The Real Deal April 2014 by The Real Deal

‘s

NYC apartment prices skyrocket

Buffett’s Buffett’sbig best buy

www.TheRealDeal.com

Domino Sugar deal not so sweet for mayor

Selling condos to fake tenants

N EW YORK R EAL E STATE N EWS

130

Kevin Maloney, almost in Attica?

Vol. 12 No. 4 April 2014 $3.00

p52

Real estate’s biggest spenders From REITs to Russian oligarchs, a look at who is preparing to buy the most property p42

Urban Compass’s new direction Can NYC’s most closely watched and well-funded brokerage start-up satisfy investors? p72

The GM Building billionaires’ club

A breakdown of the highprofile tenants in the country’s most valuable office tower p38 ILLUSTRATION BY D. STUDIO

GREEN LEAF COMMUTE

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HOME ON THE HIGH LINE

For your client: Complimentary amenity package, including private Equinox® fitness center, provided with your client’s new lease For you: One month OP VIP appointments available

abingtonhousenyc.com | 646.346.6559 Client will receive a complimentary one year amenity package for each new lease signed at Abington House when accompanied by a broker. Offer to client is valid for leases signed through 6/30/14. Broker will receive one month OP for each new lease signed by their client at Abington House. Offer to broker is valid for leases signed through 5/31/14. Client must give broker’s name when making an appointment and broker must accompany client when visiting Abington House. Client must actually lease and move into Abington House to qualify. Offers are not applicable for residents who transfer within the Related Rentals portfolio. Offers are subject to change and are not a required, essential or auxiliary service provided by the landlord.

ASHKENAZY

ACQUISITION

Premier Manhattan

200 Central Park South

Columbus Circle/Midtown

LOCATION The entire city block of 7th Avenue between 58th Street and Central Park South, this building also includes frontage on both 58th Street and Central Park South. SIZE ±31,249 SF of retail space

SUBWAY PROXIMITY within 2 blocks within 3 blocks

FRONTAGE Over 475’ of wraparound frontage INFORMATION • 4 R etail Units & 17 Professional Units • C urrent tenants include Le Pain Quotidien, Faust Pianos, Allegro Pianos and SBR Multi Sports

Philip House (1311-1337 Lexington Avenue)

Upper East Side

Retail Opportunities Lincoln Square/Upper West Side

SIZE Ground: Mezzanine: Lower Level: Total:

±3,000 SF ±2,000 SF ±2,500 SF ±7,500 SF

FRONTAGE Over 55’ of prime glass frontage on Broadway

INFORMATION • D irectly adjacent to the Apple store at Lincoln Center • D irectly across from the World Famous Lowes Theater and only 3 blocks from Lincoln Center for the Performing Arts

Lower East Side

SIZE Multiple Retail Opportunities

SUBWAY PROXIMITY within 1 block

80 Carmine Street

West Village LOCATION Corner of Carmine Street & Varick Street SIZE Ground: Lower Level: Outdoor Patio/ Glass Enclosure: Total:

SUBWAY PROXIMITY within 2 blocks

±3,050 SF ±4,955 SF ±1,000 SF ±9,005 SF

INFORMATION • Turn-key restaurant opportuni ty with 1,000 SF of outdoor patio; all uses considered • N eighboring tenants include: HSBC, vw, Soul Cycle, Equinox, NY Sports Club

For Leasing Information Please Contact:

AJ Levine • alevine@aacrealty.com • 646.214.0245

1991 Broadway

SUBWAY PROXIMITY within 5 blocks

LOCATION Corner of Delancey & Clinton Streets, at the foot of the Williamsburg Bridge

INFORMATION • Si tuated at the base of Philip House, a classic 12-story prewar condominium conversion containing 71 luxury residences • Located i n the heart of Carnegie Hill, home to some of the world’s wealthiest residents •The bl ock experiences an average of 815 people every hour on weekdays

ACQUISITION

LOCATION On Broadway between 67th & 68th Streets

LOCATION Located on Lexington Avenue between 88th & 89th Streets SUBWAY PROXIMITY within 2 blocks

ASHKENAZY

SIZE Ground: Up To:

±2,725 SF ±5,250 SF

156 Delancey Street

FRONTAGE Over 100’ of frontage along Delancey Street

INFORMATION • B e seen by over 111,189 vehicles and over 200k people traveling the bridge each day • Directly across from the newly approved Seward Park Development, a 1.65M SF mixed use project including 1,000 new housing units

145 Greene Street

SoHo LOCATION Corner of Greene Street and Houston Street

FRONTAGE Over 124’ of frontage along Houston Street

SIZE Ground: ±1,970 SF Lower Level: ±960 SF Total: ±2,930 SF INFORMATION • Features i nclude high ceilings and extraordinary frontage • N eighboring retail includes: Chanel, Louis Vuitton, Club Monaco, Ralph Lauren, Burberry, Dior • A t the cross-roads of SoHo, NYU, Greenwich Village, and NoHo

Daniel Iwanicki • diwanicki@aacrealty.com • 646.214.0251

ASHKENAZY

ACQUISITION

Premier Manhattan

200 Central Park South

Columbus Circle/Midtown

SUBWAY PROXIMITY within 2 blocks within 3 blocks

FRONTAGE Over 475’ of wraparound frontage INFORMATION • 4 R etail Units & 17 Professional Units • C urrent tenants include Le Pain Quotidien, Faust Pianos, Allegro Pianos and SBR Multi Sports

Philip House (1311-1337 Lexington Avenue)

Upper East Side

Retail Opportunities Lincoln Square/Upper West Side

SIZE Ground: Mezzanine: Lower Level: Total:

±3,000 SF ±2,000 SF ±2,500 SF ±7,500 SF

FRONTAGE Over 55’ of prime glass frontage on Broadway

INFORMATION • D irectly adjacent to the Apple store at Lincoln Center • D irectly across from the World Famous Lowes Theater and only 3 blocks from Lincoln Center for the Performing Arts

Lower East Side

SIZE Multiple Retail Opportunities

SUBWAY PROXIMITY within 1 block

80 Carmine Street

West Village LOCATION Corner of Carmine Street & Varick Street SIZE Ground: Lower Level: Outdoor Patio/ Glass Enclosure: Total:

SUBWAY PROXIMITY within 2 blocks

±3,050 SF ±4,955 SF ±1,000 SF ±9,005 SF

INFORMATION • Turn-key restaurant opportuni ty with 1,000 SF of outdoor patio; all uses considered • N eighboring tenants include: HSBC, vw, Soul Cycle, Equinox, NY Sports Club

For Leasing Information Please Contact:

AJ Levine • alevine@aacrealty.com • 646.214.0245

1991 Broadway

SUBWAY PROXIMITY within 5 blocks

LOCATION Corner of Delancey & Clinton Streets, at the foot of the Williamsburg Bridge

ACQUISITION

LOCATION On Broadway between 67th & 68th Streets

LOCATION Located on Lexington Avenue between 88th & 89th Streets SUBWAY PROXIMITY within 2 blocks

ASHKENAZY

SIZE Ground: Up To:

±2,725 SF ±5,250 SF

156 Delancey Street

FRONTAGE Over 100’ of frontage along Delancey Street

145 Greene Street

SoHo LOCATION Corner of Greene Street and Houston Street

FRONTAGE Over 124’ of frontage along Houston Street

Daniel Iwanicki • diwanicki@aacrealty.com • 646.214.0251

bespokemillwork â&#x2C6;&#x2122; premieredesign/build â&#x2C6;&#x2122; construction management

TheRenovated Home

New York

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TheRenovated Home

New York

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Long I sland

BocaRaton

est.1991

Contents A P R I L

REFLECTING PRESENCE

2 0 1 4

Prices shoot through roof

Interest rate heebie jeebies

Behind the shared-space craze

Manhattan residential sales see megaprice spike compared to last year.

More tenants split their office rent.

New types of financing to gain popularity in NYC as hikes loom. After expanding in Manhattan, WeWork and other shared-office firms tackle the outer boroughs.

At the desk of: Cetra and Ruddy The husband-and-wife architecture team —responsible for mega-projects like One Madison — talk about meeting at City College, Indian goddesses and more.

John Cetra and Nancy Ruddy in their office last month.

As the only building officially on memorial grounds, the National September 11 Memorial Museum Pavilion must echo the somber dignity of its WTC environs while admitting thousands of visitors to its exhibits each day. To achieve these diverse goals, Snøhetta teamed with consultant Front Inc. to design an enclosure that both maximizes the building’s security and mirrors its placid surroundings. Through the changing days and seasons, it offers museumgoers a setting for reflection on the past while looking to the future.

Transforming design into reality

The billionaire’s building 38 GM: A floor-by-floor breakdown of

who works in the country’s most valuable trophy tower.

rebound in home equity 40 Big Home value spikes lift millions in U.S. out of negative equity.

Station back from dead? 40 Penn Gov. Cuomo is resurrecting plans to expand the transit hub.

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

The GM’s tenants include firms founded by tycoons like Carl Ichan and Ron Baron.

Hey, big spender From REITs to Russian oligarchs, a look at who’s preparing to open their wallets for NYC properties.

up Wythe 46 Waking A map of the Williamsburg stretch’s

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

makeover, where the Wythe Hotel is one of dozens of new developments.

48 The Wythe Hotel kicked off the transformation of the strip.

Luis Ortiz on MDL’s third season The Elliman broker and “Million Dollar Listing” reality TV star on getting fired from Keller Williams and not dating.

Buffett’s best deal

Architect: Snøhetta Photo: Snøhetta

How a Greenwich Village retail strip became the Oracle of Omaha’s best investment. And he’s never even seen it. Billionaire investor Warren Buffett

10 April 2014 8 October 2012www.TheRealDeal.com www.TheRealDeal.com

www.TheRealDeal.com March 2012 00

RECENT TRANSACTIONS S ince 2005, we have invested $1.6 billion in the origination and acquisition of commercial mortgage loans collateralized by multifamily, retail, office and light industrial properties throughout the United States.

$52,000,000

$17,440,000

$16,100,000

Note Acquisition Multifamily Manhattan, NY February 2014

Note Financing Multifamily Properties Bronx, NY December 2013

Distressed Note Portfolio Acquisition Multifamily Properties Brooklyn, NY January 2014

$11,250,000

$7,750,000

$5,400,000

Loan Origination Townhouse Manhattan, NY January 2014

Loan Origination Residential Development Hamptons, NY February 2014

Loan Origination Development Site Brooklyn, NY January 2014

$5,000,000

$3,700,000

Note Acquisition Multifamily Greenwich, CT December 2013

Loan Origination Townhouse Manhattan, NY January 2014

825 Third Avenue • 37th Floor • New York, NY 10022

(646) 472-1900 • www.madisonrealtycapital.com Includes deals closed by Sullivan Realty Capital, LLC, an investment adviser registered with the Securities and Exchange Commission doing business as Madison Realty Capital, and its affiliates. Past performance does not guarantee future results. It should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities listed. Holdings are subject to change.

Contents continued

ASTOR TURF

52 A look at the developers with the most square footage being planned in the five boroughs.

Domino deal not as sweet as it seems for de Blasio

A rendering of the planned Domino Sugary Factory redevelopment

Was affordable housing deal at project actually a positive for the real estate industry?

of a big buy 60 Anatomy Behind the roller-coaster ride leading up to the megadeal at 470 Vanderbilt in Brooklyn.

In Manhattan’s East Village, a neighborhood known for passionately independent movements, 51 Astor coolly shows it belongs. Designed to attract a diverse range of tenants by Maki and Associates for Edward J. Minskoff Equities, it links two huge volumes on a full city block yet manages to appear different from each angle. The building’s structural steel acrobatics ensure flexibility to serve this market long-term while coalescing with a neighborhood master plan to connect community through public space—a restrained composition in an unrestrained neighborhood.

The ascent of 51 Astor

Urban Compass’s new direction

An inside look at how Edward Minskoff ’s once-struggling spec office tower attracted tech firms that are competing for space.

Doubters say the firm won’t be able to satisfy investors, but the company leadership remains confident.

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

Commercial Market Report

Maki strikes again

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

The Japanese architect’s 4 WTC offers a ‘shimmering perfection’ and ‘silvery brilliance,’ critic says.

Structural Steel Right for any application For help achieving the goals of your next project, contact the Steel Institute of New York.

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

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

4 World Trade Center

106

128

Publisher of Metals in Construction 211 E 43 ST | NY, NY 10017 | 212-697-5553 | www.siny.org

Wicked ‘debuts’ in Harlem Actors of hit Broadway show flock to one Uptown condo.

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

108

Residential Deals An insiders’ look at how home sales really happen.

122

Calendar of Events Architect: Fumihiko Maki, Maki Associates Structural Engineer: Ysrael A. Seinuk Photo: Richard Ginsberg

10 12 April October 2014 2012 www.TheRealDeal.com www.TheRealDeal.com

130

Kevin Maloney beats odds My parents ‘fully expected to come visit me in Attica ... but for some reason it all fell into place.’

Check out this month’s activities.

128

We Heard A lighter look at industry buzz.

www.TheRealDeal.com March 2012 00

As your jumbo lender, we understand that the mortgage process needs to be smooth and easy when buying in the luxury market. Our exceptional customer service, coupled with the right loan program, will make buying your home a worry-free experience. • Loan Amounts up to $10,000,000 • Down Payments as Low as 10% • Investment Properties Eligible

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Long Island

Manhattan

LAKEWOOD

560 Broadhollow Road Mellville, NY 11747

120 Broadway, 29th Floor, Suite 2950 New York, NY 10271

(516) 430-5555

(646) 568-3600

401 Madison Ave, Third Floor Lakewood NJ 08701

(732) 719-8750

The Real Deal N e w Yo r k R e a l E s tat e N e w s Publisher Amir Korangy Editor-IN-CHIEF Stuart W. Elliott Managing Editor Jill Noonan DEPUTY Managing Editor Eileen AJ Connelly EXECUTIVE Web Editor John Goff

Whether you need to buy or sell a building having a real estate broker that knows the local players is key - the buyers and the sellers. You need an intensely dedicated broker who is still on the job long after the lights have gone out elsewhere.

You need Rosewood Realty Group

Art Directors Ronald Gross, Keziah Makoundou Senior ReporterS Adam Pincus, Katherine Clarke Reporter Hiten Samtani SOUTH FLORIDA BUREAU CHIEF Eric Kalis Contributors C. J. Hughes, David Jones, Adam Piore EDITORIAL OPERATIONS MANAGER Linden Lim Web Producers Mark Maurer, Julie Strickland, Zachary Kussin, Angela Hunt SOCIAL MEDIA COORDINATOR Kerry Barger Editorial Assistant Sasha von Oldershausen

212.359.9900

www.rosewoodrealtygroup.com

Rosewood Knows New York

We are pleased to announce the following results for Q1 2014, Rosewood has completed total sales of

$610,698,000 which include:

Manhattan: Aggregate sales of

$164,043,000

11 Buildings / 467 Residential Units / 24 Commercial Units Brooklyn: Aggregate sales of

$119,875,000

20 Buildings / 843 Residential Units / 5 Commercial Units Bronx: Aggregate sales of

$102,150,000

14 Buildings / 878 Residential Units / 36 Commercial Units Queens: Aggregate sales of

$224,630,000

18 Buildings / 1,269 Residential Units / 10 Commercial Units

14 April 2014 www.TheRealDeal.com

Interns Juan Zielaskowski, Inga Ryabchikova Photographers Chris Martin, Marc Scrivo Director of mARKETING OPERATIONS Yoav Barilan ASSOCIATE SALES DIRECTOR Ross Fox Advertising Sales Eran Evron, Abi Laoshe, Nick Mascaro, Robert Stearns, Nicki Chadi, Sigalit Levi, Marcus Guest, Chris Cuomo DIGITAL TRAFFic MANAGER Junaid Zahid WebmasterS Nima Negahban, Andrew LoCascio Finance director Kenneth Cyrus OFFICE MANAGER Virginia Durso Circulation Paul Destanko Distribution Mitchell Newman, Patricia Hofmann, Forero Express ATTORNEY Barry J. Friedberg Trachtenberg Rodes & Friedberg LLP Accountants William T. McCallum, CPA, P.C., Christine Wang

The Real Deal is a registered trademark of Korangy Publishing Inc. Copyright © 2014. Call 212-2601332 or e-mail news@therealdeal.com. Warning: It is illegal to photocopy or reproduce any part of The Real Deal without express written consent. For reprints and duplication rights, call 212-260-1332. Principal office: 158 West 29th St., New York, NY 10001. The Real Deal is published monthly. Annual subscriptions cost $95. Send check or money order to 158 West 29th St., New York, NY 10001.

Thank |ou Alison Abovsky Jasmin Abrol Sean Attebury Michael Bartlett Elizabeth Beare Emily Beare Doug Bowen Parul Brahmbhatt Oliver Brown Winchester Brown III Brett Caspi Raphael Chejade-Bloom Julia L. Cole Mickey Conlon Cassie D’ Agata Deirdre De Risi Kevin Delmore Brendon DeSimone Chris Dominiak Doug Eichman Martin Eiden Alexandra Fairweather Andrew Farber Ryan Fitzpatrick Brittany Fox Lee Frankel Romina Frecha Stephen J. Gallagher Marsi Gardiner Gideon Gebreyesus Lisa Graham Reginald V. Grayson Evan Greenberg John Harrison Leora Aimee Hasas Michelle Imhof Ben Jacobs Paul Johansen Dana Karson

CORE-TRD-ThankYou2014-Select.indd 1

Elizabeth Kee Maggie Kent Jenna Klein Naomi L. Klein Blu Kokin Scott Kreitzer Adie Kriegstein Patrick Lilly Kerry Lynn Natalie Malikyan Sean McGinley Reba Miller Patrick S. R. Mills Limor Nesher Ivana Nikolic Adrian Noriega Steve Pak Tom Postilio Natalie Rakowski Jarrod Guy Randolph Tucky Ridder Keren Ringler Christian Rogers Susan Rubell Michael Rubin Tony Sargent Jessica Silver Lindsee Silverstein Jeff Smith Steve Snider Andres Emilio Soto Ashley Sternbach Lawrence Treglia Cleo Vauban Sidney S. Whelan Shawn Wilson Doron Zwickel Mirie Zwickel

For making us Manhattan's

# brokerage firm for the third year in a row.

THE EVOLUTION OF REAL ESTATE

CORE · 104 Fifth Avenue · NY, NY 10011 · 212-609-9100 · corenyc.com

3/28/14 11:11 AM

micro-unit

EDITOR’S NOTE All the fake news that’s fit to print

n honor of April Fools’ Day, I’d like to share some of the fake news headlines (à la “The Colbert Report”) inspired by the past year of covering the always-over-thetop world of New York City real estate. Those events include some insanely priced sales amid a record low number of available apartments (for more on that, see page 26), characterized by foreign buyers with big checkbooks and sometimes questionable taste. The new mayor, who is intent on reversing the trend of the rich getting richer and the poor remaining stuck in place, has also provided good fodder for this exercise too. Then there are the industry figures wining and dining buyers and sellers to bring them together to get deals done. Place all of that against the backdrop of a topsy-turvy winter, which has included evidence of global warming that will eventually result in New York being: a) annexed into the Arctic Circle South, b) becoming a subtropical jungle, or c) being completely covered in water.

Here are a few headlines:

• A look at the best summer rentals — if there is a summer • Inside the inventory crunch: Buyers swarm open house for 400-square-foot studio facing brick wall, the only apartment left for sale in Manhattan • Dolly Lenz’s new firm ramps up, now with a landline and company email address • Buyers consider purchasing in super-tall luxe towers on 57th Street, but then ask themselves, “Why would I live on 57th Street?” • De Blasio makes headway on affordable housing goal by renting out Gracie Mansion bedrooms at below-market rates • Exclusive Zillow report: NYC average apartment price now cheaper that Detroit, Bulgaria • Outtakes from “Million Dollar Listing New York” for hard-core groupies: Ryan Serhant does his taxes; Luis Ortiz gets his dry cleaning delivered • REBNY denies working with NSA in inquiry over drones taking aerial photos of high-end properties • Wall Streeter to the tech millionaires who just purchased pricey apartments: “That used to be me” • Spike Lee rails against New York’s gentrifiers; lists Upper East Side townhouse for $32 million • TRD announces new probing feature: “On the couch with: Inside the therapy sessions of real estate’s top players”

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Now back to reality! We’ve got some great (and true) stories worth checking out in this jam-packed issue. In our main cover story, we examine the most active developers in New York City. On our list are some expected names — Extell Development, the Moinian Group, Related Companies — as well as some unexpected players like the Continuum Company and Rabsky Development. See the story starting on page 52 to find out who else made the cut. In another cover story, meanwhile, we look at who has the deepest pockets in real estate — in other words, which players are likely to spend the most on all kinds of properties, from townhouses to trophy office towers, in the coming months. See page 42 to find out who has a $1 billion check to write. Speaking of billionaires, we’ve also got a story that details the illustrious tenant lineup at the city’s most valuable office tower, the GM Building, on page 38. And we’ve got a piece about the best investment that Warren Buffett, the Oracle of Omaha, says he ever made. You guessed it, it’s a New York City property — one he’s never even visited (proof positive that reality is often stranger than fiction). See the story on page 50. Lastly, check out our profile of Urban Compass, the start-up that’s raised $33 million and is hoping to transform the New York City residential brokerage world. Recent changes to its business model, however, have spawned a slew of doubters who don’t think it can do so. Read more on page 72. And for those of you pining for warmer weather (and slightly cheaper real estate), check out our 60-plus-page South Florida Market Report that’s included with this issue. We look at development in Miami’s burgeoning Downtown area and the rapidly rising prices investors are paying for condos in South Florida today. It’s a one-stop shop for all you need to know about the so-called sixth borough. Enjoy the issue.

16 April 2014 www.TheRealDeal.com

Stuart Elliott

LI V E MIAMI

ONLY WITH ONE The top brokerage firm for luxury condo sales over $1M in Miami

A truly international city offering endless world-class entertainment, fine dining, and ideal weather year round. Debuting 80 condo towers with over 20,000 units — an iconic city not just to play but to stay — Miami is on the rise.

Supported by a global brand with over 650 offices worldwide, ONE | Sotheby’s International Realty is poised to make Miami your second home. Our brokerage is comprised of more than realtors: Global Real Estate Advisors, ready to expertly guide an international audience through the South Florida market.

How many luxury square feet does $1M buy? *

MIAMI

“Demand for prime Miami property remains strong and price growth is set to keep pace with the key East and West Coast markets in 2014.”

“Miami’s high-end condo market has proved especially vibrant, and has gone hand in hand with new luxury shopping destinations in Brickell and the Design District.”

701

- Jonathan Miller, Property Analyst

- Conor Dougherty, Wall Street Journal

SHANGHAI

MOSCOW

PARIS

SYDNEY

497

463

449

443

square feet

NEW YORK

LONDON

HONG KONG

MONACO

433

271

222

161

square feet

*2013 Global Market Report, Knight Frank (Miami range based on South Beach value)

View from one of our exclusive developments, One Thousand Museum.

MIAMI AS A GLOBAL MARKET W H E R E A R E B U Y E R S C O M I N G F R O M?** Top National Markets

Top International Markets

1. California

6. Michigan

1. Brazil

6. Venezuela

2. Georgia

7. Pennsylvania

2. Colombia

7. Bolivia

3. Texas

8. Virginia

3. Canada

8. France

4. New York

9. New Jersey

4. India

9. United Kingdom

5. Illinois

10. North Carolina

5. Argentina

10. Russia

** Miami International Council

For immediate assistance with your real estate transaction, please call 888.998.5560.

ONESOTHEBYSREALTY.COM ©MMXIV ONE Sotheby’s International Realty, licensed real estate broker. Equal Housing Opportunity. Each Office Independently Owned And Operated.

LI V E MIAMI

ONLY WITH ONE The top brokerage firm for luxury condo sales over $1M in Miami

How many luxury square feet does $1M buy? *

MIAMI

“Demand for prime Miami property remains strong and price growth is set to keep pace with the key East and West Coast markets in 2014.”

“Miami’s high-end condo market has proved especially vibrant, and has gone hand in hand with new luxury shopping destinations in Brickell and the Design District.”

701

- Jonathan Miller, Property Analyst

- Conor Dougherty, Wall Street Journal

SHANGHAI

MOSCOW

PARIS

SYDNEY

497

463

449

443

square feet

NEW YORK

LONDON

HONG KONG

MONACO

433

271

222

161

square feet

*2013 Global Market Report, Knight Frank (Miami range based on South Beach value)

View from one of our exclusive developments, One Thousand Museum.

MIAMI AS A GLOBAL MARKET W H E R E A R E B U Y E R S C O M I N G F R O M?** Top National Markets

Top International Markets

1. California

6. Michigan

1. Brazil

6. Venezuela

2. Georgia

7. Pennsylvania

2. Colombia

7. Bolivia

3. Texas

8. Virginia

3. Canada

8. France

4. New York

9. New Jersey

4. India

9. United Kingdom

5. Illinois

10. North Carolina

5. Argentina

10. Russia

** Miami International Council

For immediate assistance with your real estate transaction, please call 888.998.5560.

ONESOTHEBYSREALTY.COM ©MMXIV ONE Sotheby’s International Realty, licensed real estate broker. Equal Housing Opportunity. Each Office Independently Owned And Operated.

15 LEONARD STREET 15 Leonard Street features 4 full floor luxury 4 bedroom residences, one Townhouse and a triplex penthouse which all have keyed elevator access, deeded storage, private outdoor space and private parking. The interior of these residences unite luxurious sensibility to modernism with rich natural materials, including a collection of fine stone, porcelain tiles and custom wood finishes.

Brett Miles Licensed Real Estate Sales Person Andrew A. Azoulay Licensed Real Estate Sales Person

Exclusive Sales and Marketing by TOWN New Development

212 -775-0015 INFO@15LEONARDST.COM

Tribeca Development Partners, LLC Gold Development

Starting from $6,150,000. THE RESIDENCE LAYOUT, SQUARE FOOTAGE AND DIMENSIONS ARE APPROXIMATE AND SUBJECT TO NORMAL CONSTRUCTION VARIANCES AND TOLERANCES. SQUARE FOOTAGES EXCEED THE USABLE FLOOR AREA. THIS FLOOR PLAN IS BASED ON CONSTRUCTION DRAWINGS. MINOR INACCURACIES BETWEEN THIS FLOOR PLAN AND THE ACTUAL RESIDENCE LAYOUT WHEN BUILT WILL NOT EXCUSE A PURCHASER FROM COMPLETING THE PURCHASE OF A UNIT WITHOUT ABATEMENT IN PRICE AND WITHOUT RECOURSE AGAINST THE SPONSOR. SPONSOR RESERVES THE RIGHT TO MAKE CHANGES IN ACCORDANCE WITH THE OFFERING PLAN. THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE FROM SPONSOR FILE NO. CD13-0208. SPONSOR: TRIBECA DEVELOPMENT PARTNERS, LLC. INTERIOR DECORATIONS FINISHES AND FURNISHINGS ARE PROVIDED FOR ILLUSTRATIVE PURPOSE ONLY. SPONSOR MAKES NO REPRESENTATIONS OR WARRANTIES EXCEPT AS MAY BE SET FORTH IN THE OFFERING PLAN. WE ARE PLEDGED TO THE LETTER AND SPIRIT OF U. S. POLICY FOR THE ACHIEVEMENT OF EQUAL HOUSING OPPORTUNITY THROUGHOUT THE NATION. WE ENCOURAGE AND SUPPORT AN AFFIRMATIVE ADVERTISING AND MARKETING PROGRAM IN WHICH THERE ARE NO BARRIERS TO OBTAINING HOUSING BECAUSE OF RACE, COLOR, RELIGION, SEX, HANDICAP, FAMILIAL STATUS OR NATIONAL ORIGIN. THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE FROM THE SPONSOR FILE NO CD13-0208. SPONSOR: TRIBECA DEVELOPMENT PARTNERS, LLC.

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Brett Miles Licensed Real Estate Sales Person Andrew A. Azoulay Licensed Real Estate Sales Person

Exclusive Sales and Marketing by TOWN New Development

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Tribeca Development Partners, LLC Gold Development

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O F D AV I D C O L L I N S S T U D I O , L O N D O N , W I T H T H E A R C H I T E C T U R E A N D R E S I D E N T I A L P L A N N I N G O F

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Sponsor: MCP SO Strategic 56 LLP, c/o Green Investments, 160 Varick Street, 2nd Floor, New York, NY 10013. This is for informational purposes only. The complete offering terms are in an Offering Plan available from the sponsor. File No. CD07-0132. This is not an offer to sell condominium units in any jurisdiction which requires prior registration and in which the Condominium is not registered. We are pledged to the letter and spirit of US policy for the achievement of equal housing opportunity throughout the nation. We encourage and support an afﬁrmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, handicap, familial status, or national origin.

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Re s i d e n t i a l Ma r k e t

By Katherine Clarke anhattan condo and co-op prices are finally seeing the impact of chronically low residential inventory and a shift toward über luxury in new development. The average sales price for a Manhattan apartment jumped by a shocking 30.9 percent year over year, according to a quarterly report compiled by appraisal firm Miller Samuel on behalf of

Residential prices shoot through roof Ongoing Manhattan apartment shortage prompts huge jumps in apartment costs

brokerage Douglas Elliman. The average price per square foot increased by 23.6 percent year over year, to $1,363 in the first quarter of the year. “This is going to be widely talked about,” said Miller Samuel CEO Jonathan Miller, “and it made me nervous just because there was such a jump.” Rising prices can be attributed to the ongoing Manhattan inventory crisis, which has seen

fewer than 5,000 apartments on the market at any given time over five consecutive quarters. Also contributing is a general upward pressure on new development pricing as the result of an overheated market for land. Competition between developers trying to secure new Manhattan sites has sent land prices above $800 per square foot in some instances, meaning developers have to reach for the skies

on pricing to maintain profitability. “It’s a nice place to be. It’s one of those moments where — you almost don’t want to say it — it seems like ‘green-light-go’ for the foreseeable future, looking at the inventory that’s in the pipeline and the amount of demand we’re experiencing,” said Jeff Appel, president of residential brokerage Town Residential. The average price of housing

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stock on the high-end of the market is skewing upward thanks to a handful of luxury buildings like Extell Development’s One57 at 157 West 57th Street, where prices have topped $6,000 per square foot. A large number of sales closings at the building hit public records last quarter, pushing average closing prices up. The average price in the first quarter of the year for a luxury apartment, classified as an apartment in the top 10 percent of co-ops and condos, was $2,706 per square foot, a 40.6 percent increase year over year and a 17 percent increase from the fourth quarter of 2013. To be in the top 10 percent, an apartment had to close for at least $3.72 million in the first quarter, up from $2.94 million in the same quarter of 2013. “Because of the increased cost of land and the increased costs of development, sponsors are only bringing units to the market on the super-high end,” said Daniel Hedaya, president of Platinum Properties. “The $1-million-to-$5-million range is where the depletion of inventory is the worst. I was looking, myself, to buy a two-bedroom on the Upper East Side. I tried getting three apartments. Every single one, I lost out on, because it went above the asking price for all cash.” But experts said the overall market numbers, while undoubtedly strong, may be somewhat deceptive. That’s because the first quarter of 2013, with which comparisons are made, was particularly weak, coming directly after a frantic fourth quarter, which saw a rush of closings ahead of an expected rise in capital gains taxes. Monthover-month increases paint a slightly less dramatic picture. “However, even if you try to adjust for that year-over-year anomaly, we’re still seeing a sharp increase in price,” Appel said. Median prices by unit-type were up across the board in the first quarter. The median price for one-bedroom condos rose 12.5 percent from the year earlier, to $928,000, the data shows. The median prices for a studio Continued on page 116

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Staving off the interest rate heebie jeebies Alternative sources of financing could grow more popular as rate hikes loom By Janna Herron ast year, the Related Companies got $475 million in construction funding for its behemoth 13 million-square-foot Hudson Yards project from an unlikely group of investors. Starwood Property Group provided $350 million, while Related’s joint venture partner Oxford Properties Group, the trade union United Brotherhood of Carpenters and Joiners, and luxury

retailer Coach, a future tenant, put up the balance. The package also included a rare mezzanine construction loan. This sort of alternative financing could become more common as interest rates rise, according to Dan Fasulo, managing director at Real Capital Analytics. That’s because commercial developers will likely feel the biggest impact from rising rates, making it necessary to look outside the traditional

avenues for funding. Interest rates remain low, although they have risen slightly. Late last month, 30-year fixed rate mortgages, the type most often used by middle-class homeowners, were at 4.4 percent, up about a percent in the past year, according to Freddie Mac. Meanwhile, five-year adjustable rate mortgages were at 3.1 percent, up about a half percent from a year ago. On the commercial side, loans

over the past six months have increased to a range of 3.75 to 5.45 percent, from 2.75 to 4 percent, for trophy and Class A office transactions, according to Jones Lang LaSalle. The exact rate is determined by the length and size of a loan and the source of the capital. Higher rates will most definitely have at least some negative effect on the real estate industry. The stock market’s reaction to comments last month from

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Federal Reserve Chair Janet Yellen predicting faster increases than previously expected showed that real estate investment trusts are likely to feel the brunt. Investors, both in REITs and those who buy real property, will also feel a pinch. But despite stock traders’ heebie-jeebies, experts are predicting limited damage, barring a sudden rate spike. And there may be a plus side for some. New York landlords, for instance, could benefit as higher rates restrict first-time and middle-income buyers and push more tenants to continue renting in their buildings. And observers say New York’s residential market overall should stay stable, since cash buyers are still king for many deals. Here’s a breakdown of how interest rate hikes will be felt across the real estate industry:

No wiggle room Residential developers don’t have the luxury or the room in their construction loans — which typically last between two and three years — to use the sort of adjustable-rate loans available to individual homebuyers that can provide some cushion from rate increases. So they will need to look for ways to temper the cost or seek other funding sources. “[Rental] developers, for example, will have to either figure out how to pass costs on through higher rent or [find] other ways to finance, through mezzanine financing or additional equity,” said Fasulo. “In any case, if rents go up and vacancies stay low, that will soften the blow of the debt costs.” One option may come from overseas. “There is a lot of foreign money willing to take lower returns,” said Andrew Gerringer, managing director of the Marketing Directors, which handles sales for new developments and provides market research for developers. “Now we’re seeing an influx of Chinese investors. There is always somebody who is willing to take that risk.” In one high-profile example, the Bank of China stepped in with a $600 million loan for Vornado Realty Trust in late January for the REIT’s long-delayed luxury condominium at 220 Central Park South. The loan covers four lots on West 58th Street in Midtown. Similarly, a consortium of Asian Continued on page 112

By the Numbers

2.8 million

Splitting the rent

Combined square footage that the five biggest sharedoffice space providers occupy throughout Manhattan. In 2008, total shared space offered in the city was about 1 million square feet.

Long popular in Manhattan, shared and temporary workspaces begin to proliferate in outer boroughs

435 million

Total square footage of Manhattan office inventory as of Jan. 30.

6,000

Number of WeWork members in New York City. The company, founded in 2009, counts companies like Mashable, Buzzfeed, Reddit, Artsy, and Upworthy among its tenants.

1.6 million

hared office space is one of the hottest subsectors in New York City commercial real estate. Local startup firms to international behemoths are gobbling up spots in Manhattan office buildings to rent out to tenants seeking fully furnished, temporary digs. For example, WeWork, one of New York’s fastest-growing sharedspace firms, is reportedly in talks to take an additional 500,000 square feet at the Brooklyn Navy Yard, which would be its ninth location in the city and first outside of Manhattan. These communal offices offer tenants traditional amenities like receptionists and serviced kitchens, and some throw in avantgarde amenities like meditation rooms and Zipcar subscriptions. In addition, some cater to particular industries, like law or tech. One even offers spaces exclusively for women entrepreneurs. This month, The Real Deal looks at the growth in the shared office space market over the last few years. B y S asha von O ldershausen Regus CEO Mark Dixon

New Listing By the Numbers

The amount of square footage that Luxembourg-based Regus, the largest player in the field, has at its 35 New York City locations. By comparison, WeWork has just over 650,000 square feet in seven locations, while relative newcomer Jay Suites occupies 150,000 in six spots.

$616 million

Regus’ gross profit worldwide in 2013. In 1999, the year it entered the New York market, the company booked a $28 million profit.

$599

Rental price per month for a oneperson workstation at Corporate Suites, another New York–based provider with seven Manhattan locations. For a fully furnished private office space for one, the cost jumps to $1,200 per month.

$35

Cost of a day pass at co-working space New Work City. The Tribeca company offers “full-time access” for $375 a month. In Good Company, a shared work space for women entrepreneurs in the Flatiron district, charges $400 for an annual membership, plus monthly fees that start at $250.

3 to 6 months

Typical wait-list time for a private office in WeWork’s Meatpacking District office.

25 and 27

Ages of brothers Juda Srour and Jack Srour, founders of Jay Suites. Adam Neumann, founder and CEO of WeWork, is 34 years old.

40%

Projected percentage of the U.S. workforce that will be contractors, temporary workers or selfemployed by 2020, according to a study by software company Intuit.

$1.17 trillion

Total income generated by independent workers nationwide in the year that ended in September.

A crowded café

256

Number of Starbucks cafés in New York City, most of which offer space to log on with a laptop and work. Sources: Cassidy Turley, Regus, The Real Deal, WeWork, US Census, New Work City, In Good Company, MBO Partners, Starbucks

20 East 65th St – Mansion Condominium | $20,000,000

Compiled by Yaffi Spodek

Sotheby’s International Realty and the Sotheby’s International Realty logo are registered (or unregistered) service marks used with permission. Operated by Sotheby’s International Realty, Inc. 04-14-field.indd 1

30 April 2014 www.TheRealDeal.com

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: f o k s e

D e h t t

John CETRA & Nancy RUDDY

orresponding passions for art and architecture drew Nancy Ruddy and John Cetra together as City College students in 1975. Ruddy joined architecture and design firm Perkins & Will in 1978, and Cetra came on board three years later. Working together was such a success that the husbandand-wife team decided to start their own firm — the eponymous CetraRuddy — in 1987. The duo has over 250 projects to their name, including One Madison and 242 West 53rd Street, a 426unit rental building slated to begin construction later this month, according to the website of developer Algin Management. Last month, TRD checked out CetraRuddy’s Soho office. B y J ulie S trickland

Bowl from Botswana

Historic postcards

Italian marble

During a trip to Botswana, Ruddy

Ruddy often travels overseas to select marble for

Ruddy began collecting historic

repeatedly admired the bowls

project finishes. This block is from a condo the firm

postcards about 15 years ago,

used by the cook at a camp

designed for Skyline Developers at 200

with a focus on international

where they stayed. The cook

East 79th Street. “I went to Italy and into

World’s Fairs. The collection

gave this bowl to her as a gift.

the stone caves there,” she said. “When we

spans fairs from Stuttgart

“It has this beautiful perforation,

find blocks that are the right thing, I like to

to Barcelona, and includes

this beautiful pattern,” Ruddy

get a little piece of them to take back. I carried it back

cards from the 1893 World’s

said. “It’s very near and dear to me.”

Columbian

in my suitcase.”

Exposition in

Chicago and, of course, the 1939 and 1964 World’s Fairs in Queens.

Ski man

Regatta hat and megaphone

Cetra said skiing is his prime

The New York architecture

passion outside of architecture. The

Saraswati painting

community has a yearly sailing

firm’s staff gave him this figurine

When client Ravichandran Nehru,

competition in New York Harbor.

10 years ago. They removed one of

chairman of TVH Homes in

Cetra and Ruddy have competed

the poles to suggest that he’s such a

Chennai, India, visited New York,

for three years. “You have to put

good skier he didn’t need both. Press

he gave Ruddy this painting of an

together a tribe — five on the boat

a button, and the figure dances.

Indian goddess, representing a

and then three who are allowed to

combination of wisdom and

be on the float cheering you on,”

warmth. “Our client felt that I

Ruddy said.

represented that, because the combination is so unusual,” Ruddy said.

Gray high-heeled booties

Film noir

The magazine Development New York named Ruddy one of its “14

Ruddy is a film noir

Women to Watch” in February. She was photographed for the cover

fanatic. “Watching a great

on a terrace at One Madison. “It was a horrible 5-degree, snowy day,

film after a long day is

so I had heavy snow boots on,” Ruddy recalled. The publisher loaned

my meditation,” she said,

The couple’s one child, Andrea, 20, is a student at the University

her stiletto heels “8 inches high” for

listing “Now Voyager” and

of Oxford. “We always say she’s our greatest project,” Ruddy said.

the shoot, which were retouched to

“Notorious” among her

The couple keeps the first little object Andrea ever constructed

look black. The publisher then

Daughter’s first construction

with hammer and nails on a shelf in the office.

favorites.

presented her with these boots at the magazine’s awards ceremony.

242 West 53rd Street model This model shows their newest building, which will start construction this month. It’s unusual because its shape morphs as it rises. The windows are recessed, creating some solar protection. “It’s nice if you can incorporate terraces and balconies into a residential building without making it look like it’s sticking out on the side of the building,” said Ruddy.

32 April 2014 www.TheRealDeal.com

PHOTOGRAPH OF John Ruddy and Nancy Cetra FOR THE REAL DEAL BY Christian Fernandez

Office listings

Retail listings

Residential sales and rentals

Property information & ownership search

Agorafy is the open platform for marketing and researching real estate availabilities in New York City. Want maximum exposure to active buyers and potential tenants? Get started for free at agorafy.com. Send your listings to listings@agorafy.com.

Commercial Ma r k e t

Pushback against young tech firms

Perception of start-ups as risky tenants has some landlords shying away By Adam Pincus ome of the most valuable office leases inked in Manhattan’s Midtown South in the last year were with the new darlings of the real estate world, technology firms. Among the attention-getting deals were Twitter signing at 245-249 West 17th Street, IBM’s Watson Group

at 51 Astor Place and Facebook at 770 Broadway. Yet there is a quiet grumbling against their smaller and less credit-worthy brethren, brokers and owners said. The wariness regarding the generally younger tech firms is stoked by those that have failed and left landlords with the

expensive proposition of releasing the space. Some landlords also dislike the short-term leases such firms often require. The perception that untested technology firms are risky is leading some owners to shy away from them and look for companies in more traditional industries like architecture, finance or advertising.

“If a company goes under, [the landlord] loses money,” Stephen Powers, director of leasing at brokerage Denham Wolf Real Estate Services, said. That antipathy to new tech tenants gave him leverage representing an architect in Midtown South. Traditionally, landlords sought someone with strong credit, “but suddenly the market was hot for a different type of tenant. It was not what they were used to, and [some] got burned,” he said. Cautious landlords will consider taking on young tech companies, but are asking for a year or more in security deposit, according to one landlord, who asked not

Manhattan office stats AVAILABILITY AVG. ASKING RATE RENT

Q1 ’14 Q1 ’13

Manhattan 11.4% $63.59 12.1% $55.74

Midtown Q1 ’14 11.8% $73.49 Q1 ’13 12.4% $65.02 Midtown South Q1 ’14 8.8% $55.53 Q1 ’13 9.0% $50.62

Q1 ’14 Q1 ’13

Downtown 14.4% $50.25 16.1% $45.45

Source: Colliers International

to be identified. That’s two or three times a standard deposit range. Despite misgivings over some tech firms, the overall Manhattan office leasing market was much stronger in the first quarter than it was a year ago. The average asking rent rose sharply last quarter to $63.59 per square foot, a 14 percent jump from the first three months of 2013, when it was $55.74 per foot, data from commercial firm Colliers International shows. At the same time, the availability rate — which measures space available now or in the next 12 months — declined by 0.7 points to 11.4 percent, compared with the first quarter of 2013. “At the end of the day, with the market supply constrained, you can be pickier with the type of tenant,” said Greg Kraut, a principal with the commercial firm Avison Young.

Midtown

The field Team Advantage

連接全球資深買家與曼哈頓豪華地產的橋

nikki field | Visit us at NikkiField.com Senior Global Real Estate Advisor, Associate Broker The Field Team at Sotheby’s International Realty 212.606.7669 | nikki.field@sothebyshomes.com

east Side Manhattan Brokerage | sothebyshomes.com/nyc 38 East 61st Street | NY, NY 10065 | +1.212.606.7660 Sotheby’s International Realty and the Sotheby’s International Realty logo are registered (or unregistered) service marks used with permission. Operated by Sotheby’s International Realty, Inc.

The largest block of space to hit the market in the last six weeks was for eight floors at the Paramount Group’s 2.5 million tower at 1633 Broadway, between 50th and 51st streets, according to an analysis of data from the CoStar Group The more than 415,000 square feet on floors 23 through 30 in the 48-story building is available for occupancy in 2015, earlier than some of the large office towers planned or underway in the Hudson Yards area. Although there is no published asking rent, insiders said the landlord was pricing it in the high $70s per square foot. “I don’t think that building will be too challenging to lease up at those numbers,” Kraut said. The number of large blocks of space available is declining in Continued on page 110

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USC4013 B Promo

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Finding the right home starts with ﬁnding the right mortgage.

In their words... “The rent is too damn high because the laws are too damn stupid.”

The funniest and most insightful comments on real estate

“If a worker comes on to a construction site, drunk as a skunk and stoned on cocaine, and falls out a window, I’m liable.” Developer Uri Kaufman of Harmony Group, on how the state’s scaffold law is bad for business.

Real estate attorney Stephen Meister, on how the city’s rent-stabilization and rent-control laws are to blame for the city’s housing shortage and exorbitant rents.

Sources: Crain’s, Capital New York, Albany Business Review, the Wall Street Journal, New York Post, the New York Times.

“I augmented my work to reflect my emotions at that moment.” “They have a completely different DNA from the rest of us.” Prime Manhattan Residential’s

Rober Dankner, on the buying preferences of young tech millionaires.

“No nudes is good nudes.” ReMax’s

Lyn Sims, on the wisdom of removing risqué artwork when showing off a home.

36 April 2014 www.TheRealDeal.com

Black House Development’s Sean Ludwick, confessing to breaking into his ex-girlfriend’s home and drawing penises on his own artwork, originally painted during better times in their relationship.

“It’s become the little Madison Avenue of Soho.”

“The question is: Can the toothpaste be put back in the tube?” First Deputy Mayor Anthony Shorris, on whether the Port Authority will be able to clean up its act after the “Bridgegate” scandal.

“First Avenue is not a sin.” Town Residential’s Ginger Brokaw, on how the Second Avenue subway is making the Far Upper East Side an in-demand neighborhood.

Douglas Elliman retail guru Faith

Hope Consolo,

on Greene Street’s new status as a retail hotspot.

“New York City may find itself being shrinkwrapped in the de Blasio administration.” NYU Law professor Rick Hill, on how Bloomberg-era rezonings may not leave sufficient room for growth.

“Whatever Tony can do, we can do better.” Durst Organization’s Douglas Durst, on putting LED lights on One Bryant Park and Four Times Square well before Anthony Malkin introduced them at the Empire State Building.

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Office Leasing

GM Building:

billionaire’s nest

The

A breakdown of some of the high-profile tenants in the country’s most valuable trophy office tower

By Hiten Samtani and Guelda Voien n 2008, developer Harry Macklowe was faced with $7 billion in debt and was forced to give up his crown jewel, the 50-story, 1.82 million-square-foot GM Building at 767 Fifth Avenue. A group led by Boston Properties’ Mort Zuckerman paid $2.8 billion for the tower, about twice what Macklowe had paid just five years earlier. But last year, when the families of two billionaires, Soho China’s Zhang Xin and Brazilian banking magnate Moise Safra, bought a 40 percent stake in the building, its value had shot up to $3.4 billion, making it the most expensive office tower in the country. “It’s probably one of the most recognizable assets in the world,” said Greg Kraut, a principal at commercial brokerage Avison Young. Kraut added that the property was one of the only buildings in the Plaza District with floor plates large enough to support the bigger hedge funds. “Once you manage more than a couple billion dollars worth of assets, you can’t be on 10,000-square-foot floor plates,” he said. This month, The Real Deal broke down just which companies occupy the trophy tower. Hint: billionaire bold-faced names abound. CoStar Group data shows that there are currently over 90 tenants at the property, which is anchored by the white-shoe law firm Weil, Gotshal & Manges and cosmetics giant Estée Lauder. But the building is also home to some of the world’s most highprofile private equity firms, with founders including billionaires Carl Icahn and J. Christopher Flowers. And according to website Hedge Tracker, the address was home to eight of the world’s top 100 hedge funds in 2012. CBRE Group, which handles leasing at the property, referred questions to Boston Properties, which did not respond to requests for comment. On the following page is a look at some of the building’s most noteworthy tenants.

38 April 2014 www.TheRealDeal.com

The GM Building’s owners Billionaire Moise Safra, a GM Building investor

Boston Properties’ Mort Zuckerman, the majority owner of the GM Building

Soho China’s Zhang Xin, who bought a stake in the GM Building last year

“Once you manage more than a couple billion dollars worth of assets, you can’t be on 10,000-square-foot floor plates.” Greg Kraut, Avison Young

R e a l E s Ot af tf ei c ae n Ld e Sa so icni ga l M e d i a

Banco Itaú Floor: 50

GM tower’s A-list tenants

In May, the Brazil-based bank expanded to 35,000 square feet on the top floor of the tower, and agreed to pay just shy of $200 per square foot, making it one of the priciest leases since the 2008 real estate boom, according to news reports.

Baron Funds Floors: 47 (partial), 48 (partial), 49 (full) Money manager Baron Funds, founded by billionaire Ron Baron, expanded by 25,000 square feet on the 47th floor last month at rents just shy of $200 per square foot, sources said. The move gives Baron over 80,000 square feet at the tower.

Perry Capital Floors: 19–20 The hedge fund, which has about 74,000 square feet at the tower, owns a controlling interest in Barneys New York and manages about $3.4 billion in assets, according to hedge fund tracker Insider Monkey. It pays rents in the low-$90s per square foot, according to CompStak.

York Capital Management Floor: 17 The hedge fund has 35,537 square feet and manages about $19 billion in assets, according to Forbes. Founder James Dinan lost his entire life savings on Black Monday in 1987, but is now worth $2 billion, according to the magazine.

Reservoir Capital Floor: 16 In September, the investment manager Reservoir Capital took 38,000 square feet, which it sublets from the General Motors Company. The firm, which is run by Och-Ziff Capital Management veterans Daniel Stern and Craig Huff, manages more than $6 billion in funds, according to news reports.

Grosvenor Capital Management Floor: 14 In December, fund of funds Grosvenor Capital Management inked a deal for the 14th floor. Grosvenor signed a seven-year lease for 38,100 square feet of space. The rent was reportedly in the low $80s per square foot.

Maverick Capital Floor: 11 Hedge fund Maverick Capital signed a 10-year, 36,126-square-foot lease in 2010, paying around $80 per square foot, according to published reports. The fund, which is headed by founder and former billionaire Lee Ainslie III, took a major hit during the recession. But in the last few years, it’s regained much of its value, according to the site Hedgefundletters.com, a non-profit industry newsletter.

Icahn Enterprises Floors: 46 and 47 Carl Icahn is worth $20.3 billion, making him the 18th-richest person in the country, according to Forbes. His firm, Icahn Enterprises, leased just under 28,000 square feet in the building in 2012, paying rents in the high-$170s per square foot, according to CompStak.

The Estée Lauder Companies Floors: 37–46 Cosmetics manufacturer Estée Lauder has had offices in the GM Building since 1969, and currently holds just under 310,000 square feet of space, according to CoStar. CompStak data shows that the company pays rents in the mid-$80s per square foot for the majority of its space.

J.C. Flowers & Company Floor: 23rd (partial) In January, private equity billionaire J. Christopher Flowers’ firm, J.C. Flowers & Company, inked a deal for 18,134 square feet in the building. The firm agreed to pay rents starting in the mid-$80s per square foot in the five-year sublease deal, a steep discount from the $140 per square foot the firm paid at its last home, at 717 Fifth Avenue, CompStak data shows.

Weil, Gotshal & Manges Floors: 21–22, 24–35 International white-shoe law firm Weil, Gotshal & Manges has had an office in the GM Building since 1968 (perhaps an arrangement of convenience since it represented General Motors), and currently has over 360,000 square feet at the property, according to CoStar. The firm is one of a select few with gross revenue over $1 billion a year, according to a ranking from American Lawyer magazine.

Macklowe Properties Floor: 21 (partial) Harry Macklowe continues to operate out of his former prized possession, with about 30,000 square feet on the 21st floor.

Perella Weinberg Floors: 3, 4, 5, 10 (partial) This asset manager occupies over 100,000 square feet at the building, and pays rents that range from the mid-$70s to the mid-$80s per square foot, according to CompStak. The firm raised more than $1.1 billion before setting up shop in 2006, leading Gawker to call it “possibly the most expensive start-up in Wall Street history.”

www.TheRealDeal.com April 2014 39

REGULATING REAL ESTATE

Big rebound in home equity

Value spike lifts 4 million owners out of negative equity By Kenneth R. Harney he economy may be growing at a frustratingly slow pace, but one piece is booming: homeowners’ equity holdings — the market value of their houses minus mortgage debts — soared last year to $10 trillion, an increase of nearly $2.1 trillion. Thanks to rising prices and equity levels, about four million owners nationally last year climbed out of the financial tar pit of the housing bust — negative equity. Negative equity gums up people’s lives and the real estate marketplace as a whole. It makes it difficult or impossible to refinance out of a higher-cost mortgage into a more affordable one. It makes it painful to sell — owners must bring cash to the table to pay off what they still owe the bank. Plus almost no one wants to lend them money, at least not at reasonable interest rates secured by real estate, when they’re deeply underwater. So they’re likely to spend less, invest less and will probably not buy another house or sell the one they have. So when four million owners manage to transition out of negative equity into positive territory, that’s significant news for them and for the economy overall. Two statistical studies released last month offered a glimpse of where the country is in terms of homeowner equity, seven years after real estate began to crash. The first was the Federal Reserve’s quarterly “flow of funds” report, which, among other things, found that homeowner equity has rebounded to its highest level in eight years, though it’s still not quite back to the $12 trillion it was during the 2005 high point of the housing boom. The second study, from real estate analytics firm CoreLogic, focused on the flip side, the shrinkage of

negative equity. Researchers found nearly 43 million owners with mortgage debt have positive equity. Roughly 6.5 million are still in negative equity positions down from more than 12 million in 2009. Not surprisingly, they are heavily concentrated in areas that saw the wildest price run-ups, the heaviest use of toxic loan products and the steepest plunges during the crash. In Nevada, 30.4 percent of all mortgage holders are underwater. In Florida, 28.1 percent. In Arizona, 21.5 percent. Still, all three areas have improved sharply in the past two years. Although non-coastal California markets suffered some of the most dramatic declines in property values during the bust, researchers found that the state as a whole is nowhere near the top of the latest negative equity list. With 12.6 percent of mortgaged homes underwater, California has a lower overall negative rate than the national average (13.3 percent.) Among the best markets, if you’re measuring for positive equity: Texas, where just 3.9 percent of owners are in negative positions, Alaska (4.2 percent) and New York (6.3 percent.) Higher-priced houses generally have lower rates of negative equity. Just 8 percent of mortgaged homes worth more than $200,000 have negative equity, compared with 19 percent of homes under $200,000. About 21 percent of all mortgaged homes nationwide have less than 20 percent equity and 1.6 million owners have less than 5 percent equity. Kenneth Harney is a syndicated columnist.

Whoever Said

GOVERNMENT BRIEFS Loft Law deadline passes March 11 marked the deadline for tenants to register for protection under the Loft Law, a state measure that granted New Yorkers who live in illegal loft buildings immunity from eviction, while also putting them on the path toward rent stabilization. The current law is an amendment of the original law passed in 1982, which exclusively protected loft dwellers in lower Manhattan. The latest version not only expanded protection to residents in the outer borA Manhattan loft space oughs, but also implemented a series of rules necessary to qualify for protection, including minimum-square-footage guidelines on apartments, stipulations on windows and doors and a time line during which residents must have lived in their apartments. In addition, residents were given a six-month window to apply, which raised concerns about the possibility that some loft dwellers who were unaware of the law missed the deadline. New York City Loft Tenants, a tenant advocacy group, is lobbying for an amendment that would either extend or eliminate the deadline.

Penn Station expansion takes another step The Cuomo administration is moving forward with plans to expand Pennsylvania Station into the Farley Post Office, which is located across Eighth Avenue. The expansion plan has been 20 years in the making, with multiple setbacks, including funding issues and bureaucratic conflicts. The most recent step was posting a request for proposals seeking a broker to market the 1.5 million square Penn Station feet of air rights attached to the post office, and then using those profits to fund the expansion. The plan foresees the sale generating hundreds of millions of dollars that would be used to convert the post office into an Amtrak waiting room, the Wall Street Journal reported. However, a concrete time line has yet to be set, and state officials remain reticent about disclosing further details.

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A class action lawsuit filed against the city claims that New York City real estate laws discriminate against black and Hispanic renters. Plaintiffs Ernest Robinson and Rosa Rodriguez alleged that according to the Fair Housing Act, New York’s real estate tax system unfairly privileges owners of one-, two-, and NYC Supreme Court three-family houses, most of whom are white and Asian. The plaintiffs argue that residents who fall under Class 2 housing — that is, condos, coops and multi-family buildings — end up paying 37 percent of the city’s real property tax, as compared with the 15.5 percent paid by Class 1. The complaint cited a report issued by the Furman Center for Real Estate and Policy at New York University, which stated, “Tenants in Class 2 rentals are also much more likely to be black or Hispanic and to have children than co-op and condo owners, so the burden of undervaluation may threaten the city’s ability to attract and retain a diverse range of households.” Compiled by Sasha von Oldershausen

Like The Real Deal on Facebook: www.facebook.com / TheRealDealMagazine PS30133TRD-0114

40 April 2014 www.TheRealDeal.com

Reaching NEW HEIGHTS of Success

U.S. Immigration Fund is pleased to announce the appointment of Ambassador Charles Gargano as Executive Director. In this role, Mr. Gargano will oversee the future development and success of the U.S. Immigration Fund portfolio of USCIS-approved Regional Centers. Charles Gargano has spent more than 20 years in public service at the State and Federal level, serving Presidents Ronald Reagan and George Bush, and New York Governor George Pataki. As Executive Director of U.S. Immigration Fund, Gargano will be responsible for business development and relationship management, project negotiation and operational oversight. “I am confident that Charles Gargano will be an undeniable asset to our company,” explains Nick Mastroianni, President of U.S. Immigration Fund. “His successful career in both the public and private sectors is indicative of his drive to form reliable, long-lasting partnerships and dedication to improving not only New York City, but the U.S. as a whole, through well-planned growth and development.” Mr. Gargano will primarily represent U.S. Immigration Fund’s New York Regional Center, a Manhattan-based operation. U.S. Immigration Fund partners with premier real estate developers and industry leaders to bring New York City and beyond funding for worthwhile projects that create jobs, stimulate the economy and influence their surrounding skylines.

1.855.EB5.USIF I WWW.USIFNY.COM To encourage immigration through the EB-5 category, Congress created the EB-5 Regional center (Pilot) Program in 1990. Regional Centers are considered to be any government approved entity, organization or agency which focuses on a specific geographical area of the United States and that seeks to promote economic growth, increased regional productivity, job creation and domestic capital investment. This advertisement is intended for general information purposes only. All financial information and projections are rounded numbers and should not be relied upon for exact statistics. This does not represent an offer or solicitation to buy or sell any security. Investments are available only to qualified investors via a confidential offering memorandum.

Who’s Buying

Hey, big spender The major players — from investment firms to Russian oligarchs — likely to open their wallets for all kinds of NYC properties in the coming months

By Hiten Samtani ust days after American Realty Capital’s New York Recovery REIT acquired an office building at 1440 Broadway in October for $529 million, the company’s chief investment officer made a bold proclamation. Michael Happel said his company had a “loose target” to spend another $1 billion on commercial real estate in Manhattan over the next year. While not everyone has a cool $1 billion to drop, there are plenty of deep-pocketed investors on both the residential and commercial fronts hungry for New York assets. “I’ve never seen the marketplace so liquid and so deep,” said Dan Fasulo, the managing director of Real Capital Analytics. While investors like Jeff Sutton and Thor Equities’ Joseph Sitt continue to rack up mega-acquisitions (and headlines) in a flurry of deals, a bunch of other players, from real estate investment trusts to Russian oligarchs, are also searching for assets with investment potential. This month, The Real Deal identified some of the noteworthy companies and individuals likely to open their wallets in the coming months, whether it be for office buildings,

“We’re nowhere near the peak,” Schorsch said during a phone interview last month. “There’s still some leasing upside in the market.” Formed in 2010, the New York Recovery REIT quickly exploded into one of the city’s most aggressive players. It acquired about $1.8 billion worth of New York City real estate in 2013, mostly Manhattan core office and retail properties. Schorsch said that 80 percent of the REIT’s upcoming investments would be in Manhattan, primarily in office and retail properties with significant upside. The REIT is eyeing the Garment District, Midtown South and the Far West Side for those acquisitions. “The trophy buildings tend to bring sovereign money — you get the whale hunters,” Schorsch said. “That’s not necessarily for us. Do you really want to be on Park Avenue buying a 4-cap building when you can buy a

multi-family properties, retail condos or pricey residential pads.

American Realty Capital American Realty Capital’s New York Recovery REIT, which stunned the market with one eye-popping buy after another in 2013, is poised for another big year. It recently raised $1.7 billion from investors in preparation for a stock exchange listing later in 2014. Nicholas Schorsch, CEO of the REIT’s parent company American Realty Capital, told TRD that the funds will primarily be used to purchase more commercial real estate assets in New York City. 42 April 2014 www.TheRealDeal.com

6-cap building somewhere else?” The company’s biggest deal was in November, when it outmaneuvered RXR Realty to snag a 48.9 percent stake in the 59-story, 1.8 million-square-foot Worldwide Plaza, with a right to buy the office tower outright for a total of roughly $1.45 billion. It has raised more funds than any other non-traded REIT, according to news reports. The initial public offering, Schorsch said, will “allow us to lower the cost of capital” and lead to a broader availability of money to spend.

RXR Realty Scott Rechler’s RXR Realty shows no signs of putting the brakes on its ultra-aggressive run. “We’re going to continue to build on our successful strategy,” said Seth Pinsky, who recently joined the company after leading

through joint ventures or as the sole buyer, according to Real Capital Analytics data. The priciest was the 1.2 million-square-foot 237 Park Avenue, which it bought with Walton Street Capital for $800 million in October. And shortly before TRD went to press, it went into contract to buy 61 Broadway, a Financial District office building, for $330 million. Pinsky, who heads up RXR’s investments in emerging neighborhoods in the New York City area, said the overwhelming competition from global investors in Manhattan is forcing many real estate players to look outside the borough for viable acquisitions. RXR, for one, is allocating $1 billion to buying properties in the outer boroughs, including industrial buildings in the South Bronx, office buildings and development sites in Long Island City and retail and residential properties on Staten Island.

“The trophy buildings tend to bring sovereign money — you get the whale hunters. That’s not necessarily for us. Do you really want to be on Park Avenue buying a 4-cap building when you can buy a 6-cap building somewhere else?” Nicholas Schorsch, American Realty Capital

Nicholas Schorsch of American Realty Capital, which has a $1.7 billion fund that will be largely deployed in NYC

the city Economic Development Corporation under former Mayor Michael Bloomberg. That echoed a comment Rechler made to TRD last year that “we think this is the time to be active.” The company has made good on that promise, building an enviable portfolio of New York properties. It’s closed on over $2.44 billion in acquisitions since 2012, either

And it’s already gotten started on deploying that cash. In January, it struck a $195 million joint-venture deal with American Landmark Properties to buy the long-term lease of a large office building at 470 Vanderbilt Avenue, near the Barclays Center (see related story on page 60). Pinsky declined to comment on specific acquisitions RXR is considering, but said,

Who’s Buying “We’re in active discussions on a number of different fronts” and “we’re looking at the full mix of uses.” The firm will have little trouble replenishing its funds if need be. Rechler has connections to “big sovereign wealth money,” said a source familiar with RXR. Plus, he’s got a track record of convincing deep-pocketed investment firms to open their wallets for him. In December, NorthStar Realty Finance Corp. announced that it was investing $340 million in RXR in exchange for a 30 percent stake in the company.

Mikhail Prokhorov The Russian businessman, best known in New York as the majority owner of the Brooklyn Nets, has a net worth of $12 billion, according to Bloomberg. Last month, the Moscow-based Prokhorov, who also owns a 45 percent stake in the Barclays Center, said he’s trying to relocate Ziel Feldman the Nets’ parent company, Onexim Sports & of HFZ Capital Entertainment, to Russia because of growing Group, which tensions between the United States and his will soon announce the native country. Prokhorov, who made his acquisition fortune in precious metals, is also thought to of up to six projects be close to Russian President Vladimir Putin. But the potential tax consequences of relocation may force him to reconsider his Vornado Realty Trust decision, according to real estate lawyer While Vornado, the second-biggest office Edward Mermelstein, who is unconnected landlord in the city, made some big-ticket to Prokhorov but works with many wealthy buys in the last few years, it’s largely been in Russian buyers. selling mode. “For him it makes more sense to continue That may be starting to change. The with his investment policy in the U.S.,” REIT, headed by Steven Roth, is reportedly Mermelstein said, as opposed to many of considering spinning off its suburban the other oligarchs. “The fact is that’s he’s shopping centers into a separate company. vetted by both the government and the NBA, Those who follow the firm said if that happens, and has full access to the banking system at it could free up resources and manpower for this point.” Vornado to focus more on acquiring core office When in New York, Prokhorov is known and retail assets in urban markets. to stay at the Four Seasons. So if he decides “The idea behind Vornado’s divesting to continue investing here, it might make strategy is to eventually focus [its] resources on sense for him to invest in a pied-à-terre. A the underlying property portfolio in profitable trophy buy would put him in the ranks of areas” such as New York and Washington, other oligarchs, such as Dmitry Rybolovlev according to a February report cited on the and Len Blavatnik, who’ve taken a fancy to investment website Seeking Alpha. the Manhattan market. The firm has cash to spend. At the end of Another Russian billionaire may hold 2013, the company’s cash and cash equivalents off on spending for the time being. Roman stood at $583 million, according to regulatory Abramovich, the owner of British soccer filings. powerhouse Chelsea Football Club, went In addition, in June, it lost out on its bid into contract in January to buy a mansion for the office and retail tower 650 Madison at 828 Fifth Avenue for $75 million. That Avenue. (Vornado ultimately got in on the deal is currently in dispute, and sources said deal with a minor $12.5 million investment that Abramovich, a Putin crony, may want after a partnership led by Crown Acquisitions to keep a low profile for now. and Highgate Holdings paid $1.3 billion for “It would be politically the 27-story building.) Nonetheless, the fact unwise [for Abramovich] that Vornado initially vied for a bigger stake to buy now,” a source in the mega-building signals its intent to be said. “There’s no a player in this market. reason for him to In October, it paid $300.3 million for spend what’s going to the 57,500-square-foot 655 Fifth Avenue, be reported as Russian which has about 20,000 square feet of national funds. He would retail space. It also bought a $171.2 have unfavorable million development site from press very Seth Pinsky of RXR, which is Extell at 225 West 58th allocating $1 billion to buy quickly.” Street, where it’s planning

Russian billionaire Mikhail Prokhorov may buy properties for tax reasons.

The move followed several big buys in 2012, including the $150 million purchase of the 147unit Chatsworth Building at 344 West 72nd Street in a joint venture with BSG Real Estate. Investment sales brokers said Feldman was actively scouting for more buys. “We’re looking for circumstances [for deals],” Feldman told the New York Times last year. “Churches, nonprofits, synagogues, they’re starting to realize the untapped financial resources that they have in real estate.”

Alexander Rovt to develop the 41-story condo 220 Central Park South. Vornado has struggled through a rough patch in recent years, culminating with the resignation of CEO Michael Fascitelli last year. But in the past two quarters, its stock price has rebounded (see related story, page 74.). Vornado made good on its promise to streamline its business and Roth “regenerated a lot of goodwill in the past two years,” said Alexander Goldfarb, an analyst with Midtownbased investment banking firm Sandler O’Neill + Partners.

HFZ Capital Group On the residential side, Ziel Feldman’s HFZ Capital Group has been among the most active investors (see related story on page 52). And he shows no signs of letting up. Indeed, Feldman told TRD that he will soon announce the acquisition of up to six more residential projects. HFZ is also in the market for trophy mixeduse properties, such as 650 Madison, which it bid on but lost to the Crown-Highgate partnership in June. Sources said Feldman teamed up with wealthy Middle Eastern investors on that bid. HFZ’s track record over the past year certainly suggests an abundance of funds. In December, the company — which according to Real Capital Analytics, spent almost $1 billion on multi-family properties since 2012 — paid $610 million for a 743-unit, four-property rental portfolio in Manhattan.

In 2012, Ukraine-born fertilizer tycoon Alexander Rovt paid more than $300 million for a 1 million-square-foot office building at 14 Wall Street. What shook the market, however, was the audacious manner in which he bought the building — all in cash. Rovt is now looking to spend up to $200 million to buy another New York commercial property, he said at a Baruch College event in February. And the current political turmoil in Rovt’s native country is unlikely to affect his financial situation here. A source familiar with Rovt said he cashed out his investments in Ukraine a few years ago. On the residential front, Rovt is renovating the Henry T. Sloane mansion at 18 East 68th Street, which he bought in 2011 for about $33 million. He’s also looking to unload a townhouse at 232 East 63rd Street; he recently tossed in a Rolls-Royce Phantom to sweeten that deal, but not before jacking the asking price up by $3 million. Forbes recently pegged his net worth at $1.1 billion, noting that he “has

Ukraine-born fertilizer tycoon Alexander Rovt is looking to spend up to $200 million on a New York commercial property. Ex-L.A. Dodgers owner Frank McCourt’s firm has $550 million in assets and capital to spend.

outer-borough properties

www.TheRealDeal.com April 2014 43

Who’s Buying been pouring his money into real estate and owns more than 30 investment properties, mostly apartment buildings in New York City.”

Frank McCourt

Los Angeles Times. In September, he gave his alma mater Georgetown University $100 million to start a public policy school. McCourt Partners is armed with more than $550 million in assets and capital, and plans to spend a large chunk of it in Manhattan. McCourt said that his company was already negotiating on another Manhattan development site.

When it comes to individual players on the development scene, the former owner of the Los Angeles Dodgers is making a name for himself in New York. McCourt, a one-time Boston developer, made a splash when he paid $167 Benchmark million, or more than $640 per Real Estate Group square foot, for a development site The competition in the midat 358 10th Avenue across the street sized multi-family investment from Hudson Yards, in September. market is also fierce, with McCourt Partners, a players such as Stone joint venture between Street Properties, McCourt Global and Silverstone Property financial services firm Group and others Qatari Prime Minister Sheikh Hamad bin Guggenheim Partners, competing for assets. Jassim bin Jaber Al-Thani is reportedly is planning to build a Among them, planning on continuing his New York spending spree. 730,000-square-foot Benchmark Real mixed-use building at Estate Group made the 10th Avenue site. In December, McCourt a number of significant buys since its launch told TRD the deal would be the first of many. in 2009, including a $57 million December Peter Wilhelm, a senior managing director deal for a mixed-use apartment and retail at the firm, said at the time that McCourt building at 55 Third Avenue in the East preferred development sites over existing Village. buildings. “Frank kept coming back to sexy But after losing out on a few multi-family development deals and the idea of building deals recently, the company now has a new important buildings.” Wilhelm said. pile of cash to tap into. Last month, the firm, He’s certainly got the cash. McCourt made which was founded by Aaron Feldman and a net profit of roughly $1.28 billion from his Jordan Vogel, raised a $95 million fund that 2012 sale of the Dodgers, according to the will allow it to close on at least $300 million of

Manhattan real estate in the next 12 months. Vogel told TRD that Benchmark is targeting deals priced between $10 million and $150 million. And, he said, the company is already in contract on two mixed-use properties Downtown — both in the $10 million-range.

19 East 64th Street, a 20,500-square-foot townhouse. It plans to convert the building, which was being as an art gallery, into its consulate. The ruling family is likely to continue its buying spree, sources said.

Qatari Royal Family

With the exception of the $800 million it agreed to plunk down last month to buy the remaining stake in the Citigroup headquarters at 388-390 Greenwich Street, Manhattan’s largest office landlord has been uncharacteristically quiet about acquiring trophy office properties for the last couple of years. In fact, the REIT hasn’t bought a $200

The ruling family of the wealthy Middle Eastern nation has been on something of a buying tear in New York — and it has hit on several different asset classes along the way. Qatar’s sovereign wealth fund certainly has money on hand: about $170 billion in assets under management, according to the Sovereign Wealth Fund Institute. In March 2013, it partnered with Aby Rosen’s RFR Realty to buy the nearly 400,000-square-foot 350 Madison Avenue for $261.5 million. The previous year, Qatari Prime Minister Sheikh Hamad bin Jassim bin Jaber Al-Thani paid Rosen $47 million for his 22 East 71st Street townhouse. And, last June, Al-Thani paid $35 million for the Ellen Biddle Shipman Residence, a six-bedroom townhouse at Beekman Place. In December, the nation of Qatar went into contract on the purchase of an 80 percent stake in the $300 million InterContinental Barclay Hotel at 111 East 48th Street. And in January, Qatar, represented by Douglas Elliman brokers Oren and Tal Alexander, agreed to pay $100 million for

SL Green Realty

Marc Holliday of SL Green, which is planning to up its retail and residential holdings Continued on page 116

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Waking up

Wythe

TRD maps out the transformation of the fast-changing Williamsburg stretch, where the Wythe Hotel is just one of dozens of new developments

By C. J. Hughes or better or for worse, few neighborhoods were more transformed by the last development boom than Williamsburg. Sparked by the area’s sweeping 2005 rezoning, the long-time middle-class manufacturing district traded its warehouses for glassy apartments and became the goto neighborhood for post-college arrivals. First Bedford Avenue got a makeover, and then the waterfront. Now, the once-gritty Wythe Avenue is having its moment, with new rentals, hotels and restaurants popping up — and in a 1 390 Wythe Avenue Built in the late 1800s, the former Matchett Candy Factory was once an art gallery. But in 2011, Caro Enterprises converted it into a 69unit rental called Wythe Confectionery, which includes studios to two-bedroom units. Those studios started at $1,850 a month when the building opened three years ago, according to news reports. Today, according to StreetEasy, they start at $2,600.

2 373 Wythe Avenue

A 13-story rental, the 84-unit Karl Fischer–designed Williamsburg opened last year on the site where a one-story commercial building once stood. A developer named Mario Fichera broke ground on the building, which has a part-time doorman and bamboo floors, in 2008, but the project saw delays. One-bedrooms at the building, which is being marketed by Halstead Property, were starting at $2,676 a month at press time. Brokers say units on the street rent for about $60 a square foot, compared to $70 on the waterfront.

16 46 April 2014 www.TheRealDeal.com

its 122 units until 2010. But in 2012, it sold out with average prices of $760 a square foot, according to StreetEasy.

5 268 Wythe Avenue A slender 13-unit condo with wood slats across its facade, No. 268 struggled to connect with buyers in the recession, selling just a single unit, according to Eric Benaim, CEO of the brokerage Modern Spaces, which took over the project in 2012. After being rechristened as the Louver House, the remaining units sold in the high-$700-asquare-foot range, Benaim said, adding that they could fetch $1,100 per square foot if resold today.

6 225 Wythe Avenue Relish, a restaurant tucked inside the Wythe Diner, near North 3rd Street, closed in 2010. Reborn in 2011 as Café de la Esquina, an offshoot of the Soho restaurant, it serves $16 pork enchiladas.

3 320 Wythe Avenue

7 224 Wythe Avenue

Two Jakes Furniture, which opened in 1997, was a retail pioneer in an area loaded with nine-to-five factories. Today it sells aluminum Emeco bar stools, which start at $650.

At North 4th Street, this four-story, 20-unit rental called Wythe Avenue Lofts was developed by the Chetrit Group, which took out a $56 million mortgage in 2008, according to city records. In 2012, though, the firm sold at least a stake in the property to Olive Partners for $14 million, records show. A two-bedroom was recently listed at $3,850 a month.

4 80 Metropolitan Avenue

sign reminiscent of the Meatpacking District, black town cars line some blocks on weekend nights. But the 20-block heart of Wythe Avenue — from the Williamsburg Bridge to the Greenpoint border — reveals that the transition hasn’t always been smooth. Some projects that stalled during the recession are still empty pits, even as others have resumed. “What’s happening is incredible,” said Andrew Barrocas, the CEO of brokerage MNS, which has two offices nearby. “Wythe is filling in the gaps.” Below is a look at some of the properties that are transforming the stretch.

This nearly full-block six-story condo, which sits on the corner of Wythe and was developed by an affiliate of Steiner Studios, felt the sting of the recession. Launching in 2007, the building, which features private rooftop cabanas, didn’t even hit the halfway mark of sales of

8 76 North 4th Street Called the SteelWorks Lofts, this residential conversion perhaps best

5 embodies the area’s spectacular collapse and Phoenix-like revival. In 2007, developer Fifth Square Partners paid $27 million for this property, a former fabrication plant on the corner of Wythe, then began to create 83 condos. However, during the downturn, the firm was unable to pre-sell enough units to get full financing, according to sources close to the project. In 2010, Cayuga Capital Management and Jacob Toll, son of real estate mogul Robert Toll, stepped in, paying about $17 million for the long-stalled site, which is now being reinvented as a rental. The apartments will hit the market by June, said Jamie Wiseman, a Cayuga principal.

9 50 North 5th Street A sprawling seven-story rental developed by Mack Real Estate Group and Urban Development Partners on the site of a former carpet factory, this building opened last fall with 229 units. Studios at the building, which was originally known as 204 Wythe Avenue, start at $2,600 a month. Different in look from many of the glassy towers that went up on other blocks in the mid-2000s, this red-brick complex, which is on the corner of Wythe, includes a lobby that recalls a vintage steak house, with tufted banquettes and dark-wood floors.

10 149 Kent Avenue This massive site, which extends along North 5th to Wythe and also housed a carpet manufacturer, is being developed into a 164unit rental by L&M Development Partners. The project is slated to open in 2015; sources said 20 percent of the units will be affordable. In 2012, L&M bought the site for about $20 million, according to news reports. Ron Moelis, L&M’s co-founder, did not return a call for comment. But David Maundrell, of aptsandlofts, said the building will rise to 70 feet, which is permitted under the 2005 rezoning that covered many of Wythe’s blocks.

11 185 Wythe Avenue This winter, for the first time, the successful Williamsburg Flea market decamped from the nearby East River State Park to the 47,000-square-foot second floor at this 1940s industrial building. (It had spent the previous winter at One Hanson Place, the former Williamsburgh Savings Bank.) Asking commercial rents have been $50 to $100 a square foot at the graffiti-covered building, which also housed the food fair Smorgasburg. Both tenants were scheduled to be there into last month.

12 133 Wythe Avenue Café Mogador, a longtime East Village Moroccan-themed favorite, expanded to this address in 2012.

13 96 Wythe Avenue

6 — three contiguous parcels — to Ennismore Capital, which developed London’s Hoxton Hotel, for $17 million, though Sydell will still be involved in the project, sources say. While no building permits have yet been filed, sources add that a 100-room hotel is planned. Rosenwach did not respond to requests for comment, while Ennismore declined to comment.

15 90 Wythe Avenue Among the many hybrid store-restaurants in the area is Kinfolk, at North 11th Street. However, its restaurant portion Aska, which on a recent day offered a $39 prix-fixe menu of lamb hearts and skirt steak, closed last month. This month, a new bistro is to open there.

16 87 Wythe Avenue A former bus garage that runs from North 10th to North 11th streets will soon be razed to make way for a 12-story, 100,000-square-foot retail-and-office building, its developer, Cayuga’s Wiseman, told TRD. As part of the project, Vice magazine, currently a tenant next door, at 90 North 11th Street, will lose its home; so will Fast Ashley’s Studios, at 95 North 10th Street, added Wiseman, who’s partnered with the current landowner, whom he did not name. Cayuga has not ruled out leasing space to Vice once the new complex is built, Wiseman said.

17 80 Wythe Avenue The 2012 opening of the Wythe Hotel was a game-changer for the area. “The Wythe really kicked it all off,” Wiseman said. Developed by local restaurateur Andrew Tarlow, and Jed Walentas of Two Trees Management, the 70-room former cooperage has quickly become fashionable, with a line of black town cars often waiting outside. Walentas, of course, is also redeveloping the nearby Domino Sugar Factory.

18 74 Wythe Avenue

19 61 Wythe Avenue The 2,000-square-foot Brooklyn Bowl, a concert venue with 16 bowling lanes and a Blue Ribbon restaurant, opened in 2009. Its leased space, which underwent major renovations, is inside a restored 1882 ironworks foundry.

20 55 Wythe Avenue

The city’s 2005 rezoning kept the rough-edged northern section of Wythe a manufacturing area. But now, hotels, which are allowed under the zoning, are popping up. Indeed, on the corner of North 10th Street, foundations are being poured for a hotel that’s expected to have around 160 rooms. Sources say Heritage Equity Partners and local landlord Yoel Goldman are the developers and that they paid $7 million for the site. A message for Heritage CEO Toby Moskovits was not returned.

14 93 Wythe Avenue

Heritage Equity is planning a rare speculative office complex at this site, which extends through to Wythe, from North 12th to 13th streets, where cherry-picker machines were once stored, according to sources close to the project. The $32 million purchase closed last year, city records show. “A lot of tech companies will be looking to plant their flag here,” said Barrocas of MNS. TRD

Thumping with techno is the 11,400-square-foot Outpost Club, which opened a year ago in a former spice factory. Cayuga Capital Management is the landlord. Meanwhile, around the corner, another club, Verboten, opened last month in a former metal shop. “There are hints of the Meatpacking District here,” Maundrell said, “but these places aren’t snobby and snooty.”

Another hotel, with 183 rooms and 20 stories, is planned for a blocklong site between North 12th and 13th streets containing Star Poly Bag Manufacturing, according to a sign. To be built by local developer Zelig Weiss, the high-rise will also have retail and offices, according to news reports. According to city records, a contract has been signed, but the deal has not closed. A message left with a number appearing on the contract was not returned.

For years, a full-block site between North 9th and 10th streets was owned by the Rosenwach Group, which makes wooden water tanks for city roofs. But in quick succession last year, the site swapped hands twice: In May, the Sydell Group, the firm behind the Ace and NoMad hotels, paid $10 million for the site. Then, last fall, Sydell sold the site

21 19 Kent Avenue

11 www.TheRealDeal.com April 2014 47

Luis Ortiz on MDL’s third season

The Elliman broker and TV star on getting fired from Keller Williams, his Battery Park City home and not dating By Katherine Clarke third season of Bravo’s “Million Dollar Listing New York” airs April 2. Last month, The Real Deal sat down with one of the show’s three stars, Luis Ortiz of Douglas Elliman, at his Battery Park City home to talk about how his life has been transformed by reality TV.

How has your life changed since the show first aired? My life has changed but my essence hasn’t. Obviously, I get recognized on the street a lot. People will say, “Oh, that’s the real estate guy, that’s the real estate guy.” I’m like a walking billboard. There have been a lot of changes in your life in the last year… As soon as I started the show, I wanted to change everything. I moved out of the W Downtown and moved in here at 200 North End Avenue. I got fired from Keller Williams and I joined Elliman, which is the most intelligent decision I’ve made in my career.

48 April 2014 www.TheRealDeal.com

Luis Ortiz in his Battery Park City apartment

What do we find out about you? You get to see my hometown in Puerto Rico. You get to see my house where I grew up. You also get to see the reason I don’t date. My last girlfriend was in 2010. How do you find Ryan now? He’s a genuine and smart guy. In the beginning of the season, we had a big argument when he tried to steal a client. I really wanted to find out ... how can someone wake up and be such a piece of shit? Then, he asked me to get drinks and we got drunk together. Your apartment looks great… Thanks. Quadra Furniture Solutions did it. They also do my staging. There’s no listing I’d take ever again that I wouldn’t stage. I would rather take the person’s stuff and put it in storage.

How do you feel toward Keller Williams? I don’t want to put anybody in a bad light. They allowed me to join the firm before I was on the show, when a lot of firms wouldn’t. They believed in me. I’m glad I got the chance to go to Elliman, though. I feel it’s more my style. They understand the importance of branding. How are you different on the show? This year, I wanted to be a sharper version of myself and take my business to a new

level. You’ll see how I’ve evolved. I’m more consistent and more business oriented. I close my biggest deal ever this season. What else can we expect? If someone has something bad to say about this season, it’s because they hate life. ... I get to know Ryan [Serhant] this season. You’re also going to get to know the three agents and their motivations.

Last year the state was looking into allegations that you doctored listing photos of a townhouse. What happened? I don’t know where that is. Every time I pitch a listing ,though, and I get it, the sellers show me letters they’ve gotten from other brokers saying, “Why do you want to go with Luis Ortiz? He’s being investigated by the Department of State. He’s a scam.” I understand it’s a war when it comes to listings ... but once you sign, you hug it out. Once the listing has been given to me, why talk shit about it? TRD

www.TheRealDeal.com March 2012 00

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Warren Buffett’s model deal

How a Greenwich Village retail strip became the Oracle of Omaha’s best investment

By Janna Herron n a letter to shareholders last month, billionaire investor Warren Buffett cited a Greenwich Village retail strip that he bought in 1993 as one of his best long-

Fast forward, and the 73,700-square-foot property, which has been dubbed “University Walk” and now has 29 stores, boasts national eateries such as Chipotle and Cosi and retail stalwarts Staples and Duane Reade, along

During the Savings and Loan Crisis, the Federal Deposit Insurance Corporation foreclosed on it and, in 1991, handed property management responsibilities to the Brookhill Group.

cash receipts had doubled and 57 percent of the tenants renewed, extended or renegotiated their leases, said Bruder. “We would have bought it ourselves, but it would have been a conflict of interest,” he

Then: The retail strip on 8th Street between University Place and Broadway back in 1993

Now: The same retail strip today

term investments. When the Oracle of Omaha made that cash investment, graffiti dotted the 37 storefronts and handwritten discount signs plastered the merchant windows. The property, along 8th Street between University and Broadway and also wrapping around to 9th Street, was home to an incongruous group of tenants from hot dog joint Annie’s Franks & Fries to Flowers by Arno, along with a couple of darkened storefronts. One of the row’s largest occupants, the now-defunct Woolworth’s, was paying $12 per square foot. “It was a dreck,” said Adam Rose, whose late father, Fred, invested in the property with Buffett, Larry Silverstein and a small group of other investors. “The previous owner literally plugged space.” 50 April 2014 www.TheRealDeal.com

with local favorites like the trendy cupcake spot Crumbs and the Knickerbocker Bar & Grill. The property has returned 10 times the initial cash investment of $8.2 million, a performance Buffett touted to shareholders. Last year, he thanked Silverstein for getting him into the investment, according to a recent email Silverstein wrote and distributed to the media. But it was the Rose family who transformed the property. “They have done a very good job curating the tenants,” said Ariel Schuster, executive vice president with RKF. “They’ve been selective in the last 15 years in who they put in those spaces, even turning down many tenants.”

Sound and opportunistic The property’s fortunes didn’t start out rosy.

Billionaire Warren Buffett told shareholders that his 1993 investment in a Greenwich Village retail strip was one of his best. (Right) Larry Silverstein was also an investor.

“When we got it, 30 of the 37 tenants were not paying rents,” said Ron Bruder, founder of the Brookhill Group. “It was in disarray.” By the time the property went to auction in 1993, all the tenants were paying, the monthly

said. Rose liked the strip, but lacked cash. So before the auction, he courted some friends in high places. “It was just who was around, and who he Continued on page 118

www.TheRealDeal.com March 2012 00

Development

A look at the builders with the most square footage being planned in the five boroughs

By Katherine Clarke ould the stage be set for the city’s seemingly endless residential inventory crunch to ease slightly in the coming years? Judging by the rise in the number of construction permit applications recently filed with the city’s Department of Buildings, sources say that’s a real possibility — but there are caveats. This month, The Real Deal examined the residential building permit applications filed with the city between 2011 and February 2014 to determine the most active developers in the five boroughs. By that measure, the busiest developers were a mix of well-established players and up-and-comers. The top five developers on the rankings are: Extell Development; the

52 April 2014 www.TheRealDeal.com

Moinian Group; JDS Development (which partners on some of its projects with Property Markets Group); the Related Companies and the Continuum Company. Those firms were followed by HFZ

Others, like Simon Dushinsky’s Brooklyn-based Rabsky, made surprise appearances on the list. A relative unknown pre-crisis, the firm filed permit applications to build about 1 million

and rising prices. However, she noted, by all jumping in at once, they’re likely contributing to a stabilization of pricing. “Moving forward, the market may be moderated by growing new development

Less than 30 percent of the planned units in the Manhattan development pipeline are expected to be priced below $2,000 a square foot. Capital Group, Rabsky Development, Acadia Realty Trust, Rose Associates and the Chetrit Group. Several of those companies — the household names — were major pre-recession players with the financial means to purchase development sites on the cheap when the market stalled. Now they’re building projects on those sites and reaping the benefits.

square feet. Companies like Bruce Eichner’s Continuum Company and Joseph Moinian’s Moinian Group filed permits to build their first new projects in several years. Kelly Kennedy Mack, president of the new development marketing firm Corcoran Sunshine, said many developers jumped back into the market in 2013, encouraged by low residential inventory

inventory, which will increase the number of sales, but could potentially stabilize price growth,” she said. TRD — which zeroed in on the window between 2011 and today because many projects take an average of three years to come to fruition — found that developers applied for permits to build about 28 million square feet of new residential inventory in 2013. That’s a 56 percent

www.TheRealDeal.com January 2013 65

Development year-over-year jump, and a 140 percent increase from 2011, when the market was still reeling. Through February, plans were filed for about 3.7 million square feet of residential product in 2014. However, less than 30 percent of the planned units in the Manhattan development pipeline are expected to price below $2,000 a square foot, sources said. That’s largely because soaring land prices continue to push up luxury pricing. As a result, only the luxury market can expect any kind of relief on the inventory front. “With the limits of luxury pushing further upward, I believe there is a tremendous opportunity for developers looking to build mid-market luxury buildings in Manhattan,” Mack said.

Catching the giants

Not surprisingly, some of the developers who made TRD’s top 10 have been buying and selling real estate in the city for decades. Since 2011, Gary Barnett’s Extell filed permit applications for a total of 1.95 million square feet at three residential projects, according to TRD’s research. That does not include the company’s most high-profile project, luxury tower One57, because its permits were filed in 2009. The new projects include a 233-unit, 1,424-foot-tall skyscraper at 217 West 57th Street, which is slated to cantilever above the Art Students League building next door. Despite owning the parcel since 2005, Barnett didn’t file permit applications for the site until 2012. Last year, Extell also officially filed plans for a mammoth 594-unit rental building on the West Side, at 551 10th Avenue between 40th and 41st streets. Barnett acquired a 99-year ground lease for the site in 2011, from the estate of Sol Goldman, and last year purchased 140,000 square feet of air rights from Saint Raphael R.C. Church, which owned the adjacent site. Finally, in 2013, the developer filed plans to expand and convert a site adjacent to the Park Avenue Christian Church at 1010 Park Avenue to a 16-story, 17-unit condo with amenities such as saunas, a playroom, a gym, an outdoor recreation area and a private terrace. Barnett did not respond to a request for comment on the firm’s current activities. Meanwhile, as TRD and others have reported, Extell is not the only one with a project in the works on 57th Street. JDS, which is headed by Michael Stern, filed plans to develop a total of 1.31 million square feet of residential projects during the three-year window that TRD analyzed. That included plans with PMG for 111 West 57th Street, an ultra-skinny, 1,350foot hotel and condominium, which is slated to become one of the tallest

56 April 2014 www.TheRealDeal.com

A rendering of Vornado’s 220 Central Park South

NYC’s most active developers, by permits filed Developer

# of projects # of units

Total Square Footage

Extell Development

844

1.95 million

Moinian Group JDS Development Related Companies Continuum Company HFZ Capital Group Rabsky Development Acadia Realty Trust Rose Associates Chetrit Group L + M Development Rockrose Development Silverstein Properties Elad Group Glenwood Management Two Trees Management Vornado Realty Trust Artimus Construction Lightstone Group Steiner Equities Group

1 4 6 2 3 7 1 1 6 5 1 1 1 3 3 2 4 2 1

1,174 934 1,187 681 336 1,141 251 776 693 709 975 374 374 611 778 474 904 720 754

1.39 million 1.31 million 1.27 million 1.06 million 1.05 million 1.03 million 996,540 931,126 906,913 818,961 786,105 761,552 761,552 751,681 711,869 701,318 695,353 672,115 632,832

Source note: TRD analysis of city Dept. of Buildings permit applications for residential construction projects and major conversions, known as Alt-1 permits, in the five boroughs. Only applications filed between Jan. 2011 and Feb. 2014 were included. Each developer given full credit in the case of joint projects.

“We sold most of our real estate in 2007 and 2008. We waited about a year, and then came in and started purchasing again when others weren’t. A lot of the projects that were purchased during that time are now being built.” Ziel Feldman, HFZ Capital Group A rendering of 111 West 57th Street, which JDS and PMG are developing

residential towers in the city. The partnership is also converting a building formerly owned by Verizon at 435 West 50th Street into a 51-unit condo. JDS also filed plans to construct a nearly 800-unit rental building at 626 First Avenue. PMG is not involved with that project. Several of the duo’s joint projects, like the high-profile Walker Tower conversion in Chelsea, were not included in TRD’s analysis because plans were filed before 2011. Meanwhile, Ziel Feldman’s HFZ — which was also one of only a handful of development companies that purchased prospective development sites and mortgage notes in the wake of the recession — has 15 active projects citywide, Feldman told TRD. But permit applications were only filed for three of those properties between 2011 and February, according to TRD’s research. Those three applications totaled 1.05 million square feet of residential product and included the 35-unit High Line-adjacent condo 505 West 19th Street, where units are being marketed for prices ranging from $2.2 million to $7.4 million. HFZ also filed permit applications to convert a commercial building at 11 Beach Street in Tribeca into 27 condos in partnership with investment firm New Valley, which is headed by Douglas Elliman chief Howard Lorber; and for the construction of a hotel and condo at 20 West 40th Street. “We sold most of our real estate in 2007 and 2008. We got really lucky with timing,” Feldman told TRD. “We waited about a year, and then came in and started purchasing again when others weren’t. A lot of the projects that were purchased during that time are now being built.” Development giant Related filed permit applications for six buildings, three in Chelsea, two in Tribeca and one on the Upper East Side. They include a 36-story tower at 203 East 92nd Street, where the upper floors will contain 308 residences, and 261 Hudson Street, a 220-unit residential rental development. Meanwhile, the Chetrit Group filed permit applications for six projects during the period examined by TRD, including plans to convert the Cabrini Medical Center on East 19th Street at Second Avenue to residential use. The company is also bringing a mixed-use hotel and apartment building to 500 Metropolitan Avenue in Williamsburg. The project will have roughly 56,000 square feet of commercial space and 89,000 square feet of residential space, according to recent filings. And Vornado Realty Trust, while further down on the ranking at No. 17, filed plans for one of the city’s most eagerly anticipated residential projects, a 920foot Robert A.M. Stern–designed limestone condominium tower at 220 Central Park South. It also filed plans to build a 314-unit residential building on top of its Rego Park shopping mall, just off the Long

www.TheRealDeal.com April 2014 53

Development Big project bounce

Island Expressway in Queens. Sources said the 24-story addition, which will be designed by SLCE Architects, will be a rental.

Surprise appearances The ranking contains a few surprises, perhaps most notably that relative unknown Simon Dushinsky made the cut. “I’ve never heard of him — and that never happens,” said Stephen Kliegerman of Terra Development Marketing, which heads up sales at residential development projects throughout the city. According to TRD’s research, Dushinsky’s Rabsky Development filed permit applications for seven projects in 2012 and 2013, six in Brooklyn and one in Queens. The company’s largest projects include the 187-unit 395 Leonard Street and the 177-unit 755 Kent Avenue, both in Brooklyn. It’s also planning a 44-story residential tower with 415 units at 29-32 Northern Boulevard in Long Island City. The site cost $35 million, according to news reports. The building will reportedly feature ground-floor retail space and a 43rd-floor pool and lounge, as well as parking and a fitness center, according to news reports. It’s unclear if the residential component will be rentals or condos. Dushinsky did not respond to multiple requests for comment. “He, very smartly, became a buyer when the market crashed,” said Marketing Directors executive Andy Gerringer, who is familiar with the developer. “He was a name in Brooklyn that we’ve heard for the last several years, but the most active? That comes as a big surprise to me.” Other unexpected entries on the list of top permit applicants include Eichner, who filed applications for 1.06 million square feet in residential product, all in 2013. The developer’s previous groundup projects — the condo CitySpire, built in the late 1980s, and 1540 Broadway, an office tower — were both surrendered to creditors in the 1990s. But Eichner is now reemerging after a series of highs and lows in New York and Florida. “He’s like a phoenix that’s risen from the ashes,” Gerringer said. “He got really hammered in a couple of markets, but he’s still out there. He’s one of those guys who is just a survivor.” Eichner’s Continuum Company — whose projects have included the city’s first time-share resort, the Manhattan Club, which opened in 1997 — filed permit applications for what’s slated to become Harlem’s tallest residential project, two 320-foot-tall buildings totaling 690,000 square feet at 1800 Park Avenue. It also filed for an 80-unit condo at 41 East 22nd Street, near Related and HFZ’s almost-sold-out One Madison. The 790-foot-high tower will have a 17foot cantilever over the adjacent 33 West 22nd Street, according to news reports.

54 April 2014 www.TheRealDeal.com

Extell’s Gary Barnett

Related’s Jeff Blau

Several companies made the cut thanks to one mammoth project. The Moinian Group, for example, is building a 1,174-unit rental building going up at 605 West 42nd Street, which will total 1.39 million square feet. The firm bought the site in 2005 and broke ground on the tower that same year. The foundation was more than halfway laid when the financial crisis halted the project, but it resumed last year, and is now slated for completion next year. Rose Associates and Acadia Realty Trust also have single projects that propelled them onto the list. Rose is converting a 931,126-square-foot, 66-story Financial District office tower at 70 Pine Street into luxury rental apartments. Acadia, meanwhile, is developing a mixed-use building at 70 Fleet Street, part of its gargantuan City Point development in Downtown Brooklyn, which will have 251 residential units, according to DOB records.

The future pipeline

Continuum’s Bruce Eichner

JDS’s Michael Stern

A rendering of the Chetrit Group’s hotel and apartment building 500 Metropolitan Avenue in Williamsburg

Amy and Adam Rose of Rose Associates, which is converting 70 Pine Street from office into rentals

Overall, from 2011 through February, developers requested permits to build 62 million square feet of residential product, TRD’s data shows. About 48 percent of that square footage is in Manhattan, followed by Brooklyn at 26 percent, Queens at 15 percent, the Bronx at 10.3 percent and Staten Island at less than 1 percent. Yet while permit applications give some indication regarding the most active developers in the city, they don’t capture every project in a developer’s pipeline, especially those in the early planning stages. For example, HFZ announced plans for at least six projects that it hasn’t yet filed city paperwork for, including a hotel-condo it’s developing with the Witkoff Group and hotelier Ian Schrager at 215 Chrystie Street, as well as a condo conversion of the Chatsworth rental building at 344 West 72nd Street. HFZ also recently bought a 750-unit rental portfolio from Westbrook Partners for $600 million, and plans to convert the four Manhattan buildings, in Nomad, Midtown and on the Upper West Side to for-sale residences. Plans for these conversions also are not yet filed with the DOB. Despite this slew of new inventory in the pipeline, Corcoran Sunshine’s Mack said it will still not be enough to meet the demand. “In Manhattan, we are expecting over 10,000 new condominium units to enter the market within the next three years,” she said. “This annual average of 3,300 units is higher than the past few years, but it’s still a far cry from the more than 8,000 units that were introduced in 2007. The market needs more inventory across all price points.” TRD

PHOTOGRAPH OF BLAU FOR THE REAL DEAL BY CHRIS MARTIN; PHOTOGRAPH OF EICHNER BY MICHAEL www.TheRealDeal.com January 2013TOOLAN 65

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Development

De Blasio’s Domino Sugar deal not as sweet as it seems for mayor Sources say the affordable housing concessions at the Williamsburg project were actually a positive for the industry, and may set a precedent

After negotiations between the mayor and the developer, 40 additional affordable units were added.

By Katherine Clarke ast month, Mayor Bill de Blasio seemed to notch an early victory when he convinced Brooklyn developer Jed Walentas, of Two Trees Development, to increase the number of affordable housing units at the mammoth Domino Sugar Factory mixeduse project in Williamsburg. Walentas did so in return for a zoning change at the site. But sources said the 40 affordable units Two Trees agreed to add was not that big a concession. They said it was actually a positive for the industry, proving that the new mayor will not derail development plans or eat too far into the industry’s bottom line to achieve his affordable housing goals. In fact, if Domino — which while largely approved, was the first major development de Blasio had an opportunity to weigh in on since taking office — sets the tone for the administration, sources say the mayor may be on more of a collision course with preservationists and community boards than with real estate developers. That’s because the former groups may oppose his willingness to build tall and dense to make way for affordable units, sources said. “Domino played out exactly the way

56 April 2014 www.TheRealDeal.com

I guessed it would,” said David Kramer, CEO of developer Hudson Companies. “The new team wants to show that they can do one better than the old team, but not to the point of things coming apart. The administration wanted to be quick to point out that it’s progressive, but it’s also highly pragmatic and transactional.” De Blasio’s office did not respond to requests for comment. The Domino plan originally called for Two Trees to include 660 units of affordable housing at the 2,300-unit site. Under the new agreement, there will be 700 affordable units. While the mayor’s office touted the increase, some sources said the additional affordable units will not change the profitability equation in any significant way for Two Trees, especially since the new terms call for 50,000 square feet of that affordable space to be available to households with “moderate” incomes, rather than lower ones. “If that’s a win [for the mayor], I’d hate to see what a loss looks like,” said Jason Haber, a residential broker at Warburg Realty, who campaigned for city Comptroller Scott Stringer. “The [developers] threw him a bone. There is such a huge affordable housing crisis in this

city, they’re still nibbling at the edges and attacking it on the periphery.” “It’s tough to say that Two Trees lost out because you don’t know exactly what the deal was,” said Jordan Barowitz, director of external affairs for the Durst Organization, who served as a spokesperson for Mayor Michael Bloomberg. “It’s possible that this deal could have been done with a very small impact on their bottom line.” A representative for Two Trees declined to comment on the deal, which still requires City Council approval. “I haven’t heard Two Trees crying about anything, so I assume the deal works,” said David Von Spreckelsen, president of Toll Brothers City Living. “How much of [the company’s early protest was] negotiation and how much of that is real? I’m sure there was a breaking point; I don’t know if they came close to it.” Top, Two Trees’ Some industry execs Jed Walentas, who is redevelopargued that by pushing ing the Domino Two Trees to add more Sugar Factory. affordable housing, de Middle, mayor Blasio wanted to send Bill de Blasio, who is pushing for a strong message to the more affordable real estate industry earhousing. Bottom, ly on. The exact numpreservationist Andrew Berman. ber of additional units, Sources say comthey said, was not nearmunity activists ly as significant as the and the mayor may clash over fact that he’d pushed constructing tall for more than what Two towers for affordTrees was comfortable able housing. with — and, more importantly, further than Bloomberg had. “It sends an unambiguous message that the new administration views the world differently than the previous administration, and that smart developers will be accepting of that and modify their plans accordingly,” said Mark Weiss, vice chairman at commercial brokerage Newmark Grubb Knight Frank. “It’s not just the amount of units. It’s the fact that everyone needs to address this administration’s concerns about expanding the stock of affordable housing.” Sources also noted that de Blasio is likely looking to squeeze more affordable units out of other projects that already won all, or most, of their approvals under Bloomberg. But they said the mayor’s real sway will be in developments his adContinued on page 114

www.TheRealDeal.com January 2013 65

➜

Marketing projects to dream tenants

Developers drum up fake personality profiles to zero in on potential buyers and renters

aspiring and caring” the document said. Beyond age and marital status, these residents are further distinguished by their respective desires for a home. “There are some New Yorkers who wouldn’t be caught dead south of 57th Street, or north of 23rd Street,” Salusbury said. “We try to address their needs.” Although the Gotham Organization has been drafting personality profiles for years, it more recently adapted them to account for the influx of foreign renters and tech- and creative-industry types. Picket said it’s fun to imagine a character in one of his buildings as vivid as “a 35-yearold advertising executive who collects teapots and does yoga.” If the firm’s staff predicts that some of the tenants might go antiquing over the weekend, antiques will appear in the model units, he said. “We want to present it in a way that feels real to them,” Picket said. TRD

Who lives here?

he Gotham Organization is one of a number of residential developers

in the city that conceive of fictitious buyers and renters it thinks will be looking at the different units it offers at its new development projects.

The following are excerpts from

some of its internal materials:

“Jeanie and Terry’s two-bedroom unit

was designed as a pied-à-terre for the empty-nester couple who spend most of their time in the country, but head to the city to see shows in the nearby theater district, browse museums and shops and entertain friends. In their mid-50s, Jeanie and Terry are an active couple, heading out every morning before the city wakes to walk three miles on the West Side Highway while sipping coffee. The living room’s versatile seating arrangements for up to 12 guests allow

By Mark Maurer avid Picket admits he is no social scientist or raconteur, but the president of Gotham Organization and his team go to great lengths to paint a picture of the future inhabitants of their projects. “The Rothmans,” for example, are imaginary tenants of Gotham West, the firm’s new 1,238-unit Hell’s Kitchen rental complex. This couple and their two fictional children — who “live” in a three-bedroom unit — spend weekends in Hudson Valley, shop at the trendy Brooklyn Kitchen cooking mecca and enjoy oysters from El Colmado in the Gotham West Market, the complex’s 10,000-square-foot gourmet food store. The dad tucks in his kids at night after finishing the day’s newspaper. Gotham is one of several developers that use demographic analysis and other research to compile personality profiles of fictional renters or buyers while building a project. The idea is for the developer to draw on these make-believe families’ lives to create model units with a more lived-in feel, as well as to make the marketing materials more specific.

58 April 2014 www.TheRealDeal.com

“We do these to show people how to use space,” Picket said. “It adds authenticity and richness. Model units are really important. They’re usually the first ones to go.” The Related Companies uses a similar system at its projects, including its MiMA luxury rental towers and in the residential component of its Hudson Yards megadevelopment. While it doesn’t go as far as assigning names to fake tenants, it creates a “development brand document” that breaks down not just the wouldbe residents’ line of work and desired mode of transit, but their quirks and tastes. For example, explained Daria Salusbury, senior vice president and head of luxury leasing at Related, is their preferred nightcap a wine spritzer, or a dry martini, in the vein of James Bond? Would they rather catch up on work in an Internet café or a conference room? “On the rental side, how habitual and predictable tenants are — whether they’re a banker, lawyer or actor — affects the landlord’s expectations,” said Douglas Wagner, executive leasing manager at brokerage Bond New York, which has handled listings at Related rental buildings MiMA and the adjacent One MiMA Tower.

Whether marketing rentals or condos, the process of determining who is going to buy or rent begins as soon as Related purchases a property, Salusbury said. The developer surveys residents in its own buildings once a year to update its data, and uses what it learns to identify what the properties are lacking. A building that originally housed primarily young couples and single people might undergo renovations to include a children’s playroom, if the survey reveals that many of those residents have had children, for example, or an extra lounge, if residents say they like to entertain. As part of its MiMA research, Related surveyed about 1,300 people who either rented or owned a home in the vicinity of the building, which is located at 450 West 42nd Street, and fell into target income brackets. The demographics were largely single and married people without children. The renters ranged between 25 and 45 years old, while the condo owners ranged in age from 30 and 70, according to a Related document provided to TRD by a spokesperson. They perceive themselves as “confident, straightforward, fun-loving,

the couple to entertain often. By placing the master bed against a full wall of windows, the couple finds comfort in turning away from the city’s endless motion in their soothing bedroom.” “Bradford’s alcove studio was de-

signed as a modern man cave for a 25-year-old rising advertising professional who just moved to New York after graduating from business school. After working 12-hour days creating successful advertising campaigns in his nearby Hell’s Kitchen office, Bradford comes home to an apartment that is comfortable, calming and speaks to his eclectic personality. Bradford is an avid cyclist and also enjoys cooking healthy and wholesome meals at the end of a long day at work. … The living space was designed with traditional masculine materials such as leather, corduroy and canvas with a mix of mid-century Danish antiques and eclectic antique pieces that reflect Bradford’s personality and hobbies.” TRD

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Inside

the

Buy

eg e o a- Bro as de o te al kly r n

V Av an en de rid The e o ro r u b l l f e e ilt m on r-c

An at om 47 y o 0

de al

1. February 2000: The private equity giant the Carlyle Group inks a 77-year ground lease at 470 Vanderbilt Avenue with the property owner, the estate of Sol Goldman, with a plan to convert the manufacturing building into a telecom hub. The plan flops.

2. November 2007: GFI comes in as Carlyle’s partner, buying a $45 million stake in the property with plans to convert it into an office building. The deal was first discussed during a meeting in 2006 between Carlyle’s former managing director Tom Ray and GFI executive Steven Hurwitz.

3. October 2009: Solidifying the office plan, the city’s Human Resources Administration, represented by Peter Hennessy (now of Cassidy Turley, then of JLL), signs a term sheet for a 20-year, 400,000-square-foot lease. But as part of the agreement, HRA wants a green light from the local community board and $150 per square foot in tenant build-outs to be paid for through its own rent stream, not by the city. GFI agrees to contribute $58 per square foot, but the $45 million balance still needs to be financed.

4. Spring 2010: Anticipating the HRA lease will be approved, GFI’s lender, Canadian Imperial Bank of Commerce, reaches out to Lance, a specialty finance firm headed by CEO Richard Podos. Lance, located in the Chrysler Building, provides financing for tenant build-outs, which are badly needed at the former manufacturing space.

5. June 2010:

By Adam Pincus

he second-priciest office building transaction in Brooklyn’s history closed last month. The basic facts about how Chicago-based American Landmark Property partnered with RXR Realty to pay GFI Development and Starwood Capital $194.5 million for a longterm leasehold covering the 650,000-square-foot building at 470 Vanderbilt Avenue in Fort Greene have been widely reported. But the telling details — when the individual players first met, the meeting locations (including high-end restaurants like Le Marais), and the nail-biting, 11th-hour wire transfers — have been kept under wraps. This month, The Real Deal mapped out the anatomy of the deal, providing a blow-by-blow account of how the mega-lease purchase came to fruition. The roller-coaster transaction, which nearly collapsed earlier this year, involved some of New York’s biggest real estate players, including RXR, GFI, the Carlyle Group, Paramount Group, the estate of Sol Goldman, Eastdil Secured, Carlton Group and Meridian Capital Group. Following are some of the key moments along the way.

60 April 2014 www.TheRealDeal.com

Throwing a wrench into the owners’ plan to stabilize the building, the community board rejects the plan during a meeting at the Fellowship Hall of Brown Memorial Baptist Church in Clinton Hill. (The board cites parking problems and negative impact on the neighborhood.) HRA announces that it will no longer take the space. A source said GFI at the time thought the deal might be “dead.” However, just three months later, in September, the community board reverses course and approves the project after its concerns are addressed.

6. Spring 2011: After numerous conference calls involving the owners and lenders, HRA’s lease firms up. The agency’s commitment hinges on $45 million in bond financing arranged by Lance, which will be paid for through its rental income. The deal gives the owners their anchor tenant and satisfies HRA’s requirement of not footing the build-out bill.

7. Summer 2011: GFI reaches out to Barry Sternlicht’s Starwood to replace Carlyle — which wants to exit the deal — as its equity partner. Starwood’s interest is stoked by the promise of the HRA lease stabilizing the property.

8. Sept. 20, 2011: All hands are on deck, as multiple transactions need to simultaneously be finalized. The complicated deal with HRA closes, and, in a parallel transaction, Starwood purchases a 78-percent stake in the building for $54 million. About a half dozen sub-transactions fall into place on the same day, including changes to the lease to reflect the new ownership of GFI and Starwood and an approximately doubling of the site’s first mortgage to $130 million. At least 20 people strategize

Inside

Buy

the

on an afternoon conference call to go over final details. All of the day’s events occur under the pressure of a looming 5 p.m. deadline for multiple wire transfers between the buyers, sellers and lenders involved in the deal. (The city’s annual rent payment for the HRA lease is about $8.6 million for 2014, but jumps to $12.2 million in 2016, insiders said.)

1633 Broadway (Paramount’s office)

11 40 West 57th Street (Eastdil’s office)

1330 Sixth Avenue (RXR’s office)

150 West 46th Street (Le Marais)

9. Oct. 29, 2012: Hurricane Sandy strikes, damaging one of HRA’s current offices at 180 Water Street. The agency is forced to move out of the Lower Manhattan location, speeding up its relocation into 470 Vanderbilt.

13 560 Lexington Avenue (Carlton’s office)

10. November 2012:

Weeks later, with the building stabilized, conversations begin to percolate between Starwood and GFI about selling the full leasehold.

Chrysler Building (Lance’s office)

11. January 2013: After interviewing multiple investment sales brokers, Starwood and GFI tap Eastdil Secured’s Adam Spies and Doug Harmon, Manhattan power brokers, to market the property. Spies and GFI’s Hurwitz begin tours for potential buyers. American Landmark is one of the first to take a look.

manhattan

12. May 2013: During a meal at the Midtown kosher steakhouse Le Marais, GFI’s Hurwitz and Marcos Alvarado of Starwood agree on American Landmark as the buyer. About a month later, American Landmark signs a contract to buy the lease from Starwood and GFI.

6 80 Centre Street (HRA’s headquarters)

13. October 2013: After securing extensions to sort out complex loan issues and find an equity partner, American Landmark gets dangerously close to losing its $10 million deposit, and taps ubiquitous moneyman Howard Michaels of the Carlton Group to find it financial partners.

2 50 Broadway (GFI’s office)

180 Water Street (HRA office)

1 Battery Place (Meridian’s office)

3 350 Jay Street (Community Board’s office)

14. January 2014:

484 Washington Avenue (Brown Memorial Baptist Church)

1 470 Vanderbilt Avenue

8 10

Carlton Group gets a preliminary commitment for $43 million in preferred equity from the German firm, the Paramount Group, which owns a significant Manhattan office portfolio, to get the deal back on track. The commitment is later reduced to about $35 million.

15. Early February 2014: Eastdil’s Spies also begins looking for more equity to get the sale done. Spies meets with RXR’s Scott Rechler and Frank Patafio at RXR’s 1330 Sixth Avenue office to see if the firm wants to buy in. About 10 days later, Rechler agrees.

16. Feb. 28, 2014: American Landmark, led by CEO Yisroel Gluck, and RXR — who contributed more than $50 million in equity — along with Paramount, close on the $194.5 million purchase, which includes $142 million in JPMorgan Chase debt arranged by Meridian Capital Group’s Ronnie Levine and Reuven Hellman. The new owners are paying approximately $3.5 million a year to Goldman’s estate, sources said, which still owns the property.

brooklyn

17. April 2014: The new owners plan to capitalize on 470 Vanderbilt’s location near the Barclays Center. The goal is to target tech and creative tenants to fill the office space and lease up the retail space. TRD

www.TheRealDeal.com April 2014 61

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New crop of Chelsea buildings takes inspiration from High Line Starchitects flock to projects flanking the elevated park; “it’s its own show”

By Katherine Clarke Stern tried to match the High Line’s look everal new Chelsea developments and feel on the 30th Street building’s façade designed to frame the High Line are by using metal casement and black-metalembracing the elevated park in ways framed panels of variegated brick. On the not seen since hotelier Andre Balazs com- third floor, a tenants’ garden abuts and seems missioned the Standard Hotel to appear as to extend the park. Inside, designer Clodagh though hoisted above it. Design used furnishings harkening to West At 505 West 19th Street — a two-tower Chelsea’s industrial past, like darkened metcondominium developed by HFZ Capital and designed by Danish architect Thomas Juul-Hansen — a shared lobby between the buildings sits directly beneath the High Line, giving residents a view of the park’s metallic underside through an expansive skylight. Five of the 35 apartments went on sale in mid-March, asking between $2.24 million and $7.4 million. Meanwhile, the Abington House rental project bookends The lobby of 505 West 19th Street is below the High Line, and has a the High Line, thanks to its po- skylight that reveals its underside. sition at the end of the park’s second phase at 30th Street and 10th Avenue. From there, the park’s final phase, slated to open this year, veers west toward the Hudson, and then turns north along 11th Avenue, ending at 34th Street. “While all the other sites are along the High Line, this is literally on top,” said Ben Joseph, a senior vice president at developer the Related Companies, of the Robert A.M. Stern– Pritzker Prize–winning Zaha Hadid’s design for 520 West 28th Street features a futuristic black façade. designed tower. “You’re looking straight down the High Line, all the way to al columns with rivets and reclaimed wood. 14th Street.” “Our building responds to the industrial Rents at the 312-unit building range from character that attracted people to the High Line neighborhood in the first place,” Stern $3,000 to $5,400 a month. To build a tower flanking the High said. “It was our intention to design the buildLine has become a feather in the cap for ing to look like it belongs, perhaps like it has always been there.” top architects. Other projects coming soon include two “It’s its own show,” said architect and developer Cary Tamarkin, who has a condo condos by Black House Development and project at 508 West 24th Street. “It’s prob- Singapore-based developer Oriel. At 522 ably the densest display of starchitecture in West 29th Street, a 27-unit building with a the city.” steel, glass and timber façade is rising. The Pritzker Prize-winning Iraqi-British de- six-unit second building at 534 West 29th signer Zaha Hadid is working on a boutique Street comes online soon after. condominium at 520 West 28th Street feaDevelopment company Sherwood Eqturing a futuristic, muscular black façade. uities also launched sales at 500 West 21st “The High Line has created a perch from Street last month. A 40-foot wall of greenery which architects’ works are being viewed and will divide the homes and the park. Some are unimpressed. judged on a level never seen before in Manhattan,” said Leonard Steinberg, a luxury “The relationship between the West Chelresidential broker at Douglas Elliman. “The sea buildings and the High Line is often only High Line crowd is akin to the architectural found in architectural cues,” said architect police, and they’re harsh!” and developer Tim Crowley of the firm Flank. Developers are limited by how much “By design, these buildings can only dance buildings can interact directly with the park, beside or below the park and not interact so they look, instead, to emulate it. with it directly.” TRD

www.TheRealDeal.com March 2010

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Book review: Peering into the gilded halls Michael Gross’ 15 CPW tome leaves the reader feeling like an overzealous fan, grasping for scraps of theatrics Michael Gross’ new book takes a close look at the lives of residents of 15 CPW.

Keller Augusta Partners celebrates over 13 years of recruiting expertise within the Real Estate Industry. We're proud to hold the Northeast's premier investment, development, construction, brokerage, design & management firms as our clients. In Real Estate: It's Who You Know.

By Guelda Voien ike many best-selling authors, Michael Gross follows a formula, attempting to re-create his past hot reads. And that’s understandable, when you consider that 2005’s “740 Park” received widespread acclaim and was even used as the basis of a documentary. With his new book, “House of Outrageous Fortune: Fifteen Central Park West, the World’s Most Powerful Address,” Gross embarks on a historical-yet-tabloidesque journey through one of the most written about “it” buildings of the day. The book takes an approach similar to those he penned about Los Angeles’ pricey Gold Triangle and the storied co-op 740 Park

on which the title condominium building is built is not mentioned until page 110. The Zeckendorfs are revealed as a refreshing contrast to the people who buy their apartments, the latter whom Gross portrays as “exacting and demanding.” The brothers come across throughout the book as well intentioned and sure-footed. Most interesting is their early relationship with key lender Goldman Sachs. While one cannot help credit the Zeckendorfs for their foresight in forging the relationship, the early mentions of the bank in the book foreshadow the later, darker chapter of its influence, when Goldman captain Lloyd Blankfein and his wife, Laura, plan to move into the building. Construction was funded by the bank’s Whitehall fund, leaving the Zeckendorfs with a debt of gratitude. But, according to Gross’ account, Laura Blankfein’s unrelenting demands that the developers move a structurally necessary wall eventually leave the brothers, once grateful to the bank for ingenious financing of earlier projects, embittered at her husband’s unwillingness to intervene. “They were pains in the ass, between their wives and lawyers,” a Zeckendorf insider told Gross of Goldman buyers, who also included retired partner Alan Shuch.

Juicy bits on real estate figures like Donald Trump’s fortuitous meeting with Louise Sunshine, who worked with him when he was starting out, will make for cocktail-party fodder, but they offer little deep insight. Avenue. But while the book offers an in-depth chronicle of the Robert A.M. Stern–designed condo for the real estate junkie, for the average reader, it may be a bit of a slog. The story starts with the history of the Upper West Side, and of the dynastic Zeckendorf family, who developed the now famed 15 Central Park West. Gross delves into the Zeckendorf ’s plebeian beginnings and, eventually, the actual plot at 61st Street and Central Park West, where the building stands. These early sections plod on too often. Juicy bits on real estate figures, like Donald Trump’s fortuitous meeting with Louise Sunshine, who worked with him when he was starting out, will make for cocktail-party fodder, but offer little deep insight. Still, Gross digs out some dramatic nuggets such as a story about William Zeckendorf Sr.’s debt collectors, who, with the city’s blessing, broke into his Park Avenue penthouse to take photos of his art collection, which included works by Degas and Modigliani, to prove he could pay. However, the history of development in New York, which spread slowly to the West Side and then north, and eventually exterminated every vestige of the gritty old city, is one that has been told often. The rehash is not only unnecessary, but, if it must be included, shouldn’t fill 100 pages. In fact, the actual site 64 April 2014 www.TheRealDeal.com

Other supposed intrigue between the titans fails to captivate, usually because it comes across as imagined or exaggerated. The sometimes circuitous anecdotes Gross

Goldman Sachs CEO Lloyd Blankfein and his wife, Laura

draws on paint a picture of a vicious social landscape. But these assertions center on toolengthy observations, such as how activist investor Daniel Loeb lives in the same building as Yahoo co-founder Jerry Yang, even shortly after Loeb effectively forced Yang off the Yahoo board. Underplayed is the fact that the two actually never met in 15 CPW’s halls, nor did either grant an interview for this book. That leaves the reader feeling like an overzealous fan, peering into the hallowed halls of power, grasping for a scrap of theatrics. The book is published by Atria Books and was released in March. TRD

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Development

Hospitals as real estate powerhouses

NYC’s medical institutions are ramping up development of new megafacilities and competing fiercely for leased spaces

By Janna Herron he real estate needs of the city’s hospitals reflect a health care head-scratcher: These institutions want to treat more patients, but want only the sickest ones to show up at the hospital. To accomplish this, many of the largest New York City health care systems aren’t just renovating their hospitals into stateof-the-art facilities, they are also enlarging their footprints by opening outpatient centers. And they’re becoming big real estate players in the process. The growth thus far is evident. Last year, hospital and health care systems were the city’s fifth-largest group of recipients of loans valued at $100 million or more, according to an analysis of commercial mortgages by The Real Deal. But hospitals, especially those in Manhattan, face challenges to expansion, including finding usable space and renovating existing commercial properties, as well as winning over reticent neighbors. Some unprofitable hospitals that have been forced to shutter are now being developed into a lucrative real estate projects. For example, on the site of St. Vincent’s Catholic Medical Center in Greenwich Village, Rudin Management is now developing a luxury residential complex. Other troubled facilities, such as Interfaith Medical Center in Bedford-Stuyvesant and Long Island College Hospital in Cobble Hill, face an uncertain future. “Medical providers are taking a close look at how they can operate as cost effectively as possible,” said Paul Wexler, the leader of the Wexler Healthcare Properties Team at Corcoran Group Real Estate (see related story on next page). “Health care providers are relocating into more convenient locations to be more accessible to businesses and residences.”

Three-pronged strategy Hospitals need a three-pronged real estate expansion strategy to address today’s medical landscape, said Glenn Grube, program director of the health care spectrum at Faithful + Gould, a Manhattan-based construction project management consultancy, which completed a facility infrastructure assessment for NewYork– Presbyterian Hospital in 2010. The first prong involves erecting new buildings or renovating existing hospitals. Mount Sinai Hospital is doing both at its Astoria, Queens, facility, with a $125

68 April 2014 www.TheRealDeal.com

NYU Langone is building an 800,000-square-foot acute care facility and a 71,000-square-foot energy building along the East River. (Rendering by Ennead Architects)

Memorial Sloan-Kettering’s 1.5 million-square-foot complex on East 74th Street will include medical school facilities.

million renovation and expansion that includes a bigger 19,000-square-foot emergency department and upgrades to the existing hospital. The hospital is expanding onto an existing site that came with its acquisition of Astoria General Hospital more than a decade ago. “The most sophisticated modern care actually requires larger rooms and bigger equipment, and more single rooms to reduce the spread of infection,” said Elise Wagner, a partner in the land use department of the law firm Kramer Levin Naftalis & Frankel. “Hospitals have to take old buildings and reconfigure them, or build new ones to accommodate those needs.” For example, NYU Langone Medical Center on First Avenue in the 30s, is currently modernizing its flagship facility, Tisch Hospital, while also constructing a new 800,000-square-foot acute care facility that will link to Tisch, along with a 71,000-square-foot building that will generate its own electricity off-grid, also on the main campus. In addition to building and renovating, hospitals are also developing major outpatient facilities near their campuses, so

Mount Sinai is building a 19,000-square-foot emergency department on its campus in Astoria, Queens.

doctors can easily go back and forth, said Wagner. For instance, Memorial Sloan-Kettering Cancer Center is planning a 1.5 million-square-foot medical complex that includes an outpatient cancer care center and medical school facilities for Hunter College at East 74th Street between York Avenue and the FDR Drive.

Sloan-Kettering bought the former garage from the city in 2012 for $226 million. Designs for the complex, which is expected to be completed in 2018, were approved by the city in November, including a “bulk variance” for the 750,000-square-foot outpatient center and 450,000 square feet for the college facilities. Meanwhile, NYU Langone is also

www.TheRealDeal.com January 2011 25

Development creating a new ambulatory center at 240 East 38th Street near its main campus. The hospital bought 14 of the 24 floors, spanning about 327,000 square feet, in the building for $41.6 million in 2012 from New York University, according to Real Capital Analytics. And in Brooklyn, New York Methodist is building a 365,000-square-foot ambulatory care facility on its existing campus in Park Slope, to deal with patient loads that have nearly doubled in the last decade. The eight-story building has raised community ire for being out of character with the surrounding brownstone Brooklyn area. Other New York–based hospital systems are building outpatient centers away from their main facilities, sometimes in seemingly far-flung locales, to reach new patients, said Faithful + Gould’s Grube. NewYork-Presbyterian is partnered with Columbia Medical Center to open ColumbiaDoctors urgent care centers across the city and in the suburbs. Last year, ColumbiaDoctors moved its Midtown location, leasing a 125,000-squarefoot single-floor space at 51 West 51st Street from Vornado Realty Trust for 25 years. Mount Sinai similarly opened urgent care centers on the Upper West Side and in Brooklyn Heights, away from its Upper East Side campus. The Upper West Side center on Columbus Avenue and 91st Street opened in May 2012, replacing a McDonald’s. In Brooklyn Heights, the hospital opened a 75,000-square-foot urgent care center at One Pierrepont Plaza in September. Cushman & Wakefield represented Mount Sinai in the 15-year lease, while CBRE Group represented landlord Forest City Ratner. The deal was announced in 2012, but the space, which was once a Goldman Sachs data center, underwent an $18 million renovation.

DVDs to EKGs Expanding outpatient centers in New York City’s land-constrained market comes with challenges, most notably competing with other developers or tenants for leased space. Corcoran’s Wexler noted that there is a lack of medical space available, partly due to developers’ desire to build residential properties to capitalize on the hot housing market. For example, the Chetrit Group is planning to convert the shuttered Cabrini Medical Center in Gramercy Park into 250 apartments. It bought the 400,000-square-foot property last year for $150 million from an affiliate of Memorial Sloan-Kettering, which purchased it in 2010 for $83.1 million, and originally planned to redevelop it as a cancer outpatient center. Medical facilities are also competing for 5,000- to 15,000-square-foot floor spaces in the teens, 20s, and 30s and on the Upper West Side, said H. Guy Leibler, president of Bronx-based Simone Health-

PHOTOGRAPH THEwww.TheRealDeal.com REAL DEAL BY CHANCE YEH 28 March FOR 2012

care Development, which designs, builds and finances health care facilities. Leibler noted that urgent care centers are popping up in storefronts where now-defunct retailers used to be, like Blockbuster Video or Borders Books. “We look at health care as a retail service rather than institutional care,” he said. “No one wants to wind their way through hospital corridors anymore.” That’s also why specialized medical practices are moving out of hospitals and into smaller Class A office spaces, said Marisa Manley, president of Commercial Tenant Real Estate Representation and Healthcare Real Estate Advisors. For instance, in vitro fertilization clinics don’t need storefront space to advertise their services, so they can take cheaper office space without exterior signage, Manley said. “They don’t need it,” Manley said. “It’s a destination for very specific patients.” Hospital systems also are acquiring and hoarding potential development sites for future construction, especially in Manhattan, where land prices have soared recently. In 2011, Sloan-Kettering bought 327 East 64th Street from car rental company Hertz for $18.3 million, in a deal brokered by Cushman & Wakefield, according to RCA. Last summer, the hospital announced plans to construct a six-story, 90,000-square-foot medical lab for $169 million. In another instance, RCA records show Mount Sinai in January bought 22-26 East 103rd Street for $11.3 million from Monaco Management. The lot is adjacent to the lot on 14-20 East 103rd Street that it bought in 2011 for $25 million. No plans have been announced for development. In addition, Mount Sinai is also warehousing a number of properties it acquired through a merger with Continuum Health Partners last year, which increased the former’s New York City real estate portfolio to 17 million square feet, said Grube. “They’ve got buildings that have sat empty for 30 to 40 years. It can’t afford to let them go or occupy them,” he said. “Because once they give up the land to monetize it, there’s no way they will ever be able to buy it back.”

Prepping for patients The Affordable Care Act may soon encourage even more expansion, sources said. Simone’s Leibler said he expects the trend of expansion of ambulatory and urgent care centers to continue — and possibly fill any gaps that potential closings of other New York City hospitals leave behind, especially in the outer boroughs. And Manley said several of her clients that serve lower-income populations are wondering if they should prepare to add more urgent care facilities, as more potential patients get access to health insurance. “People are trying to read demand and position themselves,” she said. TRD

The real estate doctor is in

As health care real estate needs change, Paul Wexler leverages his expertise

ou can’t install a magnetic resonance imaging scanner in just any building. The heavy machines often require special structural supports, and also frequently need special shielding to prevent their effects from being felt throughout a

building. Other medical equipment likewise can demand custom heating, ventilation and cooling or even a crane to get them installed. That’s where Paul Wexler’s expertise comes in. After decades catering to health care clients, the leader of the Wexler Healthcare Properties Team at the Corcoran Group can often identify which locations are appropriate on sight, saving the time, and money, that might otherwise be spent to hire engineers to vet a space. “There are definitely certain physical requirements for these office spaces,” Wexler explained. “Medical equipment can’t go everywhere.” Wexler was specializing in the real estate needs of doctors and other health care professionals well before he teamed up with Corcoran 15 years ago. Today, his team represents at least half a million square feet of New York City medical space at any given point, according to Corcoran data. And Wexler still has relatively little competition in the city. Several international brokerages assign agents to specialize in medical real estate, including CBRE and Jones Lang LaSalle. However, CBRE mostly manages leases and development for health care providers, while Jones Lang LaSalle largely helps develop properties — in total, the firm managed the construction of 5.8 million square feet of medical space in the last two years. Even rival brokerage Douglas Elliman doesn’t have a dedicated health care group. Instead, the company’s commercial team handles all office leases, and although certain agents Paul Wexler

specialize in multiple-niche markets, there isn’t a go-to person for medical real estate expertise.

Part of Wexler’s success reflects the stability of the medical real estate market in New York City and the general enthusiasm landlords have for medical tenants. Medical firms are less susceptible to changes in the economy, because health care is always in high demand in the city. Even better, landlords tend to favor physicians as tenants because they tend to be more stable. Wexler said physicians prefer longer leases, often for 10 years or more, since they typically invest so much to retrofit a space. The needs of medical professionals have changed since Wexler and Corcoran linked up, so his group has had to adapt to a modernizing industry, or risk getting left behind. The latest twist is coming from health care reform. As the Affordable Care Act kicks in and more New Yorkers have access to health insurance, doctors are anticipating an increase in patient volume. Many are enlarging the space they lease and launching satellite offices closer to patients’ homes in response. “Everything used to revolve around the hospital campus,” Wexler noted. “Now, hospitals are still competitive, but realize off-campus settings like ambulatory and urgent care centers are more profitable. There are a lot of underserved areas medically, with patients having to travel much farther for care, and there is a movement now to be more accessible to patients.” Also, high office rents coupled with a need for cost efficiency has doctors joining larger practices, translating to bigger, fewer deals. “There’s a significant number of them sharing their costs, achieving efficiencies and pooling together,” Wexler said. “In the past, the typical medical office deal totaled 1,000 to 2,000 square feet. Now we’re selling spaces of more than 3,000 square feet, all the way up to 8,000 square feet in a single transaction.” Despite the difficulties the trend presents, doctors who are spreading out to the fingertips of neighborhoods are some of his favorite clients to work with because of the opportunity to bring health care offices to areas of the city that need it. Right now, Wexler and his team are working on leasing a space repurposed by Billy Macklowe at 156 William Street in a part of Downtown that has limited access to hospitals.

www.TheRealDeal.com April 2014 69

Commercial Development

The ascent of 51 Astor An inside look at how Edward Minskoff’s once-struggling spec tower attracted tech firms, who are now vying for space After struggling out of the gate, 51 Astor Place is now 80 percent leased.

By Christopher Cameron hen developer Edward Minskoff set out to build a new office tower in the East Village, with asking rents ranging from just under $90 to $120 per square foot — roughly double the average in the surrounding area — many in the industry questioned his logic. And for good reason. When the project broke ground in 2011, the economy was still recovering from the recession. Few developers were building new office space, especially without tenants lined up. Nonetheless, Minskoff landed a $165 million loan to build on a full block in Astor Place, without a robust office market there. The 12-story building — an angular modern glass structure in the midst of an area known for its decorative 19th-century stone edifices — launched leasing in June 2013. Nearly four months later, it hadn’t signed one tenant. The lack of activity generated headlines about the uphill climb Minskoff and his leasing team from commercial firm JLL would face. Both Facebook and Microsoft considered space there and then walked — Facebook to Vornado Realty Trust’s 770 Broadway, and Microsoft to 11 Times Square. “We faced a lot of negativity,” Minskoff told The Real Deal last month. “A lot of naysayers piped up and made comments about how we weren’t leasing, but they

“A lot of naysayers piped up and made comments about how we weren’t leasing, but they really didn’t know what they were talking about. People love to be negative. It’s human nature.”

Developer Edward Minskoff, the mastermind behind the spec tower

Edward Minskoff, Edward J. Minskoff Equities really didn’t know what they were talking about. People love to be negative. It’s human nature.” But Minskoff ’s gamble on the building, which according to published reports

70 April 2014 www.TheRealDeal.com

cost north of $300 million, appears to be paying off now. Last October, 51 Astor secured its first tenant when 1stdibs, an online auction site specializing in high-end vintage

goods, inked a 15-year lease for the building’s entire 42,232-square-foot third floor, paying slightly below asking rents in the low-$80s per square foot, according to CompStak data. Minskoff vowed to have the building fully leased by the end of this past January. And while he did not achieve that goal, 51 Astor was more than 85 percent leased last month and reportedly getting close to filling the rest of its spaces. In addition, the building has incited competition between major tech and social media companies, vying for the same spaces. The question is, how did the building turn its leasing luck around? “I think all the tenants that have signed in the last several months have validated Edward’s vision,” said JLL’s Paul Glickman, whose team is handling 51 Astor’s leasing. “We always expected that tenants would need to see the completed building to get a sense of its quality and its place in

the surrounding neighborhood.”

Leasing wave Since that 1stdibs lease, Glickman’s high-profile JLL team — which also includes the president of the firm’s New York operations, Peter Riguardi, and Mitchell Konsker and Cynthia Wasserberger — has secured 325,000 square feet of space in the 400,000-square-foot building, largely targeting tech firms. Minskoff has offered concession packages in the form of construction buildouts, free rent and other perks. But he has remained steadfast on asking rents, despite accepting rents in the low-80s for the building’s lowest floors. David Falk, who was part of the Newmark Grubb Knight Frank team that represented 1stbids, attributed the building’s turnaround to its prescient timing. “In the last five months, there have been probably five or six household names Continued on page 114

www.TheRealDeal.com January 2013 65

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Profile

Urban Compass’s

new directi n Doubters say the real estate start-up won’t be able to satisfy investors, but the company’s principals are still confident

By Katherine Clarke n September, New York City–based real estate and technology start-up Urban Compass closed a deal with investors for funding totaling $20 million. The investment — from companies such as Advance Publications, the parent of Condé Nast; Joshua Kushner’s Thrive Capital, and venture capital firm Founders Fund — valued the company at close to $150 million. While a $150 million valuation may seem high for a company that hasn’t yet celebrated its first birthday, it’s not unusual for tech start-ups — like messaging services WhatsApp and GroupMe — to command far more than their near-term revenue potential from investors or buyers. Still, some industry observers were dumbfounded by Urban Compass’s valuation. And that was not just because of the high-dollar figure, it was also because the company’s business model has shifted substantially since its launch last May, from a unique rental firm that undercut rival firms by offering clients lower commissions, toward a more traditional residential real estate brokerage. That shift has some industry insiders wondering whether Urban Compass can deliver returns for its tech-focused investors while competing in a low-margin market flush with well-established brokerages. “These guys are used to the world of outlier valuations based on projections and trends in the venture capital world,” said Anthony Lolli, CEO of residential brokerage Rapid Realty. “But in the world of real estate, it all boils down to, ‘how many deals are you really closing?’” Real estate brokerage valuations have rarely reached the heights Urban Compass investors are seemingly betting on. Real estate holding giant NRT bought the Corcoran Group for a reported $65 million in 2001, for instance, but Corcoran was already doing yearly sales of $2.2 billion. And with the exception of a smaller deal involving Bellmarc buying A.C. Lawrence in 2012, and becoming a Coldwell Banker franchise, no other major Manhattan real estate companies have traded in more than a decade. (The purchase price on the Bellmarc deal was not publicly disclosed.) Urban Compass executives declined to comment on the company’s dollar volume of deals or projections for profitability, but maintained that the start-up is consistently hitting the financial goals it set for its growth. “We have raised over $33 million [in total],” Urban Compass CEO Robert Reffkin said in a recent interview with The Real Deal. “We have a tremendous amount of money in the bank and we feel very secure about our position. I’m focused on creating a multibillion dollar company, and I’m fully confident that we can do so.”

72 April 2014 www.TheRealDeal.com

High-risk venture Urban Compass bounded onto the real estate scene in May 2013, generating headlines for its unconventional business model, which initially combined a StreetEasy-style listings website with a team of salaried “neighborhood specialists” who functioned much like rental brokers. But its entrepreneurial founders, Reffkin and Silicon Valley veteran Ori Allon, were also the source of much of the company’s attention. And in addition to Kushner, Advance Publications and the Founders Fund, the company has a slew of other highprofile backers, including Goldman Sachs and venture capital company .406 Ventures, as well as CEOs like Kenneth Chenault of American Express, Cyrus Massoumi of ZocDoc and megadeveloper Bill Rudin. However, neither Rudin nor Jared Kushner, who sits on the company’s board, appear to currently have any units listed with Urban Compass. While in many cases

control those decisions,” he said. It’s no wonder why the investors were attracted to Reffkin and Allon, Mandel said, adding that for this type of effort, the backers were also likely willing to accept a high degree of financial risk. “They were trying to take on an industry in a really fundamental way and to really change the status quo,” he said. “You need to put a lot of money behind an effort like that. If they’re going to put that kind of money behind something that is that high of a risk-reward scenario, they’re going to do it with proven, successful people.” Allon was the brains behind Julpan, an online tool for analyzing social information, which he sold to Twitter for an undisclosed amount in 2011, and the web search algorithm Orion, which was bought by Google in 2006, also for an undisclosed price. Meanwhile, Reffkin, at age 20,was the youngest analyst ever hired by consultancy giant McKinsey & Co., and served as special assistant to U.S. Treasury secretaries John Snow and Henry Paulson under President George W. Bush, before going into private equity at Goldman Sachs.

From left: Urban Compass executives, Gordon Golub, Robert Reffkin and Sofia Song

financial backers serve on a company’s board, they typically have little control over the direction a company takes, Michael Mandel, founder of tech company CompStak, told TRD.

Those who knew the duo believed that they could have a big impact on the way technology was being used in the New York City residential brokerage world.

“We have raised over $33 million. We have a tremendous amount of money in the bank. I’m focused on creating a multibillion dollar company and I’m fully confident that we can do so.” Robert Reffkin, Urban Compass “Most decisions don’t require board approval, and even if they do, the investors would have to control the board to

Adding credibility was the early addition of Gordon Golub, who earned his chops as the No. 2 at rental giant Citi PHOTOGRAPH BY max dworkin

Profile Developer Bill Rudin, an Urban Compass investor

Joshua Kushner’s Thrive Capital is a company investor.

Habitats, where he worked for 16 years. Poaching Golub, one of the top rental executives in the city, was seen as a major coup for the fledgling firm. Urban Compass seems to have struck the right note early on with its technology, which unlike other firms links its listings database with mobile phone technology, allowing its agents to create listings, schedule open houses, and track their customer showings easily on their smartphones. “The app is really well done,” said Stephen Kliegerman, head of new development marketing for Terra Holdings, the parent company of brokerages Halstead Property and Brown Harris Stevens. “It’s definitely unique in terms of ease of use,” he said. “It’s a very robust system they’ve built out.” Reffkin said the company has been approached by other brokerages looking to license its technology, but that it’s currently not entertaining such offers. While licensing the technology would likely be lucrative, opening it up to rivals would undercut Urban Compass’s key competitive advantage, especially now that the firm has moved to a more traditional model, sources said. “Most brokerages have a third-party technology company create a listings database and a third party create a CRM [Customer Relationship Management] database. If it’s all from different places, it’s not connected,” Reffkin said. “When you start building things the wrong way, it’s very hard to fix it. We’ve built it the right way.” For all of its success on the technology side, however, Urban Compass has made missteps on the agent side, evidenced by the fact that it adopted an entirely new, and traditional, business model late last year. At first, the firm handled only rentals, employed agents on salary and set commissions paid by clients lower than the industry average. Rather than paying 15 percent of the yearly rent, the company’s clients paid a commission of just 7.5 percent. In addition, on deals that were co-brokered, Urban Compass got 5 percent, as opposed to the industry standard of 7.5 percent. The company also used a neighborhood model whereby customers would be passed from agent to agent as they moved from one neighborhood to the next. Urban Compass has since changed gears on all of those fronts. Agents are no longer paid salaries, they’re paid solely on commission. In addition, the neighborhood model was scrapped, meaning a client can stick with one agent regardless of what area of the city they’re looking in. The company has also expanded to sales and dropped the reducedcommission system. The investment that the company’s backers made in the firm “seems to be predicated on a different model that has

essentially gone away,” noted appraiser Jonathan Miller of Miller Samuel. Urban Compass executives defended their shift in strategy, saying they were adapting to the market and changed focus primarily to attract more top agents, who tend to prefer maximizing commissions. That’s especially true since the company began moving into the sales arena in December.

Start-up sensibilities The firm, which has 44 agents, is located 155 Sixth Avenue, in an open one-floor space, complete with start-up fixtures like a pool table and beanbag chairs. In February, the company added a new 9,000-square-foot office at 19 Union Square West to accommodate its growing staff. While the shift in compensation structure seems to have attracted some recognizable brokers, including Town Residential’s Jason Saft and Takeshi “Takk” Yamaguchi, as well as Citi Habitats alumni Steve Halpern and Udi Eliasi, the firm still doesn’t appear to have significant numbers of exclusive listings, even factoring its relative youth. By TRD’s count, Urban Compass had only nine exclusive sales listings and 92 exclusive rental listings late last month. Company officials declined to reveal their internal numbers, but they were searchable on the Urban Compass website. Company investor Kenneth Chenault, CEO of American Express

Among its highest-profile listings is a $2.75 million apartment at 82 University Place and an $80,000 a month rental unit at 214 Lafayette Street, both of which are listed by Halpern. And while its technology is indisputably well regarded, sources say the firm may have originally spent too much energy on its software and not enough on the quality of its agents. “While it was a valiant attempt, it underestimated the value of the agent,” said Jeff Schleider, CEO of boutique brokerage Miron Properties, a competing firm. “To navigate this market and create good customer experiences, you need good information and new technology. But more than that, you need good agents, and good agents cost money. The agent is not a commodity that can be purchased with a salary.” Mark Menendez, former director of rentals at Douglas Elliman, agreed. “I believe they realized they may have approached the business thinking a little too far ahead,” said Menendez, who currently manages Elliman’s Tribeca offices at 90 Hudson and 4 Leonard streets. The discount commission model is simply not a draw for the high-producing agents that Urban Compass is looking to recruit, explained Eddie Shapiro, CEO of brokerage Nest Seekers International, another competing firm. “No successful agent would settle for salary, and those that do lose ambition or motivation,” he said. “I was surprised that someone would try those alternative models again, after there were so many failed past attempts by other start-ups in the 1990s and early 2000s.” Foxtons North America, which entered the New York metro area in the early 2000s with a discount model, was one of those brokerages. The firm started by offering clients a 2 percent commission, then raised it to 3 percent, and finally to 4 percent, before going bust. The technology alone will likely not be enough to attract the types of agents that will truly bolster Urban Compass’s bottom line, Kliegerman said. “I think it would be a good selling point for attracting a certain demographic of brokers, but not necessarily the elite brokers of the city,” he said. “It’s a really good rental tool but not so important as a sales tool. In the rental market, inventory is changing daily and tenants’ needs are immediate, so the technology becomes much more effective.” Reffkin admitted that Urban Compass’s internal statistics indicated that the salary model wasn’t working as well as the firm anticipated. “We looked at agents that were on salary and agents that Continued on page 112

ZocDoc CEO Cyrus Massoumi, a company investor

www.TheRealDeal.com April 2014 73

AWithREIT rundown for 2014 the broader REIT market up, New York–focused

real estate investment trusts are mostly keeping pace

By Janna Herron ornado Realty Trust shareholders are waiting to see if the real estate investment trust goes ahead with the idea it floated last month to spin off its suburban shopping centers into a separate entity. Such a deal could be a boon for the REIT’s investors, who would likely get a share of the new company. In addition to that news, Vornado shareholders, as well as investors in other New York–focused REITs, are seeing positive growth this year. So far in 2014, the Vanguard REIT Index ETF, a benchmark for real estate investment trusts nationwide, gained more than 9 percent by mid-March. That follows a 1.9 percent decline in 2013 that was largely attributed to concerns about interest rates rising — a major issue for REITs, which depend on short-term financing because they are required to return most of their income as dividends. Higher interest rates increase costs, reduce investment and pare back dividends. Depending on their subsector, some — but not all — New York City–focused REITs have shared in the gains seen in the broader REIT market this year. Apartment REITs with major New York City exposure followed a similar, if more pronounced, trajectory as the index, while hotel REITs with New York properties trekked an opposite course, with big runups last year, but slower 2014 gains. The performance of New York–focused office REITs overall was mixed in the first few months of 2014.

“New York rents have been a little soft as of late, but apartment [sales] prices remain high,” said Alexander Goldfarb, managing director and the senior REIT analyst at Sandler O’Neill + Partners. “So if you’re a single person or just coming to the city early in your career, renting is the dominant way you get your housing here.”

Apartment REITs rebound

After going gangbusters in 2013, outperforming all REIT subsectors with leaps up to 32 percent, hotel REITs with New York exposures lagged in the first part of this year. Shares of Host Hotels, Hersha Hospitality, LaSalle Hotels and Pebblebrook Hotel Trust all delivered double-digit gains last year, but in 2014, only Pebblebrook is continuing to see the kinds of gains recorded by other REIT shares. The others are appreciating at a slower pace. This comes despite the fact that New York logged a record number of visitors last year — 54.3 million — who booked 30 million hotel room nights, an increase of 1 million from the previous year, city figures show. Average daily room rates also gained 1 percent, to $280.72 in 2013, according to hotel consultancy Lodging Advisors LLC. City officials are predicting 55 million visitors this year, positioning these REITs for further growth. Host should benefit from its second

Median apartment rents may be slipping in Manhattan, but shares of AvalonBay Communities and Equity Residential are on the rise, and both outperformed the benchmark index so far this year. Shares of Virginia-based AvalonBay, which owns more than 17,300 units in the New York area, or about 22 percent of its total holdings, rose almost 10 percent by mid-March. Meanwhile, Sam Zell’s Chicago-based Equity Residential — which as of December had 38 New York City properties with more than 10,300 units, or about 10 percent of its total holdings — saw shares gain about 12 percent since the start of 2014. That’s a far cry from the pair’s disappointing 2013 performance— AvalonBay lost 13 percent and Equity Residential fell 8.5 percent. The outlook for apartment fundamentals in New York is good, even if there has been a slowdown in rent growth recently. 74 April 2014 www.TheRealDeal.com

Westin location in Union Square, which opened in 2012, while LaSalle Hotels’ $65 million renovation of the Park Central Hotel into two separate hotels should also pay off. That REIT renovated the 761-room Sixth Avenue hotel, creating the newly opened boutique-style WestHouse on the top floors. Pebblebrook also spent last year upgrading two Midtown holdings: The Benjamin and the Affinia 50. Hersha, meanwhile,

Apartment REITs with significant New York City exposure are performing well this year compared to last year, while hotel REITs did better in 2013. Office REITs are a mixed bag. Top: Jay Shah, CEO of Hersha Hospitality. Bottom: Jon Bortz, CEO of Pebblebrook Hotel Trust.

Hotel REITs start slow Top: Pebblebrook Hotel Trust upgraded the Benjamin last year. Below: LaSalle Hotels’ $65 million renovation of the Park Central Hotel should help the REIT’s New York performance.

capitalized on the strong hospitality market in January by selling its 70-room Hotel 373 in Midtown for $37 million. “That strong internal growth underpins real estate value creation,” Sullivan said.

Office REITs mixed The performance of NYC-focused office REITs doesn’t fit as tightly into a box. SL Green and Vornado, which

diversified their property holdings or spread to non-traditional office markets, delivered 21 percent and 11 percent returns, respectively, in 2013. That pace has slowed so far in 2014 but is still in positive territory. Last year, Vornado focused on buying up prime retail and mixed-use locations as demand in urban retail properties soared. In September, Vornado, through a joint venture, bought 650 Madison Avenue, a 594,000-square-foot office tower with retail space, for $1.295 billion. The retail portion houses Crate & Barrel’s flagship store. Manhattan-based SL Green likewise capitalized on the retail market in 2013, by selling the stakes in retail properties at 747 Madison and 21-29 West 34th Street that it owned with partner Jeff Sutton for a combined $355 million. It acquired the 49-year leasehold interest in 650 Fifth Avenue, again with Sutton, and bought out Juicy Couture’s existing lease there to reposition the building’s prime retail corner location. The company also took advantage of growing office demand from technology and creative firms in Midtown South, and doubled its lease with the anchor tenant at 635-641 Sixth Avenue, which it acquired in 2012 for $173 million. And to top off the year, SL Green persuaded Citigroup to relocate its headquarters to 388 and 390 Greenwich Street, from Boston Properties’ 399 Park Avenue. The bank will pay rents of about $80 per square foot on its 2.6 million-square-foot lease at the Tribeca complex. “SL Green is one of the better cash-flow engines,” said David Toti, senior managing director at Cantor Fitzgerald. “The company doesn’t just own and operate and collect rent. The management is good at getting cash in other ways, which may be slightly higher risk, but investors reward that activity.” Meanwhile, Mort Zukerman’s Boston Properties, which did not make the move to Midtown South to capitalize on the growing tech demand, saw shares lose more than 5 percent last year. But the stock has come back so far this year, gaining more than 11 percent. The REIT reported in January that it leased up 760,000 square feet for more than $100 per square foot in 2013, largely to its traditional Midtown tenant base. That’s a 38 percent increase over 2012. “Investors have gotten more comfortable with what Midtown leasing is and that softness will eventually go away,” said Sandler O’Neill’s Goldfarb. “They realize that not everyone has left Midtown for Midtown South.” TRD www.TheRealDeal.com January 2014 35

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R EAL E STATE H ISTORY A look back at some of New York City’s biggest real estate stories

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1994: MTA signs 280-year lease for Grand Central

he Metropolitan Transportation Authority signed a 280-year lease for the land under Grand Central Terminal, as well as for miles of suburban and rural rail lines, 20 years ago this month. The MTA, which operates New York’s regionGrand Central Terminal al commuter trains, along with the city’s subways, buses and certain bridges and tunnels, inked the deal with American Premier Underwriters, an insurance company formed from the non-rail assets of the railroad Penn Central, which filed for bankruptcy in 1970. Grand Central opened in 1913 and serves as the terminal for Metro-North Railroad and a major intersection for many of the city’s subway lines. The lease also covers parcels along the former Penn Central lines extending through the Bronx and Westchester County, for a total of 156 miles and terminating in the Dutchess County cities of Poughkeepsie and Wassaic. The lease expires on Feb. 28, 2274. In 2006, Andrew Penson’s Argent Ventures bought the fee — or the underlying land and additional air rights — for $76 million, making Argent the landlord to the MTA.

1916: Businesses seek factory-free zone on upper Fifth

group of local store owners and landlords launched an effort to remove garment manufacturers from the upper floors above popular shopping areas in Midtown like Fifth Avenue, 98 years ago this month. Known as the Save New York Committee, the organization complained that the large numbers of workers congregating on the shopping thoroughfares north of 33rd Street hurt their businesses. Owners of stores like B. Altman, R.H. Macy & Co. and Lord & Taylor backed the plan which was debuted in a series of newspapers advertisements. The private group arranged to relocate firms from the proposed exclusion area that extended from 33rd to 59th streets and from Third to Seventh avenues. The B. Altman store in 1914 It was not the garment trade itself that was seen as a problem, just the large numbers of employees. In fact, many firms maintained showrooms in the area, but relocated their production facilities. In 1917, the committee announced nearly 20 firms had agreed to relocate from the exclusion zone. Then in March 1918, the group proposed the district for clothing production be bounded by 17th and 31st streets and Sixth and Eighth avenues. Instead, the firms headed directly west of Midtown, and that zone subsequently became the center of the trade and was known as the Garment Center.

1848: State codifies wives’ property rights

ew York State enacted a law giving married women the right to control their own real estate apart from their husbands, 166 years ago this month. The state was one of the first in the nation to pass such a law. New York’s Married Women’s Property Act was used as a model by other states in subsequent years. Leaders of the women’s rights movement, including Elizabeth Cady Stanton, advocated for the historic measure. The law provided that a wife had the right to control the revenue derived from her property, as well as to dispose of it. In addition, her husband could not seize her assets for any reason, including to pay his Elizabeth Cady Stanton in 1848 debts, or unilaterally dispose of her properties. Prior to this legislation, single women had individual property rights, but once a woman married, her husband had the right to control her property, including selling it or taking rental income. She could not buy or sell property, make contracts, control the profits or file lawsuits before this law was enacted. Compiled by Adam Pincus

76 April 2014 www.TheRealDeal.com

MEET the Landlord

Vital Stats Name: Alan Dixon Age: 40 Currently lives in: Jersey City, N.J. Grew up in: Canberra, Australia

How many buildings does Dixon Advisory own? We own 535 one- to four-family houses in the New York metro area, all purchased since we started the fund in June 2011. There is a large smattering in Hudson County and in brownstone Brooklyn. In Queens or Brooklyn, they’re all houses that were originally singlefamily houses, but they’ve often been broken up into multiple apartments. We continue to look for opportunities in Manhattan. We’ve got 12 homes under contract or owned in Harlem. Would we like that someday to be 50? Absolutely.

How did you get involved with real estate? I worked in property investment banking in Australia for six years before joining my father’s firm [which he founded in 1986].

As an Australian firm, why did you start investing in the New York area? If you’re investing from a small country like Australia, you have to be very conscious of what the U.S. is doing. In 2008, we saw housing prices had been dropping for two years. In 2009 and 2010, they were still dropping. By 2011, we just thought the value opportunities in individual housing in this region were far too attractive. At our first fundraising, we raised $70 million. Fast-forward to today: the total fund is about $450 million.

When you broke into the New York area, why did you start with Hudson County? It was really because it felt so underresearched and people were so uninterested in it. The housing crisis was really harsh here. Blue-collar stock houses had fallen from $500,000 or $600,000 to $150,000 or $250,000. Just huge inventory available. We thought there’d be very good yields. As we did more research, we found that there was still a lot of shadow inventory. In Manhattan or Brooklyn, we didn’t find that they were good value. The reason our strategy is to keep these houses and rent them for at least five years – if not longer – is we think New York’s gentrification story has still got a really long way to run. We think there’s still a long appreciation period that’s going to happen in these types of properties in New York.

Do the rental rates or yields the firm makes cover the carrying costs of the properties? Yes, the renovated portfolio has a yield at the property level on average of about 5.7 percent. We see capital gain as a key factor in the final total return we expect to make.

78 April 2014 www.TheRealDeal.com

australia

Title: CEO, Dixon Advisory USA

Canberra

What are some things you’ve learned from the Australian real estate market that have applied here? The thing that’s interesting there is we never really had the crime epidemic in the inner city that you had here in New York City. So it’s always desirable in Australia to be close to what we call the central business district. We felt really confident that if the amazing public safety effort over the last 20 years stays, that more senior executives and young professionals and empty-nesters are going to want to live much closer to their workplace. … As long as that remains the case, you’re going to get people looking to live a lot closer in, so we focus on quick commutes. Sure, the PATH train is not the greatest train in the world, but you’re in Midtown or Downtown from Jersey City pretty darn quickly.

Do you enjoy being a landlord to hundreds of tenants? The thing you have to tell yourself is that you work for the 95 percent of really lovely people who come and rent your houses. The fact is you spend 80 percent of your day with the 5 percent of tenants who cause problems. You have to remember that’s part of any business.

Late last year, Dixon bought a singlefamily brownstone in Prospect Lefferts Gardens for $1.85 million – a record for that neighborhood. It was a double lot with two-car parking. We were quite happy to pay a big price there, because it’s got parking, so we think that house has got huge potential.

Why have you stayed away from buying properties in South Florida, Arizona or other Southern markets where foreclosures are abundant? We expected there would be far more competition, and that has turned out to be the case. We also prefer the longterm capital growth potential of the New York region.

In terms of acquisitions, what direction are you heading in? We want to get Forest Hills and Ridgewood in Queens up to a decent size. We want to get a lot more in Bedford-Stuyvesant, Bushwick and surrounding areas. We are feeling very strong demand for a higherend market – in New Jersey, Brooklyn, Queens and maybe a bit of Harlem. By Mark Maurer

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Architecture Review

Ja m e s G a r d n e r

Maki strikes again at 4 WTC

The Japanese architect’s latest NYC building offers shimmering perfection and a silvery brilliance

f proof were needed of the sad state of architectural criticism in New York City and beyond, look no further than the limited reception that 4 World Trade Center has received to date. Surely this building, the first to open for business at the new World Trade Center site, has been covered as a real estate story. But no high-profile New York City publications have written a truly critical appraisal of the project yet. There was a time when any new building of such consequence in New York City (and many of far less consequence) would have received front-page coverage in the New York Times. Those days, sadly, are long past. This oversight is especially puzzling when you consider the importance of the project; the stature of its architect, Fumihiko Maki, and the fact that (after years of dithering, delay and breathless anticipation), we, the public, are finally allowed to enter the World Trade Center site. When I visited the site on the day the building opened at the end of 2013, I felt a delightful, liberating sense that I was trespassing upon forbidden ground, so long had it been since the average citizen of New York had been allowed onto the site. Yet even if 4 World Trade were not at Ground Zero, the creation of a monument of this size anywhere in the city would surely deserve our most devoted attention. The present building is the work of a gifted architect. Maki is a winner of the Pritzker Prize, architecture’s highest honor, and it’s clear he deserved it on the basis of 4 World Trade, which is surely one of the best buildings to rise in New York in some time. Developed by Silverstein Properties, the 74-story, nearly 1,000-foot-high tower was completed in December, after nearly five years of construction. Maki is one of a new generation of Japanese architects to build in New York — if “new” can be properly applied to a group of men who are mostly over 80. Two other eminent examples are this year’s Pritzker Prize recipient, Shigeru Ban, who designed the Metal Shutter Houses in Chelsea, and Yoshio Taniguchi, whose 2004 enlargement and enhancement of the Museum of Modern Art on West 53rd Street will soon be modified yet again according to designs by Diller Scofidio + Renfro. What these Japanese architects seem to share is a love of sheer, unadorned neo-Modernist structures that have been

80 April 2014 www.TheRealDeal.com

thought out to the tiniest detail and then flawlessly executed. The problem with such architecture is that the finished result is so priestly and high-minded that it can sometimes drain all the joy from the building, thus creating something that the discerning public admires more than it loves. This, I think, is the case at the MoMA,

native architecture of Japan. It is surely a good-looking building, in the sense that it has clearly been well-constructed, and that its spare geometry admits of no element of maladroitness. All in all, the tower’s surface exhibits the shimmering perfection and silvery brilliance of a sheared-off side of mica or silicate. Though 4 World Trade consists enFour World Trade Center. Inset, Fumihiko Maki.

Four World Trade is surely one of the best buildings to rise in New York in some time. an admittedly difficult project that had to combine and harmonize the often mismatched and preexisting buildings. As for 4 World Trade, it is still a little early to say. It, too, is a study in that reticence and understatement that appear to have deep, centuries-old roots in the

tirely of curtain walls, much like 7 World Trade Center across the way, it feels like a far darker building. The result is not exactly forbidding, but it is not entirely inviting either. There is, at first blush, a deceptive simplicity to the building. It reads, from

certain angles, like a simple shaft, from which one quadrant or side has been surgically removed toward the top, thus forming a terrace around the 50th floor. (The one element of drama that Maki has permitted himself is the sharpness of the angle that suddenly forms the base of that terrace.) But from other angles, the structure seems to divide into a pair of independent-but-related buildings, with a protective, even fraternal, relation of the taller to the shorter building. Other refinements are a chamfered southwest corner, starting at around the 12th floor and rising all the way to the summit, as well as a sequence of elegantly restrained striations at the summit of the north-facing side. Presumably they have been placed there to cover up the mechanical core, but unlike similar features in most buildings, these have a powerful visual charm. In its form-shifting way, this new building by Maki recalls 51 Astor Place, another commercial building that the architect completed about a year ago. That building, equally dark in appearance, but horizontal in conception, exhibits what is surely one of the most complicated architectural compositions anywhere in the city. It seems to have eight related but different (and uniquely distinguished) façades, even though none of them is exactly in harmony with any of the others. At 4 World Trade, however, that problem has been largely resolved, and the whole is entirely satisfying. In fact, even though we are still awaiting the completion of Towers 2 and 3 at the World Trade Center — not to mention Santiago Calatrava’s transit hub and a few other projects like the memorial museum — it is not too early to say that the entire site appears to be coming along quite well. Skidmore, Owings & Merrill’s One World Trade Center is all but complete, and offers an inspiring example. The same can be said for that firm’s 7 World Trade Center, which (although not technically part of the site) is a fine building, and one that stands in such proximity to the others that it seems to reflect credit on the World Trade Center development as a whole. Each of these component parts is ultimately unlike the others, and that impression will surely grow only stronger when Towers 2 and 3 are completed. But with the opening of 4 World Trade, all signs are that the overall development of Ground Zero is turning out far better than many of us expected only a few years ago. TRD

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Q&A

The construction comeback NYC hard hats are seeing the most work since the market peak, but developers are more cost conscious than ever

By Sasha von Oldershausen

projects, is driving the industry’s upswing. That’s a major turnaround from shortly

ew York may have been one of the last cities in the country to get hit by the reces-

after the recession when public infrastructure projects were holding the industry up.

sion and one of the first to recover from the real estate downturn, but that doesn’t

Still, the construction industry has significantly changed since the recession

mean there wasn’t suffering here. And among the hardest hit segments of real estate

hit. While construction financing has loosened in the last few years, it still is not as

was the construction sector.

free-flowing as it was during the boom. As a result, the developers who are building

But things have changed. In this month’s Q&A, New York City construction indus-

tend to be more experienced because they are the ones who have more equity to pour

try executives and observers told The Real Deal that the industry is seeing the most

into deals. Sources say that developers are, however, selecting construction crews

work since the 2007 peak.

based largely on who charges the lowest rate. In addition, developers are more will-

“We’re looking at a strong market over the next couple of years,” said Louis Coletti,

ing these days to tap non-union labor, which was long taboo, in order to save money.

CEO of the Building Trades Employers’ Association, which represents construction

For more on technological advances (or the lack of them) in the construction in-

managers and contractors citywide. “My contractors are telling me that they’re book-

dustry, on whether the pace of residential construction will soon meet demand, and

ing new business. They’ve got a backlog.”

the new bells and whistles that developers are including in their projects, we turn to

In addition, sources said the private sector, including residential and mixed-used

Louis Coletti

CEO, Buildings Trades Employers’ Association The number of housing construction permits jumped 71 percent in 2013, but still isn’t back to pre-recession levels. What are you seeing in terms of construction activity in NYC? Overall, activity is up. I think the construction market is coming out of the recession of the last couple years — not only in residential, but also in institutional, higher education, and commercial development to some degree. We’re right at the beginning stages. We need another six months to really see. In general, we’re looking at a strong market over the next couple of years. My contractors are telling me that they’re booking new business. They’ve got a backlog. According to the latest stats, Brooklyn had more housing permits than any other borough. We’ve also recently written about developers jumping into the Queens market. Where are you seeing the most new construction today? It depends on market share or what sector. We’re seeing a lot of residential and retail out in Queens and Brooklyn. Keep your eyes on the Bronx — that’s the next borough. They’re ready for it. They have land available and that’s the primary factor. One concern that’s been raised is that the residential units being built are largely targeting the wealthiest buyers and renters. Do you see that as an issue for the projects underway in NYC now? The high-end residential is still a very 64 July 2013 www.TheRealDeal.com

strong growth market. And maybe contrary to what some people think, I think that’s healthy. That means that New York is still a very attractive city. That doesn’t mean that we shouldn’t build more moderate and affordable housing. But I think that having a strong spurt in the high-end market is a good thing. What type of construction are you seeing the least of now in NYC and why? Affordable housing is probably toward the bottom of those growth markets and there are a lot of reasons for that. Land costs are very expensive and are continuing to accelerate at a very high pace. Construction costs remain an issue. The regulatory process and how much time it takes is another [factor.] When you talk about affordable housing and rental housing, or sales that middle-class families can afford, it gets hard for a developer to get within that cost range. What is competition like for construction jobs in NYC today and what tactics are construction firms using to compete? [In the past] there were several factors involved in how a developer chose a contractor: cost, quality, safety, and reliability of the contractor. We’re in an age now, unfortunately, where cost is the single most important factor. I think, in general, there are too many developers who don’t have enough respect for the skills that good contractors can provide. They think they can buy them off the shelves like a Walmart. What other trends are you seeing in the NYC construction industry today? One trend I have a great deal of concern about is cash flow. Contractors are just not getting paid in a timely enough fashion in order to pay their bills. I’ve been in the business for 30 years and this is the worst I’ve ever seen it in terms of cash flow —

our panel of experts.

it doesn’t make a difference whether it’s public or private. I think it’s been part of the way the real estate construction world has developed over the last few years, especially as a result of the recession. Everyone hangs onto the dollars they have until the last second. By doing that and by passing the risk down, at some point it hits the contractor on the ground. That’s dangerous for the whole market. What are wages like for contractors and construction workers now compared to the recent past? Everybody thinks contractors make a lot of money but it’s clearly not the case. There was a study done by [financial analysis firm] Sageworks that measured net profit margins, and in 2011–2013, construction ranked next to last. Contractors are not making a lot of money, especially when you compare that to the amount of risk they assume. Most people would think they’re crazy for taking an incredible amount of risk for those profit margins.

Jay Badame

president/COO of NY, NJ and Pa., Tishman Construction How much is overall construction spending up by compared to the last few years? We have seen positive and stable growth in New York City construction activity since the downturn, and we are cautiously optimistic this trend will continue. Following 2012’s $27.6 billion in construction spending, reports estimate an increase to $31.5 billion for 2013 [once final tallies are in] and $37 billion in 2015. With ongoing work in Lower Manhattan, including the World

Trade Center site, and new starts with the redevelopment of the West Side, the industry is positioned very well. We’ve written a lot about the massive shortage of residential inventory on the market. Do you think there’s enough residential construction taking place to ease that problem? Yes, current residential construction activity is on pace to meet inventory needs. In fact, we are currently building more residential projects now than ever before. The value of 2013 housing starts has increased tremendously since 2009. It’s just shy of the 2007 boom. What type of construction are you seeing the most of in NYC? The private sector is currently driving construction activity in New York City. Most of these projects are residential, hospitality or mixed-use and they are responsible for the industry’s upswing. We would see a substantial increase in the commercial market as well if the Midtown East rezoning were to proceed.

Richard Wood

CEO, Plaza Construction Some have expressed concern that the residential units being built are targeting the wealthiest buyers and renters. Do you see that as an issue for the projects underway now? Yes. As land costs escalate, the only projects that can support those high land costs are condominiums. … Land costs are driving the absence of middle class and affordable housing. Rental housing on property purchased recently would be www.TheRealDeal.com April 2014 83

Q&A difficult to justify —even if construction costs were very low, which is not the case. Construction financing has definitely eased since the downturn but is still not as loose as it was during the boom. How is that impacting the NYC construction industry? There are less inexperienced developers due to the need for much higher levels of equity required in a project. During the downturn we wrote a lot about how construction firms were forced to take jobs they weren’t doing in the past. What is the latest on that front industry-wide? It’s true with the rise in private construction spending, the interest in public work becomes less attractive. As a result, we become more selective and try to focus on public projects that are larger. An interesting current discussion that occurs on each and every project … is the need for flood protection because of the newly adjusted flood plain instituted after Hurricane Sandy. What amenities are you seeing developers incorporate into construction projects in NYC today? Every bell and whistle you can imagine. What are the most surprising trends you’re seeing in the construction industry today? The growth of non-union construction. The willingness of the unionized construction industry to be more flexible, the advent of public-private partnerships, the advent of the international architects and their work now dotting the skyline — something we haven’t seen in New York in a very long time.

Charlie Avolio

vice president/operations manager, Turner Construction How much money is being spent on construction by developers in NYC today and how does that compare to the last few years? We are seeing construction activity pick up across many building types in New York City, including healthcare, commercial, education, residential and airports. The New York construction market is expected to reach $30 billion in 2014, significantly higher than 2009–2012 levels, though still below the highs of 2006–2007, when many large projects were underway at the same time. How much is your business up or down by compared to the years before and after the downturn? Our level of activity has picked up to ap-

84 April 2014 www.TheRealDeal.com

proximately $2 billion per year, and the number of people in our group has grown to almost 1,000 from fewer than 700 in 2009. On the commercial side, we’re working on the Manhattan West platform with Brookfield Properties, 7 Bryant Park with Hines and doing work at the World Trade Center. In the residential market, we are working with Rudin on their West Village condominiums. On the institutional side, the higher education and healthcare markets are also strong. We’re working at Columbia University, New York University, New York–Presbyterian Hospital, and Memorial Sloan-Kettering. On the cultural side, we’re working with the Whitney Museum, Coney Island Aquarium, the Strand Theater and just finished up on the transformation of Madison Square Garden.

Tom Webb

executive vice president/general manager, Skanska USA Metro New York What type of construction are you seeing the most of right now in NYC? There’s no question that there’s a ton of residential. But the commercial sector is doing quite well, too. Healthcare and education are very strong as well. In the public sector, there’s been an enormous amount of money invested in public parks [and] the work along the waterfront. We’ve been heavily involved in that. It’s work that often goes unnoticed, but if you look at an aerial of Manhattan, it’s amazing what’s been changed. What type of construction are you seeing the least of right now in NYC and why? From a hospitality standpoint, there’s not a lot of new work going up — just renovations. The sports market is pretty tapped out, in terms of stadiums. During the downturn, construction firms were forced to take smaller jobs and shift to work they weren’t doing in the past. What is the latest on that front today? No doubt, more firms were forced to diversify, and now with the markets on the upswing, they’re able to re-concentrate.

Richard Anderson

president, New York Building Congress How much money is being spent on construction by developers in NYC today and how does that compare to the last few years? There is $32 billion today in all construction — public,

private, commercial, residential. The peak was $32 billion in 2007, but if you factor in inflation, [today’s activity is] closer to $37 billion. Do you think there’s enough residential construction taking place now to ease the inventory crunch? There’s never enough residential construction in New York because demand is so high. We estimate that at least 20,000 units are needed each year. But even if you average 20,000, that’s not enough to deal with the strong demand for affordable housing. It’s not just the number of units; it’s also the price. I don’t see it easing for some time. Construction financing has definitely eased since the downturn, but is still not as loose as it was during the boom. How is that impacting the NYC construction industry? It’s helping, but not helping enough. Financing is always an issue. On the one hand, you don’t want loose money, because loose money got us into trouble in the first place. On the other hand, you’d like it to be more available so that worthy projects can move forward. We’re somewhere between loose money and projects being able to go forward. …We still have more than 600 stalled projects — projects for which there are approvals, but they’ve been stopped because financing has been withdrawn or there are other kinds of procedural difficulties. What impact, if any, do you see Mayor Bill de Blasio having on construction in the city? Well, if he’s successful in his affordable-housing initiatives, it can lead to significant work and I think we will benefit. He’s indicated he’s going to support a strong capital budget, which means continued strength in public construction. Plus, as long as the city is well managed and is attractive to investment from around the world, [there will be a lot] of private sector construction.

Barry LePatner

founder, LePatner & Associates How much is construction activity up by compared to the last few years? What we’re seeing is an increase in the numbers of projects across the city. But where those projects are being developed, how they’re being developed and how they’re being financed is evidence of a city in transition from 10 to 15 years ago. There are a tremendous amount of properties being bought in the Bronx and in parts of Brooklyn and Queens that have been purchased quietly, off the radar.

Where are you seeing the most new construction today? We have such a wide range of developers today who have a very wide range of financing, so it doesn’t surprise me that we’re beginning to see heavy investment in places like the area near the Gowanus Canal, which is an environmental cesspool. But with the government focusing on cleaning that up, you know that developers are also looking for areas that have been [more] overlooked. I believe we’re going to see a tremendous amount of development in places like Coney Island despite concerns about future hurricanes. We’re 530-some-odd miles of waterfront in New York. What we’re seeing in Long Island City is significant. We’re seeing new pockets of growth that are going to transform the city for the next 40 to 50 years. Are you concerned that a lot of the residential being built is targeting wealthy buyers and renters? At some point, we will run out of individuals who can afford to pay $1.5 million to $2 million a bedroom. There are some who say that will be a long time coming because of [international investors.] We have to balance our city to make sure it does not become an exclusively high-end enclave. We’re seeing that places that were historically comfortable areas of rental apartments are now disappearing, from Alphabet City to the Bowery. How is construction financing impacting the NYC construction industry? Compared to 10 to 15 years ago, there are many other sources of financing. Corporations can get money outside of traditional lenders. There is a tremendous amount of money offshore that has enabled developers to find funding. If they want to find funding, they can find it. What are the most surprising trends you’re seeing in the construction industry? That contractors have been so slow to move into the digital age to use technology and robots. It is only a matter of time before robotic skills will supplement skilled workers in many of the routine procedures. You will see robots put in steel studs in the commercial buildings and doing all the sheet rock. I think that’s a trend that we’re going to see in the near-term future. The construction industry is the industry that time has forgotten. We build today essentially the same way we have built for hundreds or thousands of years. We need to bring in technology so that the cost of construction goes down, and productivity goes up. TRD

Follow The Real Deal on Twitter: twitter.com /trdny www.TheRealDeal.com July 2013 65

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Developer 4701 North Meridian, L.L.C. Address: 4218 NE 2nd Avenue, Miami, FL Premier Sales Group, Inc. a Licensed Real Estate Broker is the Exclusive Sales Agent. • ONE Sotheby’s International Realty, Global Marketing Partner. The Ritz-Carlton Residences, Miami Beach are not owned, developed or sold by The Ritz-Carlton Hotel Company, L.L.C. or its affiliates (“Ritz-Carlton”). 4701 North Meridian, L.L.C. uses The Ritz-Carlton marks under a license from Ritz-Carlton, which has not confirmed the accuracy of any of the statements or representations made herein. This graphic is an “artist’s rendering” and is for conceptual purposes only. THIS OFFERING IS MADE ONLY BY THE OFFERING DOCUMENTS FOR THE CONDOMINIUM AND NO STATEMENT SHOULD BE RELIED UPON IF NOT MADE IN THE OFFERING DOCUMENTS. THIS IS NOT AN OFFER TO SELL, OR SOLICITATION OF OFFERS TO BUY, THE CONDOMINIUM UNITS IN STATES WHERE SUCH OFFER OR SOLICITATION CANNOT BE MADE. PRICES, PLANS AND SPECIFICATIONS ARE SUBJECT TO CHANGE WITHOUT NOTICE. OBTAIN THE PROPERTY REPORT REQUIRED BY FEDERAL LAW AND READ IT BEFORE SIGNING ANYTHING. NO FEDERAL AGENCY HAS JUDGED THE MERITS OR VALUE, IF ANY, OF THIS PROPERTY. ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING THE REPRESENTATIONS OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, REFERENCE SHOULD BE MADE TO THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER OR LESSEE. NEW YORK RESIDENTS This advertisement is not an offering. It is a solicitation of interest in the advertised property. No offering of the advertised units can be made and no deposits can be accepted, or reservations, binding or non-binding, can be made until an offering plan is filed with the New York State Department of Law. This advertisement is made pursuant to Cooperative Policy Statement No. 1, issued by the New York State Department of Law. CP14-0017

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Commercial Commercial and and residential real estate news news briefsbriefs residential real estate from around the U.S. from around the U.S.

NATIONAL MARKET REPORT

Palm Beach

New Orleans Since Hurricane Katrina devastated the New Orleans Six Flags in 2005, the 150-acre site has remained virtually untouched, save a few failed attempts to reopen the theme park. But a proposal deadline at the end of February garnered new development bids, including a proposal by TPC-NOLA for “Jazzland Theme Park.” TPC-NOLA, a branch of the themed entertainment development firm Paidia Co., also publicly released its plans, which include four components: the theme park itself, a backlot for use by film production companies, Baritone Beach Waterpark and Backlot Shoppes, a mixed-use venue that would include retail, dining, a multiplex movie cinema and office space. The plans estimate the project cost at $50 million for its first phase of development, which includes the theme park and film backlot. The city has an outstanding debt of about $10 million on the property and pays approximately $1.8 million toward the debt each year.

Ivana Trump

New Orleans received several bids to redevelop the Six Flags wrecked by Hurricane Katrina.

Chicago

until 2011, L.A. Downtown News reported. The six story, 280Jeanne Gang, the architect best known for designing Aqua Tower, unit building designed by Thomas Cox Architects features stuan 82-story apartment complex developed by Magellan Develop- dios, one- and two-bedroom apartments that range in size from ment Group, was selected to design another Chicago skyscraper 570 square feet to 1,140 square feet, as well as 17,000 square feet of retail space. The project, as well as recent construction of the nearby Blossom Plaza — a mixed use complex that includes 240 housing units and 17,000 square feet of plaza space — reflect burgeoning change in Chinatown, which has historically served a predominantly immigrant community. However, in an effort to create a building that fits in with the older neighborhood, designers of Jia incorporated Chinese design elements into their project, including a “flying roof ” and the prominent use of the color red, L.A. Downtown News said.

Seattle

Jeanne Gang

for the company. Magellan tapped Gang for a project that will include a hotel and residential units. No further details were released. Gang, who has headed her own architecture firm – Studio Gang – since 1997, received widespread acclaim for the Aqua tower. Her design incorporated the use of curved balconies, which not only contribute to the building’s distinct liquid and sinuous form, but also serve a functional purpose — protecting residents from wind and sun. The building, with 262 condo units, 474 apartments and a 334-room hotel, also holds the designation of tallest building ever built by a woman. Prior to Aqua, Gang had never designed a skyscraper, but her work on the building generated attention, including a MacArthur Foundation “genius” grant in 2011.

Los Angeles

The Jia Apartments

90 April 2014 www.TheRealDeal.com

The Jia Apartments, a $93 million housing complex nearly 10 years in the making in L.A.’s Chinatown neighborhood, opened with rents starting at $1,690. Developer Equity Residential found the site in 2004 and received city approvals in 2007, but didn’t start construction

Great Western Pacific released details of a proposal for a gondola that would move east to west along Union Street in the heart of the Seattle’s Seattle Gondola congested downtown. The development firm, which is headed by the Griffith family — best known for operating the Great Wheel at Seattle’s waterfront — said the project, which is estimated to cost several million dollars, would be privately financed and operated. The half-mile-long gondola route would connect passengers from the Convention Center to the waterfront, while stopping at the Downtown Transit Tunnel, Pike Place Market and the art museum. The plans say the Union Street Gondola could move 1,800 people per hour in an area of the city that is otherwise lacking in public transit options. The developers also pointed to the environmental benefits of the plan: “It is quiet, fast and powered by electricity,” the company’s release stated. Gondolas are an increasingly popular transit solution, with more than 44 systems in cities worldwide. The Georgetown Business Improvement District in Washington D.C. also recently released a plan that would incorporate the use of an aerial gondola. Compiled by Sasha von Oldershausen

Ivana Trump, ex-wife of “The Donald,” listed her 14,400-square-foot estate for $18.9 million. The former fashion model purchased the nine-bedroom, nine-bathroom home for $4.4 million following her divorce in 1994. The mansion, built in 1921, was landmarked in 1998.

Beverly Hills

Bruce Willis

Actor Bruce Willis marked down his 10,379-square-foot home again, this time to $18 million. Willis originally listed the home in May 2013 for $22 million, and brought the price down to $19.995 million in August. The house, built in 1928, features 11 bedrooms and 11 bathrooms.

Chicago

Michael Jordan

Basketball legend Michael Jordan marked down his 8,000-square-foot penthouse apartment to $4 million after ex-wife and licensed broker Juanita Jordan listed it for $4.3 million in April 2013. The three-level apartment features four bedrooms, five-and-a-half bathrooms and porcelain floors.

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ON THE MARKET Rockrose’s Tribeca Pointe slated to fetch $300M Tribeca Pointe, a 42-story rental complex in Battery Park City, is expected to sell for at least $300 million. Rockrose Development tapped a team of Studley brokers, includ41 River Terrace ing Will Silverman, Eric Negrin, Daniel Parker and Woody Heller, to market the 285,000-square-foot building, the New York Post reported last month. The developer is seeking a buyer who would either convert the 80 percent portion of the 80/20 affordable housing setup into condominiums, or continue to operate the entire property at 41 River Terrace as a rental. A gym, deli and children’s playroom are among the building’s amenities.

FiDi development site hits market for $260 million A pair of developers who picked up a distressed lot in the Financial District a few 111 Washington Street years back for a cool $57.5 million is now asking five times that amount for the property. The empty parking garage three blocks south of the World Trade Center could break the sales record for a residential development in lower Manhattan by 17 percent if it snags the $260 million ask, Crain’s

Commercial properties recently placed on the market

reported. Empire Management’s Fred Ohebshalom and his son Richard, who leads Pink Stone Capital, bought a defaulted note for the property at 111 Washington Street in 2011. Bob Knakal of Massey Knakal Realty Services will handle marketing and sales for the property.

Taconic lists office property for $160M Taconic Investment Partners listed its 300,000-square-foot office building at 619 West 54th Street for $160 million. Taconic purchased the 10-story property, located in an emerging res619 West 54th Street idential neighborhood that is also home to Two Trees Management’s Mercedes House at 555 West 53rd Street, from KBS Realty Advisors for around $110 million in late 2012. Jones Lang LaSalle’s Richard Baxter was tapped to market the building, located west of 11th Avenue, Crain’s reported. Leasing activity in the building included Taconic’s deal with luxury carmaker Maserati last year for a 25,000-square-foot ground floor retail space.

Atkins & Breskin seeking $28M for EV building

47-53 Third Avenue

Real estate investment firm Atkins & Breskin is aiming to sell an East Village residential condominium for $28 million, according to marketing materials obtained by The

Real Deal. The five-story, 30,662-square-foot building is located at 47-53 Third Avenue, between East 10th and East 11th Streets. The property has 28 one- and two-bedroom apartments and will be delivered vacant, according to the marketing materials from Ariel Property Advisors. It comes with an additional 7,802 square feet of as-of-right air rights. A team led by Ariel’s Victor Sozio and Shimon Shkury is marketing the property on behalf of Atkins.

Stake in UWS multi-family building for sale A 50-percent interest in the ground fee for an Upper West Side apartment building is on the market with an asking price of $19.9 million. The 210,000-squarefoot property, located at 323-325 West 96th Street between Riverside 323-325 West 96th Street Drive and West End Avenue, contains 172 free-market residential units ranging from studios to four-bedrooms, as well as two commercial units. Building amenities include a gym, roof deck, bicycle room, children’s play area and screening room. The other 50-percent interest in the property will remain under long-term ownership with a family trust. Gary Meese of Eastern Consolidated is handling the sale. Compiled by Linden Lim

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Office listings

Retail listings

Residential sales and rentals

Property information & ownership search

Deal Sheet summary

The Deal Sheet, on pages 96 to 104, covers transactions from 2/11/14 through 3/10/14. Please submit future deals to deals@therealdeal.com.

Overview Property sales

Financing

Leases (# of deals)

Leases (square feet)

Deals

Transactions

Office

572,032

Dollars

$506,980,000

Aggregate value

$76,950,000

Retail

130,481

Total

100

Total

702,513

Sales By dollar volume (in millions)

By type Multi-family Office

Retail Development

Hotel

Multi-family

$33.5 $3 0

5 $76.3

Industrial

Retail Development

Hotel

7 $3

0.5

Mixed-use

Office

Mixed-use Industrial

3 9 . 8

6 2 $

Office leases Office leases by industry

Office leases sf by industry

Industry

Leases of deals

Industry

Top tenant reps for office leasing by sf Leases square feet

Broker

Leases square feet

Architecture & Design 2

Architecture & Design 15,500

CBRE Group 80,390

Consulting 3

Consulting 13,064

Cushman & Wakefield 66,156

Fashion* 29

Fashion* 37,798

JLL 53,398

Financial 7

Financial 96,126

Adams & Co.

Health & Beauty

34,977

Studley 23,464

Legal 1

Legal 32,000

Denham Wolf 21,500

Media 3

Media 175,401

EVO Real Estate Group

NGO 5

NGO 21,024

Cresa 13,300

Other 20

Other 118,580

Millennium Realty 13,000

Science & Technology

Bloom Real Estate Group

27,562

36,191

18,239

7,427

Retail leases Top tenant reps for retail leasing by sf

Retail leases sf by industry

Ripco Real Estate 40,000

Food & Beverage

SCG Retail 26,066

Health & Beauty

Leases square feet

JLL 13,459 Sinvin Real Estate 11,309 Vision Property Group 10,855

Other Arts and Crafts

CBRE Group 10,000

Discount

Besen Retail 5,000

Drugstore

3,710

Health & Beauty Other Arts and Crafts

3,3

Discount

51,295

15,0

Drugstore

0 0,

CWM 3,400

2 1

Midtown Commercial Real Estate

20,709

Retail leases by industry

Broker

SKH Realty 3,100

(*includes showroom space)

www.www.TheRealDeal.com April 2014 95

Deal Sheet

Commercial deals in New York City Deals are listed from largest to smallest in square feet leased or bought. The Deal Sheet covers transactions from 2/11/14 to 3/10/14. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

One Penn Plaza

114,000

Publicis Groupe / n/a

Direct Brands Inc.; Vornado / K. Ruderman, B. Wolk, Studley

The media giant signed a sublease for the entire fifth floor and part of the fourth floor. The reported asking rent was in the $50s per square foot.

31 West 52nd St

53,398

Stone Harbor Investment Partners LP / R. Martin, B. Lane, JLL

Paramount Group / Represented inhouse

The investment advisory firm signed a 15-year lease for the entire 16th floor.

350 Fifth Ave (Empire State Building)

43,401

LinkedIn Corporation / Sacha Zarba, CBRE

Empire State Realty Trust / W. Cohen, S. Ursini, NGKF; R. Kass, ESRT

The social media company signed a new lease.

570 Lexington Ave

32,000

Carol McNulty & Kull / Joseph Harkins, C&W

Feil Organization / n/a

The law firm signed a lease on the eighth and 17th floors.

130 Fifth Ave

26,600

Fresh / n/a

Olnick Organization / E. Cagner, D. Falk, K. Ciminelli, NGKF

The beauty products company signed a lease on the 10th and 11th floors.

50 Rockefeller Plaza

18,000

TV Guide Magazine / D. Glassman, K. Broderick, C&W

Bank of America / C. Wasserberger, M. Konsker, JLL

The television magazine signed a sublease for the entire 14th floor.

One Grand Central Pl

16,995

Johnson Controls Inc. / n/a

Empire State Realty Trust / W. Cohen, J. Christiano, NGKF; R. Kass, ESRT

The sustainability and energy efficiency company signed an expansion lease.

1407 Broadway

13,719

Techstars / Ross Zimbalist, CBRE

Lightstone Group; Lightstone Value Plus REIT Inc. / P. Turchin, G. Rothkin, A. Bokman, B. Fasternberg, R. Zimbalist, L. Cross, CBRE

The startup accelerator signed a lease for the entire 24th floor.

130 Fifth Ave

13,300

Zillow / Cresa

Olnick Organization / E. Cagner, D. Falk, K. Ciminelli, NGKF

The online real estate database company signed a lease on the ninth floor.

130 Fifth Ave

13,300

Brown Harris Stevens / n/a

Olnick Organization / E. Cagner, D. Falk, K. Ciminelli, NGKF

The real estate brokerage signed a lease on the entire second floor.

250 West 55th St

13,200

Modern Bank / Craig Reicher, CBRE

Boston Properties / Peter Turchin, CBRE

The bank signed a lease on the 15th floor.

636 Sixth Ave

13,000

Movable Ink / Elliot Warren, Kaufman Organization

SecondMarket / Jim Wenk, JLL

The tech company signed a sublease.

205 West 39th St

13,000

Nordstrom Inc. / Michael Leifer, Millennium Realty

n/a / Mitchell Cooperstock, EVO Real Estate

The department store chain signed an office lease for the entire 15th floor.

28 West 25th St

11,000

BKSK Architects / Stephen Powers, Denham Wolf

Brickman / Represented in-house

The architectural firm signed a 10-year lease renewal.

24-32 Union Square East

10,660

Shake Shack Enterprises / Mitchell Cooperstock, EVO Real Estate Group

n/a / Mitchell Cooperstock, EVO Real Estate Group

The burger chain expanded its headquarters.

19 West 44th St

8,377

Eos Products LLC / G. Taubin, G. Marans, Studley

Deka Immobilien GmbH / B. Winter, B. Korchak, JLL

The beauty products manufacturer signed a 10-year lease for part of the eighth floor.

570 Lexington Ave

7,758

THL Credit Advisors LLC / Stephen Berliner, Studley

Feil Organization / n/a

The private equity firm signed a lease on the 21st floor.

570 Lexington Ave

7,570

Cornwall Capital Management / K. Caggiano, R. Shah, CBRE

Feil Organization / n/a

The financial investment corporation signed a new lease on the 10th floor.

19 West 44th St

7,329

Lieberman Research Worldwide / H. Nottingham, R. McKinney, Studley

Deka Immobilien GmbH / B. Winter, B. Korchak, JLL

The marketing research firm signed a seven-year lease for part of the 15th floor.

570 Lexington Ave

6,514

Globex International Holdings / S. Eaton, S. Bloom, Bloom Real Estate Group

Feil Organization / n/a

The management consulting firm signed a lease on the 15th floor.

31 Penn Plaza

6,228

NPD Group / A. McCostlin, D. Hrobsky, DTZ

Savanna / M. Konsker, M. Astrachan, M. Polhemus, JLL

The consumer market research firm signed a seven-year lease for part of the fourth floor.

19 West 44th St

5,810

Enclave Capital / M. Kunikoff, D. Someck, Lee & Associates

Deka Immobilien GmbH / B. Winter, B. Korchak, JLL

The broker-dealer signed a five-year lease for part of the 17th floor.

135 West 36th St

5,250

International Market Recruiters / David Kahane, DAK Real Estate

Howard Warehouse / Larry Portnoi, Midtown Commercial Real Estate

The recruiting firm signed an eight-year lease on the 16th floor. The reported asking rent was $35 per square foot.

135 West 36th St

5,250

Nonprofit Coordinating Committee of New York / Paul Wolf, Denham Wolf

Howard Warehouse / Larry Portnoi, Midtown Commercial Real Estate

The nonprofit signed a 10-year lease on the 15th floor. The reported asking rent was $35 per square foot.

135 West 36th St

5,250

Valentine Warehouse / Anita Grossberg, Douglas Elliman

Howard Warehouse / Larry Portnoi, Midtown Commercial Real Estate

The tenant signed a 10-year lease on the 14th floor. The reported asking rent was $35 per square foot.

135 West 35th St

5,250

NAIK Consulting Group / W. Siegel, T. Sullivan, CBC Hunter Realty

Howard Warehouse / Larry Portnoi, Midtown Commercial Real Estate

The consulting firm signed a seven-year lease on the 13th floor. The reported asking rent was $35 per square foot.

135 West 36th St

5,250

NPCC / Andrew Foley, Denham Wolf

Midtown Commercial Real Estate / Represented in-house

The nonprofit signed a lease.

224 West 29th St

4,500

Anthony Baratta LLC / Carry Lyon, C&W

Walter & Samuels / Represented inhouse

The design company signed a lease for the entire fifth floor.

570 Lexington Ave

4,205

Carrera Willowbridge Capital / Joel Burris, Brown Harris Stevens

Feil Organization / n/a

The security brokers and dealers signed a lease renewal on the 31st floor.

570 Lexington Ave

4,185

Strathspey Crown Holdings / Irina Super, Red Real Estate

Feil Organization / n/a

The private equity firm signed a lease on the 26th floor.

545 Eighth Ave

3,898

Association for Rehabilitative Case Management and Housing / Carry Lyon, C&W

Eastgate Realty / Represented inhouse

The community organization signed a lease for part of the ninth floor.

To view more deals visit our website: www.TheRealDeal.com 96 April 2014 www.TheRealDeal.com

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Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

570 Lexington Ave

3,883

Asset.tv / Tyler Owen, Colliers International

Feil Organization / n/a

The video reporting firm signed a lease on the 45th floor.

11 Hanover Square

3,774

Keep a Child Alive / Carry Lyon, C&W

The Beekman Estate / John Cryan, Mt. Pleasant Management Corp.

The nonprofit signed a lease for the entire 14th floor. The tenant is relocating from 45 Main Street in Brooklyn.

307 Fifth Ave

3,650

Tri-Plex Packaging Corp. / A. Bonett, B. Cohn, Adams & Co.

n/a / David Menaged, Intrepid Real Estate Group

The packaging production company signed a lease. The reported asking rent was $47 per square foot.

231 West 39th St

3,600

The NTWRK Agency / Maxwelle NY

231/249 West 39 Street Associates / James Buslik, Jeff Buslik, Adams & Co.

The apparel company signed a lease renewal and expansion. The reported asking rent was $45 per square foot.

10 West 33rd St

3,278

YM Accessories Inc. / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The accessories firm signed a new lease. The reported asking rent was $44 per square foot.

16 West 36th St

3,269

Susan & Company / H. Epstein, E. Klein, EVO Real Estate Group

n/a / H. Epstein, E. Klein, EVO Real Estate Group

The jeweler signed an office lease.

80 Maiden Ln

2,852

Empire State Pride Agenda / Carry Lyon, C&W

A.M. Property Holding Corp. / Represented in-house

The community organization signed a lease for part of the ninth floor.

40 Broad St

2,734

Health Concept Partners / Gene Spitzer, Midtown Commercial Real Estate

161 Mav LLC / Jonata Dyan, EVO Real Estate Group

The medical device distributor signed a seven-year lease for part of the sixth floor. The reported asking rent was $40 per square foot.

16 West 36th St

2,526

BFI Contruction Corp. / John Brierty, NGKF

n/a / H. Epstein, E. Klein, EVO Real Estate Group

The construction company signed a lease.

501 Madison Ave

2,518

Prime Time Galleries / Francine Kayden, Midtown Commercial Real Estate

Colliers International / Timothy Pond, Colliers International

The gallery signed a 10-year lease for part of the seventh floor. The reported asking rent was $60 per square foot.

15 West 26th St

2,500

The Dock Group / Catherine Kuo, CBRE

n/a / A. Gamberg, C. Catuogno, J. Anderson, EVO Real Estate Group

The fashion designer signed a lease.

37 West 39th St

2,500

Copen United LLC / Howard Epstein, EVO Real Estate Group

n/a / Howard Epstein, EVO Real Estate Group

The textile company renewed its lease and expanded its office space.

10 West 33rd St

2,350

Alliance Wholesale Corp. / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The apparel firm signed a lease renewal. The reported asking rent was $52 per square foot.

19 West 44th St

2,333

Gemvara / J. Schindler, B. Boisi, Cassidy Turley

Deka Immobilien GmbH / B. Winter, B. Korchak, JLL

The jeweler signed a three-year office lease for part of the eighth floor.

152 Madison Ave

1,810

Euro Pacific Precious Metals LLC / B. Bernstein, H. Epstein, EVO Real Estate Group

n/a / B. Bernstein, H. Epstein, EVO Real Estate Group

The precious metals company signed a lease.

231 West 39th St

1,640

Kabir SM Holdings Inc. / James Buslik, Jeff Buslik, Adams & Co.

231/249 West 39 Street Associates / James Buslik, Jeff Buslik, Adams & Co.

The apparel company signed a lease renewal. The reported asking rent was $45 per square foot.

34 West 33rd St

1,600

Girandola USA LLC / D. Levy, B. Maslin, Adams & Co.

Arcade Building Associates / D. Levy, B. Maslin, Adams & Co.

The apparel company signed a lease renewal. The reported asking rent was $42 per square foot.

10 West 33rd St

1,371

Colombino Headwear Inc. / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The accessories firm signed a lease renewal. The reported asking rent was $47 per square foot.

231 West 39th St

1,354

Amanda Uprichard LLC / James Buslik, Jeff Buslik, Adams & Co.

231/249 West 39 Street Associates / James Buslik, Jeff Buslik, Adams & Co.

The apparel company signed a new lease. The reported asking rent was $45 per square foot.

231 West 39th St

1,324

Irina Korkhin Sales LLC / James Buslik, Jeff Buslik, Adams & Co.

231/249 West 39 Street Associates / James Buslik, Jeff Buslik, Adams & Co.

The apparel company signed a lease renewal and expansion. The reported asking rent was $45 per square foot.

58 West 39th St

1,300

Grassroots Campaign / M. Kabiri, W. Stein, Manhattan Commercial Realty

n/a / Robert Buckley, Keller Williams NYC

The strategic consulting and fund-raising company signed a two-year lease for the entire fifth floor.

34 West 33rd St

1,248

C.K. (NY) Industries Inc. / D. Levy, B. Maslin, Adams & Co.

Arcade Building Associates / D. Levy, B. Maslin, Adams & Co.

The apparel company signed a lease renewal. The reported asking rent was $44 per square foot.

19 West 44th St

1,132

SRG44 / Josh Goldman, C&W

Deka Immobilien GmbH / B. Winter, B. Korchak, JLL

The tenant signed a 10-year lease renewal for part of the 14th floor.

10 West 33rd St

1,112

Straw Studios LLC / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The accessories firm signed a lease renewal. The reported asking rent was $52 per square foot.

10 West 33rd St

1,090

Summer Rio Corp. / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The footwear company signed a lease renewal. The reported asking rent was $44 per square foot.

231 West 39th St

1,086

DL & Company LLC / James Buslik, Jeff Buslik, Adams & Co.

231/249 West 39 Street Associates / James Buslik, Jeff Buslik, Adams & Co.

The apparel and accessories firm signed a new lease. The reported asking rent was $45 per square foot.

34 West 33rd St

1,077

Flyers Group USA Corp. / D. Levy, B. Maslin, Adams & Co.

Arcade Building Associates / D. Levy, B. Maslin, Adams & Co.

The apparel company signed a new lease. The reported asking rent was $49 per square foot.

34 West 33rd St

1,066

Lola Jo Sales Group-East Inc. / D. Levy, B. Maslin, Adams & Co.

Arcade Building Associates / D. Levy, B. Maslin, Adams & Co.

The apparel company signed a lease renewal. The reported asking rent was $44 per square foot.

231 West 39th St

1,039

Kendra Scott Design Inc. / James Buslik, Jeff Buslik, Adams & Co.

231/249 West 39 Street Associates / James Buslik, Jeff Buslik, Adams & Co.

The accessories company signed a lease renewal. The reported asking rent was $45 per square foot.

34 West 33rd St

1,035

EI International (USA) Inc. / D. Levy, B. Maslin, Adams & Co.

Arcade Building Associates / D. Levy, B. Maslin, Adams & Co.

The apparel company signed a new lease. The reported asking rent was $44 per square foot.

34 West 33rd St

1,019

DNF International Company Inc. / D. Levy, B. Maslin, Adams & Co.

Arcade Building Associates / D. Levy, B. Maslin, Adams & Co.

The apparel company signed a lease renewal. The reported asking rent was $44 per square foot.

231 West 39th St

1,002

Travelerâ&#x20AC;&#x2122;s Choice Travelware / James Buslik, Jeff Buslik, Adams & Co.

231/249 West 39 Street Associates / James Buslik, Jeff Buslik, Adams & Co.

The apparel company signed a new lease. The reported asking rent was $45 per square foot.

10 West 33rd St

962

Intercontinental Leathern Industries / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The accessories firm signed a lease renewal. The reported asking rent was $52 per square foot.

381 Park Ave South

913

Tataway LLC / S. Bloom, S. Eaton, Bloom Real Estate Group

ATCO Properties & Management / Represented in-house

The tattoo-removal-services provider signed a four-year lease for part of the seventh floor.

231 West 39th St

900

Denesh LLC / James Buslik, Jeff Buslik, Adams & Co.

231/249 West 39 Street Associates / James Buslik, Jeff Buslik, Adams & Co.

The apparel company signed a new lease. The reported asking rent was $45 per square foot.

231 West 39th St

900

Babtech Inc. / James Buslik, Jeff Buslik, Adams & Co.

231/249 West 39 Street Associates / James Buslik, Jeff Buslik, Adams & Co.

The apparel company signed a new lease. The reported asking rent was $45 per square foot.

231 West 39th St

900

J.T. Design Studio Inc. / James Buslik, Jeff Buslik, Adams & Co.

231/249 West 39 Street Associates / James Buslik, Jeff Buslik, Adams & Co.

The apparel company signed a lease renewal. The reported asking rent was $45 per square foot.

10 West 33rd St

882

I Love Accessories / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The accessories firm signed a lease renewal. The reported asking rent was $44 per square foot.

10 West 33rd St

866

Sand N Sun Accessories Ltd. / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The accessories firm signed a new lease. The reported asking rent was $44 per square foot.

98 April 2014 www.TheRealDeal.com

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VISIT OUR OFFICE

780 Third Avenue, 16th Floor New York, NY 10017

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

10 West 33rd St

843

Lemberger & Taubman Inc. / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The software company signed a lease renewal. The reported asking rent was $44 per square foot.

231 West 39th St

842

Chapter One Sportswear Inc. / James Buslik, Jeff Buslik, Adams & Co.

231/249 West 39 Street Associates / James Buslik, Jeff Buslik, Adams & Co.

The apparel company signed a lease renewal. The reported asking rent was $45 per square foot.

10 West 33rd St

718

CMD Handbags Inc. / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The accessories firm signed a new lease. The reported asking rent was $42 per square foot.

34 West 33rd St

575

Joseph Henry LCC / D. Levy, B. Maslin, Adams & Co.

Arcade Building Associates / D. Levy, B. Maslin, Adams & Co.

The apparel company signed a new lease. The reported asking rent was $44 per square foot.

34 West 33rd St

462

Biscotti Inc. / D. Levy, B. Maslin, Adams & Co.

Arcade Building Associates / D. Levy, B. Maslin, Adams & Co.

The apparel company signed a lease renewal. The reported asking rent was $42 per square foot.

Retail leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

675 Sixth Ave

30,000

Michael’s Arts & Crafts / P. Ripka, A. Mandell, R. Skulnik, Ripco Real Estate

675 6th Avenue LLC / P. Ripka, A. Mandell, R. Skulnik, Ripco Real Estate

The arts and crafts store signed a lease for a new location.

31-00 47th Ave (Queens)

13,459

Juice Press Super Kitchen LLC / A. Chudnoff, D. Turkewitz, JLL

Jamestown 47th Avenue LP / M. Arkin, C&W; G. Smith, JRT Realty

The juice retailer signed a 10-year, 4.5-month lease for part of the ground floor.

366 Broadway

10,855

Gourmet Garage / C. Welles, SCG Retail; J. Clott, Vision Property Group

n/a / D. Rubens, L. Block, Winick Realty

The supermarket signed a lease.

101 Clinton St (Brooklyn)

10,100

Rite Aid / Chase Welles, SCG Retail

Joralemon Realty LLC / n/a

The drugstore signed a 10-year lease for a new location.

230 Park Ave

10,000

Urban Space / A. Yunis, B. Daniels, CBRE

Monday Properties; Invesco / J. Berger, Monday Properties; D. Green, S. Soutendijk, C. Shwart, C&W

The restaurant group signed a lease for a new food hall.

31-41 Belmont Ave (Brooklyn)

10,000

Deal$ by Dollar Tree / R. Senior, M. Mahony, E. Bukai, Ripco Real Estate

Osborn Belmont Properties LLC / R. Senior, M. Mahony, E. Bukai, Ripco Real Estate

The discount chain signed a lease for a new location.

501 Madison Ave

6,909

Porsche Design / Michael Glanzberg, Sinvin Real Estate

501 Madison-Sutton LLC; 501 Madison Avenue LLC / Kevin Wang, KRW Realty Advisors

The luxury goods retailer signed a 15-year, nine-month lease with two fiveyear renewal options.

4201 Avenue U (Brooklyn)

5,000

Marine Park Discount Inc. / Jack Cohen, Besen Retail

Marc Brothers Holding LLC / Jack Cohen, Besen Retail

The discount store signed a lease.

131 Greene St

4,100

n/a / n/a

131 Greene Street Owner / Sinvin Real Estate

The tenant signed a 10-year retail lease.

14 Wooster St

3,600

Luceplan / Sarah Shannon, Sinvin Real Estate

14-16 Wooster Street Realty LLC / M. Glanzberg, M. Talpalar, Sinvin Real Estate

The lighting products retailer signed a five-year lease with a three-year option to renew.

561 Seventh Ave

3,400

Wasabi / Simon Gibbs, CWM

Handler Real Estate / S. Galin, J. Pennington, Ripco Real Estate

The sushi restaurant signed a lease.

135 West 30th St

3,100

Dewey’s / M. Strombelline, S. Davis, SKH Realty

Altitude Capital; Flintlock LLC / M. Strombelline, S. Davis, SKH Realty

The gastropub signed a 15-year lease.

19 West 21st St

3,027

Exhale Mind-Body Studio / E. Ezra, E. Getz, RKF

Oberman; Fifth Partners LLC / C. Owles, M. Talpalar, Sinvin Real Estate

The wellness spa signed a lease for a new location.

75 Greenwich Ave

2,760

Mighty Quinn’s BBQ / J. Greenstone, M. O’Neill, C&W

n/a / C. Zelnik, A. Weinblatt, Zelnik & Co.

The barbecue restaurant signed a long-term lease.

162 N 4th St (Brooklyn)

2,725

Sweetgreen / D. Firestein, J. Klinger, T. Brandes, SCG Retail

Redbridge Bedford LLC / P. Braus, P. Levitan, Lee & Associates

The restaurant signed a lease.

135 West 36th St

2,700

Damee Inc. / Richard Price, EVO Real Estate Group

Howard Warehouse / Larry Portnoi, Midtown Commercial Real Estate

The fashion retailer signed a 10-year lease. The reported asking rent was $85 per square foot.

252 West 79th St

1,900

Naftali / Jeff Cohen, Midtown Commercial Real Estate

Friedland Properties / Represented in-house

The tenant signed a two-year retail lease. The reported asking rent was $70 per square foot.

239 Bleecker St

1,500

Starbucks / T. Brandes, D. Firestein, SCG Retail

n/a / Y. Amron, J. Ezra, RKF

The coffee chain signed a lease for a new location.

19 West 44th St

1,100

E.B. Meyrowitz & Dell Opticians / Represented in-house

Deka Immobilien GmbH / B. Winter, B. Korchak, JLL

The optician signed a 10-year lease renewal.

357-359 First Ave

910

Tal Bagels / Sung Cho, Midtown Commercial Real Estate

L&M Development Partners / Bradley Cohen, SCG Retail

The bagel shop signed a 10-year lease.

244 Madison Ave

900

Dunkin’ Donuts / Sung Cho, Midtown Commercial Real Estate

Douglas Elliman / Represented inhouse

The donut chain signed a 10-year lease for a new location. The reported asking rent was $100 per square foot.

60 Wall St

886

Starbucks / T. Brandes, D. Firestein, SCG Retail

n/a / R. Mauro, M. Brady, Jones Lang LaSalle

The coffee chain signed a lease for a new location.

221 East 23rd St

800

Mystery Sandwich / S. Rappaport, M. Sarway, Sinvin Real Estate

M&E 23rd Street Realty LLC / S. Rappaport, M. Sarway, Sinvin Real Estate

The restaurant signed a 10-year lease.

1031 Lexington Ave

400

Fabrizio Giannone / Adam Weinblatt, Zelnik & Co.

1031 Realty Company LLC / n/a

The jeweler signed a 10-year lease. The reported asking rent was $390 per square foot.

239 Ninth Ave

350

Perfect Brows / n/a

Aimco / H. Goldfarb, S. Lindenfeld, Lee & Associates

The threading salon signed a 10-year lease. The reported asking rent for the ground-floor space was $171 per square foot.

To view more deals visit our website: www.TheRealDeal.com 100 April 2014 www.TheRealDeal.com

StevenG_RDNY3.14_Layout 1 3/28/14 10:48 AM Page 1

FLORIDA 2818 Center Port Circle Pompano Beach, FL 33064 P 954.735.8223 F 954.735.7546 100,000 sq ft showroom Multi lingual design firm FL State Licensed Designer #000407 NEW YORK 221 East 60th Street New York, NY 10022 P 212.644.3403 F 212.644.4236 www.interiorsbysteveng.com www.antiquitiesweb.com DESIGNS WORLDWIDE

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

247 East 28th St

17-story apt. bldg, 128 units total

n/a / George Niblock, FriedmanRoth Realty

RWN Real Estate Partners; Silverstone Property Group / n/a

The property sold for $99.75 million.

Bronx portfolio

4 apt. bldgs, 305 units total

Goldfarb Properties / A. Doshi, L. Blumberg, Besen & Associates

Putter Realty Corp. / A. Doshi, L. Blumberg, Besen & Associates

The package of apartment buildings sold for $53.03 million, or $158 per square foot. The price represents a capitalization rate of 6.1 percent and a gross rent multiple of 9.8. The properties are located at 2160 Matthews Avenue, 1135 Pelham Parkway North and 1130 and 1540 Pelham Parkway South.

540 West 21st St

5,320 sf retail bldg

n/a / n/a

n/a / Denham Wolf

The property sold for $50 million.

335 West 35th St

12-story office bldg

Manhattan 335 Tower Inc. / n/a

Acuity Capital Partners / n/a

The property sold for $42.5 million.

161-165 West 17th St

55-unit apt. bldg

n/a / Lipa Lieberman, Eastern Consolidated

n/a / D. Schechtman, A. Kassin, Eastern Consolidated

The property sold for $35.6 million.

223-225 Bowery

10-story hotel bldg

Omnia Group Ltd; North Wind Group / R. Ortiz, A. Miller, Eastern Consolidated

The Salvation Army / n/a

The former single-room-occupancy hotel building sold for $30 million. The property will be converted into an Ace Hotel and possibly luxury residential condos.

1064-1066 Madison Ave

5-story mixed-use bldg

n/a / n/a

n/a / Thomas Gammino Jr., Massey Knakal

The property sold for $26 million, or $2,253 per square foot.

809 Broadway

Development site

IDM Capital / Joe Berko, Berko & Associates

Blatt Billiards / Joe Berko, Berko & Associates

The property sold for $24 million. The buyer plans to build a 15-story mixeduse tower on the site.

2770 Broadway

9,500 sf retail condo

David Berley, Walter & Samuels / Ric Kaiser, Cohen Real Estate

Charles Ackerman, Ackerman and Co. / Ric Kaiser, Cohen Real Estate

The retail condo sold for $20.25 million.

17 East 47th St

8-story comm. bldg

Sun Acre’s LLC / S. Zimmerman, M. Jones, D. Schechtman, Eastern Consolidated

The Center for Fiction / S. Zimmerman, M. Jones, D. Schechtman, Eastern Consolidated

The property sold for $18 million.

234 and 518 East 88th St

Two 5-story apt. bldgs, 40 units total

Aimco / P. Von Der Ahe, J. Koicim, D. Lloyd, Marcus & Millichap

The Orbach Group LLC / P. Von Der Ahe, J. Koicim, D. Lloyd, Marcus & Millichap

The properties sold for $12 million, or $300,000 per unit.

2252-2257, 2260 and 2261 Haviland Ave (The Bronx)

8 apt. bldgs, 120 units total

n/a / A. Doshi, S. Mehra, Besen & Associates

KMG Partners / A. Doshi, S. Mehra, Besen & Associates

The portfolio sold for $10.2 million, or $104 per square foot. The price represents a capitalization rate of 6 percent and a gross rent multiple of 7.7.

655 St. Nicholas Ave

80,000 buildable sf development site

Harlem Academy / Stephen Powers, Denham Wolf

n/a / n/a

The property sold for $9.5 million.

22-29 Dix Ave (Queens)

Five 4-story apt. bldgs, 130 units total

n/a / Lev Mavashev, Besen & Associates

JPMorgan Chase / C-III Realty Services; Savills

The complex sold for $8.52 million.

171 West Burnside Ave (The Bronx)

6-story apt. bldg, 60 units total

n/a / n/a

n/a / G. Inglese, G. Niblock, Friedman-Roth Realty

The property sold for $7.6 million.

1185 Lebanon St (The Bronx)

6-story apt. bldg, 75 units total

n/a / Alex Frants, Besen & Associates

n/a / Amit Doshi, Besen & Associates

The property sold for $7.55 million.

3556 Broadway

2-story retail bldg

n/a / n/a

n/a / Josh Lipton, Massey Knakal

The property sold for $5.05 million, or $505 per square foot.

332 East 14th St

5-story mixed-use bldg

n/a / Jeff Weiss, Highcap Group

The property sold for $5 million.

1231 Lincoln Pl and 1382 St. John’s Pl (Brooklyn)

47 res. units

n/a / D. Bestreich, L. Sproviero, Marcus & Millichap

The property sold for $4.7 million, or $113 per square foot.

195 Havemeyer St (Brooklyn)

3-story mixed-use bldg

Havemeyer Properties / n/a

195 Havemeyer Corp. / n/a

The property sold for $4.4 million, or $994 per square foot.

459 Bay Ridge Ave (Brooklyn)

20-unit apt. bldg

n/a / n/a

n/a / A. Hess, S. Shalumov, C. Pechlivanides, TerraCRG

The property sold for $4.3 million.

315 East 18th St

3-story townhouse, 2 units total

n/a / Jeffrey Shannon, Brown Harris Stevens

n/a / W. Abramson, M. Olden, Buchbinder & Warren

The property sold for $4.15 million.

288 Sixth Ave

4-story apt. bldg, 19 units total

n/a / Lev Mavashev, Besen & Associates

n/a / Glenn Raff, Besen & Associates

The property sold for $3.5 million, or $287 per square foot. The price represents a capitalization rate of 4.5 percent and a gross rent multiple of 15.

851 Franklin Ave (Brooklyn)

16-unit apt. bldg

n/a / n/a

n/a / O. Cohen, M. DiBella, D. Marks, P. Matheos, M. Hernandez, TerraCRG

The property sold for $3.25 million.

431 16th St (Brooklyn)

8-unit apt. bldg

n/a / n/a

BCB Properties / Adam Hess, TerraCRG

The property sold for $3.2 million.

12 Martense St (Brooklyn)

4-story apt. bldg, 20 units total

Prince Putnam LLC / Aaron Jungreis, Rosewood Realty

12 Martense Ft. LLC / Jake Blatter, Rosewood Realty

The property sold for $2.78 million.

18-15 Everdell St (Queens)

4-story apt. bldg, 25 units total

Galgal Realty LLC / Lev Mavashev, Besen & Associates

Yakar XVII LLC / Lev Mavashev, Besen & Associates

The property sold for $2.35 million.

657 East 21st St (Brooklyn)

4-story apt. bldg, 20 units total

n/a / Marcel Fridman, Barcel Group

The property sold for $2.28 million.

151 Dupont St (Brooklyn)

8-unit apt. bldg

n/a / J. Saros, M. Salvatico, S. Riney, Marcus & Millichap

n/a / S. Riney, J. Saros, M. Salvatico, Marcus & Millichap

The property sold for $1.89 million, or $378 per square foot.

814 Dean St (Brooklyn)

Multi-family townhouse, 2 units total

n/a / D. Bestreich, S. Riney, L. Sproviero, Marcus & Millichap

n/a / D. Bestreich, L. Sproviero, S. Riney, Marcus & Millichap

The property sold for $1.28 million.

689 East 187th St (The Bronx)

4-story mixed-use bldg

East 187th LLC / A. Doshi, R. Torres, Besen & Associates

Ital Realty LLC / A. Doshi, R. Torres, Besen & Associates

The property sold for $1.25 million.

1222 Rogers Ave (Brooklyn)

7,400 sf mixed-use bldg

n/a / D. Bestreich, E. Rodriguez, Marcus & Millichap

The property sold for $1.05 million.

1700 Pitkin Ave (Brooklyn)

2,939 sf retail bldg

n/a / n/a

n/a / E. Gevinski, S. Palmese, Massey Knakal

The property sold for $1.05 million, or $357 per square foot. The building’s two retail units are occupied by Sprint Wireless and Inder Fashion, a clothing store.

630 Central Ave (Brooklyn)

3-story apt. bldg

n/a / Marcel Fridman, Barcel Group

The property sold for $1 million.

102 April 2014 www.TheRealDeal.com

535

FIFTH

AV E N U E

Steps From Grand Central Terminal

Entire 3rd Floor: 18,957 RSF

Entire 11th Floor: 13,467 RSF Space is white boxed

Landlord will provide TIA or NBI

Oversized windows throughout

New windows to be installed

12’+ ceilings & exposed brick throughout

New tenant controlled HVAC

Fifth Avenue

Space is white boxed

EAST 44th Street Mitchell A. Arkin 212-841-7522 mitchell.arkin@cushwake.com Haley L. Klein 212-841-7892 haley.klein@cushwake.com R. Myles Fennon 212-841-7532 Myles.fennon@cushwake.com The Moinian Group • 3 Columbus Circle • 23rd Floor • New York, NY 10019 • 212.808.4000

www.Moinian.com

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

267 Rogers Ave (Brooklyn)

165-unit apt. bldg

n/a / Equicap

n/a / n/a

Equity and construction financing was provided for the $56 million project.

212 East 72nd St and 753 Ninth Ave

2 apt. bldgs

753 9th Ave LLC; 212 East 72nd Stret LLC / C. Swartz, D. Pereita, D. Mouzakitis, Suzuki Capital LLC

Doral Bank / n/a

A $8.1 million loan was provided to refinance the properties.

42-22 Ketcham St (Queens)

126-unit apt. bldg

Tova Realty Corp. / n/a

NCB / n/a

A $2.8 million first mortgage was arranged for the building.

400 Riverside Dr

48-unit apt. bldg

Fowler Court Tenants Inc. / n/a

NCB / n/a

A $1.8 million first mortgage and a $500,000 line of credit were arranged for the building.

137-149 West 12th St

102-unit apt. bldg

Centrentset Corp. / n/a

NCB / n/a

A $1.9 million first mortgage and a $350,000 line of credit were arranged for the building.

855 East 233rd St (The Bronx)

108-unit apt. bldg

The Bronxwood Tower Inc. / n/a

NCB / n/a

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

31 and 37 Nagle Ave and 14 Bogardus Pl

111 res. units

Nagle Apartments Corp. / n/a

NCB / n/a

A $1.5 million line of credit was arranged for the building.

360 West 21st St

51-unit apt. bldg

Cheltoncort Owners Corp. / n/a

NCB / n/a

A $1 million line of credit was arranged for the building.

138-10 Franklin Ave (Queens)

193-unit apt. bldg

Carlyle Towers Cooperative “B” Inc. / n/a

NCB / n/a

A $1 million line of credit was arranged for the building.

Other Deals Harbor Group to sell two buildings to Isaac Chetrit for $268M

Dan Rather picks up new Midtown office digs

1420 Broadway

Harbor Group International is in contract to sell two Garment District buildings for a total of $268 million to real estate investor Isaac Chetrit, the Virginiabased investment group confirmed to The Real Deal. The 415,000-square-foot, 24-story office property at 1412 Broadway and the adjacent 7,000-squarefoot three-story retail property at 1420 Broadway are slated to change hands for $250 million and $18 million, respectively, a spokesperson for Harbor Group said. Harbor Group’s New York operations are headquartered at 1412 Broadway, near 39th Street. The building was 97 percent leased by the end of the fourth quarter, a spokesperson said. (The deal was announced after the deadline for the Deal Sheet.) 144-150 West 34th Street

Starwood to pay $250M for Herald Square Old Navy

Dan Rather

Dan Rather is moving his AXS TV show “Dan Rather Reports” a few blocks uptown. The veteran journalist will take up a 4,479-square-foot spot on the 18th floor of 1180 Avenue of the Americas, at West 46th Street, the New York Post reported. Owned by a partnership with Chinese company HNA, the building also counts the Scripps Food Network among its tenants. John Moran of Newmark Grubb Knight Frank represented Rather in the deal, while Garett Varricchio, Bret Varricchio and James Tamborlane of MHP Realty Services represented the building’s owners. Asking rents for remaining spaces in the building range from the high $50s to $65 per square foot. (The deal was announced after the deadline for the Deal Sheet.)

Thor Equities, GreenOak close on UWS rentals for $85M

120 Riverside Drive

Barry Sternlicht’s Starwood Capital is in contract to buy a 34th Street retail building with significant future development potential for $250 million, The Real Deal has learned. The site on which the property sits could be redeveloped into a 300,000-square-foot retail and hotel tower by taking advantage of unused air rights, sources said. The 78,000-square-foot building, at 144-150 West 34th Street opposite Macy’s department store, has been owned for almost two decades by the Kefadilis family, which heads KLM Construction. Doug Harmon and Adam Spies of Eastdil Secured represented both parties in the deal. (The deal was announced after the deadline for the Deal Sheet.)

The Midtown-based landlord and development firm Thor Equities — along with joint venture partner GreenOak Real Estate — closed on the purchase of two Upper West Side rental buildings for $85 million from long-term owners last month. The acquisition was the first residential purchase for Thor since launching an apartment ownership and development division in October. Thor, headed by CEO Joe Sitt and the real estate investment firm GreekOak, purchased 120 Riverside Drive at 84th Street and the adjacent 125 Riverside Drive with a total of 97 apartment units, from an entity called Arnav Industries, a spokesperson for Thor told The Real Deal. (The deal was announced after the deadline for the Deal Sheet.)

Plans revealed for Rudin’s FiDi tower

GEM Hotel developer reloads, raises $33M in refinancing

55 Broad Street

New renderings of Rudin Management’s tower slated for 55 Broad Street in the Financial District were leaked last month, revealing yet another lofty structure coming to Lower Manhattan. Tentative plans for the mixed-use building, which Rudin tapped architecture firm FXFOWLE to mock up, call for a 53-story, 742-foot-tall skyscraper in place of the existing 35-story office tower at the site, as The Real Deal previously reported. In the rendering, picked up by YIMBY, the building, which would include residential, office and retail space, appears to dwarf the adjacent structures, including the 527-foottall William Beaver House. The site currently has 388,000 square feet of development rights. However Rudin could amass more should it obtain the rights for 45 Broad Street.

104 April 2014 www.TheRealDeal.com

300 West 22nd Street

Icon Realty Management has secured $33 million in financing for Chelsea’s GEM Hotel, replacing an initial $22 million mortgage closed in January of 2012. The first mortgage and mezzanine financing, arranged by Mission Capital Advisors and provided by Ladder Capital, was split between a CMBS loan with a 30year amortization and an interest-only mezzanine facility, a source familiar with the negotiations told the New York Observer. Mission Capital’s Jordan Ray, Jason Cohen and Ari Hirt led the negotiations on the new debt. The 81-key boutique hotel at 300 West 22nd Street opened in 2008 following a gut renovation. (The deal was announced after the deadline for the Deal Sheet.) TRD

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Development updates

Project: 77 Hudson, NJ

SALES UPDATES

Cobble Hill

The Townhouses of Cobble Hill

935-square-foot landscaped garden, and rooftop terrace with Central Park and George Washington Bridge views. The Bracha team at Keller Williams NYC is the agent. Contact: www.edgecombeparccondo.com.

Chelsea

Six of the nine townhouses that comprise the residential project co-developed by Jason Halpern and Gerard Longo are sold. The townhouses are being offered in three-, four- and five-bedroom configurations that range in size from 3,300 square feet to more than 4,100 square feet. Prices range from $3.65 million to $4.2 million. Each townhouse features oak floors, gas fireplaces, steam showers and roof terraces. Marketing is being handled internally. Contact: www.thetownhousesofcobblehill.com.

Stella Tower 425 West 50th Street Sales have launched at the 51-unit condominium building, developed by JDS Development Group and Property Markets Group, and originally designed by Ralph Walker. The 18-story building features one-, two-, and three-bedroom units that range in size from 800 to 3,600 square feet, and in price from $2 million to more than $10 million. Building amenities include a 24-hour attended lobby, fitness center, residentâ&#x20AC;&#x2122;s lounge with pantry and bar, bike storage and outdoor garden lounge. Cetra/Ruddy is the agent. Contact: www.stellatower.com.

Bedford-Stuyvesant

LEASING UPDATES

The Shelton 773 Lafayette Avenue

NO Floor Track Durable Finishes Lightweight System Simple Installation The 83-unit, middle-income building developed by TNS Development Group and Great American Construction Corp. is over 90 percent sold. The remaining four residences are two-bedroom homes with two bathrooms ranging in size from 899 to 986 square feet, and in price from $422,500 to $433,500. Income restrictions apply to the four remaining units; purchasers must show a 2013 gross income of less than $145,250 per household. Building amenities include a fitness room, a landscaped courtyard, and a common lounge area. Halstead Property Development Marketing is the agent. Contact: www.thesheltonnyc.com.

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Sl i ding Wa l ls & D oors 106 April 2014 www.TheRealDeal.com

Edgecombe Parc 456 West 167th Street

The 49-unit condominium building, developed by Gleam Realty, is now more than 50 percent sold. The building features one-, two-, and three-bedroom units ranging in size from 500 square feet to 1,170 square feet, and in price from $340,000 to $1 million, plus six commercial units. Building amenities include a doorman, fitness center, a

Williamsburg

250N10 250 North 10th Street Leasing has launched at the 6-story, 234unit residential rental building, developed by LCOR, and designed by SLCE. The building features studios, one-, and two-bedroom units that range in size from 493 square feet to 1,194 square feet. Rents start at $2,500 for studios, $3,400 for one-bedrooms, and $4,600 for two-bedroom units. The building includes a fitness center, resident lounge, roof deck with a BBQ area, and a 117-space parking garage. The Marketing Directors is the agent. Contact: www.250n10.com.

Williamsburg 456 Grand Street Leasing launched at the 52-unit boutique residential building, developed by the Babaev Group. The six-story building features one- and two-bedroom apartments ranging in size from 675 to 1,072 square feet, as well as one 412-square-foot studio apartment, and one 1,198-square-foot three-bedroom unit. Rents range from $2,225 per month for the studio to $6,000 per month for the three bedroom. Building amenities include a rooftop terrace, fitness center, and parking. MNS is the agent. Contact: www.456grand.com. TRD

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RESIDENTIAL DEALS Upper East Side $2.65 million 32 East 76th Street, Apt. 1505

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KEY TOPICS THAT WILL BE COVERED: • New Market Outlook for 2014 • Changing Opportunities in Mezzanine Financing including New Investments in Real Estate, Construction, and Secondary & Tertiary Markets

Two-bedrooom, two-bath, 1,308-squarefoot unit in a boutique condo building, The Gallery Apartments. The apartment has a view of Central Park; building has a 24-hour doorman, roof deck and parking spaces available. Common charges $2,025 per month; taxes $1,754 per month. Asking price $2.495 million; 50 days on the market. (Brokers: Stephen Ferrara, Town; Glenn Norrgard and John Tenore, Sotheby’s International) “We let all brokers know that best and final bids were due on Monday evening by 8 p.m. — in total there were seven offers. I got a phone call at 7 p.m. on a Monday evening from Glenn Norrgard at Sotheby’s International asking the status of the apartment. He called me back with a verbal offer of the full asking price — all cash — to be considered with the other bids. After voicing my concerns to Glenn, he sent me a bank statement well in excess of the purchase price. I was still a bit skeptical, but nonetheless I relayed this to my seller and he decided to give this last party a chance to participate. We pushed the deadline back to noon and Glenn came to view the apartment at 10 a.m. the following morning. After viewing it, he came in at $2.65 million, all cash, with a closing at the seller’s convenience. We accepted the offer.” Stephen Ferrara, Town

Prospect Heights $1.305 million 35 Underhill Avenue, #B1G

• Increasing Ownership Rates and the Changing Relationship Between the Senior Lender and the Mezzanine Lender • Expanding Construction and Development throughout the Country and Beyond • Blending Deals with Structural Changes in Mezzanine Financing and Preferred Equity, and Expanding Investment Opportunities Beyond Large Real Estate • Understanding the Changing Legal Structures in Mezzanine Financing Today • Finding Potential in Multi-family Housing in an Increasingly Competitive Marketplace /

www.iglobalforum.com/mezz5 108 April 2014 www.TheRealDeal.com

taxes $25 per month. Asking price $1.349 million; 22 days on the market. (Brokers: Alejandro Beitler, Citi Habitats; Vaughn Jason Barber, Citi Habitats) “When you walk in, it just feels like the outdoor/indoor lifestyle you don’t really get in New York. That’s what sold the apartment. The buyers walked in and they fell in love with the outdoor space — the greenhouse and the two additional patios. The property is unique. The space is just big and it feels almost like an apartment in a tropical climate.” Alejandro Beitler, Citi Habitats

Greenwich Village $665,000 88 Bleecker Street, Apt. 2J

One-bedroom, one-bath, 680-square-foot unit in a co-op building, the Atrium. The apartment has an open kitchen; building has virtual doorman, private parking garage, common and private storage, bike and laundry rooms. Common charges $990 per month; asking price $649,000; 90 days on the market. (Brokers: Danny Davis, Town; Holly Sose, City Connections Realty) “This buyer had an arduous time purchasing his first apartment. First, he got a board rejection while working with a broker prior to me. When we got the contracts signed for this property, we were informed of a ‘new’ charge for closings after Jan. 14, of three months maintenance. This charge wasn’t disclosed in the minutes, but we were able to hurry the board package process and submission, and scheduled a closing for Jan. 14. After all that, we were then informed the actual effective date of this new charge was Jan. 1, and that despite this misinformation, the buyer would still have to pay it. I offered to cover onethird of it to help get the deal done and allow this buyer to finally breathe easy.” Holly Sose, City Connections Realty

Two-bedroom, three-bath, 1,919-squarefoot duplex unit in a condominium building, The Washington. The apartment has marble bathrooms, a greenhouse, recreation room and two private patios. Building comes with tax abatement until 2030; common charges $529 per month;

Compiled by Sasha von Oldershausen

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RealDeal_Morris_Final.pdf

3/28/14

2:26 PM

BRUCE EHRMANN OF DOUGLAS ELLIMAN DEVELOPMENT MARKETING

CMY

CONGRATULATES

MORRIS ADJMI FOR HIS ELECTION TO THE

AMERICAN INSTITUTE OF ARCHITECTS COLLEGE OF FELLOWS HIS

2014 AMERICAN INSTITUTE OF ARCHITECTS NEW YORK MERIT AWARD AND HIS

2014 HISTORIC DISTRICTS COUNCIL DESIGN AWARD

BRUCE EHRMANN LICENSED ASSOCIATE REAL ESTATE BROKER DOUGLAS ELLIMAN REAL ESTATE T: 212.965.6035 M: 917.509.7209 behrmann@elliman.com 90 HUDSON STREET, NEW YORK, NY 10013

EQUAL HOUSING OPPORTUNITY.

Commercial market

from page 34

Manhattan, Kraut said, citing his firm’s statistics. “We like the near immediate timing of the availability of this block, and the location of the block (in the middle of the tower) because it has excellent views and light, relative to the other opportunities of this size and quality in the city,” said Peter Brindley, vice president of leasing at Paramount. That price is slightly above the average asking rent for Midtown, which in the first quarter was $73.49 per square foot. That is up 13 percent from the same period one year ago, when it was $65.02 per foot, Colliers figures show. During that same period, the availability rate declined by 0.6 points, to 11.8 percent. Brindley said the mix of firms already in the building, including Allianz, Warner Music Group and the law firm Kasowitz Benson Torres & Friedman, is a draw for prospective mega-tenants. “I think the roster at 1633 is noteworthy. It is not limited to financial services and law firms. You have leaders across multiple industries, which reflects the broader trends we are seeing in Midtown,” Brindley said.

Midtown South The Midtown South market tightened sharply in the last quarter, eradicating a rise in availability that impacted the market during the second quarter of 2013, and pushing the availability rate down to 8.8 percent. The tightening was driven not only by tech firms, but also by other types of companies, including architectural firms like BKSK Architects at 28 West 25th Street, between Broadway and Sixth Avenue.

110 April 2014 www.TheRealDeal.com

BKSK renewed its lease for 10 years for 11,000 square feet, with additional expansion options at the building, Powers said. The asking rent was in the high $50s per square foot, but the landlord constructed a “creative,” solution that allowed the architecture firm to remain, even as asking rents have risen dramatically in the building, as well as in the overall market. Asking rents for Midtown South rose to $55.53 per square foot last quarter, a 9.7 percent increase Eight floors at the Paramount Group’s 1633 Broadway are being from the same quarter a offered for lease in the high $70s year ago, while the availper square foot. ability rate declined by 0.2 points from the first quarter of 2013, Colliers figures show. The Midtown-based real estate investment firm Brickman purchased the West 25th Street building in early 2013 for $55.4 million, and is rehabilitating it. Powers said most of the tenants would likely turn over.

Downtown The availability rate in Lower Manhattan fell the most

among Manhattan’s three markets during the past year. The rate dropped 1.7 points, to 14.4 percent in the first quarter, from the same period a year earlier, when it was 16.1 percent, the Colliers figures show. The large technology and business software firm Computer Generated Solutions signed a 10-year lease renewal at Brookfield Properties’ 2.4 million-squarefoot building at 200 Vesey Street, with a starting rent in the mid-$50s per square foot, information from leasing database CompStak reveals. A representative for CGS confirmed the renewal lease was signed, but declined to comment further. Hal Stein, a managing principal with Newmark Grubb Knight Frank, represented the tenant, while the landlord was represented in-house by David Cheiken, a vice president of leasing at Brookfield, Stein said. CGS looked at options in Jersey City and Lower Manhattan but decided to stay, considering the $250 million redevelopment of Brookfield Place. Developments such as the World Trade Center and its related retail give tenants additional incentives to stay put. The firm did not even look in Midtown South, the city’s main tech center. “You really can’t find the space, and when you can find it, the price is too high,” Stein said. The starting rent figure for CGS was slightly above the $50.25-per-foot-average asking rent Downtown during the last quarter. That figure was a 10.6 percent jump from the level in the first quarter of 2013, when it was $45.45 per foot, Colliers figures show. TRD

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Interest rates

from page 28

banks gave Hines Development an $860 million loan for its planned 1,050-foot-tall tower that will house the Museum of Modern Art’s gallery expansion, along with 145 luxury condos. The billionaire Kwee family of Singapore is also putting up $300 million, in return for an equity interest in the project. Some developers may look to get into different sectors of the market altogether. Higher rates could encourage more affordable-housing projects, said Heidi Burkhart, president of Dane Professional Consulting Group. And she predicted that builders will turn to city and state agencies to fund development. Conventional construction loans will bear interest rates that are too high to make the developments make sense for builders, Burkhart said. “Either agencies will need to support development, or construction will come to a halt.”

Investment, undeterred After Yellen’s unexpected comment regarding the pace of rate hikes, REIT stocks slid by 1.3 percent, a bigger drop than the 0.7-percent decline for the Standard & Poor’s 500. REIT shares were seeing a strong turnaround through the middle of last month after stumbling out of the gate for the year (see related story on page 74), but at the end of the

month struggled to regain those rate-related losses, while the broader market quickly recovered. But the irony is that, despite investor jitters, a gradual rate increase along with a strengthening economy largely won’t deter most real estate investment. Only an unforeseen spike could derail deals and send companies into trouble. “As long as the overall economic environment is favorable,” said Ryan Severino, senior economist at real estate investment advisory firm Reis Inc., “then I don’t see any deleterious impact due to rates alone.” As for hotel sales, higher interest rates may hurt investment activity and lower values somewhat, but only in the short term as long as the economy is improving, said Sean Hennessey, founder and CEO of Lodging Advisors. Hoteliers are also more nimble when it comes to adjusting to changes in the cost of capital, because they can change room rates to match the environment. “It cuts both ways,” Hennessey said. After Lehman Brothers collapsed in September 2008, “hotels were one of the first to go into the tank,” he said. “But during the recovery, it was the first asset class to start showing improvement.” Hennessey expects operating fundamentals to continue to improve as business travel and corporate group meetings finally follow leisure travel in rebounding, he said. And that

will keep investment demand and prices up.

for “service companies” are always low. But “tech-enabled services,” such as companies like Urban Compass, which embed technology into a traditional service business, can expect the same levels of returns as a technology company, he added. Indeed, some technology execs said Urban Compass may be able to derive a great deal of profit from its technology platform, and noted that the company is likely to build on what it’s already created. “While it does seem they’ve gone a bit more of a traditional route in the brokerage world, I wouldn’t make the assumption that they intend to be a traditional brokerage,” Mandel said. “I think their platform will be much more tech-oriented.” And, Mandel added, there may be an opportunity for Urban Compass given the “recent instability” at listings website StreetEasy, which was acquired by Zillow last year for $50 million and has since seen several top staffers depart. Urban Compass already nabbed Sofia Song, StreetEasy’s longtime head of research and communications, and for many, the public face of the firm, after her mid-December exit. “Urban Compass seems pretty well poised” to benefit from that instability, Mandel said.

Executives at Urban Compass declined to reveal the number of deals the firm has closed since launching or the amount of traffic to its website. But tracking company Similar Web shows that the Urban Compass site ranked 46,824 in the U.S. for web traffic early last month. By comparison, the city’s largest residential brokerage, Douglas Elliman, ranked 10,658. But the fast-growing, three-year old Town Residential, which has also

Residential reaction Rising rates will likely mean good news for apartment landlords, because higher rates make it harder for people to afford buying. That could send more people back into the rental market, which is already tight due to strict lending standards, said Jonathan Miller, president and CEO of Miller Samuel Inc. Rents will stay strong with the increased demand. On the residential sales side, Miller believes the luxury market will largely be insulated to the rise in interest rates, since many buyers come with pockets full of cash, such as international buyers and Wall Street types with big bonuses. But the entry- and middle-home markets will start to feel the squeeze because their buyers typically depend on financing. “Still, I think there is a lot more upside to rates before it really dampens the housing market in New York City,” Miller said. “We have to go another point, well into the 5s, before we see a significant impact on transaction volume.” Homebuyers also may consider adjustable-rate loans instead of fixed-rate mortgages if interest rates rise, said Gerringer of the Marketing Directors. “There are many ways to skin a cat for these things,” he said. TRD

Urban Compass from page 73 were on commission and made our decisions based off of the facts,” he said. “Agents on commission have higher customer satisfaction scores and are more productive.”

The progress so far Now that it shifted to a more traditional model, Urban Compass is going head-to-head with other New York City firms. Many of those firms have been in business for decades, and some have more than 1,000 exclusive sales listings, along with better-known brands and far greater revenue streams. Urban Compass has been “making noise in the industry and they’ve gotten a lot of ink in regards to the concept,” Lolli said. “But that was the old concept, which was out of the norm.” If the company were being valued as a traditional brokerage, it wouldn’t come anywhere close to $150 million, multiple sources said. “Technology is infinitely scalable, while real estate is more of a traditional business model,” said one industry brokerage head, who asked not to be identified. “It’s people, it’s serviceoriented and difficult to scale up. It doesn’t seem like their original investors would have gotten into it just to start another real estate brokerage. I’m sure that’s a conversation they’re having with some of their investors.” “The valuation process for a tech company and a real estate company couldn’t be more different,” the source added. “You don’t even need earnings at a technology company” to sell for a high number. One Urban Compass investor defended the company’s shift to a traditional concept. “Currently, top agents at traditional firms in New York City are constrained in their ability to scale by the number of hours in the day,” said Graham Brooks of venture capital firm .406 Ventures. “Urban Compass has developed some unique technology that automates many of the more tedious processes on both the front end for users and on the back end, to make agents more productive.” Brooks said .406 expects to see the same level of return, even with the new model in place. Brooks, the only Urban Compass investor who responded to TRD’s requests for comment, admitted that expectations 112 April 2014 www.TheRealDeal.com

Jury still out Reffkin said Urban Compass has exclusive relationships with several city landlords to lease their buildings, but he declined to name them. Many of the listings presented on Urban Compass’s website are the result of the company’s use of a so-called VOW, a search engine service that allows it to access all the active listings in the Real Estate Board of New York’s database, essentially pulling exclusives belonging to other real estate companies onto its site. While Urban Compass is certainly not the only brokerage using a VOW, sources said brokerage heads have been irked by the idea that Urban Compass is using other people’s exclusives to bulk out its website. At other companies, the VOW service is secondary to the firm’s own exclusives, they said. “I suspect they’re upset because Urban Compass is leveraging their membership [in REBNY] to have more content on their site,” Miller said. “I could see how somebody with a lot of listings could be upset that someone else is leveraging it.”

made a big splash, ranked behind Urban Compass at 64,604. While it’s unclear how many deals the company is closing, Reffkin did reveal that customer leads, or people requesting viewings of properties listed on the site, have increased 61 percent quarter-over-quarter since launch. “We’re very proud of that figure,” he said. While the jury is still out on whether Urban Compass’s new model will be successful, Shapiro said the company faces some challenges in differentiating itself from other firms. “When you come out of the gate, especially using other people’s money, you have to have a clear plan and message about who you are and how you’re going to make an impact,” he said. “If I were an investor, I would be very upset.” Mandel disagreed, saying Urban Compass is displaying its willingness to follow the numbers and adapt to the market. “It’s a lot better to pivot and to try to figure out how to make things work than to keep trying to push through something that clearly doesn’t work,” he said. “They could have kept trying to make what they were doing work indefinitely, but if the writing was on the wall.” TRD

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De Blasio

from page 56

ministration will be green-lighting entirely. While the real estate industry did not take great exception to de Blasio’s treatment of Two Trees, some sources speculated that the mayor may be poised to butt heads with community boards and preservationists — who on the surface would seem to be his allies — given recent rhetoric backing tall, dense projects filled with affordable units. During a February meeting hosted by the Real Estate Board of New York, he reportedly told developers, including Related Companies Chairman Stephen Ross and SL Green Realty Chairman Stephen Green, that he does not oppose building taller, “to the maximum feasible extent.” De Blasio’s rhetoric on density has been “music to the development community’s ears,” Barowitz said, adding that the mayor “may be setting himself up for a fight with preservationists, community boards, NIMBYs and Council members.”

“If you can identify one community board or one local elected official who is interested in adding denser, larger buildings to their neighborhood, I’ll buy you lunch,” Barowitz added. Haber said preservationists are likely to come out in force as soon as one “50-story building is proposed on 72nd and Columbus Avenue with 50 percent affordable units.” “Forget it,” he said. “That won’t stand.” In addition, preservationists and community activists can tie up de Blasio’s affordable housing agenda in lengthy litigation, if they think the mayor is overstepping in order to reach his goals, sources said. “There are some entrenched interests in the city that he will have trouble overcoming,” Newmark’s Weiss said. “While he has a principled position on low-cost housing, the preservationists have a principled position on keeping this a very beautiful and architecturally diverse city.”

Andrew Berman, executive director of the Greenwich Village Society for Historic Preservation, told The Real Deal that he was reserving judgment on the administration’s density stance, until it’s applied to a neighborhood that does not have the same industrial traits as the Domino site. He also disputed the assumption that extensive landmark protections and an affordable housing agenda were not aligned interests. “I actually think they have more in common than in conflict,” he said. “The construct that preservation and maintaining a human scale of neighborhoods is somehow in conflict with affordability is 100 percent a construct of REBNY. Landmark protections can, when appropriately applied, be extremely helpful in terms of preserving housing stock, including affordable housing stock. When an area is landmarked, demolition becomes rare, if not impossible.” TRD

51 Astor from page 70 with great credit that wanted to be in a high-image building,” Falk said, referring to recent deals with companies like Twitter, Mashable and IBM. “These tenants wanted to make a statement, and there were only so many buildings in that area that had both a large vacancy and a high profile.” The biggest and most noteworthy of the deals that 51 Astor secured was with IBM’s Watson Group, the company’s incubator for entrepreneurs. In December, the Watson Group and social media giant Twitter went head-to-head for 120,000 square feet, covering floors four through seven. The space includes a large outdoor terrace — a major draw for the creative employees at many tech firms — and was the most affordable space of that size in the building because prices escalate for higher floors. Ultimately, Twitter lost the space and opted to move into Savanna’s 245-249 West 17th Street. IBM paid rents ranging from the low-$80s per square foot to more than $90, according to CompStak data. That was slightly under asking rent for the space. When asked if a bidding war had broken out between IBM and Twitter, Minskoff said he “wouldn’t call it a bidding war,” but that it was “the closest thing to a bidding war we’ve seen.” He added that money was not the deciding factor. “Twitter didn’t get outbid. It was a matter of timing,” he said. Minskoff said that what tipped the scales in IBM’s favor was his history with the company, noting that he’s had a “21-year relationship with IBM, going back to a transaction at 590 Madison back in 1994.” One source close to the deal said, “he might have been able to fit Twitter in as well as IBM, but the economics get very expensive as you go up the building.” Nonetheless, the fact that two companies were competing over the same space is indicative of 51 Astor’s strengthening position — despite the fact that the building faced several unique challenges out of the gate. “Minskoff took some risk,” said Greg Kraut, principal at commercial firm Avison Young. “He had a lot of money invested in it. I think the only issue was knowing if he would get the kinds of three-figure numbers that he needs [for the top floors].” Part of the gamble was building in a far-flung area to the east of Midtown South’s tech nerve, where the only other office building of significance is 770 Broadway. But Newmark’s Falk added that tech tenants are flexible when it comes to location. “Tenants in the tech sector aren’t saying to me, ‘I want to be on Fifth and 20th Street.’ They’re saying, ‘We want a building that reflects our image,’ ” Falk said. In addition, because the building has relatively small floor

114 April 2014 www.TheRealDeal.com

The lobby of 51 Astor

plates, it wasn’t targeting giant corporate tenants who often make leasing decisions years in advance. The tenants it was going after often want to see the spaces they’re taking before committing. As a result, the JLL brokers had to wait until the space was ready to fully begin marketing it. “Sometimes these leasing decisions are made by the head of the company, and they like to feel and touch what they are buying to fully appreciate what the building has to offer,” Glickman said. One such decision came a few months before the IBM deal, when St. John’s University signed a lease, giving the building — which is required by zoning laws to lease about 50,000 square feet to an educational institution — a crucial victory. Glickman and his team had been in talks with St. John’s since the building launched. The school walked away from negotiations over the summer, but in December ended up signing a 71,000-square-foot lease for its School of Risk Management, a division of its business school. In recent months, 51 Astor has seen two more full-floor deals — one with Mail Online, the web branch of the British tabloid the Daily Mail, for the 25,400-square-foot ninth floor; the other with Claren Road, a financial asset manager, for the 12th floor, which is the same size. Though the rent was not available, sources speculated that Claren may have paid as much as $120 per square foot for the top-floor space, which would make the deal one of the most expensive ever in Midtown South. (Commercial brokerages include Astor Place inside the boundaries of the Midtown South office market despite the fact that it is fairly far south.) The Mail Online paid in the high-$90s per square foot, according to CompStak.

Timing is everything Courting the tech sector in booming Midtown South — where

there is a shortage of high-efficiency floor plates — has also helped buoy 51 Astor. And the building stands in contrast to the 1.1 million-square-foot 11 Times Square, a spec tower developed by SJP Properties, which has struggled to attract tenants. From the time 11 Times Square kicked off leasing in 2008, until 2012 when it signed a 230,000-square-foot deal with Microsoft, the project sat 60 percent vacant, as TRD has reported. In addition, sources noted that 11 Times Square was being erected in Midtown as rents were peaking, but that Midtown rents stagnated after the recession. Between January 2008 and 2014, Midtown rents have only grown 2.3 percent, to an average of $70.20 a square foot, according to data from CBRE and Colliers International. Meanwhile, construction of 51 Astor Place was ideally timed to the market. Asking rents in Midtown South increased 46 percent to $55.79 a square foot in February from $38.21 in 2011’s first quarter. “These buildings are from different times,” Kraut said of the two spec towers. “There were a lot of blocks of space on the market three years ago, and now 11 Times Square is five years old. It’s not a brand-new building anymore.” Kraut added that many tech companies are eschewing areas like Times Square while fueling the growth of office markets further Downtown.

Not done yet Despite the building’s success, 51 Astor still has some 75,000 square feet to lease. It also has three retail storefronts, totaling roughly 15,500 square feet, all of which are currently vacant. Minskoff said that JLL is talking with half a dozen companies, any of which he would be happy to have in the building. He estimated that the last of the office space would be spoken for in about 45 to 50 days. The building is seeing about five or six tenant showings a week, sources said. “We are hoping to attract the vast numbers of companies in the technology field that have expanded in New York City,” Minskoff said. “And I don’t think we have competition. Most of the inventory in Manhattan is north of 50 years old.” “There is an old saying,” he added, “that an ugly building that is 100 percent leased is beautiful, but a beautiful building that is 100 percent leased is gorgeous.” TRD

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Residential market

from page 26

and a four-bedroom also jumped by 7 percent and 20.4 percent, respectively, to $620,000 and $5.42 million. The average sales price for a co-op was up 41.5 percent year over year, to $1.49 million, and 27 percent from the fourth quarter of 2013. For new development, the average sales price was $2.83 million in the first quarter, a 47.7 percent rise from the first quarter of last year and a 5.1 percent uptick quarter-over-quarter. Meanwhile, the inventory shortage shows no signs of letting up soon. While a rise in permit applications over

the last three years may signal a jump in the number of units coming to market (see related story on page 52), those units likely won’t hit the market for some time and, even then, won’t be enough to meet demand, sources said. “A permit filing means that you’re not going to see that project be marketable for at least a year or two, and then closing in two or two-and-a-half years,” Miller said. “So, that’s really a commentary on what we’re going to see in the market in 2016.” Listing inventory stayed steady year over year, rising by only 0.2 percent, according to Elliman’s report. And

a report by Town shows that the median number of days on the market dropped to 81 in the first three months of the year, from 90 at the end of 2013. With pricing reaching historic highs, is there any anxiety in the market that another bubble could be inflating? “There is no fear that I’m sensing among some highly sophisticated individuals to enter the marketplace,” Appel said. “There does not seem to be a tremendous resistance to money coming in to back new projects. That’s interesting, since there had been a lot of talk about land prices stifling development.” TRD

It’s pressing for a net growth in its retail and residential portfolio of around $750 million this year, company executives said at the firm’s annual investor conference in December. While mostly quiet on the office front, the company made some serious acquisitions recently on the retail side. It partnered with Sutton to buy the long-term retail leasehold at 650 Fifth Avenue for $326 million, and paid $146 million in a series of deals for retail space along Fifth Avenue. On the residential side, meanwhile, it acquired the Olivia, a 36-story tower at 315

West 33rd Street with 333 luxury rentals for $386.8 million, and partnered with Ben Shaoul on a three-property, 84-unit multi-family portfolio in Williamsburg for $54.9 million. In the next few years, however, it plans to expand its residential portfolio to 5,000 units from the roughly 1,500 it currently holds, executives said at the investor conference. “Management seems to prefer the durability of rental apartments versus the volatility of the condo market,” analysts from Sandler O’Neill said in a recent report. TRD

Big spenders from page 44 million-plus Manhattan office tower since January 2012, when it paid $252.5 million for 10 East 53rd Street. The lack of purchases can probably be attributed to the frothy office market, which is prompting buyers to pay hefty cash to snap up trophy towers. The resulting low yields are not enough to satisfy REITs’ hungry shareholders, who, by law, are entitled to 90 percent of the taxable income that REITs rake in. Instead, SL Green is looking to make other investments.

Warby Parker arrival seen as tipping point for Lexington in 80s Brokers say presence of trendy retailer could help fuel retail rush into neighborhood

86th Street,” he said. “I think you’re going to see other hip young designers want to be their neighbor.” Warby Parker leased the space from Samy Mahfar of SMA Equities earlier this year. Rubens and colleague Lee Block represented Mahfar in the deal, while Matthew Siegel and Kyle Allen of Thor High Street Advisors represented Warby Parker. “That neighborhood is evolving and just keeps getting better and better,” said Douglas Elliman retail maven Faith

The corner location at Lexington Avenue and East 82nd Street

Trendy eyewear retailer Warby Parker opened a new store at 1209 Lexington Avenue last month, marking its third Manhattan outpost.

By Katherine Clarke t’s a retail strip home mostly to dry cleaners and delis. But the arrival of a trendy retailer may signal changing prospects for Lexington Avenue in the 80s. Hordes of bespectacled, skinny-jean-wearing types typically seen hanging out in Williamsburg flooded the retail portion of 1209 Lexington Avenue last month for the opening of the latest outpost of Warby Parker, the trendy eyewear company. Warby Parker restored a century-old storefront at the

116 April 2014 www.TheRealDeal.com

location, formerly home to Lascoff Pharmacy, to its former glory, by maintaining the interior moldings and the original terrazzo floors from the early 1900s. “I think they’re the coolest, hippest retailer to open on the Upper East Side,” said Darrell Rubens of Winick Realty, who represented the landlord in the company’s lease deal. “There’s nothing really sexy on the street right now.” “This area of Lexington Avenue still maintains the character of old New York with local and mom-and-pop stores, as opposed to the national chains that proliferate nearby on

Hope Consolo of the Warby Parker lease. “This is just the first of many deals coming into the area. Lex in the 80s will soon look like Lex in the 70s.” The location, which is Warby Parker’s third in Manhattan, consists of a 1,600-square-foot ground floor and approximately 600 square feet each on the mezzanine and in the basement. It has cathedral-style 20-foot ceilings, 20foot arched windows and 115 feet of wraparound frontage. “When Lascoff Pharmacy lost their lease, they started dismantling and selling off pieces of the old architecture, everything from the fixtures to the stained glass windows,” Rubens said. “When Samy purchased the property, he quickly put a stop to this and was even able to save the legendary blade sign, which is still hanging on the building today.” TRD

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from page 50

was friendly with, and who had the cash,” said the younger Rose. Among others, the shortlist included Silverstein, the Malkin family, and Buffett, who had befriended Silverstein when he ran Salomon Brothers, which was located in Silverstein’s 7 World Trade. “We became friendly, and he asked me to put him into a real estate deal that I felt was sound and opportunistic and good enough for me,” Silverstein said in the distributed email. “He invested about $1 million of his money and joined with Fred Rose and me in buying the property.” Rose went to auction with handshake commitments, but the auction had heavy activity, said Bruder. The Rose-led group came in second, but the winner couldn’t produce the 20-percent deposit within 48 hours. Days later, Rose and company made the highest offer through a sealed bid. The group put up $8.2 million in cash for the $20.2 million purchase, according to the younger Rose. Fred Rose served as leasing agent and Malkin as managing agent. The others were passive investors. “It was an unusual collection of investors that we never duplicated,” Adam Rose said. “I think they were all just having fun.”

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Still, the property desperately need to be redeveloped, said Bruce Spiegel, senior managing director at Rose Associates, who has overseen leasing there since the beginning. “The storefronts looked like they were leased one-off, not collectively,” Spiegel said. The transformation didn’t happen overnight; the investors honored existing leases and waited for renewals to come due to make major changes. When Gristede’s lease was up, Rose and Spiegel forced the grocer to renovate if it wanted to stay. Woolworth’s — which was paying just $12 per square foot for 22,000 square feet of ground floor and basement space — was pushed out once its lease expired. Market rate for the ground floor was between $75 and $100 per square foot, Spiegel said. Spiegel and the investors didn’t lease to just any tenant. They wanted a mix of local, regional and national names. “Our best tenant is Mom’s Cooking,” said Spiegel of a local soup and sandwich spot. “They have a line outside for lunch.” Not all tenants were home runs, Rose said. He recalled several “creative frozen dessert” places along with a Japanese electronics store that didn’t make it. Another key part of the property’s revival was cleaning up the façade. The group, for example, required new identically shaped awnings, giving retailers the choice of 10 colors. Not everyone is happy with the metamorphosis. Michael Toback, the owner of 20/20 Eyewear, which has been located at the property for 31 years, said the strip has lost its character and is “frankly ruined.” “It’s a suburban mini-mall. It’s horrible,” he said. “It used to be great. It was the Village.” Toback’s lease is up in November, and he’s worried the rent increase will be unaffordable. “I just want to sign a five-year extension,” he said. “And then I’m out.”

Strong distributions Still, Buffett said his yearly distributions exceed 35 percent of his original investment. He’s also received special distributions equal to 150 percent of his down payment. “Fred was an experienced, high-grade real estate investor who, with his family, would manage the property,” Buffett said in his annual shareholder letter. “And manage it they did.” “I’ve yet to view the property,” he added. The investors, of course, also got help from outside forces. “It was a different city back then,” said Andrew Mandell, managing partner at Ripco Real Estate. “I’m not sure anyone had the vision 20 years ago that New York City would be where it is today.” Today, New York University is working on developing two superblocks, set to wrap up in 2021, that will buoy the area’s retail, said James Famularo, senior director at Eastern Consolidated. In addition, the recent office leases to major tech tenants in the area are expected to boost traffic at local stores. That means University Walk will likely continue to stand the test of time. “We’ve never gone back to Buffett for another investment, which is not very smart,” Rose said. “I should call him tomorrow and offer him something.” TRD

C O R R E C T I O N S A N D C L A R I F I C AT I O N S In the March magazine story “Real estate’s rising stars,” a photo caption incorrectly identified the principals of Silvershore Properties. Jason Silverstein was on the left and David Shorenstein was on the right. In the March Closing interview with Bill Rudin, TRD incorrectly stated one of Rudin’s vices. He intended to say it was eating hamburgers from the restaurant J.G. Melon. In the March magazine story “Top-dollar deals, temporary digs,” TRD incorrectly identified the addresses of the top two deals. Both deals were at 502 Park Avenue.

118 April 2014 www.TheRealDeal.com

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www.WolfgangsSteakhouse.net Miami: 315 S. Biscayne Blvd. • Miami, FL • 305.487.7130 Midtown: 200 E. 54th St., NY, NY Times Square: 250 W. 41st St, NY, NY 212.588.9653 212.921.3720 Beverly Hills: 445 N. Canon Dr., Beverly Hills, CA Tribeca: 409 Greenwich St., NY, NY 310.385.0640 212.925.0350 Hawaii: 2301 Kalakaua Ave. 3rd Level, Honolulu, HI Park Ave: 4 Park Avenue, NY, NY 808.922.3600 212.889.3369

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The Council of New York Cooperatives and Condominiums presents “Lights! Camera! Action! Should Your Building be Used for Movies or TV Shows?” Featured speaker Isabelle Wedemeyer will lead a panel discussion about the issues that arise when landlords allow their co-ops and condos to be used for film and television shoots. 7 p.m. Location TBD. Fee: free for members, $50 for nonmembers in advance, $65 for nonmembers at the door. Information and registration: www.cnyc.com.

CALENDAR 1 2 3 4 5 6

The Architectural League, in conjunction with The Irwin S. Chanin School of Architecture of the Cooper Union, presents the work of Yung Ho Chang of Atelier Feichang Jianzhu (FCJZ). He will present his work in a public lecture followed by a moderated conversation with Calvin Tsao, principal of TsAO & McKOWN. 7 p.m. The Cooper Union, 7 East 7th Street. Fee: free for members, $15 for nonmembers. Information and registration: www. archleague.org.

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The Real Estate Board of New York presents “Running Your Business from Apps: Essential Tools for Today’s Agents.” Renee Fishman, associate broker at Halstead Property, is the keynote speaker. She will discuss how to master the skills necessary to use apps to prosper in the era of technological change. 9 a.m. breakfast and networking. 9:30 a.m. to 11:30 a.m. program. Saint Francis College, 182 Remsen Street. Free, members-only event. Information and registration: www.rebny.com.

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The Center for Architecture presents its “Oculus Book Talk.” Journalist Charles Montgomery will present his new book, “Happy City: Transforming Our Lives Through Urban Design.” 6 p.m. to 8 p.m. The Center for Architecture, 536 LaGuardia Place. Fee: free for members, $10 for non-members. Information and registration: cfa.aiany.org.

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The REIT Center at the NYU Schack Institute of Real Estate presents its 19th annual REIT Symposium, which will focus on issues affecting the REIT industry. Jonathan Gray, global head of real estate at Blackstone, will be the keynote speaker. Featured speakers include David Simon, chairman and chief executive officer of Simon Property Group, and Debra Cafaro, chairman and chief executive officer of Ventas Inc., among others. 8:05 a.m. to 4:10 p.m. The Pierre Hotel. 2 East 61st Street. Fee: $795. Information and registration: www.scps.nyu.edu.

The American Society of Interior Designers presents its “REGREEN Implementation Workshop.” The day-long seminar will address the challenges interior designers face when renovating client space. Rachel Hulan, sustainable consultant at Hulan Design, will teach the workshop. 8 a.m. to 6 p.m. Carnegie Fabrics, 41 West 25th Street. Fee: $375 for members, $475 for non-members, $250 for students. Information and registration: www. REGREENprogram.org.

Interior Designers for Legislation in New York presents “Designers on the Block 2,” an auction of donated designer participant services. The event will feature live jazz music, food, and drink. Proceeds from ticket sales and auction will go toward lobbying for the Interior Design Practice Act of 2014. 6:30 p.m. to 9:30 p.m. Mohawk Group Showroom, 71 West 23rd Street. Fee: $125. Information and registration: www.idlny.org.

Professional Women in Construction presents its “Hospitality Forum.” Featured speakers include Dan Lesser, president and CEO of LW Hospitality Advisors; Nancy Ruddy, founding principal at Centra/ Ruddy; Sharon Cadman, director of finance at Shawmut Design and Construction; and D.C. Becker, senior vice president of sales and marketing at Interstate Hotels and Resorts. 8 a.m. to 10 a.m. General Society of Mechanics and Tradesmen, 20 West 44th St. Fee: Information and registration: www.pwcusa.org.

The Cooperator’s Co-op, Condo and Apt. Expo presents its annual trade show, which features hundreds of exhibits of products and services for housing cooperatives and condominiums, as well as advice booths and educational seminars. 9 a.m. to 4:30 p.m. The New York Hilton Hotel, 1335 Avenue of the Americas. Fee: free, advance registration required. Information and registration: www. coopexpo.com.

122 April 2014 www.TheRealDeal.com

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The Center for Architecture presents its “2014 Design Awards” exhibition opening, which features winning projects in architecture, interiors, and urban design. Exhibition will be on view through June 13. 6 p.m. to 8 p.m. The Center for Architecture, 536 LaGuardia Place. Fee: free. Information and registration: cfa.aiany.org.

O NLINE

Web hits: The month in review (Read full stories online)

Wall Street bonuses jump in 2013

Sen. Chuck Schumer

Senate gets ILSA amendment bill By Hiten Samtani A bill that exempts condos from filing and registration requirements mandated by the controversial Interstate Land Sales Full Disclosure Act made its way to the U.S. Senate. Sen. Charles Schumer introduced it March 10. Under the bill, developers of new condos or timeshares with at least 99 units would no longer have to register their buildings with the U.S. Department of Housing and Urban Development. The bill unanimously passed the House in September, a move hailed as a victory for condominium developers. The ILSA law was passed in 1968, and was seldom used in New York City until the 2008 crash, when it became a pet exit strategy for condo buyers looking to get out of their deposits, spawning a cottage industry of federal litigation. Buyers were able to overturn contracts, even when developers made seemingly trivial ILSA filing errors.

Top deals of the month Leslie Wilson

By Hiten Samtanii Brokers better gear up for a rush of new clients. Bonuses paid to employees in the securities industry jumped by 15 percent, to $164,530 in 2013, according to an estimate released last month by New York State Comptroller Thomas DiNapoli. That’s the largest average bonus paid out since the 2008 financial crisis. Given the strong connection between Wall Street bonuses and real estate sales, it’s likely to lead to some trophy buys. Employment in the securities industry stabilized in 2013, DiNapoli said, though at 165,200 jobs as of December 2013, it’s still 12.6 percent lower than pre-crisis levels. The industry is a major contributor to the city’s tax coffers — about 8.5 percent of the city’s tax revenues in 2013, or about $3.8 billion, were from activities directly attributable to the securities industry, according to DiNapoli. That’s a year-over-year increase of nearly 27 percent.

Frank Ring

Ring picks up Park Slope properties By Julie Strickland Frank Ring, who sold his stake in a 13-building Manhattan South real estate portfolio to Gary Barnett’s Extell Development for $308 million in January, has started to build a new portfolio with his sons, The Real Deal reported. Ring paid $5 million for a pair of side-by-side townhouses at 468 and 466 9th Street in Park Slope, and $2.85 million for a semi-detached four-story, four-family rental property at 385 9th Street, listed by broker Joanne Gay of Joanne Gay Realty. In addition, Ring purchased a three-unit rental at 844 Union Street for $3.1 million, listed by Jill Braver and Brian Lehner of Brown Harris Stevens, and another threeunit rental, at 336 10th Street, listed by the Corcoran Group’s Frank Castelluccio, Nicholas Hovsepian and Mara Ingram, for $2.24 million. The brokers and Ring all declined to comment.