facing economic headwinds, the developers couldn’t obtain construction funding and permits, so the process stalled.

In late 2007, UBS walked away from several pending construction deals, including this project, where news reports state that the bank had agreed to provide construction financing. That left the developers scrambling for alternate lenders. Potential buyers such as Toll Brothers, which ultimately bought the site, took notice. “We knew about the site for four years,” said David Von Spreckelsen, senior vice president at the development firm. “We knew the owners, and they were talking on and off about [joint ventures] or selling.” Kaish & Taub failed to find replacement financing, nor could the firm repay the UBS loan, which was declared in default in August 2008. In March 2009, UBS filed to foreclose on the $30.5 million mortgage. A little over a year later, in May 2010, the state court judge appointed a referee to determine the amount the developers still owed on the loan. In November, with the debt valued at $46 million — including principal, interest and other charges — the judge approved the foreclosure sale and set the auction for March 30, 2011.

Bob Toll of Toll Brothers

State Supreme Court building

376-380 Third Avenue



Holding on


But UBS thought it could get more money and didn’t play along. So, a day before the scheduled auction, Gramercy Park Land, a so-called special purpose entity formed by Kaish & Taub for this project, filed for Chapter 11 bankruptcy, a common but sometimes risky strategy used to halt foreclosure actions. That bought them some time and delayed the auction.

Identifying a deal Late last year, UBS had hired the Jones Lang LaSalle investment sales team led by Jonathan Caplan to market the note. During that time, JLL heard from potential buyers who were willing to pay above the Alchemy offer, court records show. Ultimately more than 100 parties reviewed confidential documents to consider a bid, among them the Pennsylvania-based home builder Toll Brothers, headed by Bob Toll.

The stage was set for that showdown in 2009 and 2010, as Kaish & Taub were trying to hold on by negotiating with potential investors willing to buy the site. They hoped to avoid losing everything at a foreclosure sale. But they were racing against UBS, which was also entertaining potential buyers for the note. The developers ultimately struck a tentative deal with Kenneth Horn’s Alchemy Properties, which offered to buy the site and air rights from them for $27.5 million in early 2010. All they had to do now was get UBS on board.

In their bankruptcy filings, the debtors suggested that Alchemy Properties’ offer would provide a floor as a “stalking horse,” or minimum bid, at the bankruptcy auction. And if any bidder offered more, Alchemy would be paid 3 percent of the purchase price as a breakup fee. UBS didn’t bite, and successfully pushed for the litigation to return to state court. Kaish & Taub withdrew the bankruptcy filing when it became clear UBS wouldn’t agree to its terms.

Jonathan Caplan of Jones Lang LaSalle

Closing the deal

Taking control

The foreclosure auction was now back on, for June 22, in the State Supreme Court building in Foley Square. A handful of investors made offers, but Toll Brothers’ $35.5 million bid won.

On July 7, Toll Brothers officially obtained the deed to the property, which includes 276-280 Third Avenue (also known as 160 East 22nd Street) and air

40 August 2011

Leonard Taub of Kaish & Taub

Norman Kaish of Kaish & Taub

Kenneth Horn of Alchemy Properties

rights over four other properties. Von Spreckelsen said Toll Brothers plans to build a roughly 20-story building with about 80 residential units. It is unclear whether the units will be rentals or condos. TRD




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REAL ESTATE HISTORY The Real Deal looks back at some of New York’s biggest real estate stories 1974: HELMSLEY BUYS STARRETT-LEHIGH FOR $13.5M


eal estate mogul Harry Helmsley snapped up the largest manufacturing property in the city — the 2.2 million-square-foot Starrett-Lehigh Building in Chelsea — for a bargain price of $13.5 million in a foreclosure auction, 37 years ago this month. Helmsley, president of Helmsley Spear, beat out the Chicago-based real estate investment firm that was a lender on the building and had started foreclosure proceedings. The investment firm refused to bid more than the $2.1 million mortgage it provided, paving the way for Helmsley to take control of the property at 601 West 26th Street, which was owned by Jacob Freidus. The $13.5 million price tag included Helmsley’s payment of $2.2 million in cash, the assumption of $10.8 million in debt, plus a $500,000 loan Helmsley provide Starrett-Lehigh Building on the building that he forgave. In 1944, the 30-year-old Freidus had purchased the property for an undisclosed sum. But by the time Helmsley came in, manufacturing was on the decline and the structure was just 60 percent occupied, with rental rates at about $1.20 per square foot. Earlier this year, Scott Rechler’s RXR Realty agreed to buy the 1932 building — which occupies the entire block from 26th to 27th streets and from 11th to 12th avenues — for $900 million.


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he federal government stepped in to stop the eviction of the then-unknown artist Alice Austen from a pre-Revolutionary War house in Staten Island, 67 years ago this month. The government revoked the order to remove the 78-year-old and nearly penniless Austen from the Victorian Gothic, two-story 1690 house at 2 Hylan Boulevard, just days before she was to be thrown out. The 1944 eviction attempt highlighted the sharp decline in fortune for Austen, who had lived in the house since she was an infant. In 1918, Austen, who was living in the house with her longtime partner, Gertrude Tate, turned down offers to sell the property for the significant sum of $100,000 to real estate broker and operator Joseph P. Day. Then, nearly two decades later (in the mid-1930s), Austen lost ownership of the home, known as Clear Comfort, in a foreclosure auction, though she continued living there as a tenant. In August 1944, Austen’s landlord, Grace Mandia, was just days away from taking control of the property, but got stymied when it was discovered that she misrepresented her intentions and was planning on selling it. Because of the tight housing market during Alice Austen World War II, a landlord could not legally throw out a tenant unless the owner intended to live there. In addition, the New York Times reported that year that Mandia’s father, a bar owner, had considered opening a tavern there. Austen moved out in 1945 and died in 1952. The house is now a museum.



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42 August 2011

early two dozen of the city’s oldest real estate transfer books documenting deeds and mortgages from as early as 1686 were lost 101 years ago this month. City officials speculated that some of the 23 volumes, known as “libers,” disappeared when the old Hall of Records in City Hall Park was torn down in 1903 and a new one was built. But since the books had not been kept securely, they could have been taken at any time in the preceding years. The most valuable book, known as Liber B, had historically valuable records in both Dutch and English and included transcripts of conveyances occurring just after New York Governor Thomas Dongan issued the so-called Dongan Charter in 1686. The charter gave to the City of New York, which at that time was only the island of Manhattan, all “waste, vacant, unpatented and unappropriated lands.” Other volumes from the 17th and 18th centuries that went missing included the original records of the division of large farm tracts in Manhattan like the Bogardus farm, later controlled by the powerful church-affiliated Trinity Corporation. Despite the loss, there was no confusion in title, because copies and redundant records had been compiled for years in Albany. Compiled by Adam Pincus

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Inn fashion HOTELS

Attractive cap rates pull private investors into hotel game alongside REITs BY C. J. HUGHES or the last few years, investing in New York hotels was like scoring the Presidential Suite at the Plaza — an experience reserved only for a select few, primary real estate investment trusts. Indeed, as the stock market roared back, these publicly traded REITs were able to raise capital almost as easily as dialing up room service. Recently, though, other types of investors — most notably management companies, private equity firms, government investment arms and hedge funds — have edged into the New York market, convinced, it seems, that hotel values in the city still have a ways to Mark Gordon climb. That is despite the fact that hotels have already rapidly risen in value after taking a severe recessionary beating in 2009. It took a while for those outside the lodging industry to realize what was happening to New York lodging,” said Bjorn Hanson, a hotel specialist at New York University’s Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management. “It has all created appeal for the nontraditional investor.” With tourists and business travelers now back in force in Manhattan for more than a year, investors and developers have taken notice, Hanson said. Sure, room rates aren’t back up to their pre-recession levels yet, but in a city that by many measures still has a limited supply of hotels, occupancy rates have remained strong. Indeed, hotel occupancy in Manhattan is projected by analysts to be as high as 85 percent for 2011, versus the low 70s in the depth of the recession. And, that’s close to the peak levels experienced in the 12 months before September 2008, when Lehman Brothers imploded. More important, though, may be the economics of hotel deals: The spread between asks and bids has narrowed, analysts said. That, they noted, is a sign of greater activity and interest, and is like chum in the water for deal-hungry investors. Plus, observers noted, with the now-seesawing stock market, there’s a sense that REIT stock prices may be vulnerable to drops, making it potentially difficult for those entities to use future public offerings as a way to drum up capital. So, with their competitors’


44 August 2011

hands tied, private investors can now afford to play. “The cost-of-capital advantage that public companies have is waning,” said David Loeb, a hotel analyst with Milwaukee-based private equity firm Baird. “Private

capital has gotten more competitive” because bank-issued debt is becoming comparatively more affordable, he added. The numbers are expected to begin bearing out this point soon. In 2010, the buyers in

Ron Burkle

six of the 12 biggest hotels that traded for over $50 million in Manhattan were REITs, according to data from the research firm Real Capital Analytics. So far this year, REITs were also buyers in approximately half of the 13 deals to date, but analysts say that the second half of the year will tip the scales in favor of private investors. Indeed, fashion mogul Tommy Hilfiger signed a contract to buy the MetLife clock tower building on the edge of Madison Square Park in May for $170 million, with plans to turn it into a hotel. And in July, Tribeca Associates, the group behind the Smyth Hotel Tribeca, purchased the former Donnell Library on West 53rd Street, in a partnership with Starwood, for $59 million, Tribeca Associates partner Mark Gordon confirmed. Gordon’s company — which seems to be showing proportionally greater interest in hotel deals than other types of investments lately — is also looking to convert 170 Broadway from an office to hotel, according to news reports, though Gordon declined to comment on that deal. Gary Barnett Meanwhile, Aby

Total dollar volume of Manhattan hotel sales

Tommy Hilfiger

Source note: Data from Real Capital Analytics. Only deals of $20 million and above were included. Data only includes existing hotel sales. The 2011 total is year-to-date.

Total number of hotel rooms in Manhattan by year

Source note: Data from PKF Consulting. Number of hotel rooms is as of Jan. 1 of each year.

HO T E L S fices, is hardly an apples-to-apples proposition, many analysts caution. “Sometimes that kind of investing is not mutually exclusive,” said Cheryl Boyer, president of Lodging Advisors, a seven-year-old ManhattanSource note: Data from Smith Travel Research, McGraw-Hill Construction Dodge Index, the city’s marketing arm NYC & Company, and news reports. based consulting group. And in June, grocery-store magnate Ron Rosen’s company RFR Holdings has also In other words, it would be somewhat Burkle invested in the upcoming 168-room unusual for, say, Cornerstone Real Estate been keen on hotel investments recently. In June, RFR, which has been struggling NoMad Hotel, in the gentrifying area at Advisers, the private firm that bought the at several of its projects, surprised many in the Broadway at West 28th Street. Burkle, who Algonquin Hotel in June for $79 million, industry when it picked up the Paramount owns a stake in the Morgans Hotel Group, to have passed on the chance to buy a simiHotel at West 46th Street for $275 million. joined forces on this deal with the Sydell larly priced office building, analysts said. Though Rosen does already own a pair of hoFor one thing, offices tels outside the city (and, of course, bought often require decadeout partner Ian Schrager at Gramercy Park long leases, where Hotel), this seems to represent a local push the rents are locked in a new direction for RFR, whose portfolio in, while the nightly historically has featured offices and retail. In room rates at hotels have lots of leeway to Mark Hotel float, so the business models are hard to compare.

Five largest hotels under construction in Manhattan

frame was 6.7 percent. To be fair, hotels normally have higher cap rates than office buildings. The inherent unpredictability of the hotel business means that they’re always a riskier real estate asset. Hence, the higher cap rate. And while the cap rates of New York hotels have been dropping for the last three years, as the city’s tourism industry recovered and the hotel sales market heated up, they are still high compared to offices, which may be tempting to investors, analysts say. “It’s a difference worth noting,” Loeb said. The fever for hotels appears to be affecting smaller-bore investors, too. David Schechtman, a broker with Eastern ConMetLife clock tower building

Chelsea Hotel

NoMad Hotel at 1170 Broadway

addition, in April, the Chetrit Group, known for office and rental addresses, bought the legendary Hotel Chelsea for $80 million, perhaps signifying a new focus for that company, too. Even ground-up development deals are attracting new faces, like Gary Barnett’s Extell Development Company, which is including a massive Park Hyatt at its One 57 project on West 57th Street (see story on page 58). The 90-story tower, which will also include condos, is slated to become New York’s tallest residential tower. In addition, Dune Capital Management, a hedge fund spun off from Goldman Sachs, bought the Upper East Side’s Mark Hotel in March for $190 million. Plus, the Kuwaiti IFA Hotels & Resorts joined investment agencies from Kuwait and Portugal to buy Yotel, developed by Related Companies, in June for $315 million.

The former Donnell Library

Group, a part-owner of the nearby Ace Hotel. Other Burkle-Sydell hotel investments should follow, Sydell executives say. Meanwhile, last month Parkview Developers announced that a new hotel called the Out NYC, which will cater to the gay community, is under construction at 510 West 42nd Street, between 10th and 11th avenues. The project, which will also include a nightclub and lounge, will have 105 rooms. No completion date has been set for the hotel, but the lounge is scheduled to open this fall. Whether developers are turning to hotels at the expense of other deals is unclear. Comparing lodgings to other assets, like of-

But it is worth noting that capitalization rates, which are a reliable way of determining the value of buildings, show that there may be better bargains to be had in the hotel market these days, said Baird’s Loeb. To wit: For the last 10 months, the average cap rate, or ratio between the annual net operating income of the asset and the price paid for it, was about 5.4 percent for 16 of the 50 office building deals in Manhattan where the cap rate was calculated by RCA. In contrast, the average cap rate for Manhattan hotel transactions over the same time

Manhattan’s five priciest hotel sales in 2011 — so far

Source: Real Capital Analytics

solidated, is listing a new 43-room hotel on Allen Street in Chinatown for $19 million; it’s being marketed as a Howard Johnson’s, though the buyers could go with a different operator, he said. In addition to the usual REITs, other investors have also been nosing around, including Extell, private equity firms, and one man who owns auto dealerships in the boroughs who has never owned a hotel before, Schechtman said. “He has watched neighborhoods grow up around hotels and is interested,” Schechtman said. Does all this interest suggest that a bubble may be forming? Far from it, he said. “I think the market for hotels will be robust for another 36 months,” he predicted. TRD August 2011 45


Midtown mania BY C.J. HUGHES uring the boom, when no Manhattan neighborhood seemed vulnerable to the economy, hotel deals seemed to pop up on every corner of Manhattan — no matter how far-flung. Now, though, as the market recovers, deal-making in Manhattan’s chief central business district — Midtown — has seen more hotel activity, and larger deals, than any other part of Manhattan, sources say. The area — which stretches from 34th to 65th streets and river to river — has seen “a number of high-dollar-amount deals,” said John Fox, a hotel industry specialist at PKF Consulting. A handful of these Midtown deals involve ground-up construction of new hotels, though most involve investors and developers snapping up older properties, including brands like the Algonquin and the Paramount, with the intention of renovating them.


A roundup of the recent hotel deals in NYC’s most active hospitality market

Midtown’s hot streak has been partly fueled by hotel-focused real estate investment trusts. Those REITs have been especially active in the area during the last year and a half, as the stock market has roared back. Fox said these national, deep-pocketed investors like to deploy their capital in large fell swoops, and Midtown’s hulking, big-ticket hotels provide those kinds of spending opportunities. “One $100 million deal is much better than four $25 million deals,” Fox said. And there are plenty of other non-REIT investors swooping in, too. That’s partly because the value of the dollar remains weak against European currencies, which delivers a one-two punch benefiting New York hoteliers — not only do international travelers find it affordable here, but Americans are now, say, skipping a long weekend in Paris for one on Columbus Circle. Here’s a look at some of the recent Midtown hotel activity.

Doubletree Guest Suites 1568 Broadway (460 rooms): Sunstone Hotel Investors bought this Times Square high-rise from Whitehall, a Goldman Sachs unit, and other owners for $286 million in January.

Ink48 653 Eleventh Avenue (220 rooms): Situated inside a former printing plant, this hotel, part of the Kimpton chain, ran into trouble last fall when a bank foreclosed on its developer, Horizen Global. Eastern Consolidated is selling the mortgages on behalf of U.S. Bank National Association.

Yotel 570 10th Avenue (670 rooms): An investment group led by the Kuwaiti IFA Hotels and Resorts paid the Related Companies $315 million in June for this “pod”-room property inside its new mixed-used project, MiMA.


Paramount Hotel, 245 West 46th Street (600 rooms): In a move that surprised many in the industry, embattled real estate mogul Aby Rosen hammered out a deal to buy this 1980s icon for $275 million from Walton Street Capital and Highgate Holdings. The deal is expected to close this quarter.



Milford Plaza Hotel 700 Eighth Avenue (1,300 rooms): The Rockpoint Group and Highgate Holdings teamed up to buy this Times Square mainstay (which many remember for its “Lullaby of Broadway” jingle) from Ogden Cap Properties for $200 million.

46 August 2011



Four Points by Sheraton 326 West 40th Street (245 rooms): Also in June, L.A.-based Gehr Development paid the Lam Group $112 million for this tower overlooking the Port Authority. Gehr owns the adjacent Fairfield Inn. While it does not plan to connect the two hotels, company president David Lifschitz said the central location and the fact that the firm owns the rooftop lounge that straddles both hotels was a selling point.


Cassa Hotel and Residences 70 West 45th Street (220 rooms): Open for less than a year, this Enrique Norten-designed hotel-condo filed for bankruptcy this spring, as its owner, Assa Properties, became ensnared in disputes over unpaid contractor bills. But almost immediately after the bankruptcy became public, Assa announced that it had inked a "binding" contract to unload the hotel portion of the project for $130 million. The buyer was identified only as an "international investor." As of press time, no sale had been recorded with the city.




Park Hyatt 157 West 57th Street (210 rooms): Extell Development’s foray into hotels in NYC will be tucked inside one of the city’s most highly anticipated ground-up projects: One 57 from architect Christian de Portzamparc (see related story on page 58). The project is currently under construction.



Buckingham Hotel 101 West 57th Street (100 rooms): A real estate arm of UBS bought this 1929 edifice from a partnership that includes Equinox founder Danny Errico for $60 million last July. The property was closed in February for a two-year renovation.

Park Central Hotel 870 Seventh Avenue (935 rooms): LaSalle Hotel Properties, a Marylandbased REIT, bought this hotel in June from a consortium including Whitehall Real Estate Funds, an affiliate of Goldman Sachs, for $406 million — the biggest recent deal in the area.



Doubletree Metropolitan 569 Lexington Avenue (760 rooms): Black Entertainment Television founder Robert Johnson's RLJ Development spent $332 million on the hotel near the end of 2010. The company, which went public in May, purchased it from Whitehall, which continued to divest itself of assets. The hotel last traded for $110.5 million in 2003.

Palace Hotel 455 Madison Avenue (899 rooms): Midtown’s famed Palace Hotel sold in May to the investment advisory firm Northwood Investors for around $400 million, or $445,000 per room.

13 9

The Royalton 44 West 44th Street (170 rooms): As part of a one-two deal (see No. 11), FelCor also paid $87 million for this recently renovated hotel.

11 8

Algonquin Hotel 59 West 44th Street (175 rooms): In June, Cornerstone Real Estate Advisers, a MassMutual-owned investment group, closed on its acquisition of this landmarked building, famous for Dorothy Parker’s literary salons, from Connecticut-based HEI Hospitality, for $79 million.

12 Morgans Hotel 237 Madison Ave (110 rooms): In April, FelCor Lodging Trust, a Texasbased REIT, shelled out $53 million for this boutique hot spot as part of the twopart deal with the Royalton. The REIT, which has been trying to find deals in major urban markets since the start of the downturn, issued millions of shares to help fund the buy, its first in New York.

Radisson Lexington 511 Lexington Avenue (710 rooms): The REIT DiamondRock Hospitality purchased this property on a hotel-lined stretch of Lexington for roughly $335 million, or $471,000 a room, from a venture that included the Blackstone Group. The deal closed in June.

New York Helmsley Hotel 212 East 42nd Street (770 rooms): The signature address of Leona Helmsley’s empire was officially sold in March to Host Hotels & Resorts for $314 million by her estate. Host reportedly beat out 14 other bidders, including Tishman Hotel & Realty. The hotel will be renovated and turned into a Westin Hotels & Resorts in the middle of 2012. August 2011 47

To list or not to list? Brokers weigh in on putting new properties up for sale in summer



hen temperatures rise in New York City, apartment buyers skip town — or so goes the conventional wisdom. That leads many sellers to believe that they are better off waiting for the fall to list new properties. But this summer, it’s not so clear-cut. Today’s market is more unpredictable

than ever. As a result, more brokers are choosing to list properties in August rather than face the unknown in the fall. This month, The Real Deal asked industry experts to weigh in on the pros and cons of listing a new property during the dog days of summer. Here’s what they had to say:

Con: No more teachers, no more books

that I’m meeting with now, I suggest putting the place on the market sooner rather than later.”

The traditional argument against listing properties in the summer still holds true: With school out, many potential buyers of large, family-size apartments, which are all the rage in New York City these days, are away on vacation. And sellers may be distracted for similar reasons, so price chops and staging may be far from their minds. “The kids have gone to camp or the parents are out of town, in the Hamptons or the Jersey Shore,” said Robert Browne, a senior vice president at the Corcoran Group. “It’s almost like they’re not really in the mood to focus on it.”

Con: High-end buyers are more likely to skip town Elliman’s Teplitzky said that in the current market, high-end apartments — those priced over $5 million — are scarce. Of course, these pricey units are also the ones whose sellers, and buyers, are most likely to leave for the summer. So, for brokers listing high-end properties, waiting until fall may make sense.

Pro: Endless summer

Pro: Mid-range buyers stick around

September isn’t what it used to be, said Douglas Heddings, of the Heddings Property Group. “People who summer, people who are out of the city, that’s kind of gotten extended,” he said, noting that many New Yorkers are gone on weekends until October, and others celebrate the Jewish holidays in September. As a result, the payoff of waiting until fall to list a property might not be as big as expected. Better, he added, to list now.

Con: Trouble scheduling the board interview It isn’t just buyers and sellers who need to be in the city to get a sale done. There are also co-op board members and bank attorneys, to name a few, said Jon Phillips, an agent at CORE. “When you go to New York closings, there are a lot of people sitting at the table,” he said. In the summer, some of them may be on the beach instead.

Pro: Vacationing foreigners Some New Yorkers may flee when the heat and humidity strike, but not everyone minds the sticky conditions. Summer is a prime time for international buyers looking at condos, noted Jacky Teplitzky, an agent at Prudential Douglas Elliman. This year, she said, favors Brazilians. “Prices are lower, the Brazilian economy is doing great, the exchange rate is very good for the Brazilian buyer,” she said. And, of course, summer here is winter in South America, so a 48 August 2011

“If an apartment is really something that’s right for someone, you’re going to be the only game in town.” Robert Browne, the Corcoran Group hot New York vacation may be just what Brazilian and other South American buyers are after.

Pro: The rush to buy before FHA guidelines drop For buyers paying under $1 million who need to secure a mortgage, there is little incentive to wait. That’s because Federal Housing Administration loan limits are set to drop in the fall from $729,750 to $625,500, Phillips said, putting a pinch on buyers who are counting on the loans. Buyers who need larger loans than the government is willing to back will have some lessappealing options, such as making larger

down payments or turning to jumbo mortgages with higher interest rates. “There’s going to be a certain amount of urgency for people in that school to try to get something done before October,” he said.

Pro: Rising interest rates While interest rates are still close to historic lows, Heddings predicts that they are likely to rise in the coming year as the economy improves — a point many in real estate have stressed in the last few years. A rise in rates, he said, will reduce purchasers’ buying power and cut into sellers’ profits. While he advises clients on a case-by-case basis, Heddings said, for “90 percent of the people

The market for units under $1 million picked up in the spring. And, brokers said, there’s little reason why that shouldn’t continue through the summer, with the buyers of these properties more likely to take a one-week vacation than flee the city for more extended stretches of time. “The one-bedroom market, the studio market, those people are around,” Heddings said. “They’re still beating the pavement on the weekends at open houses, because they’re not summering in the Hamptons or Saint-Tropez.”

Pro: Standing out from the crowd In the recovering-but-still-unsteady economy, it’s difficult to predict market conditions months from now, brokers said — especially amid reports that Wall Street firms, facing smaller profits and tighter regulations, are considering downsizing. Better, they argued, to strike while the iron is hot. Besides, bucking conventional wisdom to list during the summer can make counterintuitive sense. Browne, of Corcoran, said he often prefers to put new listings on the market in August, when there’s less competition. When overall activity is low, he said, “if an apartment is really something that’s right for someone, you’re going to be the only game in town.” TRD ILLUSTRATION FOR THE REAL DEAL BY PETER BONO



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Sternlicht’s next stop: New York City

Active elsewhere in the country since the bust, Barry Sternlicht’s Starwood Capital has recently ramped up its deal-making here

Barry Sternlicht is on an NYC buying spree.

“We haven’t seen this level of origination since we started our [lending] business. There’s a lot of volume in the market today, and we expect it to grow, not shrink.” Barry Sternlicht, Starwood Capital Group BY DAVID JONES arry Sternlicht started his company, Starwood Capital Group, during a downturn — and recently he’s been expanding it, especially here in New York. Since the beginning of the year, Sternlicht, the firm’s chairman, has been ramping up his Manhattan deal-making. The brains behind the iconic “W” brand, he’s picked up a slew of Manhattan properties in the last few months, including 1414 Avenue of the Americas, and the former Donnell Library on West 53rd Street, among others. While Sternlicht has been one of the most active real estate players of the downturn, the focus on New York marks


52 August 2011

a shift from 2009 and 2010, when he concentrated on distressed properties in other parts of the country. Notable was his company’s 2009 deal to buy a 40 percent stake in Corus Bank’s distressed loan portfolio for $554 million after the lender was shut down by regulators. Starwood led a group of investors on that deal to buy the portfolio — which was made up mostly of loans on condos in Florida, Washington and New York — at 60 cents on the dollar. However, now the Big Apple has been getting more of Starwood’s attention as the hotel investment market here has caught fire (see related story on page 44). “We have some investors that are very excited about investing in New York,” Stern-

licht told The Real Deal during a phone interview last month. “New York will always be the pit stop for foreign travel. It’s the only city in the U.S. with a [hotel] occupancy rate that hovers above 80 percent. Over time, the city will be okay.” That rosy outlook for the New York hospitality sector wasn’t always the case. At the beginning of the downturn, the hotel market plummeted in New York City, with hotel investors defaulting on loans, and hotel operators decreasing room rates. Revenue per room was down across the board. But those fundamentals started turning around in 2010, and for the last six to nine months, investors have been going after hotels in the city. Among those investors, Sternlicht is in prime position to pounce.

In late January, Starwood Capital paid a modest $72 million to buy 1414 Avenue of the Americas, just one block from Central Park, with plans to convert the former office tower into a boutique hotel property. The previous owners — Murray Hill Properties, headed by Norman Sturner, and private investor David Werner — bought the property for $120.5 million. In 2009, hotelier Ian Schrager, working with Sturner, announced plans to convert the 18-story building into a “sixstar” luxury hotel. But the plan stalled, and the owners sold a $65 million loan to RCG Longview in July 2010. Ivan Hakimian, president of Hakimian Properties and the lone broker on the deal, said Starwood made the most sense as a credible buyer that could close a deal in a prime Manhattan location on time. “I worked on the deal very quietly [and] brought in a few potential buyers,” Hakimian told The Real Deal. “There were people that were a little bit higher on pricing, but we went with the right buyer who was able to close on the deal in a short period of time.” A few months later, in March, Starwood stepped in again to buy another stalled New York City project, this time teaming up with Manhattan-based developer Tribeca Associates. The two spent about $400 million and have plans to build a 120-room hotel and 140,000-square-foot condo project at the former Donnell Library at 20 West 53rd Street. Sternlicht also told The Real Deal that Starwood has become an equity partner with JDS Development and Property Markets Group, the investment company cofounded by Ziel Feldman, in a new $150 million condo project at the former Verizon building at 210 West 18th Street. “We were looking for a partner that had the financial strength to help get us over the line,” said Michael Stern, managing partner at JDS. The residential brokerage Core is scheduled to launch sales at the site in the spring of 2012. John Fox, senior vice president of PKF Consulting, said Starwood has done a good job of strategically posi-

PROFILE tioning itself to take advantage of distressed assets that become available. “Like their competitors, I think they are opportunistic,” Fox said. “When they see the right deal at the right time, they jump.”

From the beginning Starwood’s ascent did not happen by accident. Sternlicht, 50, best known as the wunderkind of the hospitality world,

Starwood quickly began to acquire dozens of residential and hotel properties. In 1994, it bought a firm called Hotel Investors Trust, which it renamed Starwood Lodging. And in 1997, Starwood acquired Westin Hotels and Resorts for $1.7 billion, and ITT Sheraton for a stunning $14.3 billion — a move that was heavily criticized by investors, who said Sternlicht overpaid. Upon the completion of the Westin deal in 1998, the company was renamed Starwood Hotels and Resorts.

obsessed with every detail of the business. And he certainly didn’t want anyone thinking he was playing second fiddle. “This is a very smart guy who knows what he wants, and what he thinks is going to work,” said one industry observer who has worked with Sternlicht. “He won’t hesitate to tell you what he thinks.” The internal battle not only led to Nanula’s departure, but proved to be a sneak preview of Sternlicht’s infighting with other top executives at the company. He later

The firm teamed up with Tribeca Associates to buy the former Donnell Library, with plans for a hotel and condo project.

The Carlyle Hotel

iStar’s Jay Sugarman

The former Verizon building at 210 West 18th Street

launched Starwood Capital 20 years ago after spending much of his formative years working for a Chicago-based real estate firm called JMB Realty. He got pushed out of JMB following the disastrous $425 million acquisition of London-based Randsworth Trust PLC, in which he was the lead analyst in 1989. Soon after leaving, Sternlicht and a group of several other young executives, including iStar’s Jay Sugarman, were managing about $60 million in investments for the Ziff and Burden families, the former of publishing fame and the latter representing one wing of the Vanderbilt family. And by 1991, Sternlicht formed Starwood Capital Group.

Starwood bought 1414 Avenue of the Americas in late January.

Shortly after consolidating the new company, Sternlicht brought in longtime friend and former Harvard Business School classmate Richard Nanula as the new CEO. But the move backfired. According to news accounts at the time, it created internal turmoil at Starwood and ultimately soured their friendship. Some believe Sternlicht was also irked that Nanula, former chief financial officer at Disney, was being portrayed as the company’s top decision maker — a portrait Sternlicht wanted corrected. But Sternlicht disputes that. “That became a convenient myth for the rest of my career,” he told The Real Deal. Still, Sternlicht had developed a reputation as a brilliant yet mercurial executive

Ivan Hakiman

lost a power struggle with the board over his role and the role of former Coca-Cola executive Steven Heyer. Ultimately, Heyer took over as CEO at Starwood Hotels and Sternlicht left in 2005. (Heyer was ousted as CEO in 2007.) After leaving Starwood Hotels, Sternlicht went back to his roots at Starwood Capital. He quickly began acquiring several luxury brands, including the Hôtel de Crillon in Paris and Baccarat Hotels and Resorts. He also started an eco-friendly joint venture with Avalon Hotels called 1 Hotel & Residences. The partners were planning to develop a hotel near Bryant Park on West 40th Street, but the deal fell through. However, the market crash forced Stern-


licht to put his plans to launch these new hotel brands on hold. He is starting to roll out them out overseas now, but his plans for them in the U.S. are still unclear.

Repositioning time Still, Starwood did not stall for long — even once the market turned down. Months after the Lehman Brothers collapse, Sternlicht made several key moves to position Starwood Capital for the eventual recovery of the capital markets. In 2009, Sternlicht issued an initial public offering for a new company called Starwood Property Trust, a real estate finance firm that originates and invests in commercial loans and debt. Also, starting in 2009, Starwood Capital began to raise more than $4.4 billion in a bid to both position itself as a lender of choice and acquire distressed assets. By April 2010, the firm said it raised $2.8 billion through two new funds, the Starwood Global Opportunity Fund VIII, which raised more than $1.8 billion, and the Starwood Capital Global Hospitality Fund II, which raised $965 million. And the company has used that money to make some major acquisitions, including the Corus loan portfolio. While some say Sternlicht paid way too much for the $554 million portfolio (his group paid about 20 percent more than the next-highest bidder), he defends the deal. He says the group has reduced the total number of distressed assets from 101 to about 60, and has only eight foreclosed loans remaining. “It’s done better than we thought, prices are higher than we thought, and the velocity faster than we thought,” Sternlicht told The Real Deal. “I’m really thrilled with the investment. It was a great contrarian play.” Meanwhile, in June 2010, Starwood acquired a 49.9 percent stake in Hersha Hospitality Management, a Philadelphia-based firm that operates more than 70 hotels nationwide. Starwood plans to fuel Hersha’s strategy of acquiring select and full-service hotels in major suburban markets. Hersha has acquired hotels in New York City as well, buying and managing a number of properties built by the McSam Hotel Group under the Holiday Inn, Hampton Inn and other “select service” brands. Continued on page 84 August 2011 53


State says no to quid pro quo

New opinion says brokerages can’t give special treatment to lawyers who feed them title-insurance business BY CATHERINE CURAN law aiming to prevent improper quid pro quos for title insurance agents just got a new set of sharp teeth — causing a furor in the already embattled industry. In late May, the Office of the General Counsel of the state’s Insurance Department issued an opinion about whether it’s legal for a residential brokerage to place lawyers on “recommended” lists, which are distributed to homebuyers, in exchange for those lawyers referring clients to the brokerage’s title insurance affiliate. The answer was a resounding no. The state agency ruled that this kind of quid pro quo is a violation of state law. As a result, brokerages are now prohibited from rewarding lawyers for using their firm’s af-

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Several big New York residential firms now have affiliated title agencies. For example, Manhattan’s Skyline Title is owned and operated by Title Resource Group, which shares a parent company, the massive Realogy Corporation, with NRT, the owner of Corcoran and Citi Habitats. Meanwhile, Prudential Douglas Elliman owns PDE Title, and Westchester brokerage Houlihan Lawrence partnered with Electronic Land Services to form Thoroughbred Title Services in 2009. During the boom of the mid-2000s, these brokerages began to see title affiliates as a chance to make additional revenue. Plus, they felt they could effectively market title insurance to their existing clientele. Real estate firms “did the math and saw they could make money on this venture,”

“These inside, preferred deals have hindered our market for years, and the end result was a poor system that often closed an eye to title issues and conflicts of interest.” Luigi Rosabianca, attorney

filiated title agency, or “punishing” those who don’t by removing them from recommended lists. (Until now, industry sources say that lawyers who failed to refer back business to the firms were often nixed from these lists.) Those who violate the law will now be slapped with a $1,000 fine or five times the amount of the financial inducement, whichever is larger. While the law has been on the books since the 1970s, this new opinion interpreting it is expected to have far-reaching consequences for the industry, which has seen more and more title insurance companies partner with real estate firms in recent years. “These inside, preferred deals have hindered our market for years, and the end result was a poor system that often closed an eye to title issues and conflicts of interest,” said attorney Luigi Rosabianca, general counsel to the independent Manhattan title-insurance provider Loranca Settlement Services Corp. Title insurance executives, especially those not affiliated with brokerage firms, said the change will level the playing field. The new rules “will take away the slightly unfair advantage [brokerages with affiliated title insurance companies] had to influence where title insurance was purchased,” said Marc Lawrence, a principal and senior managing director at independent title insurance firm American Land Services. 54 August 2011

said Lawrence. Smaller, independent title insurance companies, by contrast, typically get referrals from other real estate professionals such as attorneys, mortgage bankers or mortgage brokers. As affiliated businesses became more common, the question of referrals between them turned into a hot topic. But it’s recently reached a boiling point, as the slump in residential sales has sharpened competition for title insurance fees. It’s legal for brokerages to refer customers to their affiliated title agents, as long as the title agency also gets a significant portion of its business from several other sources. Still, discomfort with “recommended lists” has been growing for years among attorneys, who have ethical concerns about being pressured to use certain title agents in exchange for being on the lists, according to Denise Ward, president of the Mamaroneck-Harrison-Larchmont Bar Association. In the last few years, members have approached her about the issue with increasing frequency, Ward said, noting that conditional referrals are a violation of the federal consumer protection law called the Real Estate Settlement Procedures Act. Lawyers also worried about being sued for malpractice, which could happen if an attorney uses Continued on page 80

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Timing New York’s timeshares While some say the tiny market for shared apartments will expand, others say they’re too costly to develop and have high foreclosure rates BY ADAM FUSFELD or all the unconventional housing arrangements people devise to afford living in New York City, the timeshare, historically, has not been one of them. There are just two timeshare-only buildings in all of Manhattan. And, at first blush, the owners of those timeshares — at the 161-unit Hilton Grand Vacations Club on West 57th Street and the 300-unit Manhattan Club on West 56th Street — appear to be struggling. Since opening in 2009, the Hilton Grand has seen 52 lis pendens, or pre-foreclosure filings, and six foreclosures among its timeshare owners. Meanwhile, the Manhattan Club has witnessed 17 lis pendens and 22 foreclosures since 2007, according to real estate data website PropertyShark. If you include data from Manhattan’s other big block of timeshares — 72 units on the top two floors of 1335 Sixth Avenue, which share the building with the Hilton Club hotel — the totals balloon to 285 total lis pendens and 108 total foreclosures spread over a pool of 533 units. (There are other scattered timeshare units throughout the city, but no comprehensive list of those units is publicly available). With all of that distress, it might appear obvious why no developer has swooped in to expand Manhattan’s very small timeshare market. But those first-glance numbers don’t tell the whole story. Firstly, timeshares can be expensive, meaning they may only appeal to a small group of buyers. The average cost of a week at the Hilton Grand is between $40,000 and $60,000, according to Michael Brown, executive vice president of sales and marketing for Hilton’s U.S. Division; he noted that the price can climb to $165,000 for a high-demand week such as Christmas in New York. Also, the sponsors often act as lenders to buyers in need of financing , and the money doesn’t come cheap. Buyers often put 20 percent down, just as many apartment buyers do, although they face higher interest rates. According to Mark Eble, a senior vice president at hospitality advisory firm PKF Consulting, a 15 percent interest rate is standard nationally for such loans. And buyers are limited in when they can use units. Owners pay for the right to a week in a specific unit type (most commonly a studio or a one-bedroom) — during a specified season, but they’re not guaranteed the same unit each time. So, each unit can be sold to upward of 50 shareholders. (Generally, one to two weeks are left unbooked, so that the unit can undergo maintenance.) Under this structure, if one of a unit’s owners defaults, it’s not necessarily bad news for the building owner. The building


56 August 2011

owner simply puts the unit back on the market, and ultimately generates even more revenue because another buyer means another down payment. One obstacle developers face is marketing costs, especially in an economic environment like this. Unlike typical condo sales, where just one buyer is needed per unit, it can take years to completely sell out even a single timeshare unit. “Twenty to 30 percent of the cost of time-

The two most recently developed timeshare properties in Manhattan are owned by Hilton Worldwide. In 2002, the company converted the top two floors of 1335 Sixth from hotel rooms into timeshares. Those

The Hilton Club at 1335 Sixth Avenue

The Hilton Grand Vacations Club on West 57th Street

Manhattan Club developer Bruce Eichner

The Manhattan Club at 200 West 56th Street

shares is derived from marketing and sales,” Eble estimated. Given that lengthy sell-out process, it’s easy to see why timeshares have been far less popular with developers than hotels. (There’s also the fact that as far as consumers are concerned, hotels have more brand recognition, and that timeshares haven’t fully shaken off the idea that they’re somehow fraudulent — a reputation they earned when they first became popular in the 1950s, Eble said.)

Mark Eble of PKF Consulting

timeshares sold out, and in the wake of its success, Hilton introduced the 57th Street ground-up timeshare in 2009. Brown said the former has 3,100 owners (some owners take more than one week), while the latter is “ahead of projections,” as nearly 75 percent of its inventory is sold.

According to Brown, less than 4 percent of the owners of the New York properties are in some stage of foreclosure (though that is much higher than Manhattan’s overall residential foreclosure rate). There are those who doubt whether Manhattan will see more timeshare development in the future. Skeptics include Bruce Eichner, who developed the Manhattan Club, which debuted as the first New York timeshare in 1997. “I don’t believe the Manhattan timeshares have made any money for Hilton whatsoever,” said Eichner, chairman of Continuum Construction, which still manages the Manhattan Club. “It has to be a loser.” But Brown called the project a “success,” noting that owner occupancy has been high, and said Hilton is interested in “future projects in Manhattan.” “Since sales of West 57th Street began, we’ve been attracting owners who return to New York City several times a year,” he said. Eichner said he believes Hilton converted part of 1335 Sixth, and eventually built the second Hilton Club, for the benefit of its internal timeshare exchange program, which allows owners to trade their week in, say, Disney World, for a corresponding week sightseeing in the Big Apple. “New York has the highest ‘trading power’ of any timeshare market in our system,” said Gordon Gurnik, president of Resort Condominiums International, which first developed the exchange concept in the 1970s and currently has 3.5 million members. According to RCI — which is not affiliated with any Manhattan timeshares, but has a system that allows customers to find timeshares here — New York is the most coveted destination. “There’s more demand than our system can handle, so we book hotels to accommodate some of our customers,” Gurnik added. Brown agreed that New York “is in high demand,” and said that one aspect of Hilton’s decision to build in New York was its internal exchange program. While he wouldn’t comment on the building’s financials, he argued that if the converted part of 1335 Sixth wasn’t successful, “we wouldn’t have built the 57th Street timeshare.” But according to Eichner, “you simply cannot make any money under the current market conditions in New York.” But Eichner claimed he earned four to five times his investment in the Manhattan Club back in the 1990s. When he bought the building at 200 West 56th Street in 1997, he paid $100,000 per room in acquisition and renovation costs. Now the building has 15,000 owners, some of Continued on page 80


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Is One 57 the new 30 Rock?

Even partially complete, the Portzamparc-designed tower represents a breathtaking change to the Central Park South skyline Rem Koolhaas, and before there was Lord Parc de la Villette in Paris, as well as the BY JAMES GARDNER hat signature skyline of Central Park Foster and Lord Rogers or Shigeru Ban headquarters of the newspaper Le Monde South, one of the most illustrious and and Herzon & DeMeuron, the 65-year-old in that city. iconic in the city, is about to change Portzamparc — who won the coveted PritzAs for One 57, even in its state of parmore fundamentally and definitively than ker Prize in 1994 — had created the much- tial completion, one senses a feeling of imit has in well over a generation. admired Louis Vuitton headquarters build- mense consequence. Much, but not all, of Long before it has topped out, One 57, ing, known as the LVMH Building, three this is attributable to the enormous breadth the goliath designed by Christian de Portz- blocks east of his newest venture, at 19 East and height that the building is destined to amparc at 157 West 57th Street, is a thing 57th Street. Whatever the ultimate mer- attain. But more than that, it has to do with of pharaonic immensity that will be, the sense that hisat 90 stories, the tallest residential tory is being made tower in the city. It will even dwarf — and that, quite aside from the Trump World Tower, which stands at a puny 72 stories, and 8 Spruce Street, which at 76 stories is currently the tallest residential tower in the city. The new building, formerly known as Carnegie 57, will contain 135 residential units, designed by Thomas Juul-Hansen, and will rise above a 210-room Park Hyatt Hotel. A project of the Extell Development Company, One 57 has not yet risen so high as to be visible from the park or the Upper East or West sides. But when it does — in a matter of months, if not weeks — the skyline looking toward Central Park South will be changed in one of two ways. Either it will remain at its present height, with the exception of this one vastly larger protuberance, or this new intervention will ignite another race to the skies. The last time we saw anything like this was when Rockefeller Center’s GE Building, also known as 30 Rock, was erected in the early 1930s. While that building — which was formerly known as the RCA Building and which was designed by a team led by Raymond Hood — stands near skyline of Central 50th Street, it nevertheless protruded Park South, West in isolation above the skyline of Central Park South several blocks away for 57th Street itself nearly a generation. It was later joined will never be the A rendering of the Extell-developed tower, which will include a Park Hyatt Hotel along with by the Carson & Lundin-designed 666 same. residential condos. Top inset: The building under construction. Bottom inset: Architect Fifth Avenue in 1957; the Skidmore Christian de Portzamparc. To judge from Owings and Merrill-designed 9 West the renderings, the 57th Street in 1974, and the Cesar Pelli-de- its of that 23-story building, completed in building will consist of two main and ansigned Carnegie Hall Tower in 1991. 1999, it has proven to be one of the most tithetical façades, one showing its face to But based on the renderings released influential in the recent history of Manhat- the park, the other to the south. The main by Portzamparc’s office, this new tower, tan architecture. Its Deconstructivist idiom one, to the south, consists of a billowing whose considerable breadth is minimized — which was new to the city at the time cascade of wavelets that course down its only by its great height, will drastically — introduced a vocabulary which gave rise surface. They achieve — or at least aspire change the calculus of Central Park South to One Bryant Park (the recently completed to — something like contextualism, in that once again. Not only will it set a new bar Bank of America Building) as well as Kohn they most closely resemble the detailing on for size, but it will also change the area’s Pedersen Fox’s 505 Fifth Avenue and Dan- such monuments of the Art Deco style as design vocabulary. iel Libeskind’s initial design of the under- Irwin Chanin’s the Majestic at 115 Central Park West, or his Century Building, a few Portzamparc is one of the more illus- construction One World Trade Center. Among the other projects Portzamparc blocks to the south. trious starchitects to build in Manhattan. Indeed, before there was Frank Gehry and designed are the Cité de la Musique in the The allusions to Art Deco are surely cal-


58 August 2011

culated to promote associations with what was the golden age of the New York skyscraper. (Many more skyscrapers went up in the ’50s and ’60s than in the ’30s, but in the postwar era, they had become sordid, boring and routine.) Portzamparc hopes to restore some of the poetry and wonderment that was once associated with this building typology, to de-banalize the concept of skyscrapers. It’s too early to tell if he’ll succeed (the building is not scheduled to be completed for another two years), but there is reason to be optimistic. Most skyscrapers built in New York in the past two generations have been surprisingly self-effacing. If they appeared big, that was because they probably were big — but the design of the towers was intended to neutralize, as much as possible, any sense of scale. Size was not part of their poetry, as it had originally been with skyscrapers, and as it continued to be in the Woolworth Building, as well as the Chrysler and Empire State buildings. Yet in conceiving his latest project, clearly Portzamparc had size uppermost in his mind. The sharp, coursing lines that shoot vertically up the southern façade of One 57 were clearly meant to enhance the sense of height (as though 90 stories were not sufficient by itself ), while the breadth of the building promises to suggest the impressive presence of the Empire State Building. And so, even in its state of partial completion, there is a breathtaking drama in the very terms of One 57, which will doubtless seem flattering to the vanities of the plutocrats being invited to purchase an apartment. (Units will start at $5 million and go up to $30 million.) Worth noting is that the design of the northern side of the building is very different from that of the south. In the tower facing the park, the glazing to the east and west settles into a familiar and sheer curtain wall enlivened by parti-colored windowpanes set in a syncopated rhythm such as we last saw in Bernard Tschumi’s Blue building on the Lower East Side. Facing north, however, it creates an illusion — despite its being attached to the larger building behind it — of a nearly freestanding tower of almost inconceivable thinness. Here, again, the strong vertical thrust of the lines serves to underscore, even exaggerate, One 57’s all-important sense of height. The ultimate success of this development cannot be known until it can be seen fully, in the flesh. What seems likely, however, is that for the first time in decades, pedestrians will soon look up at it and be astounded by its immensity. TRD


Looking for new loopholes To bypass banks, some attorneys add

Cooper, Robertson & Partners

questionable riders to sales contracts

Architecture, Interiors, Urban Design

BY SARAH GROSS the real price is lower once concessions are n order to complete real estate trans- factored in. actions in New York’s still-tough lendSome consider this practice ethically ing climate, some lawyers are turning dubious, since future buyers and appraisto creative loopholes that have them oper- ers rely on publicly recorded sales prices ating in an ethical gray area, industry in- for comparables, but it is legal as long as siders say. both the co-op board and the lender know Boilerplate contracts — once the norm in about it. residential transactions — have been scarce But sources say that lawyers and brokers for several years now as lawyers come up are now more likely to push the boundaries even further. In order to alwith deals “tailored” to the spe“The cific needs of buyers and sellers. low sellers to give larger con[lending] But some lawyers are now going cessions, they are leaving some even further to avoid strict lendcredits and concessions out of rules are ing rules, adding contract riders official mortgage docutough, but the that are not submitted to banks. ments (including the HUD-1 the agents Settlement Statement, a docuOther buyers and sellers simply make private side agreements and brokers ment that lists all closing costs that are not mentioned in any of who want and gives each party a complete the closing documents. list of their incoming and out“People often do this as a to survive … going funds) and instead listway to encourage lenders to ing them in riders that banks do try all lend more money than they ordon’t see. sorts dinarily would have,” said Aaron “Lenders would have a of things.” problem with [these concesShmulewitz, an attorney at BelAttorney kin Burden Wenig & Goldman sions], especially if it affects the who has represented more than Nathan Erlich consideration being paid,” said 250 cooperative and condominattorney John Serpico. Noneium boards in New York. “It theless, “parties make all kinds gets close to bank fraud someof agreements all the time that times.” [are] not necessarily in the For example, the value of concesmain contract.” sions that sellers can throw in to Lenders, for obvious sweeten the deal for buyers is limited reasons, frown on this pracby Fannie Mae, Freddie Mac and the tice. Federal Housing Administration, the “If they throw in something even as a entities that insure most home loans in the U.S. For FHA loans, the value of these credit, it must be done concessions — from drapes and furniture properly and declared on the HUD and reto prepaid maintenance — cannot exceed flected on the contract 6 percent of the sale price. For Fannie and Freddie, the amount ranges of sale,” said Nathan Erlich, from 3 percent to 9 percent, dea lawyer who has long reprepending on how much the buyer sented lenders like HSBC and puts down. said he has not seen the practice But in today’s difficult marfirsthand. “[If ] they put it in a rider and they don’t declare it to ket, sellers anxious to unload the bank, that’s called fraud.” their property often want to In all-cash transactions, there is give more. In many cases, they no limit to seller’s concessions, so atfeel they can’t simply slash the purchase price, because banks will torneys have more freedom for creative decrease the loan amount and co-op boards deal-making. By contrast, lenders often won’t accept deals they fear will devalue the view concessions as “trying to dupe them building. into lending you more money,” explained Lawyers and brokers have devised Sandy Schwartz of Manhattan law firm ways to skirt these obstacles. As the web- Schwartz, Levine and Kaplan. “It smells a site reported, one lot worse if there’s a bank involved.” such way is to state a sales price on the conAnd when the buyer is paying in cash, tract that is higher than what the buyer co-op boards can pose challenges to conceshas actually agreed to pay. Then, the sell- sion-giving. Buyers and sellers are technier agrees to refund a chunk of the money cally supposed to inform the co-op board of back to the buyer at closing. The contract any concessions, but most don’t, for fear of price is recorded by the city, even though Continued on page 84

Photo: Peter Murdock


212.247.1717 60 August 2011


The ‘Situation’ at the Jersey Shore Snooki and friends may be embarrassing for real estate pros in Garden State beach towns, but the market there is stabilizing

BY MELISSA DEHNCKE-MCGILL nooki and the Situation may be embarrassing longtime Jersey Shore homeowners and renters with their hit MTV show “Jersey Shore,” but real estate professionals say the program’s notoriously trashy antics haven’t taken the market down with it. This month, The Real Deal talked to brokers and analysts who follow the Garden State’s beach towns, from Belmar to Long Beach Island, to find out how their season has been shaping up. They told us that the market is stabilizing — even if a full bottoming might be as far off as 2013. While sales volume is still running at two-thirds of its historic average in the so-called anti-Hamptons, it is up from last year’s all-time lows, one source said. The source also added that while there are bigger discounts to be had on the Jersey Shore than in New


Jeffrey Otteau

president, Otteau Valuation Group Inc. Some real estate experts have said they don’t expect the overall New Jersey market to reach a bottom until 2013. How is the residential market doing at the Jersey Shore in terms of sales volume compared to the last few years and last year in particular? While the market continues to struggle, there are increasing signs that stabilization has begun. We expect the “bottom” to be anywhere between the third quarter of 2011 and the second quarter of 2013. But the Jersey Shore market is performing at a weaker pace than the

Kevin Gillen

research fellow, University of Pennsylvania’s Institute for Urban Research How is the residential market doing at the Jersey Shore in terms of sales volume compared to the last few years? Sales are currently running at about two-thirds of their historic average, but they are up from the all-time low they hit in early 2010, and rising. What kinds of discounts are buyers getting off listing prices? They can get bigger discounts there than they can in New York or Philly, but it’s still

Just think about it: If you were looking to spend more time at the beach with your kids and grandkids, and were being asked to plunk down $450,000 for a home that had Snooki and the Situation as your neighbors, would you be more or less likely to buy it? Kevin Gillen, University of Pennsylvania’s Institute for Urban Research

overall market — with 18 months of unsold inventory compared to 12 months statewide. How much are residential prices off at the Jersey Shore since the boom? Home prices overall are off in New Jersey by an average 22 percent, which holds true at the shore area as well. Which Jersey Shore areas are struggling most? The hardest-hit market over the past few years has been Cape May County, where price declines in places like North Wildwood have exceeded 40 percent from the peak. 62 August 2011

not Florida or Nevada, where they’re practically giving homes away. How much are prices off since the boom? They are down an average of 32 percent from their boom-level peak, but there is significant variation across different communities and locations. Which price segment of the Jersey Shore market are you seeing perform best right now for both rentals and sales? The data indicate that there are bigger discounts to be had for the new construction segment of the market than for older, existing homes. There have been auctions of new condos in an attempt to move inven-

York or Philadelphia, “it’s still not Florida or Nevada, where they’re practically giving away homes.” And, of course, the choppiness in the market varies by both town and price range. Most said the higher-end market was faring better, but some said the sweet spot has been the middle of the market, from $800,000 to $1.2 million. Analysts also noted that new construction homes and condos have been struggling the most, partly because the home-building industry is dominated by local builders who “don’t have the financial resources to carry a large inventory of vacant homes.” A bright spot, many agree, has been the rental market, which has seen more activity earlier in the season this year. For more on which towns are doing best and worst, what kind of distress exists in the market, and how negotiable buyers and sellers are, we turn to our panel of experts.

tory. And, since the home-building industry at the shore is dominated by familyowned local builders, these guys typically don’t have the financial resources to carry a large inventory of vacant homes the way the big, national home builders do, so they can be more motivated to sell. That said, even with these discounts, prices for new homes still remain well above those of existing homes. Is there still a lot of distress, or has that worked its way out of the market already? The southern half of the Jersey Shore seems to have emerged from the foreclosure crisis, whereas the middle region is still struggling. According to RealtyTrac, the foreclosure rate of Ocean County is well above that of both nearby Atlantic and Cape May counties, and even New Jersey as a whole. Which Jersey Shore towns and areas are performing best? Pricier towns have held up better than less expensive places for two reasons: There is a flight to quality during times of economic distress, and wealthier owners and buyers are better equipped to weather an economic downturn. The very wealthy are taking advantage of this market to acquire upper-end homes at a discount, plus they can pay cash and avoid the hassles of financing. Which segments of the Jersey Shore market are struggling the most? The middle segment of the market is having the biggest problems meeting the down payment requirements and qualifying for financing. While prices are down the most in the less affluent towns, I think the segment that is struggling the most is new construction targeted for middle-income homebuyers, regardless of location. The buyers just aren’t there in the numbers they used to be. However, if you do have the resources to commission a new home or even remodel/expand your

existing home, there is no better time to do it than right now. The housing downturn has left a lot of architects, designers and contractors looking for work, and deals can be made. How has the “Jersey Shore” TV show impacted real estate in the area, for better or for worse? It has helped draw more young people looking to have a good time to visit communities like Atlantic City or Wildwood. This may help the local economy in general, but I don’t know that this necessarily helps the housing market. Most of the year-round locals resent the stereotypes about New Jersey that the actors seem hell-bent on perpetuating. Most Shore homebuyers are middle-aged or older. Just think about it: If you were looking to spend more time at the beach with your kids and grandkids, and were being asked to plunk down $450,000 for a home that had Snooki and the Situation as your neighbors, would you be more or less likely to buy it?

Lee Childers

owner/broker, Childers Sotheby’s International Realty How is the residential market doing at the Jersey Shore right now? We do the Jersey Shore from Point Pleasant to Island Beach State Park and prices have held up very well here, much better than any area in New Jersey. Our sales volume is excellent and we are having one of our best years ever — that includes 2005, which is probably the highest volume we’ve had. You might say, “How can that be in a soft market?” If the sellers listen and go with realistic pricing, there are buyers. If they try to get 2007 prices, there are no buyers. The bubble that burst

Q&A was pricked, it is slowly deflating, and we are either at or near the bottom, but that doesn’t mean it is going to go up 20 percent in the next six months. How much are prices off since the boom? I think somewhere in the 15 to 20 percent range. How is the rental season at the Jersey Shore doing this season? Did homeowners struggle to find renters or vice versa? For the first time in years I can tell you that it’s up. We’ve done more rentals [this year] than in the last three years. … During the boom, homeowners were pulling their homes off the market because they didn’t need to rent. Now we have a difficult economy, so many people have put their houses up for rent to help their income. … We have the inventory to rent and the people who want to rent. What about rental prices? Were homeowners negotiable on pricing? If they demand too much money it goes unrented. The ones that are negotiable get rented. Which Jersey Shore price ranges and areas are performing best and worst? The real sweet spot seems to be $800,000 to $1.2 million, which for us is the middle. As far as rents go, that would be the midrange of $2,500 to $5,000 a week. For Normandy Beach and the surrounding communities, it’s a terrific year for sales. Lavallette is another excellent one. Seaside Heights is struggling. I think they overbuilt condos there on the low end. The top high end and one of the highest [markets] in New Jersey is the Mantoloking market and Bay Head, sister towns next to one another. There have been a couple of sales over $4 million, but it’s not like it was. The last time I checked there were 28 homes for sale in Bay Head, which is twice as many as a normal year. What are you seeing on the high end in general? We certainly have had some high-end sales. We had a $6 million sale, but that’s the exception more than the rule. We had a $120,000 season rental, but that’s also the exception. On the higher end, which in the sales market is $3 million and up, we have only had a handful of sales. In the rental market, $12,000 a week and up is generally a soft spot. Who are the primary second-home buyers in the market today? A typical buyer lives in Northern New Jersey, works in Manhattan, is doing well and wants to vacation at the shore. But it could also be a blue-collar plumber from Hoboken or Bayonne that’s doing well and can afford something here. … The Greatest Generation — the wealthiest generation in history — is dying off and leaving unprecedented wealth

to their children, the Baby Boomers. Even in modest estates people are coming into hundreds of thousands of dollars or millions of dollars, so many people are paying $1.2 million cash for a second home. How has the “Jersey Shore” TV show impacted real estate in the area, for better or for worse? That Jersey Shore-type subculture is a very small segment, but it’s definitely there. As far as what it’s done to real estate — I don’t think it has affected the areas around [where it tapes]. But in Seaside Heights proper, I’m concerned. I’ve heard that it’s getting more out of hand. It used to be a family place and it isn’t anymore. I don’t think Seaside Heights likes it. It gets publicity, but I don’t know that it’s the type of publicity it wants.

Diane Turton

owner/broker, Diane Turton Realtors How is the residential market doing at the Jersey Shore? The market here in Monmouth and Ocean counties is showing some signs of vibrancy, but it’s hard to predict. While we saw some real improvement in 2010, in large part due to the first-time homebuyer stimulus, we saw the volume drop off again this spring. Continuing uncertainty in the job market and worldwide economies keep those cautious buyers from moving forward. How much are prices off since the boom? In many areas it’s 30 percent below peak. How is the rental season at the Jersey Shore doing this year? Rentals are pretty stable. The nicer properties that are closer to the beach are generally gone, but we still have availabilities. What’s going on with rental pricing? Are homeowners negotiable? We are again negotiating prices. Tenants that booked early may have paid full price, but they got the first choice of properties. Tenants booking now are getting better prices, but have to take the time frames that are left. Which price segment of the Jersey Shore market are you seeing perform best right now? In many areas the mid- to high end has been hit the hardest. Our Lavallette office reports $750,000 to $1 million is the worst. Rentals are just the opposite. The lowerpriced, smaller units are not as popular. How has the “Jersey Shore” TV show impacted real estate in the area? I don’t think sales have been affected at all. As far as rentals are concerned, many younger people are looking to rent in Sea-

side to be part of the scene. I do hope that the world knows we have much more wholesome lifestyles to offer than are depicted on the show.

David Cowles

realtor, Prudential Zack Shore Properties How is the residential market doing on Long Beach Island, your coverage area? We have already reached the bottom, more or less. There could be a slight downside continuing in the market, but if so, nothing traumatic. How is Long Beach Island’s rental market doing this season? The rental business on Long Beach Island has been amazingly consistent in terms of the demand. It really doesn’t fluctuate very much like the sales market does. But this year we have actually seen a pretty significant increase in business compared to last year. … Normally most of the rentals were booked by March 1 or the end of March. In the last three or four years there was plenty of availability and we had a lot of rentals as late as May, June or even into July. This year more rental properties booked earlier in the year. The number of leases is up about 40 percent from last year. Our total dollars are up in the neighborhood of 40 percent as well. So it is the healthiest rental market we have had in the last few years. What’s going on with rental pricing? Have owners been negotiable or have they held the line? They held the line a little more this year, and that is evidenced by the fact that there were fewer rentals available late in the season. Usually if you have rental properties with a couple of weeks unrented and it’s June, that’s the time that homeowners will negotiate. There has been less of that this year. How has the “Jersey Shore” TV show impacted real estate in the area? It doesn’t have an effect on us at all. Personally, as a native New Jerseyan and a lifelong Long Beach Islander, it’s embarrassing, but it doesn’t affect us on the island.

PJ Rotchford

broker/manager, Rumson office, Gloria Nilson Realtors What kinds of discounts are buyers getting off listing prices? The market at the Jersey Shore is clearly still considered a buyer’s market. But an appropriately priced home can still sell within days. And in fact, bidding wars are

not out of the question. However, many of the homes currently on the market are in need of price adjustments. How much are prices off since the boom? Unlike the traditional communities of the Jersey Shore, in our market on the northern tip of the shore, 95 percent of residents are year-round homeowners. From our record highs during 2005, we have seen a price decrease of approximately 23 percent. Which price segment of the Jersey Shore market are you seeing perform best right now? The high-end market within Rumson itself — very much driven by the Wall Street market — has performed exceptionally well this year. In fact, we set a new record this year with a sale of $12 million. New construction, mainly due to its limited supply at this time, has also done very well.

Judy Appleby

owner/broker, Appleby Realty; 2010 President of NJAR How is the residential market doing at the Jersey Shore right now? In our area we have one large MLS that covers Monmouth and Ocean counties, a good portion of the Jersey Shore. In May, the median sales price for the shore and inland year-round communities had dipped $7,000 in the last year. Looking at the whole MLS, we have about 25 less sales overall than last year at this time, which is not a big dip. Last year we had a pretty decent spring season, and this year the same thing occurred. In my area there are still properties for sale, but a lot of those are priced by people who can’t get over 2006 sale prices. Is it still a buyer’s market? Yes, it is absolutely a buyer’s market. That’s the name of the game. Which price segment of the market is struggling most right now? We really don’t have a lot of properties that rent for more than $6,000 a week. If there were some for $8,000 a week, those would be struggling, but I don’t have any of those. Older homes need certain amenities. People want air-conditioning, laundry, TV and Internet. If houses don’t have those amenities, those houses will go for a lot less. How has the “Jersey Shore” TV show impacted real estate? I don’t know that it has impacted it. I had a car pull up next to me at the bank and two women asked, “How do we get to Karma?” That’s the nightclub that the group goes to. They just wanted to see it and take a picture. It certainly hasn’t impacted real estate; it’s not reality and they aren’t even from here. TRD August 2011 63


The Hascoe estate

Waterfront mansion sells for record price The Greenwich estate of late husband-and-wife entrepreneurs Norman and Suzanne Hascoe has sold for $39.5 million, the Hartford Courant reported last month. The price is the highest ever paid for waterfront property in the ritzy suburb, and the sale is the most expensive in Greenwich since 2004. The mansion, known as Point of View, sits on 4.2 acres, with 340 feet of frontage on the Long Island Sound.

Industry experts say the sale indicates that the luxury home market in Greenwich is reviving, after the downturn dampened home sales through the state for several years. The deal “aligns with what we’re experiencing in Greenwich, which is that high-end buyers are return-

ing to the market, and are acting on special opportunities such as the Hascoe family estate,” said Kathy Korte, president and chief executive of Sotheby’s International Realty, which listed the property. For example, Mel Gibson’s 16,000-square-foot Greenwich mansion, initially listed in 2007 for $39.5 million, sat on the market for years before selling in 2010 for $24 million. By contrast, the Hascoe estate hit the market in October, and closed less than a year later, on June 30.


Office vacancies up The market for office space in Westchester County is struggling as corporations abandon the suburbs for Manhattan and other cities, the Wall Street Journal reported. Due to a spike in gas prices and a weak economy, companies like Bank of New York and Citibank have closed some of their Westchester locations, according to the Journal. More than a dozen buildings in large office parks

along I-287 are now at least partially vacant, and the overall vacancy rate in Westchester County is 17.9 percent, compared to 10.7 percent in Manhattan, according to data from real estate research firm Reis Inc. Prices have suffered as a result. Prime office space now rents for approximately $25 to $28 per square foot in Westchester, compared to $60 to $80 in Midtown Manhattan, the Journal said. De-

450 Mamaroneck Avenue

veloper Robert Weisz recently paid $7.2 million for the empty 180,000-square-foot building at 450 Mamaroneck Avenue, previously occupied by Citigroup. Four years ago, he paid more than twice as much for a nearby building. In response, a group of Westchester firms is attempting to raise $3 million to fund a marketing campaign to attract companies to the area. Many owners are boosting the office parks’ appeal with amenities like shuttle services from the train station, jogging trails, car washes and dry-cleaning services.


Garden State tackles foreclosure scams A bill to regulate “foreclosure rescue” fraud has overwhelmingly passed both the New Jersey State Assembly and Senate. Gov. Chris Christie has 45 days to review its contents before taking action, according to the Newark Star-Ledger. The “Foreclosure Rescue Fraud Prevention Act” aims to prevent scams in which companies promise to help distressed borrowers keep their homes, but then enrich themselves at their clients’ expense. Last year, New Jersey State Attorney General Paula Dow obtained $17 million in legal settlements through rescue-fraud prosecutions. The bill, first introduced four years ago by Assemblyman Gary Schaer, would require foreclosure consultants to obtain a license and post a bond with the Department of Banking and Insurance before conducting business in the state. Compiled by Omari Allen 64 August 2011

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NATIONAL MARKET REPORT Commercial and residential real estate news briefs from around the U.S.

The Seattle skyline

Miami Nearly a third of Florida’s homebuyers are international purchasers, up from 10 percent in 2007, according to a survey by the National Association of Realtors. “International buyers have been the fuel for the Miami recovery,” Ronald Shuffield, president of Esslinger-Wooten-Maxwell Realtors in Coral Gables, told USA Today. In fact, sales volume is so high in the Miami region that house and condominium sales this year may outpace 2005, said Shuffield, who estimated that 40 percent of buyers in the area are from outside the U.S., up from around 35 percent before the recession. In downtown Miami, the percentage of foreign buyers is even higher, he said. Most buyers are investors from South America picking up condos to rent out, said Peter Zalewski of market researcher Condo Vultures.

San Francisco

Seattle Real estate professionals believe the Seattle housing market has finally stopped declining, the Seattle Post Intelligencer reported. “It feels like we have hit the bottom,” said Lennox Scott, chairman and chief executive officer of John L. Scott Real Estate. “Buyer confidence has definitely returned.” Sales in King County rose 0.6 percent in June from the same period of 2010, and increased 12 percent from May, the paper reported. Meanwhile, pending sales were up 35.6 percent from a year earlier, but down 3.4 percent from May. The median sales price for a Seattle home was $345,000, down 8.2 percent from May and 4.7 percent from the prior year.

and ambition,” university president James plan also calls for up to 10,000 units of Doti said. “I like to think those are the same student housing and 600,000 square feet characteristics we have here at Chapman.” of retail space along Maryland Parkway The initial reorganization plan, filed in May, called for the sale of the property for $46 million to Orange County-based developer Greenlaw Partners, which would transform segments of the property into apartment complexes. The Roman Catholic Diocese of Orange said it was also considering buying the property. Ed Roski Jr.

Washington, D.C.

Morgan Stanley Real Estate Investing and the homebuilder NVR teamed up to acquire a portfolio of 5,600 residential building lots in nine separate Washington-area Chapman University has offered to pay $46 communities, according to the Washington million for the site of bankrupt Crystal Ca- Business Journal. “The purchase provides thedral, the Los Angeles Times reported. our partnership with a sizable portfolio of Chapman would use the 40-acre site as a well-located residential lots in the Washsatellite campus, according to the Times. ington, D.C., area, one of the strongest and The proposal would allow the landmark more supply-constrained residential marProtestant church, which filed for bank- kets in the United States,” said John Klopp, ruptcy last October, to lease back its build- co-CEO of Morgan Stanley Real Estate Inings and repay debts sooner than a previous vesting. Financial terms of the deal and specifics about the locations were Crystal Cathedral not disclosed. NVR, which builds in 25 metropolitan areas but concentrates mostly on Washington and Baltimore, reported a net income of $15.2 million for the first quarter.

Los Angeles

Las Vegas

exit plan put forward a few months ago, the Times said. The church is about $50 million in debt to creditors. “The offer is consistent with the Crystal Cathedral’s vision of hope 66 August 2011

Despite the legislative failure of financing for the project, developers are forging ahead with plans to build a new stadium for the University of Nevada, Las Vegas, according to the Las Vegas Sun. California developer Ed Roski Jr. and his Las Vegas-based partner, Craig Cavileer, are planning a $600 million expandable stadium designed by Dan Meis, the architect behind Los Angeles’ Staples Center. The

and Tropicana Avenue. A bill that would have allowed local developers to compete for public financing of arena projects lost momentum in the final hours of the legislative session, the Sun said. Cavileer has reportedly spoken with Goldman Sachs about raising debt financing to fund the project.

Boston The Abbey Group, a Boston-based developer, has unveiled plans to replace a former McDonald’s at 1282 Boylston Street with a 16-story multi-use development, the Boston Globe reported. Abbey acquired the Fenway Park-area site two years ago, and plans to start development next year. The complex will include 210 apartments, as well as office and retail space, and will leave room for outdoor cafés and a courtyard. “We’re trying to create a building that fits with the urban village objective and really targets a multigenerational group of people,” said David Epstein, president of the Abbey Group. The neighborhood around Fenway Park, once populated by gas stations and fast-food outlets, is increasingly occupied by stylish restaurants and clubs, the Globe said.

Vornado Realty Trust is close to securing a loan on its 52-story tower at 555 California Street, according to Bloomberg News. Lenders Pacific Life Insurance and MetLife are on track to win the assignment, beating out Wall Street banks competing to package the loan for sale. The 1.5 million-squarefoot tower, home to Bank of America’s San Francisco headquarters, was built in 1969 and featured in the 1974 film “Towering Inferno,” starring Steve McQueen. It is the fifth-tallest building on the West Coast, according to data from Emporis. Banks have been competing for loans on top-tier buildings to bundle into bonds, Bloomberg said. “We’re going to focus on high-quality assets,” said Robert Merck, senior managing director and head of retail investments at MetLife. “There’s a real difference between the core primary markets like New York, D.C., San Francisco, L A.,” and properties in other cities. Virtually every big Wall Street bank was competing for the loan on this particular building, said Wendy Silverstein, executive vice president at Vornado. They were willing to lend close to $650 million against the building, which is valued at around $1 billion, she said. Compiled by Katherine Clarke 555 California Street

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Commercial properties recently placed on the market UES rental building could fetch $220 million

Queens industrial property asking $39 million

Package of 145 Bronx co-op units for sale

A prewar Upper East Side rental building that hit the market last month could draw $220 million, real estate experts predict, because of its potential to be 11 East 68th Street turned into condominiums and the value of its prime 10,000 square feet of Madison Avenue retail space, according to Crain’s. “There is a limited amount of properties on the market in general, so investor interest should be through the roof for something like this,” Dan Fasulo, managing director at Real Capital Analytics, said of the 11-story property at 11 East 68th Street, which is owned by Abro Management.

A two-story office and industrial building at 22-09 Queens Plaza in Long Island City is on the market with an asking price of $39 million. Sitting on an 111,500-square-foot lot, the 90,000-square-foot building is zoned M1-5, which allows for light manufacturing as well as residential and other commercial uses, and has a floor-area ratio of 5. This will allow the buyer to develop a property of 557,500 square feet on the site. The owner, PEC Realty Corp., will deliver the building vacant. Eric Anton and Ronald Solarz of Eastern Consolidated are marketing the building.

A portfolio of 145 co-op units at 2100-2120 Wallace Avenue in the Bronx is on the market with an asking price of $17 million. The for-sale units make up 96.5 percent of the elevator building’s co-op shares. Average rents at the 144,354-squarefoot property exceed $1,200 per month, with two-bedrooms leasing for $1,500 per month and up, according to the list2100-2120 Wallace Avenue ing. The building’s current gross scheduled annual income is $2.15 million. A Massey Knakal team consisting of Robert Knakal, Nicholas Burns, Jonathan Hageman, Matthew Abreu and Andrew Essick is handling the sale.

Hudson Square development site for sale The 95-year leasehold interest in a development site at 68-74 Charlton Street is up for grabs for $45 million. Also known as 61063 Vandam Street, the 15,142-square-foot lot could support a development of up to 181,535 square feet. The current owner has plans for the construction of a 35-story, 309-room luxury hotel, but the site can be repositioned for commercial, nonprofit or institutional use. If the purchaser opts to go the hotel route, plans call for room sizes of 350 to 646 square feet, as well as 3,500 square feet of meeting space, a spa and a rooftop bar. Brian Ezratty of Eastern Consolidated is handling the sale.

68 August 2011

Harlem school building on the market The seven-story Rice School building at 74 West 124th Street will be auctioned off by bankruptcy court later this year, with a possible sale price of up to $30 million, according to the New York Post. The Catholic high school, which shut down in June after losing millions of dollars a year, is 59,521 square feet and sits on an 11,358-squarefoot lot. The building contains a pool, gym and cafeteria, as well as dorm facilities. James Kuhn and Jennifer Schwartzman of Newmark Knight Frank, on behalf of 74 West 124th Street the bankruptcy court, are seeking a stalking-horse bidder for the auction, which is scheduled for the fall. “There are many schools out there looking for great buildings and many residential developers looking for great acquisitions,” Kuhn said.

Greenwich Village buildings on the block Two mixed-use buildings at 175-177 MacDougal Street and a retail building at 179 MacDougal are on the market with an asking price of $12.95 million. The buildings at 175-177 MacDougal Street contain 10 apartments, two retail spaces and two commercial spaces, while 179 MacDougal Street consists of five stores. The lots that the buildings sit on form an L-shaped parcel, with 75 feet of frontage on MacDougal Street and 45 feet of frontage on West 8th Street. Massey Knakal’s James Nelson is marketing the properties. Compiled by Linden Lim

Deal Sheet summary Sales


By type

Property sales

By dollar volume (in millions) 6















Deals Dollars

The Deal Sheet, on pages 70 to 76, covers transactions from 6/11/11 through 7/10/11. Please submit future deals to

31 $866,310,000


93.51 263 0 29.35 298.05













Aggregate value


Leases Office






Leases square feet Office Retail Total

2,044,569 111,835 2,156,404

Office leases Office leases by industry Industry

Office leases sf by industry Leases


Advertising & Marketing


Advertising & Marketing

Architecture & Design




Education Fashion* Financial



Top tenant reps for office leasing by sf

Square feet leased

Tenant representative

Square feet leased


Cushman & Wakefield

Architecture & Design






CB Richard Ellis





Newmark Knight Frank





NAI Global




Savitt Partners

















Murray Hill Properties





CBC Hunter Realty



M.C. O’Brien



Grubb & Ellis


9,505 91,240

Other / n/a


Other / n/a


UGL Equis






Sinvin Real Estate






GlenMark Realty


Science & Technology


Science & Technology


Manhattan Commercial Realty






Susan B. Anthony Inc.


Retail leases Top tenant reps for leasing by sf

Retail leases by industry





Square feet leased

Retail leases sf by industry 15,485

Winick Realty





Ripco Real Estate


Financial Services


Financial Services


Picken Real Estate


Food & Beverage


Food & Beverage




Health & Beauty


Health & Beauty


Cushman & Wakefield






Isaacs & Co.


Prudential Douglas Elliman




New Street Realty Advisors


NAI Friedland Realty


Focus Real Estate Group


CPEX Real Estate


Robert K. Futterman & Assoc.


(*includes showroom space)

8,525 August 2011 69

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 6/11/11 to 7/10/11. Please submit future deals to

Office leases Address


Tenant / Representative

Landlord / Representative


Worldwide Plaza


Nomura / John Cefaly, C&W

George Comfort & Sons; RCG Longview / n/a

The U.S. subsidiary of the Japanese securities firm signed a 20-year lease for 20 full floors. The company is relocating from Brookfield Properties’ World Financial Center. Nomura is expected to move in 2013.

One Pierrepont Plaza (Brooklyn)


Morgan Stanley / M. Barnett, G. Greenspan, C&W

Forest City Ratner Companies / A. Esmaeilzadeh, Forest City Ratner Companies; M. Tighe, H. Fiddle, K. Caffiano, E. Haskell, R. Shah, CBRE

The financial services firm signed a 10-year lease renewal on the second through fifth floors.

Two MetroTech Center (Brooklyn)


The City of New York / n/a

Forest City Ratner Companies / A. Esmaeilzadeh, Forest City Ratner Companies; M. Tighe, H. Fiddle, K. Caffiano, E. Haskell, R. Shah, CBRE

The city’s Department of Information Technology and Telecommunications signed a 20-year expansion lease for parts of the fifth and ninth floors and the entire second and fourth floors.

Two MetroTech Center (Brooklyn)


General Services Administration / Allyson Bowen, Studley

Forest City Ratner Companies / A. Esmaeilzadeh, Forest City Ratner Companies; M. Tighe, H. Fiddle, K. Caffiano, E. Haskell, R. Shah, CBRE

The GSA signed a 10-year lease for parts of the ground floor and the entire sixth and seventh floors. The space will be occupied by the Internal Revenue Service by early 2012.

875 Third Ave


Cerberus Capital Management / Stephen Siegel, CBRE

Eastgate / Paul Glickman, Jones Lang LaSalle

The private equity firm signed a 10-year lease. The company is relocating from 299 Park Avenue.

Two MetroTech Center (Brooklyn)


Polytechnic Institute of New York University / G. Markman, C&W; H. Kessler, Newmark Knight Frank

Forest City Ratner Companies / A. Esmaeilzadeh, Forest City Ratner Companies; M. Tighe, H. Fiddle, K. Caffiano, E. Haskell, R. Shah, CBRE

The university signed a 15-year expansion lease for parts of the ground and ninth floors and the entire 10th floor.

666 Fifth Ave


International Strategy and Investment Group / M. Zimmerman, T. Dickey, NAI Global

Kushner Companies / S. Siegel, H. Fiddle, Z. Freeman, S. Li, M. Concannon, CBRE

The investment research firm signed a new 10-year lease for part of the 10th floor and the entire 11th floor.

7 Hanover Square


International Business Times Inc. / T. Kaufman, R. Murphy, C&W

The Guardian Life Insurance Company of America / J. Harkins, B. Stern, Grubb & Ellis

The online business publication signed a sublease for 8.25 years.

1114 Sixth Ave


Kilpatrick Townsend & Stockton / Ken Ruderman, Studley

Brookfield Properties / n/a

The law firm signed a lease for the entire 21st floor and part of the 22nd floor.

1251 Sixth Ave


Lowenstein Sandler / Michael Goldman, Studley

Mitsui Fudosan America / D. Falk, P. Shimkin, Newmark Knight Frank

The law firm signed an expansion lease on the 17th floor. The company already occupies 59,841 square feet on the 18th and 19th floors. The reported asking rent was $85 per square foot.

623 Fifth Ave


Doral Financial Corp. / n/a

Charles S. Cohen / n/a

The holding company of Doral Bank signed an expansion lease for the entire 19th floor.

530 Seventh Ave


Maggy London International / Marc Schoen, Michael Schoen, Savitt Partners

n/a / n/a

The women’s apparel company signed a lease renewal on the 16th floor and took additional space on the 15th floor.

75 Broad St


Reliance Insurance Company / Wes Rudes, Murray Hill Properties

75 Broad LLC / Joe Jerome, JEMB Realty

The insurance firm signed a lease. The actual rent was $27 per square foot.

229 West 28th St


33Across / David Danick, CBC Hunter Realty

Joss Realty Partners / Barry Bernstein, Winoker Realty

The social targeting platform signed a lease.

25 West 39th St


Celebrate Interactive Holdings Inc. / n/a

Apparition LLC / J. Wechsler, M. Mandel, M. Gottlieb, Grubb & Ellis

The communications company signed a five-year sublease.

261 Madison Ave


Sigma7 Design Group Inc. / n/a

GL Trade Americas Inc.; SunGard Financial Systems / J. Harkins, B. Lewen, Grubb & Ellis

The architectural and engineering firm signed a 6.5-year sublease.

1350 Broadway


Wiss Janney Elstner / David Goldstein, Studley

W&H Properties / J. Fanuzzi, R. Silver, Newmark Knight Frank

The design firm signed a lease renewal and expanded.

414 West 14th St


AboveNet Communications / Armando Nunez, CBRE

Carlyle Group / Brad Gerla, CBRE

The broadband services provider signed a lease for the entire second floor and part of the third floor. The reported asking rent was $65 per square foot.

1440 Broadway


Macy’s / S. Gottlieb, M. Laginestra, CBRE

Monday Properties / Represented inhouse

The retail giant signed an expansion lease for its corporate offices.

100-104 Fifth Ave

9,505 / P. Milunec, S. Gamber, CBRE

Kaufman Organization / Grant Greenspan, Kaufman Organization

The online review website signed a five-year lease. The reported asking rent was $55 per square foot.

450 West 14th St


Sullivan & Co. / G. Markman, D. Berke, C&W

Winthrop / B. Waterman, L. Korman, Newmark Knight Frank; Winthrop

The branding firm signed a lease on the 12th floor.

One Cross Island Plaza (Queens)


Delmar International Inc. / M.C. O’Brien

Cross Island Plaza Inc. / n/a

The freight-forwarding company signed a lease.

One Grand Central Place


CIBT Inc. / Ken Rumerman, Studley

W&H Properties / W. Cohen, R. Silver, J. Christiano, Newmark Knight Frank

The tourism company signed a lease renewal.

38 East 29th St


n/a / Betty Posner, NYCRS

Private investor / Betty Posner, NYCRS

A medical group signed an office lease.

One Grand Central Place


Publishing Group of America / Toby Banta, UGL Equis

W&H Properties / W. Cohen, R. Silver, J. Christiano, Newmark Knight Frank

The publishing company signed a lease renewal and expanded.

530 Seventh Ave


Topson Downs / Marc Schoen, Michael Schoen, Savitt Partners

n/a / n/a

The fashion manufacturer signed a five-year lease renewal on the 15th floor.

39 Broadway


Technology Desking Inc. / R. Doolittle, W. Rudes, M. Toubin, Murray Hill Properties

n/a / Dan Ginsberg, The Lawrence Group

The trading and control desk solutions provider signed a lease for part of the 16th floor. The actual rent was $27 per square foot.

62 William St


n/a / Jared Jasinski, NYCRS

Private investor / James Famularo, NYCRS

An information technology company signed a lease.

510 Madison Ave


Thiam Management / n/a

Boston Properties / P. Amrich, K. Powers, CBRE

The financial firm signed a lease for part of the eighth floor.

70 August 2011 December 200

The best view of New York real estate is from the top July 2010 - June 2011 Top 10 Largest Offi ce Leases

Top 25 Largest Offi ce Leases





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Source: Compiled from an analysis of data provided by CoStar Inc. and the top Manhattan offi ce leases lists published in Crain’s New York Business (2/14/11; 7/26/10).

New York’s premier real estate firm, since 1917 For the most complete view of the market, more of New York’s leading businesses choose to work with Cushman & Wakefield. Over the past 12 months, Cushman & Wakefield professionals have represented tenants and landlords on 8 of the 10 largest Manhattan office leases and 14 of the top 25 — far more than any other firm. Involvement on more of the largest leases requires a high degree of trust, which is a commitment from clients that enables more market knowledge and better leverage on each assignment. And clients know that brings more success on their terms.

Moving with confidence. © 2011 Cushman & Wakefield, Inc. All rights reserved.

Office leases continued Address


Tenant / Representative

Landlord / Representative


530 Seventh Ave


YMI / Marc Schoen, Michael Schoen, Savitt Partners

n/a / n/a

The denim company signed a lease on the 27th floor. The tenant had been subleasing space in the building prior to signing the direct lease.

100-104 Fifth Ave


Interactive Partners Limited / Randy Sherman, Murray Hill Properties

n/a / Chris Wilson, Stribling & Associates

The advertising and marketing agency signed a lease for the entire 10th floor. The reported asking rent was $55 per square foot; the actual rent was $52 per square foot.

34 Cooper Square


Urgent Group Inc. / Deborah Stewart, NYCRS

Hartz Mountain / Nora Stats, Tarter Stats O’Toole

The venture development firm signed a lease.

370 Lexington Ave


Neufeld & O’Leary LLP / Barry Lewen, Grubb & Ellis

Sherwood 370 Lexington LLC / n/a

The law firm signed an 8.5-year lease.

400 West Broadway


Manhattan Bancorp / Christopher Owles, Sinvin Real Estate

SF Acquisition LLC / Christopher Owles, Sinvin Real Estate

The finance company signed a five-year lease on the fifth and sixth floors and the penthouse level. The reported asking rent was about $60 per square foot.

552-556 Broadway


Pump One Inc. / Fenton Leung, GlenMark Realty

Royal Crospin / Mansour Tabibnia, Itzhaki Properties

The tenant signed a lease.

56 West 45th St


Bar 1 Productions LLC / Pamela Title, Murray Hill Properties

n/a / n/a

The entertainment and media firm signed a lease for the entire 18th floor. The actual rent was $33 per square foot.

229 West 28th St


NABET - DWA Local #1 / D. Danick, M. Okun, CBC Hunter Realty

Joss Realty Partners / Barry Bernstein, Winoker Realty

The local union for the engineers and technicians of the ABC TV network signed a lease.

16 Court St (Brooklyn)


Universal Genetics LLC / M.C. O’Brien

16 Court Street Owner LLC / C. Gulden, SL Green; C. Havens, Creative Real Estate Group

The genetics lab signed a lease.

112 West 34th St


Leviton Manufacturing Co. / J. Kuriloff, J. Roberts, C&W

W&H Properties / M. Arkin, K. Mekles, H. Klein, C&W

The manufacturing company signed a new lease on the 19th floor.

535 West 24th St


Gemini G.E.L. at Joni Moissant Weyl / Susan Anthony, Susan B. Anthony Inc.

GTM Associates / M. Stone, G. Wasserman, Sinvin Real Estate

The art gallery signed a five-year lease on the third floor. The reported asking rent was $42 per square foot.

552-556 Broadway


Mercer Street Medical / Steve Tarter, Tarter Stats O’Toole

Royal Crospin / Mansour Tabibnia, Itzhaki Properties

The medical office signed a lease.

One Penn Plaza


State Grid Corporation of China / J. Hilton, L. Greene, Grubb & Ellis

One Penn Plaza LLC / n/a

The electricity provider signed a five-year lease.

328 East 61st St


The Ballet Club / n/a

Hirschfeld Properties / n/a

The ballet studio signed a five-year lease on the second floor. The reported asking rent was about $32 per square foot. The space was formerly occupied by Rabbi Yishayahu Pinto’s Mosdot Shuva synagogue.

285 West Broadway


Coburn Greenberg Partners LP / William McCollum, Prime Manhattan Realty

285 West Broadway Associates LP / Joshua Salon, Salon Realty

The investment banking and advisory firm signed a new five-year lease.

6218 20th Ave (Brooklyn)


Goodwill Sportswear Inc. / M.C. O’Brien

6218 20th Avenue LLC / M.C. O’Brien

The manufacturing company signed a lease on the second floor.




s e

The most stylish people are often at the forefront of trends. In the real estate world, The Real Deal monitors those movers and shakers. Reading The Real Deal won’t just keep you on top of everything you need to know in the world of real estate, it will also show you’ve got style.

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Real estate news for the smart and savvy. 72 August 2011

o e

Office leases continued Address


Tenant / Representative

Landlord / Representative


10 East 33rd St


US East Inc. / Thomas Sullivan, CBC Hunter Realty

Berik Management / Represented inhouse

The technology consulting and executive search firm signed a lease.

381 Fifth Ave


kb1111 Inc. / M. Kabiri, W. Stein, Manhattan Commercial Realty

n/a / Elliot Klein, Winoker Realty

The modeling agency signed a five-year lease for the entire third floor. The reported asking rent was about $34 per square foot.

552-556 Broadway


New York Sports Therapy / Andrew Boliek, Colliers International

Royal Crospin / Mansour Tabibnia, Itzhaki Properties

The physical therapy office signed a lease.

530 Seventh Ave


Lorena Sarbu / Marc Schoen, Michael Schoen, Savitt Partners

n/a / n/a

The fashion designer signed a five-year lease. The tenant had previously been subleasing space on the sixth floor.

757 Third Ave


Ixus International / Todd Hershman, Grubb & Ellis

Corporate Suites 757 LLC / n/a

The international trading firm signed a seven-month lease.

33 Nassau Ave (Brooklyn)


Venessa Arizaga Jewelry; Shawn Roche Photography / H. Darsi, W. Chang, Kalmon Dolgin Affiliates

33 Nassau LLC / Grant Dolgin, Kalmon Dolgin Affiliates

The jeweler and photographer signed a lease.

2432 Grand Concourse (The Bronx)


NY State Senate / Kathy Zamechansky, NAI Friedland Realty

Pal Affiliates LP / Kathy Zamechansky, NAI Friedland Realty

The government office signed a lease.

494 Eighth Ave


iCorps Technologies / J. Rubens, M. Politi, Murray Hill Properties

n/a / Daniel Bodner, CBRE

The information technology firm signed a lease. The actual rent was $30 per square foot.

485 Seventh Ave


Eclipse Group NY LLC / R. Zimmerman, Newmark Knight Frank; J. Smith, Jay G. Smith Inc.

n/a / M. Politi, E. Zar, J. Rubens, J. Tamborlane, Murray Hill Properties

The telecommunications firm signed a lease. The actual rent was $32 per square foot.

1251 Sixth Ave


People’s Insurance Company of China / Annie Yao, Buchbinder & Warren

Mitsui Fudosan America / Newmark Knight Frank

The Chinese insurance company signed a seven-year lease to relocate its U.S. headquarters.

333 Hudson St


Mass Transmit / Deborah Stewart, NYCRS

n/a / Newseed Advisors

The marketing agency signed a lease.

112 West 87th St


n/a / Betty Posner, NYCRS

Private investor / Betty Posner, NYCRS

A dental group signed an office lease.

152 Madison Ave


I Source Manufactory / Alex Baumol, Sinvin Real Estate

Heskel’s Paramount LLC / H. Epstein, B. Bernstein, Winoker Realty

The factory showroom signed a three-year lease on the ninth floor. The reported asking rent was $36 per square foot.

2366 Flatbush Ave (Brooklyn)


Mayflower Coach Inc. / M.C. O’Brien

TGTM Realty LLC / M.C. O’Brien

The bus company signed an office lease on the second floor.

285 West Broadway


Priest & Grace LLC / n/a

285 West Broadway Associates LP / Joshua Salon, Salon Realty

The design firm signed a new five-year lease.

249 East 48th St


n/a / Betty Posner, NYCRS

Private investor / Betty Posner, NYCRS

A dental group signed an office lease.

118 Baxter St


The Shakespeare Society / A. Rosen, T. Gaskin, A.C. Lawrence

Fa Tad Realty Corp. / Wayne Leong, Reliance Realty of Manhattan Corp.

The nonprofit signed a lease. The reported asking rent was $39 per square foot.

25-27 East 10th St


Patrick LaBella / D. Rosen, H. Vinik, A.C. Lawrence

BLDG Management Co. / Brian Scharfman, Savitt Partners

The psychotherapist signed a 10-year lease. The reported asking rent was $52 per square foot.

134 West 29th St


Dr. Daniel Poreda / M. Kabiri, W. Stein, Manhattan Commercial Realty

n/a / Teresharan Land Co. of Manhattan LLC

The medical office signed a three-year lease. The reported asking rent was $30 per square foot.

146 West 29th St


All Kinds of Books / M. Kabiri, W. Stein, Manhattan Commercial Realty

n/a / Teresharan Land Co. of Manhattan LLC

The bookseller signed a five-year office lease. The reported asking rent was $30 per square foot.

Retail leases Address


Tenant / Representative

Landlord / Representative


73-39-49 Grand Ave (Queens)


TD Bank / R. Senior, I. Shabot, Ripco Real Estate

73-49 LLC / R. Senior, I. Shabot, Ripco Real Estate

The bank signed a 20-year ground lease.

1675 Third Ave


Duane Reade / Ann La Centra, Winick Realty

Carnegie Park Associates / n/a

The drugstore renewed its lease.

215 West 28th St


Dubcork Inc. / Bill Zorzy, Picken Real Estate

n/a / William Abramson, Buchbinder & Warren

The Irish-themed sports bar signed a 15-year lease for multilevel space.

475 Driggs Ave (Brooklyn)


Fushimi / Diana Boutross, Winick Realty

Driggs Development / Diana Boutross, Winick Realty

The Japanese restaurant signed a lease.

50 Bowery


Duane Reade / Ann La Centra, Winick Realty

Bowery Holdings / n/a

The drugstore renewed its lease.

37 West 23rd St


CityMD / n/a

n/a / F. Consolo, J. Aquino, Prudential Douglas Elliman

The walk-in medical emergency center leased retail space for its second Manhattan location.

147 Remsen St (Brooklyn)


Team Wellness Corp. / n/a

147 Remsen Street Associates LLC / M.C. O’Brien

The Massage Envy franchisee signed a lease.

201 East 57th St


TD Bank / Joanne Podell, C&W

Marx Realty & Improvement Co. / S. Rhulen, S. Kurland, CBRE

The bank signed a lease for another location.

15 Mercer St


3x1 Hot Jeans / J. Levin, M. Simon, Isaacs & Co.

15 Mercer Street LLC / M. Tabibnia, B. Farchi, Itzhaki Properties

The fashion retailer signed a lease.

231 Second Ave


Ronnie Kaplan / C. Montemurro, A. Hill, Winick Realty

East 14 Realty LLC / Represented inhouse

The club owner signed a lease for a new concept.

333 Park Ave South


Wahoo’s Fish Taco / Alexandra Turboff, BCD

333 Park Avenue South LLC / R. Gelber, S. Ferrigno, RKF

The taco restaurant signed a 10-year lease. The reported asking rent was $120 per square foot.

83 Spring St


Brandy Melville / n/a

83 Spring Street LLC / Mansour Tabibnia, Itzhaki Properties

The fashion boutique signed a lease.

365 First Ave


Beehives & Buzzcuts / J. Isa, B. Tregerman, Winick Realty

Sassouni Management / J. Isa, B. Tregerman, Winick Realty

The hair salon signed a lease.

91 Franklin St


Noho Organics / Deborah Stewart, NYCRS

Private investor / Karen Kemp, Corcoran

The hair salon signed a lease.

522 West 23rd St


Vicky David Gallery / Russell Puttmerman, Focus Real Estate Group

520 West 23rd Street Corp. / Kristin McCann, Sinvin Real Estate

The art gallery signed a seven-year lease. The reported asking rent was $95 per square foot.

970 Flatbush Ave (Brooklyn)


970 Donut Corp. / n/a

970 Flatbush Avenue LLC / M.C. O’Brien

The Dunkin’ Donuts franchisee signed a lease.

1076 First Ave


Il Valentino / G. Dana, R. Dana, Prudential Douglas Elliman

n/a / G. Dana, R. Dana, Prudential Douglas Elliman

The Italian restaurant signed a 15-year lease to relocate from its previous home of 16 years at 330 East 56th Street.

www August 2011 73

Retail leases continued Address


Tenant / Representative

Landlord / Representative


525 Atlantic Ave (Brooklyn)


Maimonide of Brooklyn / R. Condren, E. Altschul, CPEX Real Estate

525-541 Atlantic / GFI Retail Group

Restaurateur Cyril Aouizerate signed a 10-year lease for a new restaurant.

181 Grand St


Fuel Energy / James Famularo, NYCRS

Private investor / James Famularo, NYCRS

The health food restaurant signed a lease.

400 West Broadway


Robert Lee Morris / Christopher Owles, Sinvin Real Estate

SF Acquisition LLC / Christopher Owles, Sinvin Real Estate

The jeweler signed a five-year lease extension. The reported asking rent was about $209 per square foot.

475 Driggs Ave (Brooklyn)


Nail It / Diana Boutross, Winick Realty

Driggs Development / Diana Boutross, Winick Realty

The nail salon signed a lease.

347 Lexington Ave


Bagel Express / N. Kerem, M. Pinsky, Affinity Commercial

347 Lexington LLC / A. Stern, G. Alterman, RKF

The bagel shop signed a long-term lease.

976 Sixth Ave


Red Rocket Tattoo / B. Weber, J. Tomita, Winick Realty

976 Sixth Ave Operator / B. Weber, J. Tomita, Winick Realty

The tattoo parlor signed a lease.

121 Madison Ave


Delectica / J. Gettler, M. Gorman, New Street Realty Advisors

Stanford Realty Associates / K. Cohen, J. Pruger, Newmark Knight Frank

The restaurant signed a lease.

1412 Broadway


Coffee Bean & Tea Leaf / n/a

Jordan Stone, Harbor Group International / n/a

The coffee shop signed a lease. The reported asking rent was $250 per square foot.

104 Second Ave


Hot Kitchen Inc. / M. Kabiri, W. Stein, Manhattan Commercial Realty

n/a / J. Lack, A. Stanford, Newmark Knight Frank

The restaurant signed a 10-year lease. The reported asking rent was $135 per square foot.

135 East 65th St


Ankasa / Jordan Barker, Crown Retail Services

1200 Tenant Corp. / B. Rosen, B. Singer, RKF

The textile retailer signed a long-term lease for a new store.

2476 Broadway


Crumbs / M. Frankel, B. Birnbaum, Newmark Knight Frank

n/a / D. Berke, P. Berkman, Newmark Knight Frank

The bakery chain signed a lease. The reported asking rent was $200 per square foot.

2043 Grand Concourse (The Bronx)


Samuel S. Oberg / R. Stassa, K. Mosberg, NAI Friedland Realty

Grandside Realty / R. Stassa, K. Mosberg, NAI Friedland Realty

The tenant signed a retail lease.

1309 Lexington Ave


Tina Nail & Spa / C. Montemurro, S. Mann, Winick Realty

Schneider & Schneider / Represented in-house

The nail salon signed a lease.

1050 Third Ave


The Juice Press / Jason Turner, Zelnik & Company

n/a / D. Berger, P. Liptrot, Bernstein Real Estate

The smoothie shop signed a lease. The reported asking rent was $225 per square foot.

2537 Decatur Ave (The Bronx)


Little Caesars Pizza / R. Herko, D. Scotto, NAI Friedland Realty

MED Realty Inc. / R. Herko, D. Scotto, NAI Friedland Realty

The pizza chain signed a lease.

24 West 8th St


Apple Café Bakery / n/a

The Jen Corporation / Annie Yao, Buchbinder & Warren

The bakery signed a 10-year lease. The reported asking rent was about $104 per square foot.

1325 Fifth Ave


City Cookhouse / F. Consolo, J. Aquino, A. Maglio, Prudential Douglas Elliman

n/a / F. Consolo, J. Aquino, A. Maglio, Prudential Douglas Elliman

The commercial kitchen for chefs, caterers and cooking teachers signed a lease.

26 West 8th St


The Growler Station / J. Gettler, M. Gorman, New Street Realty Advisors

Buchbinder & Warren / W. Abramson, A. Yao, Buchbinder & Warren

The craft beer store signed a lease.

390 West End Ave


Tumi / B. Rosen, K. Bellantoni, RKF; L. Bremer, Fandel Retail Group

William Friedland / Represented inhouse

The accessories retailer signed a lease for ground-floor space at the Apthorp.

810 Washington St


Vanita Rosa / K. Bellantoni, P. Haber, RKF

TF Cornerstone / K. Bellantoni, P. Haber, RKF

The apparel boutique signed a lease for a new store.

565 Columbus Ave


Wild Bird Fund / J. Isa, B. Tregerman, Winick Realty

67 West 87th Housing Development Corp. / J. Isa, B. Tregerman, Winick Realty

The nonprofit leased retail space.

89 Pineapple Walk (Brooklyn)


Rocco and Jezebel / Diana Boutross, Winick Realty

Whitman Owner Corp. / Diana Boutross, Winick Realty

The pet store signed a lease.

142 East 73rd St


Farrow and Ball Inc. / R. Hodos, S. Moran, CBRE

Carla Zampatti (NY) Inc. / G. Schwartz, R. Yaffa, Grubb & Ellis

The paint-and-wallpaper retailer signed a 10-year lease.

504 East 12th St


Rawvolution / D. Valentino, ABS Real Estate; J. Famularo, NYCRS

Magnum Real Estate Group / Ken Brandman, NYCRS

The raw and live food restaurant signed a lease.

2058 Broadway


The Best Chocolate Cake in the World / Cosmo Montemurro, Winick Realty

The Brodksy Organization / S. Baker, S. Mann, Winick Realty

The baked goods shop signed a lease.

252 Elizabeth St


Bed Head / Kathleen Perkins, NYCRS

Private investor / Steve Tarter, Tarter Stats O’Toole

The sleepwear store signed a lease.

514 East 6th St


Caffe / Cho Sung Goo, Midtown Commercial Realty

Magnum Real Estate Group / Ken Brandman, NYCRS

The Asian specialty sandwich shop signed a lease.

189 Columbus Ave


VLC Upper West LLC / n/a

AIMCO Columbus Avenue LLC / H. Goldfarb, S. Lindenfeld, Grubb & Ellis

Crepe maker La Crepe signed a 10-year lease.

Buys Address


Buyer / Representative

440 West 42nd St

Commercial condo

Yotel / n/a

Related Companies / n/a

Yotel paid $263 million for the commercial condo portion of the MiMA tower. The 669-room hotel offers guests 170 square feet of space in exchange for around $150 per night. Making up the rest of MiMA’s 60 stories are 500 rental units, 151 condos, 23,000 square feet of amenities and 13,000 square feet of retail space.

305 East 46th St

16-story, 187,060 sf office bldg

Government Properties Income Trust / Ken Hendrick, Stan Johnson Company

Extell Development / James Gross, Williamson Picket Gross

The property sold for $114 million. About 700 employees of the United Nations occupy the building.

1327-1329 Lexington Ave

167,000 sf apt. bldg, 99 units total

The Cheshire Group / n/a

Rhinelander Properties / n/a

The property sold for $105 million, or about $626 per square foot.

150 East 72nd St

12-story apt. bldg

Harry Macklowe / Howard Michaels, Carlton Group

n/a / n/a

The rental building sold for $70 million.

4190 Bedford Ave, 288 Bay 38th St, 2440 East 29th St (Brooklyn)

Three 7-story apt. bldgs, 352 units total

n/a / Aaron Jungreis, Rosewood Realty

Monticello Leasing Delaware LLC of 268 Bay 38 St.; Harvard Leasing LLC of 4190 Bedford Ave.; Yaille Leasing LLC of 2440 E 29 St. / n/a

The properties sold for $51 million. The price represents a gross rent multiple of 11.

74 August 2011

Seller / Representative


Buys continued Address


Buyer/ Representative

Seller / Representative


276-280 Third Ave

105,000 buildable sf development site

Toll Brothers / n/a

UBS Real Estate Investments / n/a

The development site and air rights from four nearby properties sold for $35.5 million in a foreclosure auction. The property’s original owner, Gramercy Park Land, defaulted on the loan from UBS, which pursued a foreclosure. Gramercy Park Land filed for bankruptcy in March 2011. Toll Brothers plans to build a 21-story apartment building with about 80 units.

345 East 37th St

81,000 sf medical office condo

ProMed / n/a

Spitzer family / R. Knakal, J. Ciraulo, Massey Knakal

The office condo portion of the Corinthian residential building sold for $31 million.

241 Fifth Ave

Development site

Victor Homes / n/a

Foremost / Y. Oelsner, J. Epstein, Grubb & Ellis

The stalled redevelopment site sold for $20.5 million in a “friendly foreclosure,” according to the New York Post.

220 Park Ave South

33,638 sf apt. bldg, 37 units total

BDN NY Management / n/a

Gramercy Park Mews Partnership LLC / P. Von Der Ahe, J. Koicim, Marcus & Millichap

The property sold for $20 million, or $595 per square foot. The ground-floor retail space is occupied by sushi restaurant Haru.

270 West 89th St

School bldg

B’nai Jeshurun / n/a

Abraham Joshua Heschel School / n/a

The property sold for $20 million.

448-452 Broome St

2 mixed-use bldgs

Tavros Capital; BLDG Management / Brian Ezratty, Eastern Consolidated

Caixanova / D. Schechtman, A. Aghravi, M. Jones, Eastern Consolidated

The contiguous buildings sold for $17 million. Caixanova originally acquired the properties in 2006 for $23 million.

33 Beekman St

Development site

Jiten Hotel Management / n/a

McSam Hotel Group / n/a

The distressed development site sold for $15.7 million. McSam had purchased the property for $22 million in 2007.

1515 Grand Concourse, 1136 Sherman Ave and 1052 Hoe Ave (The Bronx)

3 apt. bldgs, 175 units total

Sierra Realty; Jeff Farkas and Larry Farkas / n/a

n/a / Stuart Stein (independent broker)

The portfolio of apartment buildings sold for $15.5 million.

523-25 Greenwich St

50,000 sf development site

Fortuna Realty Hotel Soho LLC / A. Miller, R. Ortiz, P. Nigido, Eastern Consolidated

Patriot 523 Greenwich St LLC / A. Miller, R. Ortiz, P. Nigido, Eastern Consolidated

The as-of-right commercial development site sold for $12.75 million. In a release, Eastern Consolidated’s Robert Ortiz said that “a 20-plus-story hotel with two elevators with 124 rooms will rise on the site.”

123 Third Ave

2,928 sf retail condo

Private investment group / J. Fishman, A. Schuster, B. Segall, J. Butwin, RKF

123 Third Avenue Partners LLC / J. Fishman, A. Schuster, B. Segall, J. Butwin, RKF

The retail condo at the base of the new residential condo building sold for $11.05 million. The space is fully occupied by Capital One Bank.

525-541 Atlantic Ave (Brooklyn)

8 mixed-use bldgs, 30 units total

n/a / R. Helfand, S. Sadaghati, GFI Realty

Private investor / Lon Rubackin, GFI Realty

The buildings sold for $10 million. The package includes 22 apartments, seven of which are rent stabilized, and eight commercial units. Lon Rubackin, who represented the seller, has since moved on to CB Richard Ellis.

11 Saint Luke’s Pl

4,506 sf townhouse, 2 units total

n/a / n/a

n/a / James Nelson, Massey Knakal

The property sold for $9.05 million, or about $2,008 per square foot.

385-393 Fourth Ave (Brooklyn)

12,340 sf development site

New York developer / n/a

6th Street Development LLC / B. Leary, S. Kelly, C. Sendogdular, CPEX Real Estate

The vacant lot sold for $6.5 million, or $103 per buildable square foot. Current plans call for a 60,580-square-foot building with 52 residential units.

17-19 Bleecker St

6-story, 17,080 sf apt. bldg, 12 units total

Silverstone Property Group / n/a

n/a / n/a

The property sold for $5.5 million, or about $322 per square foot.

1580-88 President St (Brooklyn)

4-story, 43,920 sf apt. bldg, 48 units total

1580 President LLC / Aaron Jungreis, Rosewood Realty

JK President LLC; 2126 Dorchester Realty LLC / Aaron Jungreis, Rosewood Realty

The walk-up building sold for $5 million. The price represents a gross rent multiple of 10.

527 West 48th St

5-story, 9,250 sf apt. bldg, 20 units total

n/a / n/a

n/a / Christoffer Brodhead, Massey Knakal

The property sold for $3.83 million, or about $416 per square foot.

3050 Perry Ave (The Bronx)

36,810 sf apt. bldg, 37 units total

3050 Perry Holding LLC / Sharone Sohayegh, Sohayegh Realty Group

Ten Seventy One Home Corp. / Sharone Sohayegh, Sohayegh Realty Group

The prewar elevator building sold for $3.7 million. All of the units are rent stabilized.

2 South End Ave

3,785 sf comm. condo

n/a / n/a

n/a / Nick Petkoff, Massey Knakal

The commercial condo consisting of three retail units sold for $3.6 million, or about $950 per square foot.

318 East 6th St

8-unit apt. bldg

Benchmark East 6th LLC / n/a

n/a / n/a

The property sold for $3.25 million. The price represents a capitalization rate of 6 percent and a gross rent multiple of 11.

37-57 85th St (Queens)

4-story, 12,000 sf apt. bldg, 18 units total

n/a / Michael Guttman, Rosewood Realty

85 Street Apts. LLC / Michael Guttman, Rosewood Realty

The property sold for $2.75 million. The price represents a gross rent multiple of 10.

164-14 Cross Bay Blvd (Queens)

2-story, 10,000 sf comm. bldg

n/a / n/a

n/a / Stephen Preuss, Massey Knakal

The property sold for $2.75 million, or about $296 per square foot.

East 70s (Upper East Side)

15,000 sf of air rights

n/a / Nicole Carra, NLC Realty LLC

n/a / Nicole Carra, NLC Realty LLC

The air rights for future development sold for $2.56 million.

507 West 179th St

5-story apt. bldg, 20 units total

n/a / n/a

Washington Management Realty LLC / Moses Sioni, Sioni & Partners

The walk-up building sold for $2.2 million, or $154 per square foot. The price represents a gross rent multiple of 7.9. The units include 12 two-bedrooms and eight three-bedrooms.

37-45 75th St (Queens)

5-story, 5,890 sf apt. bldg

n/a / n/a

n/a / Swain Weiner, Massey Knakal

The property sold for $1.27 million, or about $215 per square foot. The building consists of four apartments and one professional office.

5753 Broadway

3-story, 9,500 sf mixed-use bldg

n/a / n/a

n/a / Karl Brumback, Massey Knakal

The property sold for $1.2 million, or about $126 per square foot. The building contains six one-bedroom apartments and six commercial spaces.

37-49/51 75th St (Queens)

3-story mixed-use bldg

n/a / n/a

n/a / Swain Weiner, Massey Knakal

The property sold for $1.15 million, or $295 per square foot. The building contains two professional offices and one three-bedroom apartment.

Financing Address


Borrower / Representative

Lender / Representative


1285 Sixth Ave

42-story, 1.65 million sf office bldg

AXA Equitable Life Insurance Company; JPMorgan Asset Management / W. Wilcox, M. Tepedino, HFF

MetLife Real Estate Investments / n/a

A $372 million refinancing was arranged for the building. The 10-year loan was provided at a fixed rate.

55 West 44th St


City Club Hotel LLC / J. Kelso, E. Lee, C&W

n/a / n/a

A $23 million refinancing and arrangement of up to $13 million in construction financing were completed for the hotel. The loan will allow for the addition of up to 66 rooms.

34 Berry St (Brooklyn)

142-unit apt. bldg

LCOR / J. Cadranell, J. Marshall, J. Mikula, HFF

Northwestern Mutual / n/a

A $31 million refinancing was arranged for the building. The 10-year loan was provided at a fixed rate.

The August 2011 75

Financing continued Address


Borrower / Representative

Lender / Representative


121, 145, 171 and 195 Wellington Court (Staten Island)

4 apt. bldgs, 200 units total

Quail Run @ LaTourette / Groothuis & Co.

Local bank / n/a

A 12-year, $13.2 million first mortgage was arranged for 143 of the 200 units.

114 West 86th St

16-story apt. bldg, 49 units total

n/a / Hybrid Capital Inc.

n/a / n/a

Permanent financing in the amount of $9.8 million was secured for the building.

28-02 141st St (Queens)

419-unit apt. bldg

Mitchell Gardens No. 2 Cooperative / n/a

NCB / n/a

A $6.5 million first mortgage was arranged for the building.

41-51 West Fordham Rd (The Bronx)

8,600 sf retail bldg

n/a / Mike O’Neill, Houlihan-Parnes Realtors

Local bank / n/a

A $3.35 million first mortgage was arranged for the building, which is occupied by a Rite Aid pharmacy. The five-year, non-recourse loan has a fixed rate of 5.25 percent. The financing is pre-payable throughout the term on a declining scale, and the borrower has an option to extend the loan for five more years.

42-30 Douglaston Pkwy (Queens)

91-unit apt. bldg

Wellesley Gardens Owners Corp. / n/a

NCB / n/a

A $2.2 million first mortgage and a $500,000 line of credit were arranged for the building.

One Plaza St (Brooklyn)

58-unit apt. bldg

One Plaza Owners Corporation / n/a

NCB / n/a

A $2.1 million first mortgage and a $500,000 line of credit were arranged for the building.

35 Clark St (Brooklyn)

33-unit apt. bldg

35 Clark Apartments Corp. / n/a

NCB / n/a

A $2 million first mortgage and a $300,000 line of credit were arranged for the building.

50 Park Terrace West

49-unit apt. bldg

Inwood Tenants Corp. / n/a

NCB / n/a

A $2 million first mortgage was arranged for the building.

1143 First Ave

5-story apt. bldg

n/a / Jeanne Cronin, Q10 New York Realty Advisors; Houlihan-Parnes Realtors

n/a / n/a

A $1.97 million first mortgage was arranged for the building. The five-year, non-recourse loan has a fixed rate of 4.25 percent.

317 East 18th St

29-unit apt. bldg

317 East 18th Street Owners Corp. / n/a

NCB / n/a

A $1.8 million first mortgage was arranged for the building.

645 West 239th St (The Bronx)

42-unit apt. bldg

West 239th Owners Inc. / n/a

NCB / n/a

A $1.2 million first mortgage and a $500,000 line of credit were arranged for the building.

515-521, 525-545, 551-559, 565, 581-585 Castleton Ave (Staten Island)

52-unit apt. bldg

Castleton Gardens Owners Corp. / n/a

NCB / n/a

A $1.6 million first mortgage and a $100,000 line of credit were arranged for the building.

72-20 113th St (Queens)

74-unit apt. bldg

75-20 113th Street Owners Corp. / n/a

NCB / n/a

A $1.1 million first mortgage and a $250,000 line of credit were arranged for the building.

86-10 151st St (Queens)

160-unit apt. bldg

Greenwood Arms Cooperative Corporation / n/a

NCB / n/a

A $1.3 million line of credit was arranged for the building.

509 West 122nd St

29-unit apt. bldg

509 West 122nd Street Owners Corp. / n/a

NCB / n/a

A $1 million first mortgage and a $250,000 line of credit were arranged for the building.

Other Deals UDR buys two rental communities for $581M UDR, the third-largest publicly traded apartment owner in the U.S, has agreed to pay $581 million for two Manhattan rental communities — the 706-unit Rivergate complex in Murray Hill for $443 million and the 210-unit 21 Chelsea building for $138 million — in an effort to expand its presence in the city, Bloomberg News reported. The company released news of the acquisitions last month. Georgia Malone & Co. represented UDR in the off-market Rivergate transaction; no other brokers were involved. (The deal was announced after the deadline for the Deal Sheet.)

Related and Walmart in advanced negotiations over Gateway II development The Related Companies is in advanced lease negotiations with Walmart and J.C. Penney about anchoring Gateway II in southeast Brooklyn. Having both large retailers signed on to take 150,000 square feet each at the project would likely provide enough financial momentum to move forward with the development, according to the Wall Street

Highlights from

Feature Synagogue efforts Reporter Peter Kiefer discovers that broker/ developer Ilan Bracha is trying to save plans for an UWS synagogue.


Magazine A good read Read The Real Deal’s August issue online for free and share stories with a click of the mouse.

76 August 2011

Journal. “We still have not signed any leases anywhere in the city,” Steven Restivo, a spokesperson for Walmart, said last month. “We continue to evaluate opportunities across the five boroughs.”

Dune files to foreclose on Mark Hotel loans Dune Real Estate Partners has filed to foreclose on loans granted to the Alexico Group’s Upper East Side Mark Hotel at 25 East 77th Street by Anglo Irish Bank, according to public documents filed recently in State Supreme Court. Dune bought the loans earlier this year. Alexico’s Simon Elias and Izak Senbahar pledged the hotel and co-op building as collateral for a total of five Mark Hotel-related loans, all of which are now in default, according to the public foreclosure filing dated June 9.

Chinese developer pledges up to $700M for Port Authority tower China-based retail developer Soho China has agreed to invest between $500 million and $700 million with Vornado

Realty Trust to kick-start development of an office tower over the Port Authority Bus Terminal, Crain’s reported last month. With a deal giving Vornado and partner Lawrence Ruben the rights to build over the terminal set to expire this month, the partners are at a critical juncture in negotiations with the Port Authority of New York & New Jersey, the site’s owner. Vornado and Ruben were selected by the Port Authority to develop the tower in 2000 but the project has been delayed multiple times as a result of the economic downturn, Crain’s said.

GSA halves prospective lease at One WTC The General Services Administration will likely take much less space at One World Trade Center than previously expected, the New York Post reported. While the U.S. agency and the Port Authority of New York & New Jersey announced a prospective deal for 600,000 square feet four years ago, back when officials were desperate to kick-start the project, they are now negotiating for less than half that amount, according to information gleaned by Realty Check last month. TRD


South Florida Q & A with Jack Cayre South Florida reporter Alexander Britell talks to Midtown Equities’ Jack Cayre about plans to erect a Midtown Miami hotel.

Feature Foreclosure at Mark Hotel The Real Deal’s Katherine Clarke breaks the story about Dune filing to foreclose on loans granted to the Alexico Group’s Mark Hotel.

Archive Missed a story? Don’t fret. You can get free online access to The Real Deal’s print issues dating back to 2003.

Feature Failure to meet Reporter Adam Pincus uncovers that NY State’s real estate oversight board has failed by being on a two-year hiatus.


Rental projects keep marketers afloat In changed landscape, Corcoran and Citi Habitats take top slots as the brokerage firms representing the most new developments BY SARABETH SANDERS n the past, top-of-the-line, modern finishes just weren’t available in most New York City rentals. Not so in 2011. The economic conditions of the past few years have ushered in an era of new luxury rental buildings, catering to would-havebeen condo buyers looking for high ceilings, European-designed appliances, and plush amenity packages that have traditionally only been available in apartments for sale. For the major players in new development marketing, this shift toward rentals has been shaking up the field. Firms that have always excelled in leasing are now benefiting from an influx of new inventory that fits their niche, while some sales-focused companies are expanding their repertoire to include rentals. This month, The Real Deal surveyed the city’s new development marketing firms to find out how they’ve adjusted to the changed landscape. The research looked at New York City units marketed by new development firms between January 2010 and July 2011, as well as those scheduled to come to market before the end of 2011. The consistently dominant Corcoran Group and its new development subsidiary, Corcoran Sunshine, marketed more new projects than any other brokerage by far, the data showed. Corcoran maintained the No. 1 ranking it achieved the last time The Real Deal conducted its new development survey, in 2009. However, it fell to No. 2 — slightly — behind its sister company Citi Habitats, the city’s largest rental brokerage, in terms of the total number of units represented. Citi Habitats marketed 2,966 units in 12 projects in 2010 and 2011, 903 of which were in Forest City Ratner’s New York by Gehry at 8 Spruce Street, easily the largest project to launch in the city during that time. Citi Habitats has long been a force to be reckoned with when it comes to large new rental buildings. And since those types of projects represent the bulk of what’s come online recently, it’s no surprise that the firm climbed to the top of the ranks (up from fourth place in 2009) over some of the large firms that represent mostly condos. Cliff Finn, the managing director of new development marketing for Citi Habitats, said some 400 apartments at New York by Gehry have been leased since the project officially launched in February. “With the financial crisis, there have been even more people in the rental marketplace looking for higher-end rentals, [people who] might have purchased, but are now renting,” Finn said. However, as a result of the recession, the entire field of new development marketing


78 August 2011

— encompassing both condos and rentals — has shrunk significantly since the last time The Real Deal completed its survey. All firms that appeared on both our 2009 list and our current list saw a drop-off in listings volume during the time period surveyed. The culprit? The vastly fewer projects launched in New York City due to the downturn. According to data compiled by Corcoran Sunshine, 11,302 new condo units came

ects, could soon cause a significant shortage of new inventory. And while there are some condo projects now getting off the ground again, large-scale deals are still few and far between, Kelly Kennedy Mack, president of Corcoran Sunshine, said. “The ‘Four Seasons’ of the world — the really big [deals] that we’ve been working on for a couple years — that kind of construction financing is still slow,” Mack said. “That’s a big challenge.”

said. “That was where the financing was.” adjusted its business model accordingly, Maundrell said. That meant taking over some failed condos — like 163 Washington Avenue in Clinton Hill and 349 Metropolitan Avenue in Williamsburg — and turning them into rentals, while reassuring developers that the brokerage would be equipped to handle either sales or leasing, depending on market conditions. “Between 2005 and 2007, we were sign-

Gary Malin, president of Citi Habitats (seated), and Cliff Finn, managing director of new development marketing, at the rental tower New York by Gehry.

“In the last two years, if a job was getting off the ground, it was getting off the ground as a rental.” David Maundrell, online in the five boroughs between 2007 and 2009, but only 1,767 new units hit the market in 2010. Just 1,111 new units are projected to have come online by the end of this year. Top-ranked Corcoran, which allows Citi Habitats to do the lion’s share of new development rental marketing while it focuses on sales, represented 6,661 units in 200 projects in the years leading up to The Real Deal’s 2009 survey, but marketed just 2,651 units in 74 projects in 2010 and 2011. This drop in new developments, prompted by a lack of financing for ground-up proj-

Rental boom But for new development rentals, there hasn’t been a noticeable drop. According to a mid-2011 Manhattan rental market report by veteran leasing guru Nancy Packes, an average of 2,545 new rental units per year hit the market between 2007 and 2009. Last year, 2,803 new rental units opened. By the end of 2011, Packes projects that 2,492 will have become available. David Maundrell, founder of Brooklyn-based brokerage, echoes the point. “In the last two years, if a job was getting off the ground, it was getting off the ground as a rental,” Maundrell

ing condo buildings left and right, and the new development business for us was mostly condos,” Maundrell noted. “The rental market has really exploded [since then], and that aspect of my company has grown tremendously.” Indeed,, which marketed 1,705 units in 2010 and 2011, ranked third on The Real Deal’s list, up from eighth in the 2009 survey. The brokerage also ranked second in terms of the number of projects it represented during that time period — 50, of which 12 were rentals — ousting Prudential Douglas Elliman from its secondPHOTOGRAPH FOR THE REAL DEAL BY CHRIS MARTIN


Biggest new development marketers, by number of units RANK



Citi Habitats

2 3

NO. OF UNITS 2010-11

Biggest new development marketers, by number of projects RANK





Corcoran + Corcoran Sunshine


Corcoran + Corcoran Sunshine









Rose Associates



Prudential Douglas Elliman



Prudential Douglas Elliman




Citi Habitats





The Marketing Directors






Nancy Packes Inc.



Cantor Pecorella



Cantor Pecorella



Brown Harris Stevens



MNS (formerly the



Brown Harris Stevens






10 ( T I E ) Rose Associates


Developers Group and TREGNY)


10 ( T I E ) Stribling



Synergy (formerly Urban Marketing)


10 ( T I E ) The Marketing Directors










14 ( T I E ) Synergy





14 ( T I E ) Warburg


Nancy Packes Inc.

Source: Firms and The Real Deal research. The analysis examined units marketed in NYC new residential developments that commenced sales or leasing between January 2010 and July 2011, and those scheduled to come to market before the end of 2011. The data does not include new developments marketed in-house by developers. Only firms with at least one project in Manhattan were considered. In cases where a firm recently took over the marketing of a new development that launched prior to 2010, data includes the number of available units at the time the firm took on the project. Primary rankings are based on number of units; firms were then ranked by number of projects.

place spot in the last survey. “It is extremely important for a firm to have a high level of competence in both the sale and rental markets today,” said Packes, who branched out from under the Brown Harris Stevens umbrella in 2009 and has since been growing her eponymous marketing company. Especially at the entry level in the market, “the possibility of a development going either way is very great.” Packes’ company made its debut on The Real Deal’s list this year with an eighth-place ranking by number of units — with 611 apartments in three projects. Two of them — Tapestry in Harlem and Ohm in Chelsea — are rentals. The other, 1212 Fifth Avenue, is a condo. Packes is also acting as a consultant to developers on the marketing of some 5,000 rental units citywide, including the 903 at New York by Gehry, where she’s working in tandem with the leasing agent, Citi Habitats. Family-run Rose Associates, better known as a veteran developer and manager, has also been a beneficiary of the rental development boom, using its long track record to get more involved in marketing. Continued on page 82

Biggest projects by firm, 2010-2011






95 Bedford Avenue (Brooklyn) 214 North 11th Street (Brooklyn) 175 Kent Avenue (Brooklyn)

330 120 113

2010 2010 2010

315 Gates (Brooklyn) Santorini / 35-40 30th Street (Queens) Plaza 21 / 20-01 21st Avenue (Queens)

72 62 36

2010 2010 2010

Brown Harris Stevens



Nancy Packes Inc.



1280 Fifth Avenue Reade57 / 57 Reade Street Laureate / 2150 Broadway

116 84 70

2011 2011 2010

Ohm / 312 Eleventh Avenue Tapestry / 245 West 124th Street 1212 Fifth Avenue

368 188 55

2010 2010 2011

Cantor Pecorella



Prudential Douglas Elliman



2 Cooper Square 250 West Street Port 10 / 303 10th Avenue

133 111 69

2010 2011 2010

Trump Soho / 246 Spring Street The Setai / 400 Fifth Avenue Azure / 333 East 91st Street

391 190 128

2011 2010 2010*

Citi Habitats



Rose Associates



New York by Gehry / 8 Spruce Street DKLB BKLYN / 80 DeKalb Avenue (Brooklyn) The Continental / 885 Sixth Avenue

903 365 336

2011 2010 2011

Aire / 200 West 67th Street 25 Broad at the Exchange / 25 Broad Street 184 Kent Avenue (Brooklyn)

310 309 300

2010 2011 2010

Corcoran + Corcoran Sunshine








Devonshire House / 28 East 10th Street 130 West 12th Street 20 Henry Street (Brooklyn)

134 43 39

2010 2011 2011

186 174

2010 2010






The Setai Wall Street / 40 Broad Street Cipriani Residences / 55 Wall Street

159 107

2011* 2010*

67 53

2010* 2011

The Marketing Directors



The Sheffield / 322 West 57th Street Arias Park Slope / 150 Fourth Ave. (Brooklyn) Apex / 2300 Frederick Douglass Boulevard

580 95 44

2010* 2010 2010




Carriage House / 159 West 24th Street The Savoy West / 555 Lenox Avenue

24 32

2011 2010*

be@schermerhorn / 189 Schermerhorn Street (Brooklyn) Cobble Hill Towers / Hicks, Warren and Baltic streets (Brooklyn) One Rector Park / 333 Rector Place

Core The Cammeyer / 650 Sixth Avenue 305W16 / 305 West 16th Street The Townhouse / 1862 East 2nd Street (Brooklyn)







Fifth on Park / 1485 Fifth Avenue Columbia Commons / 110 Warren Street (Brooklyn) Griffin Court / 800 10th Avenue

149 95


2010 2011

Includes projects where leasing or sales started, or are scheduled to start, in 2010 or 2011. *More than one firm has handled the marketing of this project. Projects were counted for each firm for the year in which it was hired to market the project, even if another firm handled the project previously, afterward or at the same time. August 2011 79

Government cuts

from page 16

going to see really significant cuts, huge cuts in government activity, those needs will be there, and therefore the space needs will be there,” he said. Still, New York State’s fiscal year 2012 budget includes a 2.3 percent across-the-board cut in spending. And the Human Services Council of New York City estimated that the reductions could lead to the loss of 11,000 nonprofit jobs in the city. The city’s $66 billion budget, adopted in June, calls for the elimination of more than 1,000 workers at the Department of Housing Preservation and Development, the Administration for Children’s Services, the Department of Parks and Recreation, the Health and Hospitals Corporation and the Department of Transportation. Mayor Bloomberg has warned that cuts in next year’s budget could be even more difficult. As part of a plan the mayor announced last July, the city is also in the process of shrinking its back-office operations, with the aim of saving $36 million annually by the end of 2014. So far it’s reduced its footprint of leased space by 311,862 square feet, with agencies like the Department of Citywide Administrative Services and HPD moving and consolidating space.

Other agencies, meanwhile, are moving out of Manhattan to where the rents are cheaper. For example, the Department of Health and Mental Hygiene recently moved thousands of workers to a new building in Long Island City. In addition, the state-run MTA announced in April that it’s selling its Madison Avenue headquarters, and that it had already eliminated 3,500 jobs, significantly reducing its office-space needs. The agency’s office leasing, it said, was already down 12 percent from a year earlier. Dwayne Doherty, a spokesman for Cushman & Wakefield, said such job cuts — and cuts that have been proposed during the city and state budget processes in recent years — are a critical factor in predicting the government’s office needs. “With commercial real estate, it literally boils down to employment growth or contraction,” he said. “As employment falls, occupancy requirements fall, [and] organizations look to reduce their footprints.” Josh Kuriloff, a Cushman broker who has worked with the MTA, said he could not discuss the agency specifically, but noted that many organizations moving into new offices are reducing their space needs by modern-

izing their office layouts. In the last five years, he said, nonprofits and government agencies have adopted a trend that the private sector has already embraced: more collaborative space and less individual space. As a result, companies that once allocated between 300 and 350 square feet per worker now may use 30 percent less. When those entities relocate, that can translate to a reduction in their space needs of 10 to 15 percent. Kuriloff said it may be a little early to see the full effect on landlords of local governments’ reduction in office space usage — especially since other types of office tenants, like hedge funds, are doing relatively well. Also slowing the process, said JLL’s Janet Woods, is the difficulty, for agencies, of eliminating unused space. “It’s a lot of people, and it’s a lot of coordination, and it’s a lot of things to do to make everybody happy,” she said. Still, she added, the reductions are coming and the government’s real estate representatives are on the case. “They know how things need to get done,” she said. “Sometimes it’s just the process that slows them down a little bit.” TRD

and “We Suck Less.” “I was just having some fun one day,” Gordon said. “I have no intention of ever doing anything with them. In fact, I forgot that I had them.” Gordon added he owns “hundreds” of domain names, including several joke URLs, though, ironically, RealPlus .com isn’t one of them — it’s taken. Gordon said he once offered $700 for the site, but was rebuffed, as the current owner wanted $75,000 — well beyond what he’s willing to pay. RealPlus operates instead at, meanwhile, is currently registered to an undisclosed party but is inactive. Corcoran declined to comment for this story. The bottom line, Smith said, is that online strategies intended to detract from competitors, rather than boost one’s own image, are unlikely to have any tangible financial impact. “If somebody is targeting somebody’s name, it’s re-

ally done more in a vindictive way, and not done to grow their business,” he said. And ethics aside, playing dirty online almost always backfires with consumers, because it reflects poorly on the perpetrator, strategists said. “The educated consumer is going to be offended by that behavior,” said Shaun Osher, the founder and CEO of boutique brokerage Core, which he said has worked “extensively” with SEO consultants. Osher added that he owns “quite a few domain names” but uses “very few of them.” He wasn’t sure whether is one of them, but said that even if it isn’t, the domain is “really worthless to someone who is not Shaun Osher.” “Look, David and [his wife and partner Sandra] Innocenzi — they are solid producers, but they’re not Dolly Lenz, and they’re not Michael Shvo, and they’re not Sharon Baum,” Heddings said. “It just reeks of desperation.” TRD

trade organization. The news may not be as welcome to big real estate firms and their title agencies. PDE Title did not respond to requests for comment. Skyline issued a statement saying the insurance department’s opinion simply “restates a very long-standing position of the Insurance Department, with which we fully comply. “[It] does not impact our business because we have always complied with and will continue to comply with New York law,” it said. Chris Meyers, the chief operating officer of

Houlihan Lawrence, meanwhile, said his firm’s title insurance affiliate, Thoroughbred Title, already gets more than half its business from buyers who are not working with a Houlihan broker. Meyers acknowledged that Houlihan has recommended attorneys lists, but insisted the lists are not about quid pro quo. “Attorneys are on our lists because they provide great legal representation, period,” said Meyers. “We expect only that attorneys respect a buyer’s request to use Thoroughbred if that is the buyer’s choice.” TRD

overselling the facility and making it impossible for them to book stays — even well in advance. While Eichner declined to comment on the lawsuit, before it was filed he told The Real Deal that Manhattan Club has a 5 percent vacancy rate. Several insiders doubted the viability of another timeshare in New York. But Gurnik said the demand for timeshares here is so high that it’s only a matter of time before more developers pursue them in the city. “Timeshares are a great way for

developers to maximize their return and monetize their asset,” he said. “It might take more time to sell, but you can generate more revenue by orders of magnitude.” PKF’s Eble disagreed. Because of the effort needed to sell units, he noted that timeshares are simply too illiquid to overcome the costs of development. “Timeshares can be exceptionally profitable,” he said. “But if you believe in efficient markets, the cost of all that goes in to creating and marketing a timeshare in the city is evidently providing a hurdle that’s too high for developers to cross.” TRD

Cyber-wars from page 26 personalities directory The URLs were then set up to redirect to each person’s profile on the Cityfile site, but they aren’t currently active because of a recent server change following Gawker’s acquisition of Cityfile in 2010, Stern said. Brokers — and companies — may also want to consider purchasing not-so-flattering domain names before someone else grabs them. records show that in February, Eric Gordon, creator of the listings platform RealPlus, registered both and OLR-TheySuckMore. com, an apparent reference to his top competitor in New York City, On-Line Residential. Both of Gordon’s OLR-related websites are inactive, and when contacted by The Real Deal for an explanation, Gordon said he bought them as a joke, along with a few other domain names playing on the phrases “RealPlus”

Title insurance from page 54 a title agency solely to keep referrals flowing, because that could mean putting the lawyer’s interests ahead of clients’. Now, many attorneys are relieved that the state has clarified the rules. “It helps attorneys who don’t want to be put in this box of, ‘You’re insisting I use your title company,’” said Ward. As far as title insurance agents are concerned, the new opinion “reinforces the idea of a level playing field,” said Robert Treuber, executive vice president of the New York State Land Title Association, the industry’s local

Timeshares from page 56 whom bought the most coveted weeks for as much as $50,000. Eichner said today an investor couldn’t develop a timeshare for $100,000 a room. He estimated, on the low end, that rooms in Midtown would cost seven to eight times what they did when he bought them. “I can’t charge seven to eight times what I do now, though,” he said. According to Crain’s, Eichner and the other owners and operators of the Manhattan Club were sued last month by five timeshare owners who claimed they were 80 August 2011

New development marketing Absent from the list in 2009, Rose now ranks fourth with 1,264 units marketed. Those units were spread among five large high-end rental buildings, all containing 100 or more apartments. That’s Citi Habitats’ territory — and Rose is taking advantage of its management experience to grab market share. Next month, Rose will take over leasing at two rental buildings currently marketed by Citi Habitats: Extell’s the Ashley and the Aldyn, according to Rose director of marketing Robert Scaglion. Rose is already the managing agent at both buildings. “The fact that we manage and market rentals gives us an advantage over typical brokerage agencies,” Scaglion noted.

Shifting gears Unlike their rental counterparts, most of the new condos that did launch in the past two years were small, boutique buildings. Halstead Property Development Marketing’s recent trajectory illustrates this trend. Taking on 26 buildings in 2010 and 2011, Halstead took third place in number of projects marketed, and surpassed Elliman, which signed on to market only 18 during that time. However, Halstead fell from third place to sixth place for number of units, as it repped just 1,136 apartments. Only two of Halstead’s projects over the past two years exceeded 100 units in size: the 149-unit Columbia Commons condo in Brooklyn, and the 160-unit Fifth on the Park condo-rental hybrid in Harlem. “We focus on bringing in more boutique, higher-quality products,” said Stephen Kliegerman, president of Terra Development Marketing, which oversees both Halstead’s and Brown Harris Stevens’ marketing divisions. Those include “medium-sized developments that some marketing divisions might pass up because they’re under the number of units that they normally take on,” he said. Currently, the vast majority of Halstead’s portfolio is condos, but according to Kliegerman, the firm is now beginning to talk with more developers about doing rental projects because of the boom in new product. “A lot of our clients who were condo developers are now looking at rental development, because financing [for con-

from page 79

dos] … is more difficult to obtain,” Kliegerman added. For its part, the Marketing Directors has also been taking on more rental projects in the past 18 months, said Jackie Urgo, president of the firm. One of the most dramatic dives in market share over the past two years came from Elliman’s new development division, which has been without a leader since April 2010, when longtime executive Andy Gerringer resigned from the company to join the Marketing Directors. Elliman had sat comfortably as the second-most-prolific new development marketing firm in the city in The Real Deal’s 2009 rankings, by both the number of units and the number of projects it marketed. This year, however, the firm fell to fifth place in units (1,210) and fourth place in projects. In June, Elliman finally found a replacement for Gerringer in Susan de Franca, who left her position as president of sales at the Related Companies to become president and CEO of Douglas Elliman Developments. “The purpose of me joining the company was to strengthen and expand the new development marketing team, which, frankly, had been in somewhat of a transitional year in 2010 through 2011,” de Franca said. De Franca plans an expansion that will include delving further into the rental sector. She said Elliman is currently in talks with developers of rental properties in Manhattan, Brooklyn, Long Island City, Westchester and Long Island. On the sales front, “my goal is to align our new development discipline with our top brokers,” de Franca said. Among those top brokers, she noted, are Raphael De Niro, Fredrik Eklund, Dennis Mangone and Leonard Steinberg, all of whom will be working on high-profile new developments Downtown. Elliman announced last month that De Niro and Eklund had signed on to spearhead the domestic sales efforts at the 391-unit Trump Soho. Prodigy International, which has been marketing the project since its inception, will continue to be involved in chasing down foreign buyers for the tower’s condo-hotel units. The practice of putting resale agents in charge of new developments has a slew of critics within the industry, however, and some say that’s been an obstacle for Elliman in

Commercial market report from page 22 Peter Riguardi, Frank Doyle, Cynthia Wasserberger and Alexis Tener of Jones Lang LaSalle represented the landlord, while Matthew Astrachan and Mitchell Konsker of JLL and Cushman’s Jon Herman and Steven Bauer represented Oppenheimer. (Negotiations began before Astrachan and Konsker decamped for JLL in January.) But at the same time, there were major availabilities brought to the market. As a result of Oppenheimer’s move, for example, the firm’s former 129,000-square-foot space at 125 Broad Street will now be available in December 2012. And, Citibank is offering 138,000 square feet on a sublease at 111 Wall Street. Overall, most brokers are bullish on Downtown, despite the layoff announcements. Joseph Harbert, the COO

landing new development projects. Developers worry that resale listings take brokers’ time, attention and possibly loyalty away from their projects, competitors say. But de Franca said the top-broker model actually gives developers an advantage. Top Elliman brokers already have a pool of clients to draw from, helping developers “get a head start” on sales at new projects, she said.

Grabbing market share Meanwhile, newcomers on the scene are threatening to grab market share from some of the stalwarts in the coming years. Andrew Heiberger’s eight-month-old brokerage, Town Residential, launched its new development marketing division in January, under the direction of former Brown Harris Stevens managing director Reid Price. Town, which did not make The Real Deal’s list, has only marketed some four dozen units since then, but Price said the firm is preparing to launch two small Downtown projects in the fall. The company is also in pre-development planning for a 40-unit Upper East Side project and a 50-unit Tribeca rental, both of which are slated to hit the market in mid2012, Price said. Brown Harris Stevens, which was ranked 10th by units this year with 337 units in six projects, plans to expand its marketing division now that it’s under the umbrella of the Kliegerman-led Terra Development Marketing. “We’re looking to continue to focus on high-end projects, [but to] increase volume,” Kliegerman said. With signs emerging that the financing climate for condo construction is beginning to thaw, though, it’s possible that there may be more projects to go around in the coming years. Mack, of Corcoran Sunshine, said the firm has a pipeline of over $7 billion worth of projects that it is scheduled to bring to the market over the next few years. Some already have financing, including the 145-unit 56 Leonard Street, which is expected to relaunch in the first quarter of 2012. Corcoran Sunshine projects that, citywide, approximately 5,250 condo units will hit the market by 2015. The company may soon grow as a result. “Now that our pipeline seems to be growing significantly by the week, we’re entering a time frame for us to go back out and attract some new talent,” Mack said. TRD


of Cushman’s New York region, said at the firm’s secondquarter media briefing last month that Downtown leasing activity has doubled in the first half of the year. “Something big is going on there,” he said. Cushman’s figures predicted that by 2014, the net effective rent for Class A office buildings Downtown would be $42.50 per square foot. That’s about even with the peak years in 2007 and 2008, but up 60 percent from 2010, the lowest point in this cycle, when it fell to $26.50 per square foot. The availability rate for Downtown declined by 0.1 point to 11.9 percent in July, according to Cassidy Turley. The asking rent rose by $0.28 to $37.74 per square foot, the company reported. TRD

An article in the July issue, “The business of swimming — or not swimming — at 15 CPW,” incorrectly stated that Moshe Balalo was an agent at Blu Realty Group. Balalo is cofounder of the company, not an agent. An article in the July issue, “Aby fires back,” incorrectly stated that investor Peter Brant was divorcing wife Stephanie Seymour. The two had filed for divorce, but then reconciled.

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In response to the strong rental market, some homeowners are choosing to delay putting their homes on the market. “A number of potential sellers are choosing to hold on to their apartments and rent them for a profit,” said GieFaan Kim, an associate broker and director of new business for the Bracha Group at Keller Williams NYC. Landlord concessions have now largely disappeared,

and tenants no longer have much negotiating power, with building owners refusing to budge on rent and lease start dates. In fact, some tenants are now being asked to pay their entire year’s rent in advance. Elizabeth Kee, an associate broker at Core, said multiple offers have been rejected for units at the new construction rental building 791 Broadway.

“Even though they were full asking rent, offers were rejected because they were trumped by other renters offering full asking price with up to a year’s rent in advance, plus security,” she said. Javier Amor, a sales agent at City Connections Realty, summed it up nicely: “Landlords are back in the driver’s seat.” TRD

This is not to say brokers, buyers and sellers in Manhattan should break out the bubbly. While Manhattan is doing better than the rest of the nation, insecurities abound in both the commercial and residential markets. “It is not that we are booming again, it’s that we appear to be stabilizing while a large portion of the county is looking at more declines over the next couple of years,” said Miller. “I still think New York City metro is looking at general price declines over the next couple of years which will be under the rate that we will see nationally, and I see Manhattan in the best-case scenario as remaining flat.” Other skeptics, like CoStar’s Macke, noted that recent highprofile building sales in Manhattan are somewhat misleading, and there is more demand for “trophy” properties than other market segments. “When you drill down into sales, there is a

real split between properties in high demand and everything else,” he said. “It is not as if the overall market is doing as well as the trophy [properties], which are leading this charge.” Macke added that some of the prices being paid for trophy properties are highly dependent on strong rental rate growth — which is clearly not a guarantee. In addition, Miller warned against thinking that the city is completely protected from the market forces that impact the rest of the country, noting that viewing Manhattan in a vacuum could provide a false sense of security. “The brokerage sales pitch often is that this is an island and they don’t make land here. Come on,” he said. “Technically we are an island, but that is a geographic fact, not an economic fact.” TRD Additional reporting by Jill Noonan and Candace Taylor

Klein and Russell Hernandez, had a loan from Column Financial coming due that month. After talking to a number of lenders, the owners reached an agreement with Starwood and secured a deal that included $23 million to refinance the existing securitized debt and another $13 million construction loan that will allow the owners to build an additional 66 rooms on top of the existing property. Brokers at Cushman & Wakefield Sonnenblick Goldman handled negotiations for the hotel. The City Club Hotel, a former gentlemen’s club built in 1904, is considered one of the hidden gems of the New York hotel market, a place where celebrities and other sophisticated travelers stay, because of its relatively low profile. The hotel is located in a prime area between Fifth and Sixth avenues, and is the home to chef Daniel Boulud’s DB Bistro Moderne. Jared Kelso, senior director at Cushman & Wakefield, said that Starwood Property’s background in the hospitality business allowed them to structure a complex deal in about three weeks, where more traditional lenders would have taken a pass.

“There are a lot of lenders that can claim to understand the New York City market, but there are very few who can claim to understand the intricacies of hotel ownership,” said Kelso, who represented the City Club owners. “They got the story.” Ben Thypin, senior market analyst at Real Capital Analytics, agreed that Starwood may be uniquely able to structure more complex loan deals in the current hotel market. “It seems to me they’re concentrating on the type of opportunities a more conventional lender would be less willing to do,” said Thypin, noting that they seem to be willing to lend on riskier deals that others might not take a chance on. Despite the success of his new venture, Sternlicht remains concerned about the pace of the market and warns of a debt bubble. “I was seeing deals where the debt was more than what I was willing to pay for the assets,” Sternlicht said. Starwood is also looking at a new development in Manhattan that has yet to be announced, Sternlicht said. TRD

At first, Schwartz said he wasn’t sure if he was doing the right thing. “I had some qualms about doing this and I had to do some due diligence and soul-searching,” he said. But when he found out it was an all-cash deal, “my concerns were alleviated.” Still, the board caught wind of the plan and denied the application again. “[They] came back and they said they were insulted by the application,” Schwartz said. Buyers and sellers find countless other ways of structuring deals. For example, in order to reduce the flip tax (which is calculated as a percentage of the sale price), some sellers create side agreements with purchasers. Steven Wagner, an attorney who specializes in co-op and condominium law, said a common trick he’s seen is

“to sell personal property, the proverbial Ming vase, in a side letter, and to have the purchase price of the apartment listed at a lower price.” Sometimes buyers and sellers even exchange verbal agreements to avoid being detected, Shmulewitz said. It’s not clear how often this sort of tailoring happens, Wagner said, since it’s done out of view of the co-op and therefore not frequently litigated. Just in case, when he drafts flip-tax provisions for co-op boards, he said he’s careful to “make sure that people can’t use that trick.” A disapproving Erlich said he is nonetheless surprised to hear about these incidents. “The [lending] rules are tough, but [it seems that] the agents and brokers who want to survive … do try all sorts of things.” TRD

Manhattan vs. country from page 34 tan’s diversified economy, which includes tourism, media, fashion and technology. Another factor is that the early-1990s crash prompted changes that still “reverberate today” in New York, according to Steve Malanga, a senior fellow at the Manhattan Institute. That downturn resulted in bankruptcies for entire residential co-ops buildings, he said, which in turn caused many boards to institute new restrictions on sales and financing, which, 12 years later, ended up limiting Manhattan’s exposure to subprime lending. Similarly for the commercial market, Malanga said a speculative building boom in the 1980s made speculative financing much harder to secure in the city, thus limiting overdevelopment and the creation of a glut of new, tenantless buildings.

Starwood Capital from page 53 Getting aggressive Starwood Property Trust has been aggressive in providing financing. It invested $768.8 million worldwide in the second quarter alone. Also, the company reported a 55 percent jump in firstquarter earnings to $31.4 million, or 43 cents a share, compared with $20.2 million, or 37 cents a share, in the yearago period. Among the various loans the property trust has originated is a $30 million mezzanine loan at a hotel on the Upper East Side. Starwood Capital had also previously acquired discounted notes at the famed Carlyle Hotel, which refinanced those loans in April. “We haven’t seen this level of origination since we started our business,” Sternlicht said in a first-quarter conference call with investors in May. “There’s a lot of volume in the market today, and we expect it to grow, not shrink.” One of the more aggressive deals completed by Starwood was at the landmark City Club Hotel at 55 West 44th Street, where it made a $36 million loan in late June. The property, owned by investors Stephen Brighenti, Jeffrey

Loopholes from page 60 getting rejected, industry sources said. Schwartz said he recently had a deal die because the board found this kind of financial sleight of hand distasteful, even though it was an all-cash transaction. He was representing the seller of a Midtown apartment when the board rejected the buyer. “The broker suggested it may have been denied because of the purchase price,” Schwartz said. “So we superficially increased the purchase price by throwing in a $30,000 renovation fee.” The idea was that the buyer would pay the fee to make the purchase price appear higher, then get their $30,000 back at closing in the form of a credit for their renovation.

84 August 2011


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 The American Bar Association/American Law Institute holds  a webinar entitled “Commercial Real Estate Leases: Beyond  the Basics.” The course will be taught by Richard  R.  Goldberg,  senior  counsel  at  Ballard  Spahr in Philadelphia, and Mark A. Senn, a  director at Denver-based law firm Senn Visciano Canges. The webinar addresses the issues  encountered by experienced practitioners in negotiating, drafting  and administrating sophisticated leases, with a focus on making  money for clients while minimizing their risks. 12 to 2:45 p.m. Fee:  $299. Information and registration:


The New York University Schack Institute of Real Estate hosts a three-day  “New York City Residential Market Update” course  for brokers and salespeople, part of the New York  State continuing education module. The course  will highlight residential market trends, including  sales activity and financing requirements. Lecturers include Prudential Douglas Elliman’s Jacky Teplitzky and Wells  Fargo’s Brian Cohen. 9 a.m. to 5:30 p.m. NYU School of Continuing  and Professional Studies, 11 West 42nd Street. Fee: $195. Information and registration:  


The Manhattan Association of Realtors hosts  a new-member introduction event open to  firms, brokers and agents interested in learning about  MANAR, a professional trade association representing the real estate industry in Manhattan. Free. 10:30  a.m. to 12 p.m. Empire State Building, Suite 4711. Contact: 212-594-2233 or 


The Young Real Estate Professionals New York celebrates  its 10-year anniversary with a networking event for local  real estate professionals. Food and  drinks will be served and the event  is open to anyone interested in real  estate networking. 6:30 to 9:30 p.m.  Pranna, 79 Madison Avenue. Free. Information:  


The New York Commercial Real Estate  Women’s Network hosts the third installment of its summer breakfast series. Barbara Champoux, of the law firm Crowell & Moring, is  the guest speaker. 8 to 9:15 a.m. 280 Park Avenue. Fee: $25 for NYCREW members, $45 for  nonmembers. Information and registration: 

22, 24, 29

The Center for Architecture  hosts its three-part LEED Green  Associate exam preparation course. The  course includes a study plan, test-taking  tips and a practice exam with answers.  Attendees will receive an AIA NY certificate  of  completion.  5:30  to  8:00  p.m. 536 LaGuardia Place. Fee: $250  for members, $350 for nonmembers. Register by Aug. 8 for a $50  discount. Information and registration: 


2 3 4 5 6 7

The Brooklyn Historical Society hosts  a Brooklyn real estate roundtable luncheon. The speakers are Salmar Properties’ Marvin Schein, Lisa Gomez of L+M  Development Partners, David Von Spreckelsen of Toll Brothers,  and Hung Luk, chief operating officer of the Lam Group. 12 to 2 p.m.  Brooklyn Historical Society, 128 Pierrepont Street. Fee: $300. Information and registration:


8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

86 August 2011


The Church Avenue Merchants’ Block Association, or  CAMBA,  hosts  an  information  session  entitled  “How  to Buy a Home,” which aims to teach prospective homeowners about credit issues,  affordability and mortgage options. 6 to 8  p.m. 884 Flatbush Avenue. Free. Information and registration: (718) 282-2500 or 


The UJA-Federation presents its New York Summerfest  concert, featuring the musician Meat Loaf. Scott Jaffee, a managing member of Metropolitan Realty  Group, will receive the Robert S. Boas  Award at the event, which is given each  year to someone who has demonstrated leadership in the community. 6:30  p.m. NYCB Theatre at Westbury, 960 Brush Hollow Road, Westbury, N.Y. Fee: $200. Contact: Jodi Faden at (516) 677-1852 or


The Council of New York Cooperatives and Condominiums hosts a class entitled, “Fuel Issues: Weighing the  Options When Changing from No. 6 Oil.” City  regulations require the elimination of No. 6 oil by  2015, and permits will not be renewed for buildings that burn No. 6 oil after July 2012. This class  will discuss the costs, challenges and next steps for New York City  buildings as this change takes effect. 6:30 to 9 p.m. Location to  be announced. Free for members, $50 for nonmembers. Information and registration:  


The Center for Architecture hosts a panel discussion entitled “Leading Engineers on the State of the Industry.” The Urban  Green Council’s Yetsuh Frank will moderate a  discussion by panelists Dominick DePinto of Ads  Engineers, Richard Meilan of Kallen & Lemelson, and Andrew J. Sebor of AltieriSeborWieber.  6 to 7:30 p.m. Alexander Hamilton Customs  House, 1 Bowling Green. Admission: Free for ASHRAE Region I  CRC attendees, $15 for ASHRAE-NY, Urban Green Council and  AIA-COTE NY members, $25 for nonmembers. Information and  registration: 


The Institute of Real Estate  Management holds a CPM  Capstone Track course. 8 a.m. to 5 p.m. Knickerbocker Plaza. 1751 Second Avenue. Tuition:  $1,590 for nonmembers, $1,575 for classic members, $1,550 for premium members. Information and registration:


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Web hits: The month in review Robert De Niro

Emilie O’Sullivan

Time Warner Center

Empire Hotel roof bar




De Niro selling Village home







Luxury rental tower planned for 111 Washington

Robert De Niro selling historic Village home By sArABeth sAnders Actor and real estate investor Robert De Niro is looking to unload the West Village townhouse he’s owned for the past three decades. De Niro’s 19th-century home, located at 14 Saint Lukes Place, has five bedrooms, three and a half bathrooms and a private garden. It hit the market last month for $14 million and is listed by De Niro’s son, Raphael, a managing direc14 Saint Lukes Place tor at Prudential Douglas Elliman, who did not return a call for comment. City records show that De Niro, who developed Tribeca’s Greenwich Hotel and the Loft Residences at 116 Hudson Street, purchased the home in 1975, the same year he won the Academy Award for Best Supporting Actor in “The Godfather: Part II.” The five-story, 22-foot-wide property, which was home to poet Marianne Moore during the 1920s, is on one of the West Village’s most storied and coveted blocks, between Hudson Street and Seventh Avenue.

Bracha, Pinto fight to save synagogue plan By Peter Kiefer Broker Ilan Bracha, developer Haim Binstock, and rabbi-to-the-real-estate-stars Yishayahu Yosef Pinto are battling to save their plan for a synagogue in the Heritage at Trump Place condominium. In 2008, Bracha and Binstock paid $1.65 million for the 2,700-square-foot retail space, located on Riverside Boulevard at 70th Street. They planned to convert it to a synagogue led by Pinto. But in May, Bank of America initiated $1.2 million Ilan Bracha in foreclosure proceedings, claiming that Bracha, Pinto and Binstock had defaulted on their loan. As of May 16, 2011, the principal balance due was $1,207,694.24, according to the filing, which said payments due to the bank had not been made since January. But attorneys for Pinto, Bracha and Binstock fired back in their answer, which was filed June 28.

88 August 2011


Reader comments



Top deals of the month

(Read full stories online)

By AdAm Pincus Real estate development firm Pink Stone Capital expects to build a high-end residential rental tower at 111 Washington Street, two blocks south of the World Trade Center site in the Financial District. The 54-story tower will have roughly 500 studios and one- and two-bedroom apartments, and several large penthouses may also be included, said Meir Milgraum, director of acquisitions for the firm. Some 30,000 square feet of retail space will span two floors, he said. “We hope to be in the ground by next summer and complete construction by 2014,” Milgraum said. Parking magnate Gerald Brauser originally planned to develop the property, borrowing $50 million from New York Community Bank for that purpose in 2006. Last month, Pink Stone acquired title for the site through a deed in lieu of foreclosure, Milgraum said.

Most popular stories

Top deals of the month





Raphael De Niro and Claudine De Niro

Prudential Douglas Elliman

$30.5 million

80 Columbus Circle, #76B

Ann Jeffery

Brown Harris Stevens

$24.9 million

834 Fifth Avenue, #13/14A

Emilie O’Sullivan


$19 million

768 Fifth Avenue, #501/502

Dolly Lenz

Prudential Douglas Elliman

$18.3 million

870 Park Avenue

Daniel Hedaya

Platinum Properties

$11.5 million

92 Laight Street, #12D

Sources: StreetEasy and The Real Deal. Footnotes: Data is for closed deals filed with the city from July 1 through July 22. The chart only includes sellers’ brokers. Only deals where an individual broker and address can be identified are included.

Most popular stories 1) Manhattan rents rise, with room to go higher 2) Private equity firms and developers together again 3) Buyer of record-breaking Time Warner Center condo revealed 4) Luxury rental tower planned for 111 Washington 5) Robert De Niro selling historic Village home 6) NYC’s hairiest deals 7) The Closing: Jeff Blau 8) Toshi to buy the Flatiron Hotel? 9) Related pushing to become One Madison Park sponsor 10) Africa Israel loses big on U.S. investments

Reader comments Court sides with neighbors in Empire Hotel noise-complaint ruckus:

“Put a retractable roof on a rooftop bar? If the people want peace and quiet, they shouldn’t live in Lincoln Square.” Atheists to sue over Red Hook street name change [to Seven in Heaven Way]:

“What name do the atheists suggest we use instead? Seven Rotting in the Ground Way? ... Go get an afterlife!”

TH E R E A L D E A L CR O S S W O R D Real estate voodoo, rapper investors and more By Myles Mellor

Established (1925) Owner/Developer with Assets on East Coast

SEEKING: Individual with minimum of 5 years of experience in retail leasing of Urban and Shopping Center Properties. Heavy experience with Urban Leasing and National Tenants a plus! Must be honest, intelligent, organized and ready to hit the ground running.


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Bonus for the right individual Please reply with resume and list of leases consummated over the past 24 months.

Across 1

An agent at the brokerage CORE,

29 Also known as an introductory

Michael ____ 5

mortgage rate

The subject of a class-action suit over

30 Toured a property for sale

fees paid to brokers: home ____ policies

33 Signed into law by Governor Cuomo

10 Expression of surprise at a showing

(2 words)

11 This celebrity hangout has reopened in

34 Trademark, for short


36 Last name of an Elliman agent and a

13 Susan De Franca’s new employer

famous 20th-century author

15 Late designer of some well-known

38 Rising ___ prices could make a housing

Manhattan restaurants, Larry _____

Your client is our responsibility

double dip more likely

18 Concessions for renters now

39 Brooklyn condominium at 610 Union

20 New hotel opening near La Esquina and the Bowery Ballroom

Avenue 41 What Newmark’s Jeff Gural hopes

22 Owned by 834 Fifth Avenue resident

customers place at the Meadowlands

Woody Johnson 24


____ a great view!

42 Acquired the note at One Madison Park,

25 Bullfighter’s cry

Longview ___ Construction Loan

26 Place

Investment Fund

28 A 1990s rapper who recently launched

43 Wall Street watchdog, for short

a new real estate investment website,

44 The Mets’ home

Vanilla ___

Down 1

MetLife is ____ a bigger share of the

21 Dined

residential mortgage market

22 ____ Chan, president of the Downtown

Form of mortgage


Eternity, almost

23 Onetime Developers Group CEO ___ Padeh



26 Made a bundle


Many investors became overlever____

27 ____Breeze Avenue site in Brooklyn


Moves out of town


Japanese company that announced plans

28 Corporate abbreviation

to move from Downtown to Midtown in June

29 Broker Serena Boardman has one


Yang’s counterpart

30 Art Deco and Modernism


___ Westbury’s A. Conger Goodyear House,

31 Developer Tamir Sapir was fined for

during the boom

on the market for $4.6M

Contact Charles Moore, Director of Marketing

where American Development Group once planned a luxury condo tower

having illegal ____ animal pets

14 Long Island’s Five ____

32 Architect for Cooper Square Hotel, Carlos ____

16 New 56-unit rental building in the

35 Recurring theme

Financial District, 40 ____ Street

Oz Moving & Storage (212) 452-MOVE

Brooklyn Partnership


17 Location of voodoo dolls found at the Steinway Mansion several months ago 19 Real estate values drop ___ of Lexington Avenue

36 Donald Trump is looking to acquire the foreclosed Virginia mansion of Patricia ______ 37 Border 40 Thus

To play this puzzle online, and see the solution, visit

90 August 2011

Bold Design. Radical Views. One stop to Grand Central.


Broker Commission

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D E V E L O P M E N T UP D AT E S Construction Update


Beacon Towers 29 West 138th Street Construction is complete and units are available for immediate occupancy at the eight-story affordable housing development. The 73-unit apartment building, developed by Strategic Development and Construction Group and Lemle & Wolff, currently has six unsold units. Prices for the available homes start at $275,000 for one-bedroom apartments, while two-bedrooms start at $343,000. Amenities include a fitness center, a 24-hour attended lobby, a courtyard garden and underground secured parking. Halstead Property Development Marketing is the agent. Contact:

Harlem Embelesar118 152 East 118th Street

152 East 118th Street

Construction is complete at the eight-story co-op, which has received its temporary certificate of occupancy. The building has sold 51 percent of its 57 units after a year on the market, and closings are slated to begin pending approval from the attorney general’s office. Developed by the Bluestone Organization, the building’s remaining units are priced from $199,000 to $620,000 for apartments ranging from 470 to 1,041 square feet. The development features white-oak floors, a fitness room, on-site parking, a Fresh Direct cold storage closet and a bicycle room. Corcoran Sunshine is the agent. Contact: www.embele

Sales Update

Downtown Brooklyn Oro Condominium 306 Gold Street Over 200 of the 303 homes have now closed at the 40-story building, developed by 147 Flatbush Avenue Owners. Designed by Ismael Leyva, Oro features one-, twoand three-bedOro at 306 Gold Street room condos with available units ranging from $399,000 to $685,000. Amenities include a 24-hour 92 August 2011

doorman, indoor lap pool, two-story fitness center, and screening room with theaterstyle seating. Rose Associates is the agent. Contact:

Downtown Brooklyn Toren 150 Myrtle Avenue The 37-story condominium has now sold over 75 percent of its units. The 60 remaining homes range from studios to threebedrooms. They are between 449 and 1,967 square feet, and range in price from $307,000 to $1.48 million. The units have a 25-year tax abatement. Amenities in the BFC Partners-developed building include a roof garden, outdoor screening center, fitness center and library. Halstead Property Development Marketing is the agent. Contact:

Harlem Windows on 123 Lofts 129 West 123rd Street Sales have begun at the second phase of the two-building Harlem condominium project. Developed by R&B Development, the building is comprised of eight two- and threebedroom lofts ranging from 1,441 to 1,892 square feet. Prices for the remaining units range from $895,000 to about $1.3 million. Amenities include wall-to-wall thermal windows, radiant floor heating in bathrooms, and private laundry rooms. Halstead Property Development Marketing is the agent. Contact:

Morningside Heights 88 Morningside 88 Morningside Avenue More than half of the units at the 12-story, 73-unit condominium have been sold. The one-, two- and three-bedroom homes range in size from 735 to 1,270 square feet, and are priced from $415,000 to $880,000. Amenities include charcoal maple wood floors, on-site storage, a virtual concierge and a fitness center. The development team consists of BOS Development, Horsford & Poteat Realty and the Bluestone Organization. Halstead Property Development Marketing is the agent. Contact:

Upper East Side 1212 Fifth Avenue Sales have started at the 57-unit prewar condo conversion developed by Durst Fetner Residential. Homes at the 15-story building, designed by S. Russell Groves, range from one-bedroom apartments priced at $735,000 to five-bedrooms starting at $5.1 million. Apartments range in size from 800 to 3,600 square feet. The building’s amenities include a 24-hour concierge, a children’s room and a fitness center. Nancy Packes Inc. is the agent. Contact: Compiled by Russell Steinberg

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3-bedroom, 4-bathroom, 3,899 sf prewar townhouse; 4-story property is 20 feet wide with landscaped garden, 3 terraces, 4 woodburning fireplaces, home office with private entrance and top-floor rental unit; taxes $1,785 per month; asking price $5.995 million; 21 weeks on the market. (Brokers: David Schlamm and Karen Loew, City Connections Realty; David Kornmeier, Brown Harris Stevens) “The sellers are a couple who had been living in this house for 22 years and occupied three floors — two for living, and one as a studio for his painting and photography. She is a psychologist, and there was a separate front entrance to the building where she had her sessions. But now that they’re getting older, they wanted to simplify their lifestyle. We sold them a large three-bedroom at the Ansonia, and even though they love this townhouse, which has a lot of charm and memories, moving into this totally beautifully gut-renovated condo is going to make their lives easier. They don’t have to walk up and down stairs with groceries or maintain it themselves — it’s just a one-level layout. An investor bought the house and I believe he is going to gut-renovate the whole thing and resell it.” David Schlamm, City Connections Realty

Harlem $389,000 330 West 145th Street

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2-bedroom, 2-bathroom, 1,016 sf condop in an elevator building (the Hamilton); 24-hour doorman; corner unit has views of Jackie Robinson Park, galley kitchen, and floor-to-ceiling windows; building has fitness room; maintenance $989 per month; 11-year tax abatement; asking price $399,000; 31 weeks on the market. (Brokers: Neil Tilbury and Tony Von Meyers, Halstead Property; Kevin Ryan-Young, Bond New York)

“I started with these buyers two years ago, just before they were getting married. She is the principal of a charter school in the area and he is an events coordinator for Major League Baseball. They had been renting in a brownstone and wanted to purchase something in a building with an elevator. Then they decided to save money for the wedding, so I lost them for a bit. Last year, I just happened to contact them at the right time, when they realized they were pregnant and needed to look again. They wound up with exactly what they were looking for from the beginning.” Kevin Ryan-Young, Bond New York

West Village $3.5 million 166 Perry Street

2-bedroom, 2.5-bathroom, 1,875 sf condo in a new elevator building; 24-hour doorman; unit has Hudson River views through floorto-ceiling windows, home office, wide-plank wood flooring and beamed ceilings; building has roof terrace and fitness room; common charges $2,509 per month; taxes $179 per month; asking price $3.85 million; 16 weeks on the market. (Broker: Heather McDonough, Prudential Douglas Elliman) “I had a friend who ran into someone that was looking for at least three bedrooms and 3,000 square feet. I was listing this apartment, which was much smaller than that. But I had actually also met the people who lived next door because they stopped by one of my open houses, and said that maybe in a year, they might be looking to sell. I figured that if we got them a decent number, they might be sellers now and not in a year. I called the buyer and said, ‘There’s a possible opportunity for a combination unit of about 3,000 square feet.’ Then I approached the owners of the next-door unit to see if they’d be willing to sell. The deal fell into place and both units were purchased. We wound up getting $1,865 per square foot, which was a new record for the building.” Heather McDonough, Prudential Douglas Elliman

Interviews conducted and condensed by Sarabeth Sanders

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Comings & Goings City Connections’ Longley starts new firm


any of the new firms now bursting onto the real estate scene promise the latest, greatest commission splits. But Edward Longley, a former City Connections Realty broker who launched the Hollingsworth Group last month, has a different approach. “It’s not about the payout,” Longley told The Real Deal. That may sound surprising coming from a five-year veteran of David Schlamm’s City Connections, one of the first real estate brokerages in the city to adopt a “100 percent commission” model. But Longley, who named the new firm for his grandmother, said he has a longer-term approach. He envisions a boutique brokerage that operates more like a Fortune 500 company, with a clear corporate structure, salaries and profit sharing. He believes that when all is said and done, those strategies will generate even more income for agents than the high-commission-split models now popular in Manhattan. “I want to build a firm that is coveted by agents,” said Longley, who planned to start his own company in 2008, before the recession cut his business by two-thirds; he waited to get back on solid footing before abandoning the comfort of Schlamm’s agency. He hasn’t yet hammered out the exact details of how his model will work, he said. He recently hired two agents and is waiting for them to get started first. In the meantime, he said, he is focusing on serving clients from his 150-square-foot office at 99 Madison Avenue, which he’ll expand as necessary. He plans to hire up to 15 agents. Schlamm said he wished Longley well. By Adam Fusfeld

Levan unveils ‘Be Your Own Agent’ program


hile attending open houses recently, real estate broker Patricia Levan noticed an unsettling trend: An increasing number of potential buyers were unaccompanied by brokers. In fact, many already knew which apartments they wanted to buy, thanks to StreetEasy and other websites. “It scared me at first,” said Levan, founder of six-year-old boutique firm Levan Real Estate. “I thought to myself, ‘This is foreshadowing our obsolescence on the buy side.’” But Levan soon realized that the shift presented an opportunity for her firm. Last month, she launched a program aimed at rewarding buyers “who are willing to do so much of this job on their own,” she said. She dubbed the new initiative B.Y.O.A., for Be Your Own Agent. With B.Y.O.A., buyers can find properties on their own, then use a Levan agent to help negotiate the sales price and complete the paperwork necessary Patricia Levan to close. The buyer then receives half of his or her broker’s commission. The concept isn’t entirely new — CondoDomain entered the New York City market offering a similar model last March. But Levan said she hopes the Be Your Own Agent branding will help attract clients to her firm. Plus, she believes the program will help her agents do more deals, without having to hire more people to handle the increased traffic. Despite the fact that some individual commissions may now be smaller, Levan said her agents were receptive to B.Y.O.A. “They realize, as I do, that technology forces change,” she said. “Either you grow with it, or you don’t.” By Adam Fusfeld

Former Harlem Lofts broker launches Link NY Realty


alon Nikçi, a former broker with Harlem Lofts, has left to start his own firm: Link NY Realty. The company, which Nikçi officially launched in mid-June, sells and rents residential real estate in the Bronx, Manhattan and lower Westchester. While the firm has only a small batch of listings (it has four, but is expecting two more in the next few weeks), Nikçi insists that he works fast. His company’s motto? “If we cannot sell it, we will not take it.” In addition, to attract clients, the firm is offering an incentive — part of the money that normally goes to the broker. “We are offering buyers a percentage of our commission,” he said. Nikçi is currently working from home. He said the money he saves on office rent is being used for advertising online. So far, he has spent well over $100,000 out of pocket, with no outside investors. Valon Nikçi While the company’s website has not yet launched, it’s scheduled to go live in the next few weeks. Nikçi currently has just two assistants, but hopes to hire at least five full-time agents by the end of the year. By the end of 2012, he wants the company to expand to at least 40 to 50 agents. “I want people who can produce,” he said. By Russell Steinberg 96 August 2011

Broker Exchange Residential A.C. Lawrence & Company Dean Dunbar has been hired as managing director to head the firm’s relocation division. He was previously at Bond New York. City Connections Realty The firm hired three new agents: Judy Kassin, previously of Fenwick Keats; Jay Colbert, formerly a vice president at Helmsley Spear; and Chris Halliburton, previously of Warburg Realty. Fox Residential Group Jill Silvers has joined the firm as an associate broker following a

brief hiatus outside of New York. In 1990, she founded the Manhattan-based real estate firm JR Silvers, which was later acquired by Coldwell Banker. Marie Towers has joined the firm’s townhouse division as an associate broker. She was previously with Halstead Marketing and William B. May. Laura Grazewski has joined the firm as a salesperson after spending four years in the financial services industry. Keller Williams NYC Natalie Baghdadi has joined the firm as associate broker for the Bracha Group. She previously held the same position at Prudential Douglas Elliman. Parish Pradhan, formerly a sales and rental agent at the Corcoran Group, joined the firm as a licensed sales agent. NestSeekers International Regis Roumila, previously of Keller Williams, joined the firm with team members Katherine Gale and Alexander Quvus. Other new hires include Audrey Yamaoka, formerly of Sumitomo, and Eran Elhanani, previously a partner at the Galleria Group. RealDirect Audrey Binkowski has joined the firm as director of marketing. She

was previously a partner at Large Media. Stribling & Associates Brendon DeSimone, formerly of Paragon Real Estate Group in San

Francisco, has joined the firm as a vice president in the Tribeca office. The Trump Organization Kathy Kaye joined the organization as executive vice president of sales. Kaye was most recently an executive vice president of sales at Sotheby’s International Realty.

Commercial Handler Real Estate Organization Ken Abelson has been hired as senior managing director of Third Party Management, the firm’s management division. He previously served as director of marketing at William B. May. Murray Hill Properties Diana Rau Siegal and Stephanie Aldrink, previously with First New York Realty, have joined the firm. Siegal will serve as an executive managing director, and Aldrink has been hired as director. SL Green Realty Jason Black has been promoted to the newly created position of director of sustainability. Black was formerly director of architectural services at the company. Winoker Realty Roy Somwaru and David Simon have joined the firm as directors, and Bill Viverito has been hired as an associate director. Compiled by Russell Steinberg

We heard... Soho North Toronto imports names from the Big Apple H omebuyers priced out of Gramercy or Soho may want to look a bit further north. A number of new condominiums in Toronto, Canada, are taking their inspiration from New York City landmarks. The Gramercy Park, a new condo set to open in downtown Toronto early next year, is built around a private park, much like the Manhattan setting that inspired it. There’s also Soho Lofts in Toronto’s Yonge Eglinton area, the Residences of the World Trade Centre at 10 Yonge Street, and the New Times Square Residences near the city’s waterfront. Home prices in Canada surged to new highs in May for the sixth straight month, according to the country’s TeranetNational Bank Composite House Price Index. Toronto’s market showed the strongest performance, with its home

A rendering of the Gramercy Park condo in Toronto

price index growing 1.7 percent from the previous month. Evoking the glitz and glamour of New York City helps get buyers’ attention, according to Peggy Ruttan, a sales representative at Toronto-based Re/Max Condos Plus. “It gives people the idea that they are buying into a lifestyle,” said Ruttan, who has sold several condos at the

New York brokers fly south A sudden flurry of New York City brokers are setting up shop in Florida, hoping to cash in on a housing market making strides toward recovery. In the last six months, commercial brokerage Robert K. Futterman & Associates and residential firm Prudential Douglas Elliman have both dipped their toes into the Sunshine State market with new Miami offices. They’re joining the Corcoran Group and Brown Harris Stevens, which already have offices in Florida. “Miami seems to be one of the most vibrant places in the U.S. right now, especially in terms of foreign investment,” said Robert Futterman, founder of the eponymous retail firm. In April, Futterman opened an office at 1221 Brickell Avenue in Miami, headed by Coral Gables native Drew Schaul. With 13 million people living between Miami and Palm Beach, Futterman said, there is always a need for more stores.

New Times Square Residences. Younger Canadians, in particular, associate New York City with the upscale lifestyle portrayed in television shows like “Sex and the City,” she said. “A lot of young kids want to buy into an entire package,” Ruttan said. The matching names go beyond condos. The intersection at Yonge-Dundas Square has been nicknamed Toronto’s “Times Square,” and the city has areas named Morningside Heights, Chinatown, Little Italy, Forest Hill and Midtown. Many of these names may not make much sense to New Yorkers, however. For example, the Gramercy Park has a line of units nonsensically called “Union Square at Gramercy Park.” But Toronto residents are just happy to be associated with New York City, real estate professionals said. “New York has developed a standard for [the] condo market in the Northeast,” said StreetEasy’s Jared Kleinstein, who was born in Toronto. “When you associate yourself with New York, you associate yourself with luxury.” By Russell Steinberg

More Manhattan agents do Florida deals

“Our office can expand by 25 percent next year, and we may even open an office up north [in Florida],” he predicted. Meanwhile, Elliman opened its Miami Beach office in March, and Chilean-born Elliman power broker Jacky Teplitzky is expanding her business to Florida, she told The Real Deal in June. Miami is “a natural market for me,” said the Spanish-speaking Teplitzky, noting the large number of Brazilian and Mexican buyers in Florida. She’s currently taking a Real Estate Board of New York course to get her Florida broker’s license. REBNY president Steven Spinola said the organization has offered the one-week course for about 10 years, but he’s seen a recent uptick in the number of brokers signing up. There are several reasons for the sudden interest in Miami, said William Yahn, regional senior vice president of

the Corcoran Group’s South Florida offices in Palm Beach and Delray Beach. One is the perception that it’s a growing market. “Our prices have been hammered pretty hard,” he said, “so people who have been on the fence are now buying.” Another reason is that New Yorkers have started buying heavily in the state, and Manhattan brokers have taken notice. “A good chunk of our buyers are New Yorkers,” Yahn said. For Oren Alexander, a Miami Beach-born broker working for Elliman in New York, knowledge of the Miami market is becoming more and more of an asset. “When I first started working in New York, I was bringing buyers from Miami here,” said Alexander, who has both Manhattan and Florida listings. “Now the situation is sort of reversed. Every time I post an event in regards to Florida, brokers are all over it. People are constantly asking me questions about Florida.” By Katherine Clarke

Nest Seekers cooks up new TV show

of coaching and training,” said Roumila, who brought his team of two agents with him to Nest Seekers. But he believes appearing on “Blend” will help build his brand. “The TV and marketing presence at Nest Seekers will improve Gulivindala, a Nest Seekers managing director who is in my reach,” he said. Roumila’s $4.65 million listing at 439 West 21st Street charge of “Blend.” But while the Bravo show aims to entertain viewers has already been filmed for an episode of “Blend,” he said. with the dramatic lives of real One drawback to Plum TV is that estate brokers, “Blend” is init does not air in Manhattan, but tended to generate exposure only in high-end vacation destinafor sellers’ homes. tions such as the Hamptons, Aspen “It’s all part of our clientand Miami Beach. The cable operacentered mission,” said Gulitor estimates the station gets about 500,000 to 1 million viewers at any vindala. “It’s offering another given moment. platform for our sellers. When we tell them we want to film Nest Seekers has expanded its [their properties], they love East End presence of late, acquiring two firms in the region since April. the idea.” Agents, too, want the opAnd Gulivindala said he believes portunity to show off their Caroline Grane and Regis Roumila of Nest Seekers Plum TV viewers have an inherent listings on TV. interest in Manhattan real estate. For example, “Blend” was a big reason that Paris-born “When we market a property, we don’t just do it localbroker Regis Roumila said he left Keller Williams last ly, we take it around the globe,” he said. “Anybody who is month to join Nest Seekers as senior vice president of sales watching could be a client, a referral source, or some other and managing director. advantage for our business.” “I learned a lot at Keller Williams — they do a great job By Adam Fusfeld

‘Blend’ mixes real estate with recipes, celebrities and design


ith the success of “Selling New York” on HGTV and Bravo’s forthcoming New York spinoff of “Million Dollar Listing,” there’s little doubt that New York real estate can generate solid ratings for television networks. Now, Nest Seekers International is betting that small-screen exposure can yield big sales, too. The firm has struck a deal to broadcast its own internally produced 12-minute show on Cablevision’s Plum TV every Saturday, twice in the morning and once in the evening. Called “Blend” for its mix of real estate, lifestyle and celebrities, the show is hosted by Nest Seekers senior vice president Caroline Grane and filmed inside some of the firm’s priciest listings. The first episode aired Memorial Day weekend. It featured a cooking segment, a roundtable discussion by artists and designers about Manhattan’s Sloane mansion, and a tour of the Watermill home of Todd Hase, a Soho-based furniture designer. The house is currently listed with Nest Seekers’ Joseph DeCristofaro for $3.295 million. Grane is one of four New York cast members on “Million Dollar Listing,” and Nest Seekers’ involvement inspired the firm to start producing its own show, said Ravi August 2011 97



John Catsimatidis is the owner, president, chairman and CEO of the Red Apple Group and Gristedes Foods — Manhattan’s largest supermarket chain. Red Apple — which Catsimatidis said has around $700 million to $800 million in real estate interests — has a proposal to build three residential towers in Coney Island and is planning to add more residential buildings to the one it has in Downtown Brooklyn. In addition, Catsimatidis said he personally owns 300 properties in New York State and Pennsylvania. And he owns the Hellenic Times, a Manhattan-based Greek-American newspaper. He is also a prominent political fund-raiser and donor. What’s your date of birth? Sept. 7, class of 1948. Where were you born? The small island of Nisyros. It was part of the Turkish Empire till the early 1900s. Then it became part of Italy till 1947. And I was born there in 1948 [when it was part of Greece]. So I tried to become a member of the Columbus Club, and they wouldn’t let me in because I missed it by a year. Six months later, my dad brought me to America. What did your father do? He worked for the Italian government on a lighthouse by himself for 16 years. Just to remember how hard he worked, I have a picture of the lighthouse on my BlackBerry. I took it from the yacht we charter. It’s emotional. Where’d you live when you came to America? We moved into 512 West 135th Street, near my father’s brothers. We were prisoners there for 20 years. You’re a prisoner of the ghetto till you escape. I escaped. Where do you live now? On Fifth Avenue in the 60s, in a condo. I’ve been living there since my second marriage [in 1988]. Do you have any other homes? A house in the Hamptons — East Quogue, on the beach. We also have old family homes in Greece. What are your hobbies? My number-one hobby used to be flying airplanes. When my kids were born I quit.

A family friend [was having] problems with his uncle’s grocery store on 100th Street. He said, “You gotta take my position with my uncle.” I paid [to buy him out]. Did not having a college degree hurt you? It didn’t hurt me. It didn’t hurt Bill Gates. But I don’t want my son [John Jr., 18, who starts at NYU this fall] to hear that. [Daughter Andrea, 21, has one semester left.] What’s the story with your pilot being held hostage? We were in the airplane and jet leasing business. It was 1996. We were stuck with a bunch of 727s. The only place to sell them was Africa. We delivered the last plane [to West African millionaire Foutanga Dit Babani Sissoko], but they took away our pilot’s passport in an attempt to reopen negotiations on the price. He wasn’t really a hostage. He was in a luxury hotel with many women and lots of food. So what’d you do? Lowered the price. Who’s the most famous person you’ve flown in [one of your two] planes? President Clinton uses them often.

Where do you dine out in New York City? I go to Chin Chin for Chinese, Bobby Van’s for steak, Persephone for Greek food and Milos for seafood. For good old business, I go to the “21” Club.

Are you friends? We’re friends. Hillary [Rodham Clinton] came to my daughter’s wedding. Bill was away.

What was your first job? At the Sloan’s Supermarket on 135th Street, but they didn’t pay me. I was 14. They made me hustle behind the register and deliver groceries. I ended up buying the company.

Your daughter’s husband is Christopher Cox, Richard Nixon’s grandson. He’s 11 years her senior, so were you upset when they first started dating? No. The kid was such a nice kid.

Why did you drop out of NYU as an undergraduate? I didn’t drop out. I completed four full years. I was eight credits short of graduating.

How much did you spend on their June wedding at the Waldorf-Astoria? In excess of $1 million.

Why not complete it?

You were planning to run for mayor as a Republican in

98 August 2011

2009, but withdrew when Mayor Michael Bloomberg ran for a third term. What happened? Bloomberg called me in … and asked me to withdraw and use my influence … to get him the nomination. I’m being urged to run now by the county chairs. You planning on running? I am urging [Police Commissioner] Ray Kelly to run. If he doesn’t run, I may. You hobnob with some big muckety-mucks. How did you get in with them? I ran a lot of the fund-raisers for President Clinton in the early 1990s and I give away a lot of money every year. We do a lot of fund-raising for people we like. Where do you buy your groceries? At Gristedes — and I pay for them. We even — what’s the word, schlep? — we schlep them out to the Hamptons. Forbes recently ranked you No. 692 on its list of “The World’s Billionaires” with a net worth of $1.8 billion. Is that enough, or do you aspire to climb up that list? I don’t care about the money. Like I tell my friends, if I wasn’t in the supermarket business, I’d be higher up. Your wife, Margo Vondersaar, is president of MCV Advertising and copublisher of the Hellenic Times. She was your secretary [when you first met] as well, right? Going back to 1972. There were rumors we were together [while married to his first wife]. Were you? Sometimes. You’re a gun enthusiast. Ever drawn your weapon? I captured one person 25 years ago. [Three guys] held up our store on 84th Street and York Avenue. The other two got away. By Lauren Elkies PHOTOGRAPH FOR THE REAL DEAL BY MARC SCRIVO


The Real Deal - August 2011 Issue  

The Real Deal's August 2011 Issue

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