The Real Deal December 2011 by The Real Deal

Aqueduct’s racino looks like good bet

Pop-up stores that don’t sell anything

Sparks ﬂy at TRD’s debate

Westchester waits for a rebound

Wharton’s NYC real estate maﬁa

THEREALDEAL

www.TheRealDeal.com

CIM’s New York shock and awe How L.A. ﬁrm is beating local players for deals

N EW YO RK R E AL E S T A TE N E W S

Vol. 9 No. 12 December 2011 $3.00

Planning NYC’s next 50 years A look at how zoning changes will impact developers

BY ADAM PIORE As many NYC players have struggled to score distressed assets in the last two years, the CIM Group has closed a slew of deals. Some say it overpays, but others note that the vulture business isn’t for the faint of heart. “The guy who gets the deal is the guy who’s got the balls,” one source said.

2012 predictions: Clear as eggnog Some brokers claim pent-up demand could mean a busy 2012 for Manhattan’s residential market, but many others say the sluggish economy will keep activity in check. See page 16.

Fifth Avenue’s storefront shufﬂe

As shoppers jostle for gifts, brokers jockey behind scenes

See story on page 38

A new land grab hits Brooklyn

Tight rental market spurs interest in development sites BY TRACEY SAMUELSON Land sales are heating up in Brooklyn as a tight rental market creates demand for new construction. A look at how the numbers pencil out. See story on page 18

Facelift for NYC’s biggest retailers

Above, City Planning Commission Chair Amanda Burden. This year marks the 50th anniversary of the zoning resolution that dictates building rules in NYC. What’s in store for developers in the next 50? See page 62.

Reassessing REBNY BY ADAM PINCUS The more than 12,000 members of the Real Estate Board of New York will soon be reaching for their checkbooks to send in their annual dues. And there’s no doubt many will be engaging in a yearly cost-beneﬁt analysis of

the nonprofit’s value. Members distribution of power internally. pay more than $6 million a year in This month, The Real Deal looks dues, and the group REBNY and its fiFEATURE STORY at takes in several milnances — just weeks lion more through its annual gala after the group announced plans and other income. But while the to increase dues for the first time organization presents a unified in four years. public front, there’s a lopsided See story on page 32

NYC’s biggest real estate battles and what they mean for the rest of the industry

See page 94.

PHOTO CREDITS ARE HERE

Macy’s $400 million renovation isn’t the city’s only department store upgrade. Barneys, Saks, Bloomies and several others are working on or have ﬁnished renovations for their massive retail spaces. See page 28.

As dues rise, a close-up on the powerful trade group’s ﬁnances

Courtroom clashes

Hal Fetner: Nixon and my bar mitzvah

Earlier this year, Cushman & Wakeﬁeld predicted that in 2015, the average taking rent for Midtown Class A ofﬁce space would be $97 psf. But it recently downgraded that prediction dramatically, to $82. See page 24.

AT A GLANCE

See story on page 58

BY ADAM PINCUS Upper Fifth Avenue is packed with holiday shoppers now. But behind SPECIAL REPORT the scenes, brokers and building owners are the ones jockeying for position. Inside: A breakdown of all of the leases in play on the world’s priciest retail strip.

FACT

BY LEIGH KAMPING-CARDER Not everyone has the stomach for a lawsuit — taking an otherwise private dispute and submitting it to the evaluation of the court. This month, The Real Deal proﬁles some of the biggest active legal battles in the NYC real estate world — from those that include mega-developers like Stephen Ross and big bank CEOs to smaller commission disputes. We also look at the broader legal landscape, including spotlighting an elite group of attorneys. See stories beginning on page 41

A growing Town As firm marks one year, a breakdown of its hires BY CANDACE TAYLOR A year after Citi Habitats founder Andrew Heiberger launched Town, the company has 265 agents and staff, making it Manhattan’s fastest-growing firm. Not surprisingly, its largest group of hires comes from Citi Habitats, but it also has surprisingly sizable contingents from other firms and from outside real estate. Inside: A full staff breakdown. See story on page 26

Rendering of Cornell’s design

Roosevelt Island: East but not Eden As the Bloomberg administration gets ready to select a university to build a science campus in NYC, critic James Gardner handicaps two of the leading bids — from Stanford and Cornell — which are both proposing to build on sleepy Roosevelt Island. See page 60.

Under lock and key Suburban brokers regularly rely on lockboxes to store keys for listings. Long shunned in NYC, the boxes are now coming to the rental market here. See page 30.

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BURDEN PHOTOGRAPH BY BEN BAKER; FETNER PHOTOGRAPH BY MARC SCRIVO; GAVEL ILLUSTRATION BY PETER BONO

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Highlights D E C E M B E R

2 0 1 1

Taking inventory for the New Year

Brooklyn land sales heat up

Betting on the new ‘racino’

Pricing is top of mind at year’s end, as brokers look ahead to unclear 2012.

A tight rental market causes a rise in prices for development sites.

A look at how the Aqueduct’s new gambling venue is doing.

desk of Stephen Meister 22 AtThetheoutspoken attorney shows off

a Muhammad Ali robe and more.

words ... 25 InThistheir month’s funniest and most insightful quotes.

Stephen Meister

Andrew Heiberger of Town Residential

26 Who is Town hiring?

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8 December 2011 www.TheRealDeal.com

A breakdown of where the ﬁrm’s agents have come from, as the fast-growing brokerage hits the one-year marker.

The makeover department

Under lock and key

Reassessing REBNY

Loan limits on the rise for FHA

Macy’s recently announced $400 million renovation isn’t the only upgrade among the city’s big department stores.

New ‘lockbox’ technology makes inroads in the NYC rental market.

TRD looks at the group’s ﬁnances as pros prep to pay annual dues.

Steven Spinola of REBNY

Will FHA become the go-to ﬁnancing option for NY borrowers?

The new pop-up shops

Fifth Avenue’s storefront shufﬂe

Courtroom clashes

Non-retail stores (think PayPal) join temporary location craze.

A look at the behind-the-scenes jockeying on the pricey retail strip. Real estate’s legal landscape, including NYC’s biggest lawsuits.

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Highlights continued

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the landlord 51 Meet Roberta Bernstein: From schoolteacher to building owner.

ﬂy at TRD’s debate 53 Sparks Some 1,600 real estate pros gathered at our annual forum as speakers battled it out.

Roberta Bernstein

month in real estate history 56 This Durst unloads assemblage of parcels near Times Square, REBNY ofﬁcials lay cornerstone for Midtown ofﬁce, and more.

From left: CIM cofounders Richard Ressler, Shaul Kuba and Avi Shemesh.

CIM’s shock and awe Out-of-towners take Manhattan, jumping on projects before rivals, sometimes at high prices.

but not Eden 60 East Which Roosevelt Island design is better: Cornell’s or Stanford’s? ��

Amanda Burden

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In the zone

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City Planning Commissioner Amanda Burden and other urban designers tackle the next 50 years of NYC zoning.

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Waiting in Westchester

Warren Lewis in Williamsburg

The county ﬁnally sees sales uptick, but full rebound not in cards yet.

For the first time, the 25-year-old firm opens a non-Park Slope office.

Related’s Stephen Ross and wife Kara

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

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

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

Calendar of Events Check out this month’s activities.

Development Updates The status of construction and sales at new projects around the city.

Residential Deals Brokers dish about how they made it to the closing table.

93 ��

10 December 2011 www.TheRealDeal.com

’Tis the season to be social Real estate moguls mix and mingle on New York’s high-society scene.

The Closing: Hal Fetner How the developer ended up inviting Nixon to his bar mitzvah.

Comings & Goings New ventures and companies.

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

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Our thanks and appreciation to all of our clients! Arthur Chiaramonte, MAI 12 December 2011 www.TheRealDeal.com

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The Real Deal is a registered trademark of Korangy Publishing Inc. Copyright © 2011. Call 212-2601332 or e-mail news@therealdeal.com. Warning: It is illegal to photocopy or reproduce any part of The Real Deal without express written consent. For reprints and duplication rights, call 212-260-1332. Principal ofﬁce: 158 West 29th St., New York, NY 10001. The Real Deal is published monthly. Annual subscriptions cost $95. Send check or money order to 158 West 29th St., New York, NY 10001.

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erry Seinfeld once quipped about the publishing world that “It’s amazing that the amount of news that happens in the world every day always just exactly fits the newspaper.” There may be some truth to that joke about newspapers stretching content to feed the daily news beast, but fortunately for us, there was no shortage of real estate news to cover this year. Indeed, 2011 will likely be remembered as a year in which the nation was stuck in a deep malaise. The economy, of course, was in a rut, and the federal government’s credit was downgraded. There is also widespread disenchantment with President Obama, ongoing mass Occupy Wall Street protests and lingering fears over Europe’s fiscal crisis. The situation in New York real estate is a little bit better than the economy as a whole, and better than most other real estate markets throughout the country. But there was still plenty of uncertainty, and plenty to write about here. In such a climate, what did our readers want to read about? The list below shows which magazine stories were most viewed on our website through the end of November, culled from the 1,300 pages we published this year. Largely, readers wanted to hear about solutions to the malaise — what entrepreneurs were doing to take advantage of the downturn to create profitable real estate businesses. Many of the stories on our most-read list — including “Entrepreneurs rush into NYC real estate market,” “CMBS 2.0,” “Can Heiberger do it again?,” “Private equity firms and developers together again,” “Bracha’s new gig,” and “The extra mile” (about investment fund Square Mile Capital) — pointed to that fact. Other top stories looked at overachievers in several categories. Our most-viewed story of the year, “Moguls in the making,” profiled top young guns in New York real estate. And our third-most-read story, “Clans with plans,” zeroed in on the ethnic groups (from Israelis to Syrians to Persians) that have found the most success in New York. But stories about troubles were also a big draw. Among them: troubles at newly completed condo projects (“Tumult at Nouvel tower”) and drama within powerful real estate families (“Chetrits deny split”). Finally, readers wanted a behind-the-scenes peek at how some of the most wellestablished players in the business operate — including the city’s top buildings sales brokerage (“Eastdil Secured: A $15 billion enigma”) and the man who has been called the Ari Gold of real estate finance (“Howard Michaels: The toughest boss in real estate?”). If you’ve missed reading these stories, now’s the time to go back and take a look. They just might give you a competitive leg up and spur your next business idea. Here’s a look at the most-viewed stories of 2011 (and the issue they appeared in): 1. Moguls in the making (April)

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2. Entrepreneurs rush into NYC real estate market (February) 3. Clans with plans (February) 4. CMBS 2.0 (January) 5. Eastdil Secured: A $15 billion enigma (October) 6. At 15 CPW, the rich don’t swim (July) 7. Tumult at Nouvel tower (February) 8. Can Heiberger do it again? (January)

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9. Private equity ﬁrms and developers together again — with a twist (July) 10. The extra mile (March) 11. Bracha’s new gig (January) 12. Howard Michaels: The toughest boss in real estate? (October) 13. The money spigot opens (March) 14. For newcomer ﬁrms, size on the rise (May) 15. Chetrits deny split (September)

Meanwhile, there is a lot to feast on in this issue. Check out our cover story on the ﬁnances of the industry’s most powerful trade group, the Real Estate Board of New York. Also, don’t miss our spread on New York’s biggest legal battles, and our proﬁle of the biggest new real estate buyer on the scene, the CIM Group, a huge player from Los Angeles. Enjoy the issue, and enjoy the holidays.

Stuart Elliott 14 December 2011 www.TheRealDeal.com

Taking inventory

Lack of good product and pricing tensions are top of mind at year’s end, as brokers look ahead toward unclear 2012

BY LEIGH KAMPING-CARDER s the year draws to a close, the future seems as opaque as a glass of eggnog. Some real estate profession-

RESIDENTIAL MARKET R EPORT als say pent-up demand in the residential market could foster a busy

2012, while others predict that a sluggish economy will keep prices and activity in check. Citi Habitats vice president Jay Molishever said the high rents, relatively low sales prices and increasing activity he is seeing in the current market are good signs for the New Year. “At some point,” he said, “the kindling is going to burst into

ﬂames again,” bringing high prices and high volume. Michael Signet, executive director of sales at Bond New York, anticipates a “very busy year,” with rising prices bringing inventory to market, and buyers feeling “compelled to make a decision faster, as the competition for quality apartments increases.” But there are still a few signiﬁ-

cant X-factors that could keep the market from taking off in 2012, brokers said. Chief among them is endur-

Barbaccia, director of brokerage Essential New York Real Estate. Then there’s the lack of new product and the still-difﬁcult

“At some point the kindling is going to burst into ﬂame again.” Jay Molishever, Citi Habitats

ing unease about the economy. Without a strong recovery in the New Year, prices will likely remain ﬂat, said Kenneth Scheff, managing director of Stribling & Associates. Others agreed. “It is precisely the feeling of unease that slows our market down and anesthetizes any new activity,” said Joseph

mortgage market, which are “the two things holding back the market from being smoking hot,” according to Doug Bowen, a senior vice president at Core. “The demand is deﬁnitely there.” Brokers said the continuing lack of high-quality, well-priced inventory has been a particular problem in the recent weeks, especially at the upper end of the market. Simply put, there are more active buyers than there are good apartments, said Scheff, who described a recent eight-way bidding war for a desirable prewar co-op on the Upper East Side. Hearing about the lack of inventory, sellers are getting bolder with their asking prices, brokers said. But most of today’s buyers are still looking for a steal. “Price is very important in making a sale in this market,” said Paula Del Nunzio, a senior vice president at Brown Harris Stevens, adding that if a seller wants to put a property on the market at a “vanity price,” he or she will “sit on it.” (Del Nunzio is famously handling the most expensive listing in the city, the Upper East Side’s Woolworth mansion, priced at $90 million, as well as the nearby Stanford White mansion, priced at $49 million.) “Sellers, when pricing their apartments correctly, are selling quickly,” said Barbara Fox, president of Fox Residential Group. “However, overpriced apartments are not selling well at all. ... Wellpriced, renovated properties continue to sell more quickly than overpriced ones, or those that need massive renovation.” For example, a fully renovated townhouse at 87 Cambridge Place in Clinton Hill, Brooklyn, went into contract last month at $2.16 million — a near-record for the neighborhood — a week after the owners listed it at $2.05 million. The broker, Jerry Minsky of Elliman, said that he wanted to price it higher, but the sellers were adamant about pricing it lower. As they wait to see how these factors shake out, sales brokers are sleeping off their post-Thanksgiving, tryptophan-induced hangContinued on page 82

16 December 2011 www.TheRealDeal.com

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Brooklyn land sales heat up A tight rental market causes a rise in prices for development sites BY TRACEY SAMUELSON ew York City is known for its sky-high rents. But lately, tales of Brooklyn’s hot rental market have become as numerous as the 20-somethings ﬂooding into the borough. Two Trees recently ﬁnished leasing up its 103-unit rental at 25 Washington Street in Dumbo, where all 80 of the market-rate units were rented in four months at prices of roughly $50 per square

foot, according to company vice president Jed Walentas. At JMH Development’s 184 Kent Avenue, a Williamsburg warehouse converted into a 340-unit rental building, leasing was completed within 10 months, according to Jason Halpern, managing partner at JMH. Now, with some of those leases starting to turn over, interest in the building is stronger than ever

Brooklyn land price per buildable square foot

2011: $115 2010: $101 Percent change: 14% Source: Massey Knakal. Figures for 2011 are through the third quarter.

— so strong that the rental ofﬁce inked eight new leases and ﬁelded 25 walk-in inquiries during one week last month, Halpern said. Such success stories are helping to drive up land prices in the borough. While developers had an insatiable appetite for condos during the boom and mostly halted construction during the recession, they are now eager to add rental

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projects to their plates. As a result, land prices — traditionally driven by the condo market — are being buoyed from their recession lows by developers looking to build ground-up rentals. Sales of development sites overall in Brooklyn are up from last year — in both volume and transaction price. There have been 85 sites purchased for development thus far in 2011 — a 74 percent increase over this time last year, according to data from Massey Knakal Realty Services. Average price per buildable square foot has risen to $115, up 14 percent from $101 in 2010. “We started seeing, about a year ago, a lot of local and institutional players coming back into ground-up development,” said Ofer Cohen, president of Brooklyn-based TerraCRG, a commercial brokerage firm. And unlike the mid-2000s, he said, the economics are such that “people can now build rental projects.” Determining precisely how much land prices have recovered isn’t an exact science. Michael Amirkhanian, a director of sales for Massey Knakal, estimated that land in key areas such as northern Brooklyn and Downtown Brooklyn has increased as much 25 percent from its recession lows. (Massey Knakal tracks development deals, but doesn’t separate land sales from sales of vacant buildings.) Amirkhanian pointed to a ground-up development at 505 St. Marks Avenue in Crown Heights, currently a school that the buyer will replace with a 128-unit rental building. The property sold in October for $4.5 million, or $48 per buildable square foot, he said — a 25 percent increase over initial offers when the property was first marketed in 2010. Michael Falsetta, executive vice president of the Manhattan real estate advisory firm Miller Cicero, estimated that land in Brooklyn has recovered all but 15 to 20 percent of its prerecession values, “maybe even 10 percent in hot areas.” Cohen’s experience seems to back that up. He said he’s currently marketing a development site with 22,000 buildable square feet on Bergen Street in Prospect Heights, near the corner of trendy Vanderbilt Avenue. In September, 17 bidders submitted written offers for the property, he said, and the parcel is currently in contract. Cohen declined to disclose the price, but he said it represents a Continued on page 80

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The Bulletin Board

Betting on the Aqueduct’s new ‘racino’ Compiled by Russell Steinberg

Very grand opening:

The city’s new racino — the highly anticipated casino at Aqueduct Racetrack in Queens — opened in late October. By its first afternoon in business, 15,000 customers were inside, with 5,000 more in line. By the end of the first weekend, operator Resorts World Casino sai d 65,000 people had come through the new facility.

Battling with rival casinos:

Though it is estimated to bring millions to N.Y., the racino will likely dilute the amount of money spent at nearby casinos in Connecticut and New Jersey. New York residents spend an estimated $5 billion per year at those gambling destinations, according to the Daily News.

Powerful opponents: Not everyone is a fan of the new racino. Some, inclu ding Assembly Speaker Sheldon Silver, have spoken out against the $880 million facility, fearing that it will prey on those who can’t afford to gamble away their hardearned money.

20 December 2011 www.TheRealDeal.com

Quick cash:

In its first 10 days, the racino brought in $15 million, or $1.5 million a day, from slot machines and electronic table games, accord ing to the New York Post. About twothirds of that $1.5 million daily take g oe s d irectly to public coffers in Albany, the Po s t reported.

Beefing up staff:

The level of success that the

racino saw out of the gate took even the operators by surprise. Indeed, it had 1,200 employees when it opened, but officials quickly decided to up that. They’re now planning to add 150 more jobs, mostly in customer services, according to a spokesperson.

Revenue breakdown:

Of the millions that Resorts World Casino is expected to bring in, 44% of profits will go to a state education fund while 31% will go back to the racino, according to the Daily News. The remaining 25% will be distributed to the New York Racing Association and the racino’s vendors.

Halfway there: The 190,000-square-foot first phase

that opened in October features slot machines, including one themed as “Sex and the City” and another as “Wheel of Fortune.” It also has electronic table games. Later this month, another floor, with 2,500 more machines, will open.

Not just gambling:

In addition to gambling, Resorts World Casino opened two restaurants at the racino, along with a sports bar called Bar 360. The operator has two more restaurants coming soon: the RW Prime Steakhouse and Wine Bar and a Chinese restaurant called Genting Palace.

Robots vs. humans:

Full casinos are still banned in New York, but the 2,200 slot machines and 200 electronic games don’t violate state law. That’s because they aren’t staffed by humans. They are all either computer touch screens or, in the case of table games, manned by robots.

BeSeen-9-11-Print.pdf

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PHOTOGRAPH FOR THE REAL DEAL BY CHRIS MARTIN

A photo of his three kids: Jason, 29, Jessica, 24, and Micaela, 5.

Seven years ago, for his 50th birthday, his wife, Melissa, bought him this British sports car, a 1953 MG. She tried to buy a 1954 for the year he was born, but “couldn’t find one, so she bought the ’53.”

A photo of the King Air E90 plane that Meister recently sold. The litigator started flying in the 1990s after getting fed up with traffic on his way out to the beach. He’s now an “accomplished multi-engine pilot” and says he’s “between planes.”

the

Desk

A copy of Meister’s book, “Commercial Real Estate Restructuring Revolution,” which came out last year. He says he wanted to write about “tranch warfare — the crazy fights between different lenders in the debt stack.”

A sketch Meister drew years ago of his son, Jason, who’s now 29 and works at Grubb & Ellis. Meister says it shows his “modest artistic ability,” joking that “I’m sure nobody knows [that I can draw] because they all think I’m just a raging litigator.”

Meister

Meister buzzes this bright red button when he beats a particularly easy adversary in court. It was given to him a few years ago after one such case, though he declined to say who the adversary was.

Meister, a conservative, regularly writes Op-Ed pieces for the New York Post. This one implored Occupy Wall Street protesters to decamp for Washington, D.C. So, do his views ever stop him from working with a client? “I represent Democrats and Republicans. I’m a lawyer — I’m not running for political office.”

of:stephen

This signed Muhammad Ali robe was given to Meister by client and friend Larry Gluck in 2000, after the two worked on several projects together, including Gluck’s purchase of 500-512 Seventh Ave., which he bought with Joe Moinian and Joe Chetrit. Meister was also a partner in the project.

A YouTube video of Meister on Fox’s “Varney & Company,” where he makes regular appearances. When he first appeared on the show he was just a guest, but now he is frequently part of Varney’s two-person “company.”

ttorney Stephen Meister is not the shy type. If he’s not being quoted in the real estate press blasting an adversary, his opinions can be found in the regular Op-Ed pieces he writes for the New York Post, or heard on the airwaves of Fox. His dogged approach has won him some of the city’s highest-profile real estate figures as clients, including Larry Gluck; Lev Leviev; Line Trust and Deuce Properties, lenders to the Extended Stay Hotels chain; and many others. He also represented a joint venture of SL Green and developer Joseph Moinian at 3 Columbus Circle, where he thwarted an attempted hostile takeover by mogul Stephen Ross of the Related Companies. He plots his legal strategy from his 50-attorney firm of Meister Seeling & Fein LLP, on the 19th floor of 140 East 40th Street. B y J ill N ooNaN

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Tenants snapped up space faster in 2011

Companies get off the fence after vacillating for much of 2010 BY ADAM PINCUS s 2011 draws to a close, real estate executives and brokers say it’s now clear that ofﬁce tenants made faster leasing decisions this year than last. The coming off the fence was driven, professionals say, by the realization that the economy was not likely to experience any major

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changes — for better or worse — anytime soon. Peter Braus, managing principal at commercial firm Lee & Associates, which last month announced an affiliation with Midtown-based Sierra Realty, said the mood in 2011 was a recognition that the economy was not going to turn around right away. “[This year] has been more of a realization that the recessionary economy is here to stay — at least for the foreseeable future,” he said. Peter Riguardi, president of the New York region for commercial firm Jones Lang LaSalle, said that translated into faster leasing this year. “Tenants [seemed] to make decisions more quickly in 2011, with fewer hesitations, and were comfortable that the market was at a point where they could feel good about committing,” Riguardi said. He added that he did not expect much change before the elections next fall. But those same challenging economic times led global commercial firm Cushman & Wakefield to cut back its expectations on rental growth for prime Midtown Class A office space, revealing that the international slowdown is expected to have an impact on leasing in the city. Cushman figures from the third quarter — released in late October but not reported on until now — revealed that its analysts scaled back expectations for actual rental rates in Class A office space in Midtown. In the optimism of the first months of the year, the firm’s researchers forecast that in 2015, the average taking rent in Midtown Class A properties would be $97.81 per square foot — far eclipsing the 2007 peak of about $80 per foot. But the firm has toned down its optimism dramatically, and now predicts a net effective rent in 2015 of $82.79 per foot. Still, that forecast does represent an increase of 60 percent from the Class A taking rent in the third quarter (the most recent figures available) of $52.06 per square foot, Cushman figures show. Despite the tempered optimism, the overall Manhattan leasing picture continued to improve, at least as seen in the monthly leasing statistics.

Manhattan ofﬁce stats Manhattan

Availability Average rate asking rent

Nov ’11 Oct ’11

11.0% 11.1%

$51.20 $50.74

Midtown

11.9% $58.36 12.0% $57.62

Nov ’11 Oct ’11 Midtown South

9.4% 9.4%

Nov ’11 Oct ’11

$41.10 $41.25

Downtown

10.3% $37.86 10.4% $37.57

Nov ’11 Oct ’11 Source: Cassidy Turley

The availability rate — which measures space available for rent now or in the next 12 months — fell in November by 0.1 point, to 11 percent (down from 12.3 percent in November 2010), and the asking rent rose last month by $0.46 per square foot to $51.20 per foot, data from Cassidy Turley showed. But not all tenants had the financial wherewithal to make a deal. In fact, the current economic situation helped some and harmed others, depending on their financial footing, said Paul Wolf, copresident of the Manhattan-based firm Denham Wolf Real Estate Services, which focuses on nonprofits. Those on solid footing took advantage of the relatively affordable rents. “They were actually moving into new space and expanding,” Wolf said. Other firms, meanwhile, just struggled to hold on.

Midtown The availability rate dropped in Midtown, but it may not stay that way for long. Indeed, several large projects are in the works that will deliver millions of square feet of ofﬁce space in the coming years. The Related Companies announced early last month that luxury leather company Coach will be the anchor ofﬁce tenant, with 600,000 square feet, in a new 1.7 millionsquare-foot tower at the northwest corner of 10th Avenue and 30th Street, in the Hudson Yards area. The supply of commercial space from such new buildings could push down asking rents in the city’s nearby modern but aging buildings, Braus said. “This will put downward pressure in rents for older Class A properties that can’t compete with the bells and whistles of the new buildings,” he said. Riguardi said that throughout 2011, tenants were seeking higher-quality space in Continued on page 80

In their words...

The month’s funniest and most insightful comments from real estate pros

“Leverage can be a fickle mistress.”

“[To spot the next hot neighborhood], follow the artists and follow the gay community.” Prudential Douglas Elliman broker Raphael De Niro. (Bloomberg BusinessWeek)

Developer Harry Macklowe, referring back to his lowest point following the economic meltdown, at the Bloomberg Commercial Real Estate Conference last month.

“[We developed this project] to have a new experience and do something fun. … To be honest, I have no idea how the economics are going to work out.” Developer Jed tas at the lyn Real Estate liamsburg hotel

“If you can afford to buy, [then] buy. ... [If you rent], you are only flushing hard-earned money down the really flashy and expensive self-cleaning toilet that your $20,000 rent affords you.” Jason Fien, director of leasing at Platinum Properties (see related story on page 16).

“ILSA wasn’t invented by me, it was invented by Congress.” Adam Leitman Bailey, on the controversial use of the Interstate Land Sales Full Disclosure Act.

WalenBrookRoundtable, on his company’s new Wilproject, tentatively called “the Wythe.”

“Robert Scarano, Karl Fischer and Gene Kaufman — the three horsemen of the architectural apocalypse. These men between them do not have an ounce of talent and shouldn’t be allowed near Legos, let alone our city skylines.”

“Well, she lasted longer than Kim Kardashian’s marriage!” Anonymous commenter, referring to Adina Azarian stepping down from her role as CEO of the national real estate franchise Keller Williams NYC after just seven months.

“I feel like Elizabeth Taylor’s eighth husband on [his] wedding night. I know what I gotta do, but how do I make it sound interesting.” Developer Larry Silverstein at the NYU Schack Real Estate Summit last month, after several speakers gave the same answer he was planning to use in response to a question from the moderator.

Anonymous commenter, responding to a story in the New York Post about Fischer being one of the most prolific and worst architects in the city.

“A news reader has no business making personal comments on the air. … Development is the lifeblood of New York City, whether [he] happens to like it or not.” Anonymous commenter on the local community board weighing in on a proposed “skinny” tower on West 75th Street after popular NY1 news anchor Pat Kiernan, an Upper West Side resident, blasted it as “not welcome.”

“It’s the best security in the world. Nobody’s going to rob my house.” One of Governor Andrew Cuomo’s neighbors in Mount Kisco, on the constant presence of a state police car on the street. (New York Times) www.TheRealDeal.com December 2011 25

Who is Town hiring? On the ﬁrm’s anniversary, a snapshot of the agents who make up the brokerage

BY CANDACE TAYLOR hen Andrew Heiberger launched the residential brokerage Town, he prophesied that it would become the city’s biggest firm, vowing to hire the industry’s “best and the brightest.” A year later, at least part of that prediction is on its way to coming true. With five offices and some 265 agents and staff, Town is undoubtedly the fastest-growing brokerage in Manhattan. By way of comparison, Rutenberg Realty — until now the city’s most rapidly expanding firm — didn’t top 200 agents until three years after its 2006 launch. (Rutenberg, in contrast to Town, has a low-overhead business model with just one small office.) It’s still too soon to tell, however, whether Town’s agents will become the city’s best. At press time, Town said it had 152 exclusive listings worth approximately $405 million, with an average asking price of $2.67 million for sales and $7,500 per month for rentals. While Town has a number of very pricey listings, few mega-name agents have been hired since Heiberger announced that Brown Harris Stevens superbrokers Wendy Maitland and Reid Price would help launch the firm. One possible exception is Danny Davis, a longtime Citi Habitats star. Many of Town’s hires are, as one industry veteran put it, “mid-tier sales brokers.” This month, The Real Deal took a closer look at the composition of the new firm. Not surprisingly, the largest group of hires comes from Citi Habitats, the firm Heiberger founded in 1994 and later sold to NRT Incorporated, the Corcoran Group’s parent company. More unexpected, however, is the large contingent from Prudential Douglas Elliman. Many Town agents, or “representatives,” are also new to real estate. According to The Real Deal’s research, roughly 101 of the firm’s hires come from the city’s major residential firms, while around 50 come from smaller brokerages, commercial real estate or development. The rest hail from a vast array of backgrounds, including law, architecture, banking, modeling and acting. Read on for a breakdown of Town hires from each firm. Andrew Heiberger has recruited 265 agents and staff since launching Town a year ago.

Citi Habitats: 35 hires

eiberger’s detractors claim he’s slowly dismantling Citi Habitats, the company he built. After all, he launched Town with top Citi Habitats managers Itzaskun “Itzy” Garay and Matthew Van Damm, along with Citi Habitats’ Chris Reyes as director of information technology. More recently, Heiberger shocked the industry by hiring longtime Citi Habitats broker Davis, who in 2011 was named that firm’s top-grossing rental agent and also its top-producing agent. Eric McCarthy, previously the rental giant’s Downtown managing director, recently came on board as leasing manager at Town’s West Village office. Heiberger declined to give the exact number of people he’s hired from Citi Habitats, but according to TRD’s research, it’s around 35 representatives and staff, including Lance Nguyen, Bo Poulsen, Jimmy Brett, Mark Chin and Jon Cella, who received Citi’s prize for the largest sales commission this year. Heiberger pointed out, however, that Town has hired only a tiny fraction of the firm’s roughly 770 agents. He added that agents switching firms is nothing new. “There’s no

Danny Davis

Eric McCarthy

26 December 2011 www.TheRealDeal.com

unique [circumstance] right now that people from other ﬁrms are exploring their options,” he said.

Elliman: 23 hires

he Real Deal found some 23 agents and staff who worked at Elliman immediately or shortly before joining Town. That includes eight-year Elliman veteran Robert Dvorin, who joined Town with his five-member team. Dvorin was previously the director of sales at SoLofts, the boutique sales company launched by Heiberger before he sold Citi Habitats. (When NRT acquired Citi Habitats, the two SoLofts offices became Corcoran offices.) With fellow Elliman alums Ian Wolf and Young Lee, Dvorin is currently marketing 153 Franklin Street — the townhouse rented by Dominique Strauss-Kahn this summer while under house arrest — for $12.5 million. Former Elliman agents Jason Karadus and James Cox Jr. have listed a penthouse at 88 Franklin Street for $12.5 million. Other hires from Elliman include Adam Taylor, Kelly Robinson, Elaine Schweninger, Leah Ozeri-Elias and Terry Lautin. Why the exo-

Itzy Garay

Jeff Doder

dus? “A lot of people are sick of Corcoran and Elliman,” said one broker, who requested anonymity. “They want a ﬁrm with resources, but they don’t want to be at a big corporation. Town is trying to capitalize on that.”

Corcoran: 19 hires

own has fewer defectors from Corcoran than from Citi Habitats or Elliman. But the approximately 19 Town agents and staff hailing from Corcoran and Corcoran Sunshine include key personnel such as Paula Busch, who managed some 300 people at Corcoran’s main office before resigning in March. The next month, she became a managing director at Town’s 730 Fifth Avenue office. Heiberger emphasized that he “didn’t take Paula from Corcoran,” saying they “parted ways” before she came to Town. (Corcoran and Citi Habitats did not respond to requests for comment.) Then, in May, Town hired Jeff Doder, who managed Corcoran’s Park Slope office. (Doder now leads Town’s Astor Place office.) Rose Scalia, Town’s director of human resources, had the same job at Corcoran, according to the website LinkedIn.

Paula Busch

Heiberger also hired Corcoran senior vice president Bill Kowalczuk, as well as Susan Singer and SoLofts veteran Ric Swezey. When asked how Corcoran CEO Pam Liebman and Citi Habitats president Gary Malin have reacted to these hires, Heiberger said he got “a big hug and kiss” from both Liebman and Malin (his college roommate) at a recent REBNY event. “I don’t know if it was genuine or not,” he added. “I hope it was.”

Brown Harris Stevens: 17 hires

eiberger launched his new ﬁrm with a bang when he hired Maitland — perhaps best known for reportedly working as Madonna’s longtime broker — as managing director, along with new development specialist Reid Price. Some BHS agents have followed them, though none quite as well known. They include Brett Miles and Susan Green, who are listing a townhouse at 400 West Street (designed by reality TV stars Bob and Cortney Novogratz) for $18.95 million. Paddington Matz Zwigard — previously named broker of the year in BHS’s Tribeca ofﬁce — and fellow BHS alums Par-

Reid Price

Continued on page 83

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The makeover department

Macy’s recently announced $400 million renovation isn’t the only upgrade among the city’s retail stalwarts BY PETER KIEFER anhattan’s department stores are under siege, as shoppers increasingly choose to go online rather than brave the city crowds. Last year, over $15 billion was spent in online shopping during the holiday shopping season, according to the digital research firm comScore, and that figure is expected to jump by as much as 15 percent in 2011. In response to that and mega-stores like Uniqlo and Top Shop opening throughout the city, old-school department stores — like Saks, Bloomingdale’s, Macy’s, Barneys and Lord & Taylor — have effectively doubled down, upgrading stores to the tune of a half-billion dollars. Indeed, last month Macy’s announced a planned $400 million renovation to its Herald Square flagship. Over the past few years, department store sales have fallen nationwide, forcing these stalwarts to fight over a smaller share of the pie. As a result, sources say, when one store upgrades, it often creates a “copycat” effect among others who are fearful of looking dated. But according to several brokers and appraisers, any value these renovations may add to the property generally doesn’t boost the intrinsic value of the building. That’s because given the age of these spaces, any future sale would likely require a gut renovation and a switch from retail to another use. As the holiday season moves into full swing, here is a look at recent renovations at five department stores, and what shoppers can expect to see while browsing for gifts.

valued the building at $800 per square foot. That put the total valuation of the store at around $220 million. That figure, predictably, is well above the $120.4 million that the city’s Department of Finance evaluated Barneys at (The Real Deal applied the same 45 percent markup to the city’s other department store appraisals to determine prices they would fetch, since similar valuations from RCA were not available). The upgrade is Barneys’ first major renovation since it moved to the building, which it owns, in 1993. Lasting much of this year, the renovation focused on the eighth floor, which now has a restaurant called Genes@Co-op — a hat tip to former Barneys CEO Gene Pressman. But perhaps the biggest transformation was the merging of the men’s and women’s Co-ops, the division targeted to younger shoppers. The renovation is still underway on the main floor, so look out for further changes in the coming months as the bandages continue to be pulled off. That’s in addition to the shop windows that Lady Gaga is designing for the holiday season. A Barneys spokesperson declined to comment on the cost of the renovation.

Cost of renovation: Not available Period of renovation: March 2011 to November 2011 Size of store: 859,000 square feet Scale of renovation: 132,000 square feet he 859,000-square-foot Bloomingdale’s ﬂagship on 59th Street is the old dame

debt) at the height of the boom. This year, its 660 Madison Avenue ﬂagship underwent a major face-lift, right on the heels of a reﬁnancing for which Real Capital Analytics 28 December 2011 www.TheRealDeal.com

Macy’s (151 West 34th Street) Cost of renovation: $400 million Period of renovation: Spring 2012 to fall 2015 Size of store: 2.2 million square feet Scale of renovation: Will add 100,000 square feet of selling space ast month, Macy’s announced a $400 million face-lift of its Herald Square ﬂagship, the most expensive of the city’s

of New York department stores. This year, the store celebrated its 125th year at that location with a renovation that impacted 132,000 square feet of retail space. Aisles were widened, allowing space for new retailers Bulgari, Damiani, Di Massima, Rachel Zoe and others. The city puts the current market value of the building at $170 million, but the value of the store could be closer to $245 million, given that the city undervalued the Barneys site by roughly 45 percent. Still, one source, a New York City real estate appraiser, speaking on the condition of anonymity, pegged the value closer to $221 million. According to Laura Pomerantz, principal and founding partner of PBS Real Estate, the opening of the Uniqlo on 53rd Street poses a direct chal-

appraiser source said, however, that the value could even be significantly higher, closer to $370 million. Saks, which opened the flagship store in 1924, redid its third floor and its beauty departments in 2009, and revamped menswear on the sixth floor as part of a $30 million makeover, according to published reports. And according to a Saks spokesperson, ongoing renovations over the past five years have impacted nearly every floor, including women’s apparel on the second floor. A Cartier shop opened earlier this year, and a number of dedicated shops for individual collections were added.

Lord & Taylor (424 Fifth Avenue)

Bloomingdale’s (1000 Third Avenue)

Barneys (660 Madison Avenue) Cost of renovation: Not available Period of renovation: March 2011 to December 2011 Size of store: 275,000 square feet Scale of renovation: Several ﬂoors ast year was a busy one for the upscale retailer. Indeed, new CEO Mark Lee took the reigns in September 2010. That was after Istithmar, the Dubai government’s investment arm, bought it three years ago for $942 million (including $500 million in

lenge to Bloomingdale’s. “There is strong competition from the street retailers, and so they need a new environment to combat those upstarts,” she said. “It is difﬁcult to do that without renovating their store. The old buildings cannot appropriately expand their brands.” Bloomingdale’s representatives declined to comment, and the cost of the renovation was not publicly available.

recent department store renovations. And according to Faith Hope Consolo, the chairman of retail leasing, marketing and sales at Prudential Douglas Elliman, the announcement couldn’t come soon enough. “Macy’s was tired, old and just didn’t function,” she said. The renovation is expected to start this spring and last until 2015. It will add about 100,000 square feet of selling space to the store, which opened in 1902. The plan is to convert stock and ofﬁce space into retail space, the New York Post reported. According to our back-of-the-envelope calculation, the building could be worth $400 million. But the appraiser source said that evaluation was likely too high because of the building’s wear and tear. The source put the value closer to $345 million. A new restaurant on the sixth ﬂoor will reportedly have views of the Empire State Building. Macy’s also said that it will be creating the world’s largest shoe department, featuring as many as 300,000 pairs of shoes.

Saks Fifth Avenue (611 Fifth Avenue) Cost of renovation: $30 million Period of renovation: 2006 to 2011 Size of store: 646,000 square feet Scale of renovation: 97,000 square feet he 646,000-square-foot Saks Fifth Avenue ﬂagship, at 611 Fifth Avenue, could be worth around $270 million, according to The Real Deal’s calculation. The

Cost of renovation: $20 to $25 million Period of renovation: 2010 Size of store: 611,000 square feet Scale of renovation: Multiple floors s America’s oldest department store, founded in 1826, Lord & Taylor certainly had no intention of being left behind. The retailer spent most of 2010 upgrading the six floors of its Fifth Avenue flagship store to the tune of $25 million, accord-

ing to published reports. That is no small sum, considering the value of the building is around $71.2 million, according to The Real Deal’s calculation, which the source said might be slightly high. The store moved to its Fifth Avenue location in 1914 and hasn’t had a major renovation in 30 years. According to PBS Real Estate’s Pomerantz, such significant expenditures make sense given the context of the current environment. “When interest rates are as low as they are, capital expenditures such as these make sense,” she said. “The cost is much lower than in the past.” The renovation created a new home-goods department on the ninth floor, and gave the first-floor beauty department a cleaner look. Representatives from the store did not return calls for comment. TRD

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Under lock and key New ‘lockbox’ technology makes inroads in the NYC rental market, even as most sales agents resist

BY JAKE MOONEY ichael Bass became an independent New York City real estate broker in 2008, after a 22-year career in residential leasing with the LeFrak Organization. But it didn’t take long for the routine of showing rental apartments to wear on him. The inefficiencies, he said, were maddening, especially tracking down apartment keys from building staffers. “‘Keys? What keys?” Bass recalled hearing. He added: “The worst thing is for a broker to try to show an apartment with a client, and you can’t get access to the building.” Those experiences, along with conversations with brokers outside New York, led him to a new line of work: lockboxes. In September, Bass launched Controlled Access Systems, which aims to provide lockbox technology to New York City real estate firms. Listing brokers all over the country use lockboxes to store keys to for-sale homes, so that fellow agents showing the property can let themselves in. But while the devices are widely used elsewhere — including the New York City suburbs and even Hoboken and Jersey City — they’ve never caught on in Manhattan. While sales agents here remain resistant to lockboxes, the devices may finally be gaining a toehold in the city’s rental market, brokers said. At the forefront of this trend are new electronic lockboxes that allow landlords to keep track of who enters the apartment, and when. Bass’s company, for example, has a contract to distribute systems from SentriLock, which makes boxes accessible by electronic “smart cards” and keypads. Supra, a rival company that’s a subsidiary of General Electric, makes access systems that utilize Bluetooth-enabled smart phones, among other means. Both companies provide landlords with online reports tracking the boxes’ usage, and allows them to restrict access to particular agents and times. The new devices are starting to appear in New York City. “Here and there, you’re starting to see them more, and it’s great,” said Jay Heydt, senior managing director of Citi Habitats. The boxes are a better fit for rentals than for sales in New York, Heydt said, because apartment sellers nearly always sign an exclusive listing agreement with a broker, while there are more “open listings” in the world of rentals. In addition, many New York rental buildings don’t have doormen on site to hand out keys. “If you want to increase traffic in elevator buildings that are non-doorman buildings, this is an excellent, excellent alternative,” Heydt said. Still, he said, Citi Habitats does not yet use lockboxes, preferring instead to keep keys at its offices around the city.

30 December 2011 www.TheRealDeal.com

Michael Bass, head of Controlled Access Systems, with a SentriLock electronic lockbox last month. Below: The SentriLock lockbox in an open and closed position.

“The worst thing is for a broker to try to show an apartment with a client, and you can’t get access to the building.” Michael Bass, Controlled Access Systems Locking it up Until now, brokers said, resistance to using lockboxes in New York has stemmed from security concerns, especially since traditional lockbox systems were little more than metal boxes with locks on them. “Your neighbors just don’t want people randomly coming upstairs,” said Kathy Braddock, a cofounder of Rutenberg Realty. Plus, these low-tech lockboxes often fail to function the way they’re supposed to in New York’s competitive, fast-paced real estate market, said Andrew Barrocas, CEO of the rental and sales brokerage MNS. “The typical lockbox, it just doesn’t work, because agents take the keys and do

not return them,” he said. Barrocas said he’s heard more reports of high-tech lockboxes in the city lately, and is considering using them at MNS, though he noted that the newer systems are “kind of expensive.” Some older rental buildings without doormen are now being refurbished by new owners and outfitted with card-swipe systems, according to John Wollberg, executive director of sales for Halstead’s Park Avenue office. One company, Stone Street Properties, has installed card-access systems by the firm Video Doorman at rental buildings like 11 Cornelia Street. While the system is not technically designed to help brokers, Wollberg said, brokers can benefit

from the added convenience. “It’s simply a faster, more economical method of control,” Wollberg said. “If you can control it all from the main ofﬁce on a computer, bingo.”

Full service Manhattan sales agents appear especially resistant to lockboxes, however, even with the recent technological advances. Wollberg said he doubts that lockboxes will ever be widely used for sales in the city. For one thing, he said, he would never use one for an occupied house or unit — which most for-sale Manhattan properties are — for fear of disturbing the residents. Another reason is that Manhattan sellers, unlike homeowners elsewhere, expect their listing agent to be present at showings, to meet and evaluate buyers, get feedback on the property and answer questions. “That’s part of what we think the listing is paying for,” Braddock said. “Here, the selling broker has a very hands-on role. You’re talking about the building, you’re talking about the [co-op] board.” There are various reasons for this expectation, brokers said: strict co-op boards, the high price of Manhattan real estate and the competitive nature of the market, in which brokers and agencies jockey for business by offering greater services. In part, that’s why Halstead Property uses Supra boxes for New Jersey properties, but not in Manhattan, according to Eugene Cordano, Halstead Property’s director of sales for New Jersey. “We are a full-service brokerage,” Cordano said, noting that for Halstead brokers in Manhattan, attending showings is considered part of the service. By contrast, many New Jersey buyers’ brokers often don’t want the seller’s agent present at showings. A related issue is that Manhattan, unlike other markets, doesn’t have a multiple listing service, so brokers here are less accustomed to giving up control over their listings. Moreover, some city brokers and landlords are simply skeptical of new ways of doing things, Wollberg said. Still, lockboxes have made some inroads with sellers in less-urban areas of the city, including parts of Queens, said Gloria Soria, a sales associate at Laffey Fine Homes in Jackson Heights. Soria, who also works on Long Island, where the boxes are used more frequently, said she has encountered them occasionally in Queens, mostly on foreclosure properties and vacant houses. Lockboxes make the process “totally easy,” she said. “We don’t need to wait 24 hours to get an appointment; we don’t need to wait for the seller to get into the house.” When it comes to Manhattan, however, brokers may have to wait a while before technologies like SentriLock and Supra boxes become widely used. “I do see it as a wave of the future,” Wollberg said. “I just don’t see it as our immediate future.” TRD PHOTOGRAPHS FOR THE REAL DEAL BY CHRIS MARTIN

PROFILE

Getting checkbooks out for REBNY As annual dues loom, THE R EAL D EAL looks at the group’s ﬁnances and whether real estate pros think they are getting their money’s worth for their membership

BY ADAM PINCUS he more than 12,000 members of the Real Estate Board of New York will soon be reaching for their checkbooks to send their annual dues to the influential trade group. And there’s no doubt many will be engaging in a yearly cost-benefit analysis of the nonprofit’s value. Members pay more than $6 million per year in dues — which are supposed to be in on Jan. 1 — and the group takes in several million more through its annual gala and other income that make up its approximately $9 million annual budget. The 115-year-old organization is the undisputed top real estate organization in the city, and presents a powerful and unified public front. But there are rumblings of discontent, partly because it operates with a lopsided distribution of power. For example, building owners and residential firms are contributing roughly the same amount of money to the organization, but owners outnumber residential brokers on the board 10 to 1. This month, The Real Deal takes a look at REBNY as the nonprofit business enterprise it is. We also spoke extensively to real estate professionals to get their take on what the organization is getting right and wrong. Under the leadership of its president, Steven Spinola, who has been at the helm for 25 years, REBNY pumped up its revenue sharply during the boom years, at the same time expanding its services through its NY1Residential.com listing service as it has faced more competition from websites like StreetEasy and PropertyShark. And, as The Real Deal reported last month, the organization is increasing its dues for the first time in four years. The group, led by Spinola and a board of the industry’s top building owners and brokers, holds enormous sway in Albany and New York City when it comes to real estate policy. But some critics — both members and nonmembers — say it favors the large owners, developers and several of the bigger brokerage firms when it comes to the competing interests among its members. “One of [REBNY’s] main goals is to lobby for the real estate industry,” said one member who criticized the group for not assisting everyone equally. “I think it is most beneficial for developers first, typically. Then commercial firms next, and residential firms last.” Yet while some members are critical of REBNY’s approach, many brokerages convince most of their agents to pony up their dues each year. “REBNY has certain issues that need to be worked out. But net-net, we do examine it each year and we do see a benefit of being a member,” said Lawrence Link, president of

32 December 2011 www.TheRealDeal.com

residential brokerage Level Group. On the lobbying front, the group has logged successes, like blocking a proposed commercial rent increase cap, and retaining provisions of the luxury and vacancy decontrol laws covering rent-regulated apartment

rino, an outside spokesman for the organization. “[It] is very active in lobbying for building code and tax issues that have an effect on development in New York City and, in turn, the economy.” And he stressed residential agents are not overlooked. “The division of staff, program activities, and commitment to manage and invest in the future of the invaluable RLS system reﬂect the higher expenditures for the residential division over other divisions,” he said.

The most recent nonprofit 990 federal filings from the group show that REBNY is in strong financial shape, taking in about $9.3 million in 2009, while spending about $8.3 million that year. The majority of the revenue comes from members, who in 2009 paid $6.1 million in dues. While down from the 2008 peak of $6.5 million in member dues, the 2009 figure was up by more than 50 percent from 2004, when

basic fee for commercial professionals is $550 for an associate broker, and $375 for a salesperson. On the residential side, brokers pay $425 and salespersons pay $275, figures from REBNY’s website show. While the annual federal return does not break down how much each member firm pays, The Real Deal was able to estimate the total amount that brokers and agents from individual firms pay based on the organization’s fee structure. According to The Real Deal’s analysis — which was shared with the firms to give them an opportunity to verify the numbers — those at the city’s big residential firms pay the highest fees. For example, Prudential Douglas Elliman brokers and agents this year will pay an estimated $460,000, compared to the estimated $84,000 paid by those at the city’s largest commercial firm, CBRE Group. In fact, the residential firms pay about $2.5 million in annual dues, a little under half of the $6 million in member fees, but have scant representation in the organization’s governance. Indeed, figures from REBNY show that about 78 percent of the membership is comprised of residential agents, yet only three of

the group only took in $4 million. The revenue burst was, in part, due to a large increase in membership and a 6 percent increase in membership fees in 2005, which together bumped up revenues by 31 percent to $5.3 million that year alone. Meanwhile, for the ﬁrst time in four years, REBNY has increased dues, this time between 10 percent and 17 percent. The new

the 39 board members are residential brokers. The commercial firms, which according to REBNY have 1,322 member agents, also have three board seats, including one held by the board chairman, CBRE’s Mary Ann Tighe. The law firms, too, are represented by three members. But in a twist, about 512 owners and developers (including 107 so-called Triple A members) hold the lion’s share of control on the board through their 29 board seats. In response to questions for this article, REBNY initially said that 30 percent of the membership was owners and builders, and that those members provided 40 percent of the annual revenue. In fact, owners and builders only represent about 4 percent of membership, which was revealed in figures

Healthy balance sheet

REBNY president Steven Spinola has been at the helm of the organization for 25 years.

buildings. And the group touts the guidance it provides to members in complex matters such as zoning, building codes and Fannie Mae and Freddie Mac regulations. But the nonproﬁt has also taken some hits, including failing to get a new 421a law enacted to spur new construction, and failing to block the state from raising the rent decontrol threshold to $2,500 from $2,000 — a blow to residential landlords. Meanwhile, residential brokers knock its Residential Listing Service. The trade group defends its programs and advocacy as balanced between its groups of members. “REBNY provides all of its members [with] services and information that assist them in their daily business,” said Frank Ma-

PHOTOGRAPH FOR THE REAL DEAL BY HUGH HARTSHORNE

PROFILE provided by REBNY on further analysis after presented with The Real Deal’s estimates. What’s less clear is what the city’s largest commercial owners pay annually, although it is significant. There are 107 of the largest owners, such as Rudin Management and SL Green Realty, which pay the top “Triple A” rate, $25,000, yielding $2.2 million. That fee applies to owners with more than $40 million in assessed property value. In addition to that, those firms pay a nominal amount for a handful of employees who are members. But REBNY argues — and the overall revenue numbers bear it out — that owners and commercial firms don’t get off so easy. They pay hefty additional expenses, including for tables at the annual banquet and for other projects, Marino said. “The owners and builders division is solicited throughout the year, every year, for additional contributions for special activities that would include, but not be limited to, studies, space renovations and lawsuits,” Marino said.

Yet some considered Spinola’s salary and beneﬁts to be high. “It’s a hell of a lot of money,” one company executive said.

Worth the dues? It’s no secret that real estate professionals have a wide range of opinions about REBNY. In the commercial world, leasing agents

comparable leases shared by other brokers and firms like Tishman Speyer and SL Green Realty. In addition, he said he formed other relationships through REBNY that have boosted his business. On the residential side, a review of the four largest firms showed virtually full REBNY membership. But a few executives at mid-tier firms complained that some competitors don’t require all of their agents to be

Looking forward Now, with REBNY seeking higher dues from members, some are reevaluating what they are getting in return. Some ﬁrms that have resisted joining now feel that they need to be a part of the group. One executive at a large commercial investment ﬁrm said he would be joining this

Expense side of the ledger In 2009, about half of REBNY’s $8.3 million in expenses was allocated to salaries for the staff, and more than $900,000 was spent on renting about 24,000 square feet on a long-term lease at 570 Lexington Avenue. Other expenses included the annual banquet (which in recent years cost about $450,000 and has netted more than $1.3 million), expenses for the group’s frequent brokerage meetings, and lobbying costs. The ﬁrm, which in 2011 had 37 people on staff, has scaled back its costs in recent years, including by cutting salaries. Spinola’s annual salary in 2009 was $661,380, which was down from the $682,383 he took home in 2006. A review

the clients, and it gives you credibility with the brokers,” said Khashy Eyn, CEO of residential brokerage Platinum Properties. And it appears that at several of the city’s biggest commercial firms, not everyone is a member. For example, recent REBNY diaries show CBRE with only about 180 members, but the firm has more than 350 brokers and agents in New York City, the state Department of State website shows. Likewise, Jones Lang LaSalle, with about 45 members in the 2011 diary, shows about 180 brokers and agents in the state database. But a company spokesman said the firm has recently pushed membership up to 75 percent. This, even as REBNY maintains that “CBRE, like Prudential, has full REBNY membership of all their agents.”

REBNY’s headquarters at 570 Lexington Avenue

Landlords like Marc Holliday of SL Green pay the “Triple A” membership rate.

Mary Ann Tighe, chairman of REBNY’s board

Total salaries and beneﬁts

Large commercial ﬁrms lack full REBNY membership

YEAR

STEVE SPINOLA

REBNY TOTALS

FIRM

2004

$530,288

$3,318,914

TOTAL # OF BROKERS/AGENTS

# OF REBNY MEMBERSHIP % MEMBERS

2005

$579,235

$3,478,499

Jones Lang LaSalle

182

24.73%

2006

27.27%

$682,383

$3,749,285

2007

$663,470

2008 2009

Robert K. Futterman & Assoc. 44 Related Cos.

32.43%

$3,732,540

CBRE Group

355

184

51.83%

$664,091

$4,055,066

Cushman & Wakeﬁeld

260

156

60.0%

$661,380

$4,034,077

Newmark Knight Frank

245

175

71.43%

Source: REBNY’s annual 990 nonproﬁt government ﬁlings.

of other, similar trade groups showed that his salary is within the standard range. For instance, Joseph Strasburg, president of the Rent Stabilization Association, made virtually the same amount, $666,644, in 2009. Other leaders of local private industry trade groups made less, such as the president of the Hotel Association of New York City, Joseph Spinnato, who took home $471,044 in salary and beneﬁts in 2009. PHOTOGRAPH OF TIGHE FOR THE REAL DEAL BY BEN BAKER

Source note: Total number of brokers and agents came from the NYS Department of State last month. Number of REBNY members came from the organization’s 2011 Diary and Manual.

as a class seemed to have a more positive view of REBNY than investment sales brokers. But the mirror image seems to be true on the residential side, where sales agents seem to have more positive feelings about REBNY than rental agents, insiders said. Bertram Rosenblatt, a leasing broker at the small Manhattan commercial ﬁrm Vicus Partners, said that through REBNY-sponsored leasing market meetings, he obtained

REBNY members. They charge that those agents who are not REBNY members are getting a free ride to REBNY’s Residential Listing Service. Part of the reason these ﬁrms want their agents to be members, sources said, is to get the REBNY logo — which is like a Good Housekeeping stamp for consumers — on their website. “[Membership] gives you credibility with

year for the ﬁrst time, even as he viewed the fee of more than $20,000 as hefty. But investment sales broker Timour Shafran, at Capin & Associates, has never been a member and said he doesn’t feel like he’s missing anything. “I think [REBNY] caters mostly to either owners — larger owners — or leasing brokerage ﬁrms,” Shafran said. “I have not found anything that they do that I need.” TRD www.TheRealDeal.com December 2011 33

Loan limits on the rise for FHA, but not for Fannie and Freddie

FHA loans could become the go-to financing option for homebuyers in New York and New Jersey, but with higher fees BY KENNETH HARNEY fter a year characterized by grumpy partisan gridlock, Congress came up with a Thanksgiving compromise that could change the mortgage choices of buyers and refinancers in more than 660 markets across the country: It raised maximum loan limits for the Federal Housing Administration while leaving loan ceilings untouched for Fannie Mae and Freddie Mac. In effect, this may make FHA the go-to financing option for borrowers needing loans up to $729,750 — with down payments as low as 3.5 percent — in New York, New Jersey, high-cost areas of California, metropolitan

dreds of markets are at the core of the compromise: They raise the maximum FHA loan amount in all areas of the country to 125 percent of the local median homesale price, while leaving Fannie Mae’s and Freddie Mac’s limit at 115 percent of the median. What motivated Congress to create separate and unequal rules that transform FHA — traditionally a haven for moderate-income, ﬁrst-time buyers with minimal cash — into a key source of ﬁnancing for buyers in upper- as well as mid-bracket markets? Nobody in Congress actually proposed this idea at the start. By a 60-38 vote in October, the Senate passed an amendment rais-

“There’s no doubt this will drive more business to FHA.” David Stevens, Mortgage Bankers Association Washington, D.C., and scattered counties in other states, including Massachusetts, Florida and North Carolina. Fannie Mae- and Freddie Mac-eligible loans in those areas, meanwhile, stay capped at $625,500. Equally important, the new plan raises the FHA ceilings for purchasers in hundreds of more moderately priced markets. In Hartford, Conn., the limit for FHA is now $440,000 — up from $320,850; Fannie and Freddie remain capped at $417,000. Seattle-area buyers’ maximum FHA loan amount jumped to $567,500, while the Fannie MaeFreddie Mac ceiling remains at $506,000. Buyers with low down payments in Portland, Ore., who previously had been limited to FHA mortgages of $362,250, can borrow up to $418,750 under the new plan, $1,500 more than they can get from Fannie and Freddie, which generally require steeper down payments and higher credit scores. The new loan ceilings in hun-

ing all three agencies’ limits to $729,750 in high-cost areas and 125 percent of the median sale price elsewhere. The goal — lobbied aggressively by realty and homebuilding groups — was to inject a needed oomph into lagging home sales. But Republicans in the House balked at doing anything that might prolong the existence of Fannie and Freddie, both the targets of scathing criticism for their multibillion-dollar costs to taxpayers and big bonuses for top executives. What ultimately emerged from the legislative scrum was the current compromise penalizing Fannie and Freddie, while boosting FHA. House Republicans weren’t enthusiastic about helping FHA, either — the agency faces its own ﬁnancial challenges — but unlike Fannie and Freddie, FHA is subject to congressional appropriations and closer oversight. Republican critics held their noses and voted for the plan. What will this mean for buyers from now through the end of 2013, when the compromise expires?

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“There’s no doubt this will drive more business to FHA,” said David Stevens, former FHA commissioner and current president and CEO of the Mortgage Bankers Association. Annie Austin, a loan officer with Cobalt Mortgage in Bellevue, Wash., said: “With [Fannie and Freddie] limited to $506,000 [locally], FHA is going to become the darling of the industry again” at $567,500. Bob Walters, chief economist of Quicken Loans, one of the largest national lenders, said “the increased loan limits will benefit many consumers — especially those looking to borrow larger amounts but [who] are in a credit situation where Fannie Mae and Freddie Mac loans are not available or optimal.” The switch to FHA could entail some pain, however. Tim Kepler, a loan officer with Land Home Financial in Danville, Calif., noted that the agency raised its upfront mortgage insurance premiums from 0.5 percent of the loan amount to 1.15 percent earlier this year. This “will increase [applicants’] closing costs over a [Fannie or Freddie] loan.” The premium can be financed, but can add substantially to the costs of high-balance mortgages — more than $500 a month on a $700,000 loan, according to Brian Chappelle, head of Washington, D.C., consulting firm Potomac Partners. Bruce Calabrese, president of Equitable Mortgage in Columbus, Ohio, says the hefty new premiums make “FHA too restrictive and unattractive” for most refinancers in his area, even with slightly higher loan ceilings. Bottom line for shoppers: Take a hard, close look at FHA with a local loan officer, in light of the rule changes. Pencil out the costs, down-payment requirements, and more generous standards on credit. FHA may be the best option. But then again, the higher fees just might change your mind. Ken Harney is a syndicated real estate columnist.

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Government I N B R I Ebriefs F Gotham breaks ground on new affordable housing The Gotham Organization last month started construction on a $520 million residential development encompassing nearly an entire city block. Spanning West 44th to West 45th streets from 10th to 11th avenues, the project will include over 1,200 residential units, the company said. Through a partnership with the city, the development will provide 682 inGotham’s new Far West Side project come-restricted housing units for households with annual incomes from $66,000 to $135,000. Additionally, there will be an affordable housing component for households with annual earnings of up to $40,000. A new 630-student public elementary school will be built next to the development. As part of the deal, Gotham will contribute $15 million to fund the school. The residential units are slated for occupancy in 2014, and the school is expected to open in the fall of 2013.

Buildings department fights illegal conversions New York City Buildings Commissioner Robert LiMandri last month visited Woodside, Queens, to mark the two-year anniversary of a fatal fire at an illegally converted apartment there, the Daily News reported. LiMandri vowed to educate the public about the incident and crack down on landlords who improperly subdivide spaces. Since the 2009 fire, the Buildings Department said, it has handed out more than 150,000 flyers warning of the consequences of illegal living conditions. The agency said it would distribute an additional 10,000 flyers at transportation hubs across the city. “Illegal conversions can kill — and we’re doing everything we can to make sure New Yorkers understand that,” LiMandri said in a statement.

Infrastructure projects spared from budget cuts Sen. Charles Schumer helped to rescue two key Manhattan infrastructure projects from federal budget cuts, DNAinfo reported. The cuts, proposed by the House of Representatives, would have slashed funding for the Second Avenue Subway by 21 percent and eliminated nearly 50 percent of funding for the East Side Access project, a plan to expand the under- The East Side Access project ground rail tunnels at Grand Central Terminal. Slated for completion in 2016, the East Side Access project will add new station tunnels, tracks and platforms to Grand Central. “I am pleased we were able to beat back these cuts and keep the [East Side Access] project moving forward,” Schumer said.

Fannie Mae seeks $7.8 billion in aid, defends CEO After third-quarter losses of some $5.1 billion, Fannie Mae will seek $7.8 billion in aid from the Treasury Department, according to Bloomberg News. The losses were fueled by defaults on boomtime home loans and falling interest rates, which have decreased Fannie’s expected revenue, Bloomberg reported. Freddie Mac reported a $4.4 billion loss and will seek $6 billion from the Treasury. Meanwhile, Federal Housing Finance Agency Acting Director Edward DeMarco defended salaries and bonuses Michael Williams at the government-controlled mortgageﬁnance companies, which have come under ﬁre in the Senate. DeMarco approved packages in 2009 that awarded a total of $17 million over two years to CEOs Michael Williams of Fannie Mae and Ed Haldeman of Freddie Mac. “I need to ensure that the companies have people with the skills needed,” DeMarco said in a letter to lawmakers. Compiled by Russell Steinberg

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The new pop-up shops

Non-retail stores open temporary New York City locations, even as space becomes harder to ﬁnd

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36 December 2011 www.TheRealDeal.com

BY YASMEEN QURESHI berry Street for five days last month and emporary retail stores, known as featured events, product demonstrations “pop-ups,” have been quite literally and advice for holiday shopping. popping up in New York City for And in October, the online payment several years now, often hawking seasonal service PayPal announced an invitationitems at Halloween and Christmas. But a only “installation” at 174 Hudson Street new breed of pop-ups is emerging, indus- in Tribeca. At the site, PayPal gives mertry insiders say: Non-retail ventures, from chants and media a behind-the-scenes PayPal to the TV show “Celebrity Appren- look at its newest products, the company tice,” are opening temporary locations on said. New York’s heavily trafficked streets. Lisa Rosenthal, director of the retail “We are seeing some unusual ones, in sales group Lansco, recently leased a space addition to [temporary] fashion shops,” at 155 Fifth Avenue for two days (Oct. 31 said Faith Hope Consolo, chairman of Pru- and Nov. 1) to the television show “Celebrity Apprentice,” which used it to film an dential Douglas Elliman’s Retail Group. Unlike most pop-up stores, which pri- episode for its series. Rosenthal said she marily aim to sell merchandise, these non- was also approached by a book publishing retail pop-ups are more focused on publicity and marketing. “It’s more of a place to come in and interact with the brand,” explained Lindsay Rowe, director of sales and marketing for MKTG INC, which helps create pop-ups for clients like Nike. Temporary, seasonal Shoppers at a pop-up in Tribeca that pairs lingerie designer The Lake & Stars stores have existed for and architecture firm SOFTLab. It was created by a nonprofit project called Boffo Building Fashion. years. Perhaps the bestknown example is the cosmetics store Ricky’s NYC, which opens around 20 temporary locations in the city each year before Halloween. But after 2008’s financial crisis, pop-ups became popular with nonseasonal retailers Nontraditional pop-up shops like PayPal at 174 Hudson Street are becoming more popular in the city. too. Landlords, unable to find full-time tenants, decided to rent company about a possible pop-up, though to short-term retailers instead, explained the deal never materialized. Amira Yunis, executive vice president at While some of these pop-ups, like Newmark Knight Frank Retail. Wired’s and CNET’s, do offer some items Recently, pop-ups have grown splash- for sale, their main intent is “to create visier than ever. Dylan’s Candy Bar, for ex- ibility,” Rowe said. ample, this year is slated to open a 7,000Pop-ups can function as an effective square-foot holiday pop-up shop on 42nd advertising vehicle, said Kelly Gedinsky, Street and Sixth Avenue, with a life-size an associate director at Winick Realty gingerbread house inside. Group. “Because of the expense of media adSo it’s perhaps not surprising that webvertising, and because paper advertising sites, magazines and other businesses have started getting in on the action — despite has become less efficient, it’s possibly bethe fact that they are not stores, per se. come more beneficial to advertise through A few years ago, for example, Wired a storefront,” she said. With the (slowly) improving economy Magazine became one of the first non-retail companies to open a pop-up in New and more demand from retailers, howevYork. The store — located this year in er, it’s harder this year for pop-ups to find Times Square — allows fans of the maga- the space they need. zine to stop by and try out the hot new For the third quarter, Cushman & gadgets of the holiday season. Wakefield found that the retail availabiliMKTG recently orchestrated a pop-up ty rate, which measures all space currently for CNET.com, the popular tech-review being marketed, varied by neighborhood, website. The store was open at 201 MulContinued on page 80

PHOTOGRAPH OF FASHION POP-UP BY EVAN JOSEPH IMAGES; PAYPAL STORE PHOTOGRAPH BY DEREK ZAHEDI

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For business and professional use only. Not for consumer distribution. All loans subject to approval. Certain conditions and fees apply. Mortgage financing provided by MetLife Home Loans, a division of MetLife Bank, N.A. Equal Housing Lender. 1110-3975 ©2011 METLIFE, INC. © 2011 PNTS

Retail

Fifth Avenue’s storefront shuffle A look at behind-the-scenes jockeying between brokers and owners on pricey strip By Adam Pincus pper Fifth Avenue (the portion between 49th and 59th streets) is the most expensive retail stretch in the world. However, it’s not the most stable. This past year, the strip saw an unusual amount of activity taking place in its 60-plus spaces, with about a dozen retailers signing leases, opening stores or changing brands. The half-mile span, where CBRE Group says asking rents average more than $2,400 per square foot, is now jammed with holiday shoppers jostling for gifts. But behind the scenes, there are other groups jockeying for position: the real estate brokers, dealmakers and analysts who pore over pedestrian counts, comparable

leases and store revenue numbers to determine what spaces they or their clients can afford. This month, The Real Deal looks at the current tenants in the nearly three dozen retail buildings along the stretch, as well as possible new arrivals. We combed through property records and news reports, and interviewed brokers and owners who specialize in Fifth Avenue. While Cushman & Wakefield reported in the third quarter that the availability rate was just 9 percent, we found the actual amount of space “in play” to be much higher. TRD’s analysis showed about 56,000 square feet of ground-floor space was being discussed, much of it quietly. That’s equivalent to about 20 percent of the 290,000

square feet of ground-floor retail space (excluding department stores) fronting Fifth Avenue. (The detailed items below are for those properties that may be “in play” sometime in the next few years, while the items on the shorter list are retail spaces that have seen activity in the last year.) Because so few spaces are publicly marketed, many brands have to elbow their way in, often by buying out in-place tenants. Retail broker Robin Abrams of Lansco said that new property owners on Fifth Avenue are the most likely to bring in new (and, of course, higher-paying) tenants. “They are willing to be proactive,” Abrams said, “in getting possession of their space for different tenancy, for higher dollars. They have helped to reshape the street.”

ton, which owns Christian Dior, acquired Bulgari in September and may want to give Dior a more prominent location on Fifth Avenue. However, other brokers were skeptical the two would switch, noting that the corner has jewelers Tiffany, Van Cleef & Arpels, Piaget and Mikimoto, making it a smart location for Bulgari.

3 Address: 767 Fifth Avenue (General Motors Building) Landlord: Boston Properties Tenant: CBS Size: 6,514 square feet on the ground floor, plus about 30,000 square feet on two other levels Lease status: Expiration March 2015 Asking rent: $11.5 million, sources said, but no official asking rent Notes: CBS, through its brokerage, CBRE Group, is marketing the glass-enclosed space along 59th Street on the north side of the GM Building, currently occupied by its TV studios. The available location is just behind the Apple store, and across from the Plaza Hotel. One source said food retailers were eyeing the site, but it isn’t clear if Boston Properties would accept that. Another said an apparel tenant, such as a Nordstrom or a foreign department store without a U.S. presence, was more likely.

Address: 730 Fifth Avenue (Crown Building) Landlord: Winter Organization Tenant: Bulgari Size: 3,675 square feet on the ground floor, plus about 6,000 square feet on multiple levels Lease status: Renewed in 2005, expiration date unknown Rent: $1,300 per square foot Notes: Italian jeweler Bulgari locked in this lease in 2005 at $1,300 per foot on the prime, ground-floor space at the corner of 57th Street. But one source said luxury retailer Christian Dior, currently located mid-block at 21 East 57th Street, is looking to swap locations with Bulgari. LVMH Moët Hennessy Louis Vuit-

38 December 2011 www.TheRealDeal.com

58th Street

56th Street

54th Street

52nd Street

2 3 6 8 15 16 17 18

9 50th Street

Recent deals on F Address: 724 Fifth Avenue Landlord: Under contract to SL Green and Jeff Sutton (part of a building package being purchased along with Stonehenge Partners) Tenant: Prada Size: 15,000 square feet on multiple floors Lease status: Expiration 2016 or 2017 Rent: Unknown Notes: Prada has been a retail tenant since 1998 at this property, which is under contract. Sutton is known for buying properties to create new opportunities. And one source pointed out that he controls neighboring 720 Fifth Avenue, where Abercrombie & Fitch has a lease that expires in 2018. If combined, the properties would have 100 feet of Fifth Avenue frontage — one of the largest exposures on the street (after Gucci at Trump Tower) — and give Sutton leverage to get a premium rent.

10 Address: 743 Fifth Avenue Landlord:LVMH (Louis Vuitton) Tenant: Being rebuilt for Louis Vuitton Size: 3,298 sq. ft. on the ground floor Price: Acquired for $60 million

11 Address: 717 Fifth Avenue Landlord: Jeff Sutton and SL Green Tenant: Dolce & Gabbana signed lease Size: 18,400 square feet total Rent: 15-year deal, $16 million per year

12 Address: 691 Fifth Avenue Landlord: Vornado Realty Trust Tenant: M.A.C. reportedly signed lease Size: 1,400 square feet Asking rent: $3,000 per square foot

13 Address: 689 Fifth Avenue Landlord: Vornado Realty Trust Tenant: Massimo Dutti replacing Zara Size: 15,000 square feet (on three levels) Rent: $950 per square foot

14 Address: 675 Fifth Avenue Landlord: Yeung Chi Ching, Inc. Tenant: Stuart Weitzman moved in Size: 1,600 square feet Rent: Unknown

Retail 59th Street

1 10

57th Street

4 11

5 7

55th Street

Address: 711 Fifth Avenue Landlord: Coca-Cola Tenant: Vacant (formerly Disney) Size: 8,200 square feet on the ground-floor corner, plus 29,200 square feet on three levels. Lease status: No lease in place Asking rent: $20 million per year, sources said Notes: The space at the corner of 55th Street has been empty since Disney moved out in 2010. Brokers say building owner Coca-Cola has been reluctant to lease the space, which it’s been holding for a possible Coke store selling company merchandise. However, others said Coke has just been picky about potential tenants. Regardless, because the company has owned the property since 1983, it has no financial pressure to lease the space up.

12 13

53rd Street

Address: 693 Fifth Avenue (Takashimaya Building) Landlord: Thor Equities Tenant: Forever 21 Lease status: Shortterm Size: 5,462 sq. ft. on the ground floor (part of a total of about 20,000 sq. ft. offered on four floors)

Rent: $14.8 million Notes: Joseph Sitt’s Thor Equities paid a hefty $142 million for the 20-story building between 54th and 55th streets in July 2010, but has not landed a permanent tenant yet. The space is occupied by Forever 21, but the discount store’s lease is short-term. Sitt is aggressively marketing the space. In fact, it’s the only property with a “for lease” sign on the 10-block stretch. Brokers say it has a difficult — but not insurmountable — layout for tenants. Sitt told The Real Deal last April that he had six tenants looking to take retail space.

8 51st Street

49th Street

s on Fifth Avenue 15 Address: 665 Fifth Avenue Landlord: Rolex Realty

Address: 2 East 55th Street (St. Regis Hotel), and 697 Fifth Avenue Landlord: Crown Acquisitions, Goldman Properties and Feil Organization Tenants: De Beers, Emilio Pucci and Bottega Veneta Size: 8,000 square feet on the ground floor, plus 17,000 square feet on four other levels Lease status: Less than four years remaining Asking rent: Unknown Notes: In a joint venture, the owners paid $117 million in 2009 for these two buildings. They are now quietly marketing the space, which is occupied by three separate retailers. Crown, owned by the Chera family, is known for a focus on retail, and like Sutton generally buys properties with plans to reposition them. The space would likely be leased to two separate tenants, sources said.

Tenants: Wempe and Lindt signed leases

Address: 680 Fifth Avenue Landlord: Buchmann family Tenant: The Gap Size: 34,000 square feet on four levels Lease status: Unknown Rent: Unknown Notes: Brokers started circling the Gap location following news in October that the company would shutter 200 stores nationally. But others cautioned that the company said it would only close underperforming locations, and this is seen as one of its most profitable branches. The once omnipresent clothing retailer has been in the space since 1997.

Size: 1,600 square feet on the ground floor (Wempe); 1,250 square feet on

the ground floor (Lindt) Asking rent: $2,400 per square foot

16 Address: 666 Fifth Avenue Landlord: Carlyle Group, Kushner Companies, Crown Acquisitions Tenants: Uniqlo, Swatch opened Size: 90,000 square feet (Uniqlo); 2,000 square feet (Swatch) Rent: About $20 million per year

17 Address: 666 Fifth Avenue Landlord: Inditex Tenant: Zara (division of Inditex) Size: 32,000 square feet Price: Acquired for $332 million

18 Address: 650 Fifth Avenue Landlord: Alavi Foundation Tenant: Godiva Chocolatier opened Space: 1,200 square feet Rent: Unknown

Address: 694 Fifth Avenue (Peninsula Hotel) Landlord: Peninsula Hotel (through a long-term lease) Tenant: Lindt Size: Approximately 2,000 square feet Lease status: Expiration December 2015 Rent: Unknown Notes: Swiss Chocolatier Lindt signed a lease this year for 1,250 square feet two blocks south of 694 Fifth Avenue at 665 Fifth Avenue, where asking rents were $2,400 per foot, giving it two locations on the strip. A source said Lindt would likely not renew its Peninsula Hotel lease, which expires in 2015. However, Lindt denied that, saying it would renew. A source said Lindt’s fellow tenant in the Peninsula Hotel, German watchmaker Wempe, is expected to remain at the hotel even as it, too, signed a lease this year at 665 Fifth, making it one of the few retailers with two locations on the pricey stretch.

Address: 636 Fifth Avenue (Rockefeller Center) Landlord: Tishman Speyer Tenant: Façonnable Size: 21,000 square feet on three floors, including 7,100 square feet on the ground Lease status: Six years left with five-year option to renew Asking rent: Sublease for $15 million Notes: Façonnable, through broker Jason Pruger at Newmark Knight Frank, is offering its space at the corner of 50th Street as a sublease for $15 million a year. Brokers said the landmarked Rockefeller Center is restricted in what kind of tenants can take space there because of efforts to create a more upscale ambience. TRD

www.TheRealDeal.com December 2011 39

REAL ESTATE’S LEGAL LANDSCAPE

Courtroom clashes A look at real estate’s legal scene, from NYC’s biggest battles to the leading lawyers who help shape the skyline

BY LEIGH KAMPING-CARDER nfortunately, New York is a very litigious town,” notes Mark Edelstein, the New York chair of San Franciscobased law firm Morrison & Foerster’s real estate finance practice. That’s certainly true within the real estate industry, where litigation runs the gamut from residential and commercial foreclosures to landlord-tenant suits, contract disputes between buyers and developers, and courtroom clashes involving rivals or former business partners. In the last year, some of those fights have been resolved. For example, last month, 10 Trump Soho buyers agreed to a 90 percent refund on their deposits in a suit alleging that the building’s sponsors — Bayrock Group and the Sapir Organization — misrepresented sales figures at the condominium tower. Moreover, last December, developer Jacob Chetrit won a $2.45 million judgment against his former investment partner, Bonjour Capital’s Charles Dayan, in a dispute over payments for a defaulted construction loan at 5 Beekman Street. But plenty of cases are still in full swing. This month, The Real Deal looked at the legal landscape of the New York City real estate world, from the biggest brewing court battles (see story on page 44) to an elite group of land-use attorneys working behind the scenes at some of the most complex and controversial developments in the city (see story on page 47) to a pending decision on a lawsuit against a Prudential Douglas Elliman broker who represented both the buyer and seller of a Park Avenue co-op (see story on page 48). Real estate litigation has seen its fair share of changes since the 2008 crash. For one, the number of residential foreclosure suits across the state has skyrocketed, spiking almost 43 percent in 2010 to 77,815, up from 54,591 in 2009. The most recent numbers, from November 2010, show that residential foreclosures accounted for almost 29 percent of all pending cases in New York state trial courts, according to a report from the state court system. Also, as The Real Deal has reported, the last few years have seen the rise of suits brought under the Interstate Land Sales Full Disclosure Act, or ILSA, where condominium buyers have relied on technical provisions of that 1968 law to escape sales contracts. On the whole, however, attorneys say the down market has largely kept litigation in check, as apprehensive lenders and developers refrain from pressing their interests in court. Since developers are not trying to clear tenants out of existing apartments to make way for new development, there are fewer landlord-tenant suits than before 2008, says Joseph Burden, a litigator and cofounder of New York real estate law firm Belkin Burden Wenig & Goldman. Likewise, commercial foreclosures have not surfaced in the same volume as the previous downturn in the late 1980s and early 1990s, attorneys say.

“In the last few years, there hasn’t been the volume of real estate litigation you would expect,” notes Greg Yates, a New York bankruptcy attorney at the Chicago-based firm Seyfarth Shaw, who focuses on commercial real estate. “Lenders have not really pushed the borrowers, either to take the property back or to force bankruptcies or other ligation fights. “They extend and pretend.” That’s partly because this time around, the process of foreclosing is more complicated, involving the owners of different tranches of securitized debt as well as mortgage holders, each of whom may have disparate motivations for foreclosing or holding on to a property, attorneys said. In some instances, borrowers are using litigation as a stalling tactic — filing preemptive suits to buy time to negotiate alternative financing or wait for market conditions to improve, says Jodi Kleinick, a litigator at Paul Hastings who works with real estate clients. “If [lenders] can work with borrowers to resolve things, that’s always better, particularly when you have a huge backlog in the court system that’s creating huge delays in getting to a decision,” she says, noting that cases that formerly would take a year and a half (“tops”) now drag on for two or three years. Looking ahead, real estate attorney Carl Schwartz of Herrick Feinstein does not anticipate a litigation boom, since much of the debt has been worked out and the market is tentatively coming back. However, others say litigation involving borrowers and lenders has already started to rise. Samuel Lindenbaum “People were hoping the market would turn around much quicker, and an increase in the market would save people, but that doesn’t look like it’s happening,” says Seyfarth Shaw’s Yates, forecasting an increase in these kinds of suits over the next 12 to 18 months. Additionally, as lenders become more aggressive, the number of lender liability suits — where borrowers blame lenders for failing to fund a project and contributing to its downfall — will proliferate, attorneys say. Kleinick says she’s already seen “a lot more” of these types of cases. In the residential arena, litigator Warren Estis, cofounder of New York real estate firm Rosenberg & Estis, is seeing a significant uptick in suits from developers seeking to take possession of development sites, as they start planning for future projects. “They see the daylight at the end of the tunnel in terms of building and going ahead with their projects that have been on hold for a number of years,” Estis says. TRD

42 NYC’s biggest real estate battles 45 Land-use royalty 46 A house divided www.TheRealDeal.com December 2011 41

REAL ESTATE’S LEGAL LANDSCAPE

NYC ’s biggest real estate battles A scorecard on eight active lawsuits that may impact the entire industry

Consider the condominium con-

BY LEIGH KAMPING-CARDER

ot everyone has the

tract dispute that could affect the way

stomach for a law-

New York City developers handle pur-

suit — taking an oth-

chase agreements for new condos. Or

erwise private dis-

the suit between residential brokers

agreement into the public realm and sub-

whose failed alliance could become

mitting it to the cool evaluation of the

fodder for a jury trial. Or a federal

court.

agency’s offensive against a slew of

But sometimes situations are unten-

major banks over mortgage-backed

able, and parties consider judicial inter-

securities.

vention the only recourse. The resulting

On these pages, The Real Deal pro-

lawsuits can have a broad impact, reach-

files some of the biggest active legal

ing beyond the businesses involved to

battles in the New York City real es-

encompass the industry as a whole.

tate community.

Roberts v. Stuyvesant Town

ast month, a state appeals court ruled in favor of a group of Stuyvesant Town and Peter Cooper Village tenants in a decision that puts MetLife, the former owner of the 80-acre site, on the hook for an es-

The case dates back to 2007, when a group of tenants, led by Amy Roberts, lodged a class action alleging that MetLife and Tishman Speyer (which paid a record $5.4 billion for the property in 2006) improperly deregulated the rent-stabilized apartments while taking J-51 beneﬁts. Those tax breaks are provided as incentives

VS Stuy Town tenants, led by Amy Roberts (left), sued Jerry Speyer’s (right) Tishman Speyer and others.

timated $215 million in retroactive rent reimbursements. MetLife has until early this month to appeal the decision, but will have to petition the high court to take the case, since the lower ruling was unanimous. It’s unclear whether MetLife will go this route. (An attorney for MetLife referred requests for comment to the company, which declined to discuss the case.) If the insurance giant opts not to appeal, the parties will go back to the trial court to formulate what the rents should be going forward and how much is owed in back rent, sources said.

42 December 2011 www.TheRealDeal.com

for upgrading residential properties. In March 2009, New York’s highest court, the Court of Appeals, ruled in favor of the tenants. Last month, a state appeals court determined that the earlier decision applied retroactively, meaning that even as a former landlord, MetLife was on the hook for rent reimbursements. The tenants claim those reimbursements come to $215 million. Tishman Speyer, which defaulted on its mortgage in 2010, was dropped from the case earlier this year, but special servicer CWCapital Asset Management — which took over the property after Tishman de-

A view of the Stuyvesant Town complex

faulted — is still a defendant. Representatives for Tishman Speyer declined to comment on the case, as did an attorney for CWCapital. However, if the ruling is upheld, landlords receiving J-51 tax abatements must ensure that apartments remain rent stabilized or risk lawsuits from tenants, sources say. “I suspect there’ll be a whole industry of lawyers seeking out tenants and buildings that have paid more than their stabilized rent,” said real estate attorney David Rubin of Golenbock Eiseman Assor Bell & Peskoe.

and executive who ever worked on the building. The suit, which has never been reported on, is not the ﬁrst time the 258-unit tower has been the subject of litigation. In 2009, two buyers sued the 20 Pine developers for alleged violations of ILSA, the Interstate Land Sales Full Disclosure Act. (They reached a settlement in August,

20 Pine buyers v. 20 Pine developers

n March, nearly 70 homeowners at 20 Pine Street ﬁled a $58.4 million suit claiming the Financial District condominium tower is rife with construction defects, blaming sponsor Africa Israel USA and seemingly every contractor, marketer

Attorney Adam Leitman Bailey (top) represents homeowners in the case against 20 Pine.

ILLUSTRATION FOR THE REAL DEAL BY PETER BONO; STUY TOWN PHOTO BY DEREK ZAHEDI; BAILEY PHOTO BY JAMES CHANG

REAL ESTATE’S LEGAL LANDSCAPE court documents showed.) Later that year, Aristone Capital Funding sued developer Shaya Boymelgreen, who is no longer involved with the project, for allegedly defaulting on a $3.2 million construction loan. That suit was dropped in early 2010; Boymelgreen could not immediately be reached for comment. Aaron Abraham, a partner at New York law firm Goulston & Storrs, which represents Lev Leviev’s Africa Israel, vowed to fight the most recent homeowner suit, and on Sept. 12, he filed a motion to dismiss the homeowners’ claims. “The sponsor is working diligently to meet all of its obligations under the offering plan, and will continue to work in good faith with the board and its legitimate counsel to review and address any issues affecting the building,” Abraham said in a statement. Adam Leitman Bailey, who represents the homeowners, declined to discuss the 20 Pine suit specifically, citing his clients’ request. However, he said, lawsuits over faulty construction at new developments are among the most prevalent to emerge from the condo boom. “Many buildings were built badly, and corners were cut, and we’ve been litigating these,” Bailey said.

Weinstein and Manhattan Apartments v. Franzblau and A.C. Lawrence

he economic downturn has, of course, spawned plenty of disputes between former business partners. “In a down market,” said Carl Schwartz, a real estate attorney at law ﬁrm Her-

“Jerry” Weinstein, founder of residential rental brokerage Manhattan Apartments, lodged a complaint in July claiming that Leonard Franzblau, a supermarket tycoon with at least a 50 percent stake in the firm, had conspired with rival A.C. Lawrence, which was brought on as a consultant, to push him out of the business. The suit seeks $10 million, plus punitive damages. The 83-year-old Franzblau and A.C. Lawrence fired back in August with claims that Weinstein attempted to freeze them out — opening up the firm to financial ruin — and defaulted on a $300,000 loan. They are seeking $1 million in damages, plus payment on the loan. The case is on a fast track in order to protect the business, according to Philip Greenberg, the defendants’ attorney, with both parties busy collecting testimony and exchanging documents. Weinstein and Franzblau, founder of Pioneer Supermarkets, had originally teamed up in 2008, when the latter invested $2 million in Manhattan Apartments. He later hired A.C. Lawrence principals Larry Friedman and Anthony DeGrotta, who are also named as defendants, to help turn the business around. Franzblau claims he acquired a further 20 percent stake in the firm with an additional $600,000 investment, bringing his total interest in the firm up to 70 percent. But Weinstein disputes the validity of his later investment. “For a guy who likes to invest in distressed companies, it was a perfect situation,” Greenberg said. Weinstein and his attorney did not immediately respond to requests for comment.

from the Real Estate Board of New York and the federal Consumer Financial Protection Bureau, both of which ﬁled briefs supporting Related’s interpretation of the law. The Second Circuit, which has jurisdiction over New York and nearby states, heard arguments from both sides last month and could soon issue a ruling. Requiring developers to write contracts in recordable form would create a lien against the property, scaring off commercial lenders, REBNY argued. REBNY also has

ready changed developers’ practices. “New condos which are coming out of the ground are very sensitive to the issue,” he said. This would not be the Second Circuit’s ﬁrst ruling on ILSA. In March, the court ruled on an ILSA exemption for condos smaller than 100 units, holding that the Fifth on the Park and One Hunters Point condos, in Harlem and Long Island City, respectively, were not exempt from the law, overturning a lower court ruling.

The Apthorp: Mann v. Africa Israel and Broadwell Management

Developer Stephen Ross (top) and buyer Vasilis Bacolitsas have been locked in an ILSA dispute at the Brompton (below).

Stephen Ross v. Bacolitsas

t seems that few projects have triggered as much litigation as the Apthorp, the 163-unit Upper West Side rental building that developer Maurice Mann and Africa Israel USA bought for $426 million in 2006 to convert to luxury condos. After lenders threatened foreclosure proceedings in 2008, Africa Israel’s Leviev sued to oust Mann as managing partner. Mann agreed to step down, but later responded with his own suit seeking to halt an agreement to restructure the building’s debt. That suit has since been settled. But in March, Mann lodged a complaint claiming his former business partners at Africa Israel and his replacement as managing partner, Andrew Ratner of Broadwell Management, reneged on a deal to sell him a speciﬁc unit at the condo conversion that at one time was on the market for $12.2 million, according to real estate listings website StreetEasy. A judge is currently considering a motion to dismiss the suit. On another front, the Apthorp developers are still ﬁghting Anglo Irish Bank, the project’s senior lender, over legal fees for their aborted attempt to block the bank’s

VS Manhattan Apartments founder Jerry Weinstein claims his partner conspired with rival A.C. Lawrence to push him out of the business.

rick Feinstein, “those suits start showing themselves because people, when they’re losing money, start pointing ﬁngers at each other.” Yet few pit two ﬁrms against each other, or involve the very future existence of a business. As The Real Deal has reported, Gerald

ne of the most closely watched real estate cases in the city centers on the battle between developer Stephen Ross and two of his buyers at the Brompton on the Upper East Side. The dispute is a technical one, which centers on whether ILSA requires developers to ensure that sales contracts — and not merely property descriptions — for new construction are in a suitable form for ﬁling with the city, known in legalese as “recordable” form. In September 2010, a federal judge ruled that it does, handing a victory to Vasilis Bacolitsas and Soﬁa Nikolaidou, prospective condo buyers who sued to get out of a $3.4 million condo purchase at the Brompton, developed by Ross’s Related Companies, after signing a sales contract and putting down part of a deposit. The decision let them revoke their contract and recover $520,000. Now on appeal before the Second Circuit, the decision has drawn cries of protest

PHOTOGRAPH OF WEINSTEIN FOR THE REAL DEAL BY MICHAEL TOOLAN; PHOTO OF THE BROMPTON BY DEREK ZAHEDI 52 September 2011 www.TheRealDeal.com

concerns that the ruling would make it more difficult for buyers to obtain mortgages. Bacolitsas and Nikolaidou, however, contend in court papers that developers could easily accommodate the switch to preparing sales contracts, not just property descriptions, in recordable form, since they would not actually have to record the contract, but merely prepare it. “It just changes the practice. It doesn’t hurt anyone,” said Bailey, their attorney. Mark Edelstein, chair of the real estate finance practice at law firm Morrison & Foerster, said the spate of ILSA lawsuits has al-

Developer Lev Leviev (bottom) has gone up against Alan Dukes’s Anglo Irish Bank at the Apthorp over legal fees.

www.TheRealDeal.com December 2011 43

REAL ESTATE’S LEGAL LANDSCAPE sale of the property’s troubled $385 million building loan. The Apthorp developers sued Anglo, headed by Alan Dukes, in September, claiming the sale of the loan would undermine the conversion. However, as The Real Deal uncovered, they had previously sworn to the New York attorney general that the sale would not affect the project. In October, the developers agreed to pay the AG $190,000 in ﬁnes for making misleading statements, and let buyers out of existing contracts; they also withdrew the suit. Anglo has since asked the court to force the Apthorp to foot the bill for its defense — roughly $224,000 — but the Apthorp developers argued they are only on the hook for part of the legal costs, or $30,000 worth. A spokesperson for the Apthorp declined to comment. Attorneys for the Apthorp, Anglo and Mann did not return calls seeking comment. David Nathan, who represents Broadwell in the Mann suit, said his client would not comment on pending litigation.

Vilkelis v. The Holmes Team

hen plans that are never written down go wrong, they often go very wrong. In 2008, Barak Realty vice president William Vilkelis and his then-colleagues — veteran agent Catherine Holmes, her husband Thomas Holmes and Jeff Goodman — agreed to join forces under the name “The Holmes Team” and jump to Halstead Property. Instead, the partnership fell apart, and Vilkelis was asked to leave. In 2009, he sued his former partners, accusing them of fraud and seeking $1 million in unpaid commissions and other damages. Vilkelis’s attorney, Gale Elston, said the next step in the case would hopefully be a trial. The suit hasn’t grabbed as many headlines as the commission dispute involving Brown Harris Stevens brokers Paula Del Nunzio and Shirley Miller over the $44 million sale of the Duke Semans Mansion, which was settled last December for an undisclosed amount. But while Vilkelis may not be as highprofile as Del Nunzio, he appears willing to fight. Now on his fourth version of the complaint, Vilkelis has successfully added Halstead as a defendant (for allegedly withholding about $80,000 in commissions from his time at the firm). Also, a New York state judge decided the Holmes Team was indeed a partnership, against the assertions of the Holmeses and Goodman. The defendants said in August court papers that they paid Vilkelis his full share of the roughly $126,000 in commissions

44 December 2011 www.TheRealDeal.com

Bank of America has said that Fannie and Freddie have publicly acknowledged their MBS losses were the result of the downturn in housing prices and the economy. “Fannie Mae and Freddie Mac were among the most sophisticated, powerful and heavily regulated ﬁnancial institutions in the U.S. mortgage ﬁnance system,” a Bank of America spokesman said in a statement. “Despite this, [they] are now seeking to hold other market participants responsible for their losses.” The FHFA suits are unrelated to an offensive launched by a coalition of state attorneys general, who are currently in talks with some of the nation’s largest mortgage servicers to resolve claims over improper foreclosure practices. Representatives for JPMorgan and Deutsche Bank did not immediately return calls, while an FHFA spokesperson could not immediately comment.

Commissioner Robert LiMandri (top), also head of NYC’s Loft Board, will hear a dispute involving 280 Nevins Street in Brooklyn.

William Vilkelis (top) has ﬁled a fourth complaint against Halstead’s Holmes Team, including husband and wife Thomas and Catherine Holmes (above), over a 2008 commission dispute.

the team made in 2009 — Halstead kept between 35 and 40 percent of the gross — and blamed his “argumentative and hostile” attitude for the breakup. They are seeking $1.65 million for the alleged harm to the business. “It’s ongoing. That’s all I’m going to say about it,” Vilkelis said. “He’s been treated completely unfairly by Halstead and members of the Holmes Team,” Elston said. “It would be inappropriate for anyone to speak about [the case] at this point,” Catherine Holmes said. A spokesperson from Halstead declined to comment.

Federal Housing Finance Agency v. the banks

n a bid to recover some of the losses Fannie Mae and Freddie Mac suffered from investing in residential mortgage-backed securities, or MBS, the agency tasked with overseeing the government-sponsored lenders sued 17 banking giants in federal court in New York and Connecticut in September. The Federal Housing Finance Agency under the Obama administration is claiming that Bank of America, JPMorgan Chase, Deutsche Bank and others understated the risks on $182 billion worth of MBS by misrepresenting the characteristics of the borrowers and properties attached to the loans. Though the cases are in their early stages, they represent a new front in the vast legal battle stemming from the subprime mortgage crisis. If the FHFA prevails, the banks could be on the hook for billions of dollars. Critics charge that further attacks on the banks will only prolong the recovery of the housing market, and further freeze up lending.

The Obama administration is suing Brian Moynihan’s (bottom left) Bank of America, Jamie Dimon’s (bottom right) JPMorgan Chase and Josef Ackermann’s Deutsche Bank for understating the risks on mortgage-backed securities.

Loft owners v. loft tenants

ome of the biggest legal battles are fought incrementally. Such is the case with the city’s loft law. The city passed the original Multiple Dwelling Law in 1982 as a means to convert formerly industrial buildings with illegal residents — many of them in Soho — into properly certiﬁed, rent-stabilized residential buildings. The law applied to properties with tenants living in them in the two years before the law passed (and going forward). In mid-2010, the city expanded the law to cover a new set of buildings. This also protected a new set of tenants who had lived in their buildings going back to 2008 — a change that largely affected Williamsburg and other gentrifying Brooklyn neighborhoods.

Under the loft law, landlords can opt to deregulate apartments, and charge their current tenants market-rate rent, by buying out the tenants’ “rights and improvements,” essentially paying them for the “sweat equity” they invested to make the property livable. One of the more impactful loft law cases is now winding through the administrative system, and involves 280 Nevins Street in the Gowanus section of Brooklyn. At 280 Nevins, the owner purchased the “rights and improvements” from a tenant in 2003. Two years later, the owner leased the unit to a new tenant at market rate. But after the 2010 loft law took effect, that new tenant applied for rent-stabilized status. In September, an administrative judge sided with the landlord, finding that the unit did not have to be rent stabilized because the “rights and improvement” had already been bought out in 2003. But the final say will come from the New York City Loft Board, chaired by the city’s Department of Buildings commissioner, Robert LiMandri, which could overturn the judge, said Linda Rzesniowiecki, an attorney and loft law expert who is not involved in the case. “The question here is whether a loft tenant should get a second bite of the apple,” or a second chance to sell “rights and improvements” to landlords under the 2010 loft law, explained Rzesniowiecki. If the current ruling is reversed in favor of the tenant, it could have widespread implications for landlords. Those landlords who believe their apartments are not rent stabilized could be on the hook, either to reregulate the units or to make a second round of “rights and improvements” payments, she said. “Depending on what the loft board decides, the purchase of the ‘rights and improvements’ by the landlord could be undone,” she said, particularly for “recalcitrant” landlords who have not yet obtained residential certificates of occupancy. TRD

REAL ESTATE’S LEGAL LANDSCAPE

Land -use royalty A look at the top planning and zoning lawyers in NYC

BY LEIGH KAMPING-CARDER

through the byzantine New York City planning process — particularly for proj-

hances are you won’t see the name of a land-use attorney on the side of a building anytime soon. Though these experts often appear at public hearings, their work usually takes place in the background.

ects that involve novel uses and special approvals. The land-use attorneys proﬁled below are at the top of their ﬁeld, all helping shape the height of skyscrapers, the use of public space, and what types of

And yet, these legal guides often play a pivotal role in shepherding projects

projects go where in New York.

S AMUEL “S ANDY ” L INDENBAUM AND P AUL S ELVER Firm: Kramer Levin Naftalis & Frankel f any name is synonymous with land-use lawyering in New York City, it’s Samuel “Sandy” Lindenbaum, of counsel at Kramer Levin Naftalis & Frankel. Lindenbaum has spent nearly 50 years wrangling with the city’s zoning laws, recently advising Columbia University on rezoning the 17-acre site earmarked for its Manhattanville campus, as well as the Museum of Modern Art on its 1,050-foot, Jean Nouvel-designed towSandy Lindenbaum er. Currently, Linden(top) and Paul Selver baum is representing Stanford University in its bid to develop an applied sciences campus on Roosevelt Island (see related story on page 60). But Lindenbaum’s colleagues are no slouches either. Paul Selver, cochair of the ﬁrm’s landuse department, is representing Extell Development Company at Riverside Center, the last parcel of the massive Riverside South development started by Donald Trump on the Upper West Side in the early 1990s. Extell received city approval for a 3.1 million-square-foot, mixed-use project last December, and is now helping build a school at 61st Street and West End Avenue — a pledge that won the developer an extra 20 percent of ﬂoor area, Selver said. Selver is also advising the Howard Hughes Corp. on transforming a threestory building at the South Street Seaport’s Pier 17 into a retail center, although that project is in its earliest stages. “It’s about as interesting a job as you can have,” Selver said of his profession, “if you really love New York City and you care about architecture and urban design and planning — and if you enjoy a little bit of politics and a little bit of theater.”

J ESSE M ASYR Firm: Wachtel & Masyr s one of the Related Companies’ go-to land-use specialists and an attorney for Thor Equities’ Joseph Sitt, Jesse Masyr

Stephen Lefkowitz of Fried Frank Harris Shriver & Jacobson

has plenty to occupy his time. The founder of Wachtel & Masyr’s landuse department, Masyr has worked with Related’s Stephen Ross for 25 years. He is currently working on the developer’s 21-acre Gateway II site in East New York, which was rezoned in 2009 to allow for a new, 630,000-square-foot mall. Though the greatest hurdle was securing the city’s approval, Masyr said, the project is a challenge because it needs completely new infrastructure, including streets and power lines, all of which require further approvJesse Masyr als. “We’re building a new part of the city,” he said. Meanwhile, Masyr is working with Sitt on a range of projects, including devising a plan for the four acres the developer still owns at Coney Island (he sold six acres to the city), a Red Hook property once home to the Revere Sugar Reﬁnery, and a recently approved rezoning in Bensonhurst that paves the way for a BJ’s Wholesale Club.

S TEPHEN L EFKOWITZ Firm: Fried Frank Harris Shriver & Jacobson ftentimes, the client will consult us with respect to strategy, with respect to what is possible to achieve, what’s feasible, what’s not,” said land-use heavyweight Stephen Lefkowitz. A number of clients are counting on Lefkowitz’s expertise: Cornell University, which submitted a bid for the applied sciences campus, as well as two real estate investment trusts — California-based Macerich Co. and the Virginia-based Avalon Bay Communities — which submitted a joint

PHOTOGRAPH OF LEFKOWITZ FOR THE REAL DEAL BY CHRIS MARTIN

proposal to develop the 61-acre site at Willets Point in Queens. Lefkowitz and his colleagues at Fried Frank are also working for Related on several aspects of the $15 billion overhaul of Hudson Yards. At the moment, he’s hashing out an agreement with the city for the refurbishment of the High Line’s northward extension around the West Side Yards, after Related inked a deal to lease a plot of land that will house a 51-story ofﬁce tower and the luxury goods retailer Coach. Lefkowitz is also acting as Forest City Ratner’s transactional attorney for the Atlantic Yards site in Brooklyn — “a project that never stops giving,” he joked.

B OB D AVIS Firm: Bryan Cave ob Davis’s land-use experience dates back to 1980, when his then-boss, Herb Sturz, the deputy mayor for criminal justice, was appointed chair of the City Planning Commission. Davis followed him to the new department and never looked back. “Other than parking garages,” he said, “I’ve never done the same thing twice.” Davis is now assistBob Davis ing the Gotham Organization with a $520 million residential development, billed as the largest new construction project in Manhattan. Slated for completion in 2014, the 1 million-squarefoot development will bring 1,238 new rental units to West 45th Street between 10th and 11th avenues. Further south, Davis is advising New York University on its 6 million-square-foot expansion, which includes a proposal to add

new academic buildings near Washington Square Park, as well as a public school and student housing within the Silver Towers residences, the landmarked three-building complex designed by I. M. Pei. (Davis declined to discuss details because the project is still in ﬂux.) Additionally, the New York City Economic Development Corp. recently retained Davis to work on an undisclosed project at the Lower East Side’s Seward Park.

H OWARD G OLDMAN C AROLINE H ARRIS

AND

Firm: Goldman Harris nlike the other attorneys on this list, Howard Goldman and Caroline Harris are not members of a real estate department within a larger firm. As the founders of the land-use boutique Goldman Harris, the husband-and-wife team focuses exclusively on zoning, preservation and environmental review. In 2008, several years after they married, Harris Howard Goldman decided to leave and Caroline Harris her position at the law firm Troutman Sanders and join Goldman at his eponymous firm. In 2010, they rechristened the business. Recently, the duo assisted the Archdiocese of New York in a deal to protect 80,000 square feet of unused (but expiring) building rights at a low-income housing development in the Bronx’s West Farms urban renewal area. “They put them in the bank for future use,” Goldman said. In addition to preserving the rights — so a developer can use them down the road to create an additional 150 to 200 affordable units — the transaction represents a creative way of generating more affordable housing at urban renewal projects that are set to lose the protections of the 1960s-era program, they said. The Archdiocese deal “is a model that can be used in many of the former urban renewal area districts in the city,” added Goldman, “because many of them are expiring.” TRD

www.TheRealDeal.com December 2011 45

REAL ESTATE’S LEGAL LANDSCAPE

A house divided In Elliman lawsuit, high stakes for brokers acting as dual agents

BY JAKE MOONEY n a case closely watched by the residential brokerage community, New York State’s highest court will soon rule in a legal battle between Prudential Douglas Elliman and the dissatisfied sellers of a Park Avenue co-op. The 2009 lawsuit, Douglas Elliman LLC vs. Tretter, was filed after the clients refused to pay their broker’s $70,000 commission, arguing that she was also working for the apartment’s buyers without telling them. In May, the state Supreme Court’s appellate division ruled that the fee must be paid. The sellers, Franklin and Sheila Tretter, are now contesting that decision to the New York State Court of Appeals. The court could rule at any time, affirming the decision in Elliman’s favor, finding for the Tretters, or sending the matter to trial. However the case plays out, real estate observers said the Tretters’ claim — that their broker was not wholly on their side — should serve as a warning to real estate agents to make certain that buyers and sellers understand who they represent. Elliman LLC vs. Tretter makes clear, lawyers said, that brokers are taking a risk if they allow doubt about their loyalties to creep into transactions. Disclosure forms, newly mandated in condo and co-op transactions this year, have made the procedures for disclosing these loyalties even more explicit. “I would be concerned, if I was a broker, that I could do all this work and someone could turn around and say, ‘You’re not entitled to your commission, you’re working both sides of the coin,’” said Andrea Lawrence, a real estate lawyer at the firm Epstein Becker Green who has been following the case.

Divided loyalties It all started in the summer of 2008, when the Tretters listed their two-bedroom apartment, 785 Park Avenue #11C, with Elliman broker Barbara Lockwood. The apartment sold in March 2009 for $1.4 million; as part of the deal, Lockwood agreed to accept a commission of 5 percent, reduced from 6 percent because the sale price was less than the $1.65 million asking price. But once the deal closed, the Tretters refused to pay the commission. Lockwood, they claimed, had breached her ﬁduciary duty to them by doing additional work for the buyers, including showing them a similar apartment in the same building. In April 2009, Elliman sued. (The brokerage, through a spokesperson, declined to comment on the case.) When the case

46 December 2011 www.TheRealDeal.com

reached the state Supreme Court’s appellate division two years later, a four-judge majority ruled in Elliman’s favor, concluding that Lockwood had indeed satisﬁed her duty to the sellers and should receive her commission. “It is uncontested,” the judges wrote, “that Lockwood found buyers who were ready, willing and able to purchase their apartment, who were capable of doing so.” The Tretters and their lawyer, Randy Heller of the ﬁrm Gallet Dreyer & Berkey, declined to comment while their appeal is

clusive listing agreement that outlines how much the seller will pay in commission when the deal closes. Some buyers, meanwhile, retain their own brokers, who split the commission with the listing broker when the property sells. Other buyers forgo representation and approach sellers directly. In those cases, the selling broker handles both sides of the transaction and gets the entire commission, but is still technically representing only the seller. In situations where a buyer’s agent takes a client to one of their own exclusive listings,

to be represented by someone whose allegiance is really to the seller,” he said, “or whether the buyer wants to go out and find someone to represent them.” In this case, he said, the buyer was an attorney who felt comfortable watching out for her own interests. The seller, meanwhile, agreed to the arrangement and paid Charnas’s commission as planned. The Tretter dispute focuses on whether Lockwood acted as a dual agent without properly disclosing it, Lawrence explained. Lockwood had been hired as the seller’s broker, as spelled out in the contract. But, the Tretters later argued, Lockwood confused matters by referring to the buyers, at one point, as her “customer.” The remark was especially vexing, the Tretters contended, because at that point they had already discussed private financial details and strategy with her. Moreover, they said, Sheila Tretter had raised “strenuous” objections to Lockwood’s showing the buyers other apartments. And there was reason to believe Lockwood “may have attempted to frustrate the completion of the transaction” during negotiations over her commission, according to the state “If you don’t do the right thing, then you risk the commission.” Supreme Court’s one dissenting judge. Neil Garfinkel, Abrams Garfinkel Margolis Bergson Details like this create pending. But in court documents, they claim they become a dual agent, which means that enough uncertainty about whether Lockthat Lockwood’s actions made it unclear who both buyer and seller give up their right to wood was a dual agent, the dissenting judge she was representing. the agent’s undivided loyalty. Agents who wrote, that the matter should be resolved Lockwood first met one of the buyers, are acting as dual agents must clearly explain at trial. Taurie Zeitzer, at an open house in the apart- the situation and its implications for each The use of the new disclosure forms will ment, days after a different buyer had made party. (Thanks to a January 2011 change in hopefully mean far fewer disputes like the a $1.5 million offer on the unit, according state law, agents must now obtain a written Tretter case, according to Neil Garfinkel, to court testimony. That offer was accept- acknowledgment, signed by the buyer and who serves as residential counsel to REBNY ed, and while that candidate was in front of seller, in order to act as a dual agent. But the and was involved in drafting the new law. the board, Lockwood contacted Zeitzer and change wasn’t yet in effect when the Tretters It’s not a foolproof system, however: her husband, eventually showing them five sold their apartment.) When the law was first passed, brokers and other properties. Such transactions can proceed smoothly clients alike found the forms confusing and Weeks later, the original offer on the with both parties’ permission, said Jonathan had trouble getting clients to sign them. Tretters’ apartment fell through. Lockwood Charnas, vice president at the Fox Residen- Garfinkel, an attorney at Abrams Garfinkel brought the Zeitzers to see the apartment tial Group and cochair of REBNY’s Residen- Margolis Bergson, said many brokers have again, and they eventually agreed to buy it. tial Sales Council. Recently, Charnas said, he now been trained in using the forms. was representing the seller of a co-op on 85th The Tretter case is a reminder, however, Who represents whom? Street when a potential buyer approached of the high stakes brokers face if they don’t That’s where it gets tricky. The relationship him about the unit, unsolicited. At that point, pay close enough attention to matters of between brokers, buyers and sellers in New Charnas said, he had two options: Tell the disclosure. York is somewhat confusing, especially when buyer to find another agent, or seek consent “It can be as simple as just not being the listing broker is also working with the to represent both the buyer and seller him- clear about who you represent,” Garfinkel self. said. “If you don’t do the right thing, then buyers. Sellers’ brokers here typically sign an ex“The question is whether the buyer wants you risk the commission.” TRD

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50 December 2011 www.TheRealDeal.com

Sustainability 2.0

Next challenge for NYC building owners: Going green to attract investment dollars BY TOM ACITELLI ow that the light bulbs have been changed and the solar power panels have been harnessed, real estate firms in New York are gearing up for Sustainability 2.0. In fact, just about every big New York firm has some sort of sustainability department or point person: Jones Lang LaSalle, Cushman & Wakefield, CBRE Group, Vornado, Silverstein Properties, the Durst Organization, Malkin Holdings, the Related Companies and SL Green, to name just a few. And there’s good reason for that. Gone are the days of merely hanging out a sustainability shingle that touts a building owner for being concerned about the environment. In recent years, investors have started paying closer attention to how green an asset is before deciding whether to pump their own greenbacks into the property. For example, two years ago, a group of Netherlands-based pension fund advisers began sending a survey to real estate firms worldwide to assess their sustainability efforts. David Pogue, CBRE’s national director of sustainability, said the pension fund is a good example of the new awareness of “green” on the part of investors. “The point is, this is a group of investors, and they’re beginning to use sustainability as one of the more important factors as to whether or not they’re going to invest in a particular piece of real estate or a particular company,” Pogue said. In 2011, to lure these investors, “you have to have the data,” Pogue said. Under a new city law with a final compliance deadline of Dec. 31, landlords must report how green their buildings are (using EPA benchmarks as a comparison). Using this newly collected information to entice investors will be the key challenge facing the sustainability efforts of New York’s commercial real estate industry in the next two to four years, sources say. Right now, many building owners measure their efforts through the U.S. Green Building Council’s LEED certification, through their own internal databases, or through anecdotal information. But earlier this year, the city began to fully implement Local Law 84, which requires owners to report their water and energy consumption. Landlords have until the end of the year to file their reports with the city’s Department of Finance. All buildings of at least 50,000 square feet are required to report to the city — the list of buildings runs 304 pages long. Meanwhile, the Center for the Sustainable Built Environment at NYU’s Schack Institute of Real Estate is working with the city to catalog the data. Constantine Kontokosta,

the center’s director, said the data — and a searchable database that could debut as soon as next year and may be publicly available — could supplant LEED as the marquee way of measuring sustainability. “Now that we have all this data available,” he said, “investors, owners and tenants are going to be able to go in and actually look at how much energy a building is using, and compare that to similar buildings.” The city-mandated data-gathering, sources predict, will prompt those who are not performing as well as their competitors to shrink their carbon footprint — or possibly lose investors. But making green upgrades will not come cheaply. Even retrofits for energy reductions of as little as 10 or 15 percent can be pricey for landlords. Getting more ambitious than that often means finding financing. The industry’s biggest building owners know that they’re on notice. “I don’t think we’re that far off from seeing buildings that have a fairly specific scorecard for the efficiency of that building, either available to the public through a common database and/or some sort of visible scoring system that’s available on-site,” said Peter Belisle, president of energy and sustainability services at JLL. SL Green, the city’s biggest commercial landlord, sees the new data-gathering as important but also as a part of its ongoing sustainability efforts, which were enshrined this past spring with the appointment of its first sustainability director, Jason Black. “It’s just another level of detail that we have, so as we keep going forward with our energy efficiency measures, we can keep refining and reevaluating what our next steps should be,” Black said. Industry analysts hope the data-gathering translates into greater confidence among investors, like those Netherlands-based pension fund advisers. “Now that we have this information, we should start seeing a lot more money being freed up to have more kinds of traditional lending for commercial retrofits,” said Kontokosta. “I think there’s a lot of interest now in terms of getting money out into this market. “And I think the lenders, too, are beginning to understand that if they can get money and understand the retrofit market a little bit more, get some of the risk and uncertainty out of the actual energy-saving, that will fuel a tremendous secondary-market securitization of those types of loans, which could really scale things up.” TRD

Building blocks How many properties do you own? I used to own nine different buildings, though I only own four now, on the same block: 1681, 1683, 1691 and 1693 Third Avenue, between 94th and 95th streets. Have you ever lived in your buildings? I did live in one of the buildings on the block for many years, but a couple of years ago we moved out to Long Island. My nephew and nieces take care of the day-to-day business these days. By Jane C. Timm

What rents do you charge? It ranges from $800 to $1,300 [per month]. Some are even a little less, because they’re seniors who just can’t pay. They aren’t rent-controlled units; we just work with people, which is very unusual.

Vital Stats:

Name: Roberta Bernstein Titles: Owner of R. Bernstein Company; president of Small Property Owners of New York Age: 68, “going on 30” Hometown: Born in the Bronx, grew up in Queens Currently living in: Long Island

The real world How did you get into real estate? I was a schoolteacher and I was fascinated by “the real world.” As teachers, we always felt like we were in a cocoon. So I started looking at the business world. In 1971, I bought a brownstone on 81st between First and Second avenues. The building cost $175,000 and had five units and an owner’s apartment. Then I bought derelict buildings in Chelsea — one 12-unit building and one 28-unit building. I really didn’t know what I was in for! I taught until 1976, and then I took a temporary leave of absence to focus on my properties. I always thought I’d go back, but I never did.

— Bernstein’s Manhattan properties

So how do you make money? It’s very difficult. It’s a double-edged sword — we raise the rent and tenants fall behind. At least now, we get everything paid. What is SPONY [Small Property Owners of New York]? We are a membership organization with over 1,000 members. We formed in 1984, in response to a rent reregulation law that was being drafted. I knew that it was going to be a bad thing and I thought small owners had to have a voice in the legislature, so I formed SPONY. [At the time] owners were treated as pariahs. We were labeled “landlords” — who, as we know, tie innocent maidens to the train tracks and wait for the trains to come. [In reality] we’re former teachers, civil servants, masons who saved our money and invested it in buildings. A lot of our members at the beginning were afraid to admit they were property owners, and now they’re proud members. Now, in addition to trying to create a balanced environment and reasonableness in the legislature, we also help members who are having problems.

Landlord life What’s the most challenging part of owning NYC buildings? Knowing what to do with the senior citizens, who really should be in a home, and who don’t have supportive families. What the heck do you do? We’re basically taking care of them. We check on them each day, pretty much. That’s the hardest. What’s the best part? Having tenants come back — ones who have moved out of our buildings who want to come back, or just stop by to say hi. Tenant horror story? I had a tenant who was always starting rent strikes and was very hostile toward me. He married his childhood sweetheart and they were having a kid in a six-floor walk-up! It’s really not a place to raise children, on the sixth floor of a tenement. So he decided to leave and told me that if I didn’t let him sell the lease and pocket the money, he’d tie up the apartment. It was more cost-effective for me to just let him do it than to fight him. He got $15,000 for it!

The bottom line Have you raised your rents recently? No, we try not to, because a lot of our tenants have lost jobs. Our tenants were affected by the recession in very visible ways. It’s very sad; everyone’s just hanging on by their teeth. But all of our expenses keep going up, so we do have to consider [raising rents]. They’re always increasing the water charges or tax rates. How would you change policy to help the market? Regulation causes a lot of [the city’s] housing problems. The solution would be to have a system of step-by-step deregulation of housing stock. You’d see things ease up, and you’d see more housing being built, even in this economy. When you have apartments with regulation, you see landlords having to make up the shortfall in other apartments by raising those rents. TRD

PHOTOGRAPH FOR THE REAL DEAL BY CHRIS MARTIN

www.TheRealDeal.com December 2011 51

TRD FORUM 2011

The Great Debate At TRD’s 7th annual forum, top industry players sparred over the biggest issues facing real estate today

ome 1,600 real estate pros gathered at Lincoln Center’s Avery Fisher Hall last month for The Real Deal’s

annual forum. This year, in addition to ample networking time, the event consisted of three one-on-one debates, moderated by CNBC anchor Bill Griffeth. Frederick Peters, president of Warburg Realty Partnership, and Lockhart Steele, founder of the

From left: Bill Griffeth, Lockhart Steele, Adam Leitman Bailey, John Catsimatidis, Billy Macklowe, Stuart Saft and Frederick Peters

website Curbed, took the stage to argue the effect of blogs and social media on New York City real estate. Attorney Adam Leitman Bailey, of the eponymous law ﬁrm, and Stuart Saft, chairman of Dewey & LeBoeuf ’s global real estate department, faced off on whether litigation is harming the industry — an animated discussion that had Bailey angling to settle a dispute with Saft from the podium. And developers Billy Macklowe and John Catsimatidis, CEO of the Red Apple Group, debated whether Republicans or Democrats are better for the New York real estate industry, with Macklowe making the case for the Dems and Catsimatidis defending the GOP. Needless to say, sparks ﬂew. Afterward, participants headed to the after-party at the nearby Empire Hotel. See below for photos and excerpts.

The Real Deal publisher Amir Korangy takes the stage at Avery Fisher Hall.

www.TheRealDeal.com December 2011 53

TRD FORUM 2011 PE T E R S

VS.

STEELE

G R I F F E T H : Is blog coverage harmful to the real estate industry? P E T E R S : Blogs have contributed to what I like to call the “Kardashian-ization” of news. We are now in a situation in which real estate news, in particular, is personally focused instead of business-focused ... and we don’t get the depth of research underpinning our news stories that I think they deserve. S T E E L E : I used to be a reporter, and [I’d] make ten calls to write a 1,000-word story, and publish it and that would be the end. On Curbed, we write ten 100-word stories and we keep updating the story as we hear from other people — a developer that we wouldn’t have thought to talk to, [or] something in the comments that expands the story. And at the end, when we’ve covered the story for a month, I think we get to a deeper truth than the New York Times did with one Sunday story.

Bill Griffeth

Billy Macklowe

P E T E R S : This leads to one of my bigger issues in the blogosphere, the anonymous comment. People move into personal trashing mode so quickly. S T E E L E : I feel completely the opposite. I’m a strong defender of the anonymity of commenting on the Internet. ... If one of your brokers is using their name to comment, what they’re going to be able to say is very, very limited.

John Catsimatidis

P E T E R S : But ... because they’re anonymous, you can’t defend yourself. ... The way a property is covered online can have a huge impact on how it sells, whether it sells and to whom it sells. In the same way a terrible review can have an impact on a Broadway show, you can actually interfere with marketability. S T E E L E : I think that’s an utterly bizarre way of looking at it. There’s more information out there, so that’s bad? That might be bad for the broker. ... I don’t think the goal is to make life easier for the broker, I think the goal is to make life easier and better for the actual consumer ... but I totally agree that publications have the responsibility not to let their comment sections turn into ... free-for-alls. Stuart Saft

BAILEY

V S.

Frederick Peters

SAFT Adam Leitman Bailey

G R I F F E T H : Is litigation bad for New York City real estate? S A F T : There are almost 9 million people living in the City of New York. There are 3.1 million units of housing. Between 1998 and 2008, only 130,000 were permitted to be built. Why is that? It is because it is so expensive to build in New York. ... But Adam represents a Greek shipping tycoon who decided he made an economic mistake by buying an apartment in the Brompton. Adam uses a 1978 law called the Interstate Land Sales Act ... to reverse the purchase of this Greek millionaire. Adam isn’t

54 December 2011 www.TheRealDeal.com

Griffeth (left) and Lockhart Steele

TRD FORUM 2011 protecting some elderly person who mistakenly paid $5 million for an apartment that can only be worth $4 million. [In pursuing litigation] Adam is trying to get money back for wealthy people, and in the process the lenders are saying to themselves, “Why should we lend for development in New York?”

The Real Deal editor-in-chief Stuart Elliott (right) and Joey Rubenstein, sound engineer for the TRDproduced documentary “Building Stories”

TRD’s Amir Korangy (center) with Jonathan Miller of Miller Samuel (left) and Marc Sokobin of Bank of America

Lyon Porter of MNS (left) and Joe McMillan of DDG Partners

From left: Bond New York cofounder Bruno Ricciotti, Korangy, Prudential Douglas Elliman’s Gilad Azaria, MNS CEO Andrew Barrocas and Khashy Eyn, CEO of Platinum Properties

TRD’s Yoav Barilan (left) and Adam Daniels of AD Real Estate Investors

From left: Investors Kenneth Gold and Milton Miller, and Jean Luc Botbol of Praxis Partners LLP

From left: Zhann Jochinke and Adina Azarian from Keller Williams NYC, and Joseph Ben-Zvi of OLR

B A I L E Y : People put their life savings into buying apartments and they get defrauded, and then they say, “Who’s there to help me?” But they don’t have a lot of money left. So what do they do? They hire us ... because the builder was morally challenged and decided, “I’m going to cut corners. I paid too much for this property in 2004, 2005, 2006. I paid too much; therefore I need the cheapest supplies, the worst contractors.” S A F T : What Adam basically [said] to developers, who had hundreds of millions of dollars of personal liability on the line, was, “I’m going to destroy you unless you give my client 30, 40, 50 percent off.” And it has nothing to do with the merit of any of your buyers. B A I L E Y : Some of my clients don’t have any money, so what do I do? What weapon do I have? ... What do big companies care about? Money. Money — and their reputation. They don’t want to go home and have their kids ask them, “Daddy, why are they calling you the devil in the New York Post?” SAFT: [Buyers] got an offering plan that’s 400 pages long that discloses everything conceivable. And yet all of a sudden, [ILSA] comes along and [Bailey] finds a way for everybody to get out of their contract. But my question for Adam is: What about the unintended consequences? The unintended consequences of what you did for your clients hurt everybody in the City of New York. Because it’s much more difficult to get financing for construction now — and we need housing.

C AT S I M AT I D I S

M AC K L OW E

G R I F F E T H : What should politicians do to help the real estate industry in New York?

Corcoran’s Ariel Brenner (left) and Sigal Hillel

From left: Sotheby’s International Realty brokers Vannessa Kaufman, Eric Malley, Nikki Field and Kevin Brown .

Prudential Douglas Elliman’s Judy Sahagian (left) and Vernon Jones of Live Open House TV

V S.

M A C K L O W E : I don’t mean to take John’s side here ... but Obama fumbled massively by allowing our country to [have its debt] downgraded. ... [Politicians] should be ﬁxing the mortgage crisis, they should be razing these [foreclosed-on] houses, remove the stock, get rid of it, create jobs, invest in infrastructure and have the stimulus-minded approach that puts people to work because we are, primarily, a consumer-run economy. C AT S I M AT I D I S : There’s nothing wrong with that, but we’re all businesspeople here. Businesspeople need incentives; Billy would go out and build more buildings if we could get tax breaks from the city and state. Compiled by Adam Fusfeld

www.TheRealDeal.com December 2011 55

RHE_RealDealAD_11-2011.pdf

11/30/11

10:03 AM

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1973: DURST UNLOADS PARCELS NEAR TIMES SQUARE

hirty-eight years ago this month, developer Seymour Durst acknowledged that his lenders had begun foreclosing on about a dozen of his painstakingly acquired sites in Midtown, just east of Times Square. Durst had purchased or taken control of 30 or more parcels between Broadway and Sixth Avenue and 42nd and 46th streets, with the plan to construct a massive commercial project to rival Rockefeller Center. But with about 20 million square feet of office space available in the weak Manhattan market, he said he didn’t expect sufficient demand for years to justify the development. And holding on to the parcels was draining profits from his earlier successes on Third Avenue, he said. “I can’t see any new commercial development,” Durst told the New York Times in 1973. “A good part of what [prof- Seymour Durst its] came out of Third Avenue we have lost over here.” He stopped paying the mortgage on sites like the Knickerbocker Hotel at 120 West 45th Street, and his lender foreclosed on the Woodstock Hotel at 127 West 43rd Street. The Knickerbocker was put in receivership, and the city ordered it shuttered in 1974. Durst was not the only assembler stung by the downturn. The Rudins let a lease option expire on Lexington Avenue and 50th Street, while the Minskoffs sold the DePinna Building at Fifth Avenue and 52nd Street.

1950: COMMUNITY BOARD PRECURSOR PROPOSED

ity officials proposed dividing New York’s five boroughs into 66 community planning districts 61 years ago this month. The intent of the proposal — made just after Mayor Vincent Impelliterri took the helm at City Hall — was to increase grassroots input for the development of projects like schools, hospitals and playgrounds, as well as to review land use and zoning issues. City Planning Commission head Jerry Finkelstein said the proposal would “bring planning down to the community grassroots level, where the principles of democracy may have the fullest sway.” The commission envisioned dividing Manhattan into 12 districts; Brooklyn into 19; Queens into 16; the Bronx into 11; and Staten Island into eight. In 1951, Manhattan was the first to begin experimenting with Mayor Vincent Impelliterri the idea, when it created 12 community planning councils. But it was not until 1963 that all five boroughs took part, and were divided into 62 districts (rather than the 66 proposed by the commission 13 years earlier). That was revised in 1975 to the current 59 community boards.

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he Real Estate Board of New York, the industry’s top trade group, laid the foundation for a 17-story office building at 12 East 41st Street 86 years ago this month. The 95,000-square-foot building — which it would own and partially occupy — sat just east of Fifth Avenue and cost $1.6 million to build. It opened in 1926, coinciding with REBNY’s 30th anniversary. The cornerstone contains copies of the minutes of the first meeting of REBNY’S predecessor association, the Real Estate Board of Brokers, which was founded in 1896. But the Great Depression put pressure on the trade group, which had financed construction with about $200,000 in equity, $600,000 in second mortgage bonds and $850,000 in a first mortgage. A 1932 article in the New York Times reported that it planned to transfer ownership to the bondholders through a friendly foreclosure. The outcome of that proposal was not clear, but in June 1943 12 East 41st Street a report said a foreclosure auction was scheduled for later in the month. Despite apparently losing control of the property, the association remained a tenant in the building until the 1990s, when it moved to its current location at 570 Lexington Avenue. Compiled by Adam Pincus

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PROFILE

CIM’s shock and awe

Out-of-towners take Manhattan, jumping on projects before rivals, sometimes at high prices BY ADAM PIORE he principals of the Los Angelesbased private equity firm the CIM Group know a thing or two about military strategy — two of them served as Israeli paratroopers before immigrating to the United States and teaming with a former Drexel Burnham executive to found CIM. Perhaps it’s no coincidence, then, that CIM entered Manhattan with a real estate equivalent of “shock and awe.” Virtually unknown to most local industry players until recently, CIM parachuted into Midtown in late 2009 — with a speed and decisiveness that surprised many of those still cautiously hoarding cash — and targeted distressed assets in prime locations. Two years later, the firm has multiple beachheads around the city, and has established itself as a major New York City player, likely for the long haul. “They came from nowhere,” said an industry source involved in one of their deals. “And when they made the decision to do the deal, they came up with the money within a manner of days. They move very, very quickly.” Over the last two years, CIM has completed at least 11 deals across the city, valued at a total of well over $1 billion (the exact dollar amount of their investment, however, is unclear, because the size of the firm’s stake in some of its properties is unknown). Those include its first buy, the site of the former Drake Hotel, which the firm followed up on by acquiring three neighboring properties that give it the most valuable development site in the city. Other assets include 209 unsold condos in the William Beaver House, a 47story luxury tower in the Financial District; a stake in 11 Madison Avenue, a fully occupied Art Deco office tower; 737 Park Avenue, long one of the most coveted potential condo conversion sites in the city; and Trump Soho. And as The Real Deal went to press, it was announced that CIM had teamed up with Jared Kushner, principal of the Kushner Companies (and publisher of the New York Observer) to acquire 200 Lafayette Street, an office building in Soho, for $50 million. CIM’s blitzkrieg Manhattan buying spree closely mirrors the strategy the firm developed on a smaller scale in its hometown of Los Angeles. “They tend to pick an area and hit it hard; they don’t do a one-off here or there,” said Carl Muhlstein, a vice

58 December 2011 www.TheRealDeal.com

president in Cushman & Wakefield’s Los Angeles office who has done three deals with the firm. “Speed to market and really penetrating a market quickly is their hallmark.” CIM relies on a large in-house staff with expertise in areas ranging from capital markets to construction to leasing and development to transform the undervalued

ents include pension funds in New York, New Jersey, Virginia, Texas and many other states. “After they moved from joint ventures to raising institutional money for their own funds, it allowed [acquisitions] to work much faster, with much more credibility,” Muhlstein says. “It allowed them to take it to the next level.”

Fitzgerald announced that it was partnering with CIM to originate some $5 billion in commercial loans and securitize them on the CMBS market. (Anthony Orso, CEO of Cantor Commercial Real Estate, told Bloomberg News in 2010 that CIM is putting up most of the capital.) In New York, most of CIM’s pur-

“The people who win in the vulture business are the ones who are the most skilled and the most aggressive. The guy who gets the deal is the guy who’s got the balls to come in and write the check.” Howard Davidowitz, chairman of Davidowitz & Associates Inc.

CIM founders (left to right): Richard Ressler, Shaul Kuba and Avi Shemesh

CIM bought the site of the former Drake Hotel, where Harry Macklowe ran into trouble (left), as well as unsold condos at the troubled William Beaver House (right).

assets it acquires — often urban properties in need of repositioning. The depth of that staff, which is unusual for a private money manager, allows the ﬁrm to transform its acquisitions without an outside development partner, industry experts say. Over 17 years, CIM has built up $9.5 billion in assets by following that template. The ﬁrm serves a long list of institutional clients anchored by the gargantuan, $228 billion California Public Employees’ Retirement System (CalPERS). Other cli-

CIM’S Drake play According to Real Capital Analytics, some $4.1 billion of CIM’s assets are in real estate. And in recent years, CIM has been one of the most active buyers in the industry nationally, shelling out an estimated $1.7 billion since 2009, according to the Wall Street Journal. Buys in recent months include Las Vegas condos, commercial properties in Los Angeles, high-rises in Dallas and ofﬁce space in San Francisco. In addition, last year, Cantor

chases have been targets of opportunity — troubled projects, mired in ﬁnancial distress. The ﬁrm’s biggest New York play is the Drake Hotel, which once belonged to Harry Macklowe, one of the poster children for the overleveraged excess of the boom. Macklowe had started with an ambitious vision. He purchased the Drake site on the corner of Park Avenue and 56th Street in 2006 for $440 million,

PHOTOGRAPH OF BEAVER HOUSE FOR THE REAL DEAL BY JAMES CHANG

PROFILE then demolished the hotel, planning to build a mixed-use development that would include luxury condos, a hotel and high-end shopping. First, however, he had to acquire a series of neighboring properties, driving up the cost of the project to about $724 million, even before construction. Macklowe put in tens of millions of dollars of his own money, but turned to Deutsche Bank to help ﬁnance the bulk of the deal. The bank chopped up a $559 million loan into pieces and sold it to eight different groups. In late 2008, as the credit markets were collapsing, the bank ﬁled a foreclosure suit on be-

Developer Harry Macklowe

tors, who held a total of $510 million of the debt, some at severely discounted rates. That property still carries a signiﬁcant degree of risk. According to news reports, CIM is planning to build a $1 billion condo and retail complex there. The site could include the tallest residential tower in New York. But to develop the site, CIM still needs to obtain a construction loan of as much as $700 million, no easy task in today’s market. Yet they may be just the owners to do it. “These are not the kind of people to get deterred,” said Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail consulting and investment

Developer Tamir Sapir

banking firm Stifel Nicolaus who covers iStar, said that though construction lending has come back in recent years, in order to get a loan, he believes CIM will need to obtain at least some commitments from tenants willing to move in once the building is complete. “I don’t think anybody is going to give a loan on a purely speculative basis,” he said. “They need to get commitments, or find an REIT that is willing to take it on, since they can borrow on a non-project-specific basis.” This type of project, he added, is only for those who can afford to be financially patient.

Anthony Orso of Cantor Fitzgerald

advance of any sort of deadline.” Meanwhile, CIM has continued to tap Macklowe’s expertise as it’s bought up the brownstones surrounding the Drake site (including 46 East 57th for $42.5 million and 42 East 57th for $32.4 million). Though Macklowe doesn’t have an equity stake in the project, last August, CIM backed him on an unrelated deal — the purchase of 737 Park Avenue, a 20-story rental building that he’s planning to covert to condos.

California pioneers CIM eschews publicity — so much so that no one knows for sure the meaning of the

11 Madison Avenue

Trump Soho

CIM’s most recent NYC buys DATE

ADDRESS

TYPE

SIZE

PRICE

PRICE SQ FT/UNIT

NOTES

Nov-11

200 Lafayette St.

Ofﬁce

130,000 sf

$50 million

$385 psf

Joint venture with the Kushner Companies

Nov-11

42 East 57th St.

Retail

8,580 sf

$32.4 million

$3,776 psf

Tenants include Turnbull & Asser USA

Oct-11

47-49 East 34th St. Residential

110 units

$54 million

$490,909 per unit

Bought defaulted ﬁrst mortgage

Aug-11

737 Park Ave.

Residential

108 units

$253 million

$2.34M per unit

Planned condo conversion; joint venture with Harry Macklowe

Jan-11

46 East 57th St.

Retail

7,245 sf

$42.5 million

$5,862 psf

Retail tenant to vacate; redevelopment planned

Dec-10

246 Spring St.

Mixed-use

391 units

$85 million

$217,391 per unit

Paid down loan held by iStar Financial at Trump Soho

Dec-10

11 Madison Ave.

Ofﬁce

2.25M sf

$958 million

$426 psf

Bought stake in ofﬁce tower, anchored by Credit Suisse

Dec-10

15 William St.

Residential

209 units

$60.1 million

$287,397 per unit

Bought debt on unsold condos

Dec-10

140 Sixth Ave.

Development

11,470 sf

$20.3 million

$1,765 psf

Redevelopment planned, defaulted ﬁrst mortgage

Jan-10

44 East 57th St.

Retail

7,920 sf

$106.9 million

$13,494 psf

Bought from Macklowe

Jan-10

50 East 57th St.

Retail

14,705 sf

$198.4 million

$13,494 psf

Bought from Macklowe

Source: Real Capital Analytics. Some of the listed prices are estimates.

half of the buyers who had purchased those pieces. Meanwhile, iStar Financial, which owned the largest portion of the loan, $224 million, hired Cushman to sell the note in the fall of 2009, but took it off the market because bids came in well below the $160 million asking price. It’s unclear whether CIM got involved with the Drake site through Macklowe, who was ﬁghting off foreclosure at the time, or iStar. However, when CIM arrived in late 2009 it agreed to pay off some 10 credi-

banking ﬁrm headquartered in New York. “They didn’t generate a business of this size running away from challenges.” CIM has made its name making “lemonade out of lemons,” he said. “The people who win in the vulture business are the ones who are the most skilled and the most aggressive,” he said. “The guy who gets the deal is the guy who’s got the balls to come in and write the check, and not say, ‘It’s subject to getting a construction loan.’” Joshua Barbar, an analyst at investment

PHOTOGRAPH OF ORSO BY THE COMMERCIAL OBSERVER; PHOTOGRAPH OF TRUMP SOHO BY DEREK ZAHEDI

“You really have to have a much longerterm horizon with many of those things,” Barbar noted. “The Drake might be the best piece of undeveloped land in Midtown, but if the economy stays stagnant the next few years ... having land is going to be costing you money.” In October, Shemesh told the Wall Street Journal that he was conﬁdent CIM would get the loan. “We have long-standing relationships with lenders,” he noted. “We anticipate our construction ﬁnancing to be in place well in

company’s initials. The ﬁrm declined a request for an interview with The Real Deal and would not answer written questions. A number of CIM’s local partners — including Macklowe, Tamir Sapir, Madison Equities and iStar — also declined to comment, noting that CIM liked to control its own publicity. But the ﬁrm is certainly no stranger to the media spotlight, and the broad outlines of its origins are well known. Continued on page 82

www.TheRealDeal.com December 2011 59

James Gardner | Architecture Review

East but Not Eden Cornell and Stanford want to build on Roosevelt Island. Who has the better design?

he real estate business has been analyzed from almost every imaginable angle, from the financial and the aesthetic to the psychological and the sociological. But rarely, if ever, has anyone seen fit to approach the industry from the viewpoint of evolutionary anthropology. Indeed, anthropology is, probably after chemistry, the last thing we think of with regard to real estate. And yet, how relevant it is to the development of Roosevelt Island, which — if Mayor Michael Bloomberg gets his way — may soon be home to a massive new campus affiliated with either Stanford University or Cornell University. The East River island, which stretches for two miles (from 46th to 85th streets), has manifold blessings that should give it a leg up in competition with the outer boroughs. It is more intimately proximate to Manhattan than any of them, especially to Midtown, of which it affords the sort of view that should be worth a great deal of money. But the mere fact that this land is surrounded by water changes the equation completely. It is, as the saying goes, “So close, and yet so far.” This long, narrow island, which is nowhere more than three blocks wide, has been an anomaly ever since the Dutch governor of New Amsterdam, Wouter van Twiller, purchased it from the Canarsie Indians, when it was called Hog Island. Known as Blackwell’s Island in the 19th century, it was home to the New York City Lunatic Asylum, and a penitentiary that was rendered obsolete with the opening of Rikers Island in 1935. There are few, if any, areas of Greater New York that have been developed to such a degree as Roosevelt Island with so little to show for it. It was the focus of intense speculative interest in the postwar years, especially around 1970, when the architects Phillip Johnson and John Burgee drew up a master plan for its development. Unfortunately for the island, the ’70s were not a good time for New York — or for architecture in general. And though some top architects like Josep Lluis Sert designed several of the buildings there, they were all cast in the Brutalist style of the times, which has not aged well. Subsequent building additions on Roosevelt Island by the likes of the 75-year-old New York-based firm of Gruzen Samton have been scarcely better. Taken together, the place feels like a windy and slightly deserted outpost of a decade that was surely the low point in the city’s history. From Manhattan, the island can only be reached by tram or subway today. However, two changes are afoot that may lift up the fortunes of the island. 60 December 2011 www.TheRealDeal.com

One of these is the soon-to-be-completed Franklin D. Roosevelt Four Freedoms Park, which was designed by Louis Kahn in 1974 (he had the plans with him when he died of a heart attack in the men’s room at Penn Station). Scheduled to open in 2012, it is largely of a piece with the Brutalist designs that dominate the mediocre architecture visible everywhere on Roosevelt Island. The second — and more important — change is the possibility that a major uni-

as over $100 million in tax incentives, to lure a science and engineering campus to the city. There have been seven main submissions of plans, from Carnegie Mellon, Rockefeller University and Amity University in India, among others. However, Stanford and Cornell are thought to be the frontrunners, and each would like to build on Roosevelt Island. The city estimated that the work on the campus could create over 30,000 jobs and

with strong divisions between the stories. Cornell’s proposal, meanwhile, is decidedly more angular. Its corrugated metallic roofs promise none of the organic greenery of the roofs in the Stanford proposal. In the rendering it appears as a complex of eight fairly uniform structures with sharp, silvery angles whose aesthetic recalls the inexorable geometries of solar panels and microchips. The eight units are arrayed in the form of interlocking patterns resembling a sequence

Stanford’s proposal depicts a complex of 10 buildings in a swerving, Neomodernist style. Inset: A rendering of Stanford’s proposal at dusk.

Cornell’s renderings show a more angular complex that includes eight structures. Inset: An interior rendering of Cornell’s proposal.

versity will build a campus on the island. By the end of the year (or, at the latest, early January), the Bloomberg administration will decide which of a number of prestigious institutions of higher learning will have the honor. “Universities are always a major magnet for talent — and the world’s most dynamic companies always gravitate to places where they can ﬁnd the best and the brightest,” Bloomberg said at a recent press conference, according to news reports. “Along with everything we are doing to diversify and strengthen our economy, a new applied sciences campus has the potential to be a real economic game-changer that will create jobs immediately, and for generations.” To this end, the city is offering free land on Roosevelt Island and at several other sites (including Governors Island), as well

generate more than $6 billion in economic activity over the next 35 years. The campus proposals submitted by Stanford and Cornell would each occupy around 16 acres just south of the 59th Street Bridge and just north of the Roosevelt Memorial. The Stanford proposal depicts a complex of 10 buildings conceived in a swerving Neomodernist idiom, with the usual assortment of slightly off-kilter curves and swerves of the Deconstructivist idiom. Most of the buildings are about six stories tall, with a few slightly higher and only one true highrise. Formally, they are conceived as curving slabs rising upon skinny pylons that have an impeccable Modernist pedigree going back to French architect and designer Le Corbusier. According to the renderings, they are largely conceived as curtain walls, though

of W’s. Despite the absence, as yet, of more detailed renderings, Cornell’s proposal actually looks more interesting and seems to

have the edge, even though Stanford’s proposal looks, at least on the surface, to be a little more environmentally friendly. What is so heady about the prospect of a new campus on Roosevelt Island is that it might just be the one thing that could raise the fortunes of this ill-favored corner of the city. It should now be clear to anyone that the massive efforts of the past four decades have been an atrocious failure. While buildings surely have been built and inhabited on the island, it has never coalesced into the success that was hoped for, despite projects like the more recent multiresidential building Riverwalk. An important university would promise thousands of young charges who would presumably wish to live on the island and infuse it with the sort of energy and relevance that so far have eluded the best efforts of the many planners who have tackled the problem of what, if anything, could be done with the former Hog Island. TRD

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PLANNING

FOR

NYC’S

FUTURE

In the zone

New York’s real estate planning gurus tackle the next 50 years of zoning BY LEIGH KAMPING-CARDER his year marks the 50th anniversary of the city’s comprehensive “Zoning Resolution,” which dictated what types of development could go where. The rules have undergone changes since taking effect in 1961, but in many ways, they continue to reflect the concerns of a prior era — when the automobile was king, manufacturing a steady source of employment and the Internet a far-off dream. “We are occupying a social realm that’s different than [what] we constructed 50 years ago,” developer Jonathan Rose, founder of the eponymous real estate firm, said at a conference last month organized by the Department of City Planning, the Harvard University Graduate School of Design and the Steven L. Newman Real Estate Institute of Baruch College. As the Zoning Resolution passes the half-century mark, the kind of radical revamp that took place in the 1950s is not in the works. But city planners, academics and real estate professionals are crafting proposals that will shape the way developers build in the coming years: unlocking underused land, updating Midtown’s aging office stock, incorporating sustainability, and redefining “mixed-use” in ways that blur residential and commercial districts.

Midtown District,” a zoning distinction meant to shift development from the overbuilt eastern section of the neighborhood to the west and south. In parts of Mid-

New proposals Last year, for example, the Real Estate Board of New York submitted a request to the city that effectively calls for the “upzoning” of Midtown. Some of the older Midtown buildings have larger floor-to-area ratios than what is currently allowed, since they were grandfathered in under the pre-1961 code. Under today’s zoning rules, building owners can make modifications to the structures, but if one burned to the ground, it couldn’t be rebuilt at the same size, explained Jerold Kayden, an urban planning professor at Harvard. (Kayden cochaired the zoning conference with the chair of the City Planning Commission, Amanda Burden.) That creates a disincentive for developers to demolish these aging buildings, and instead preserves structures ill-suited to modern office life, said REBNY chair Mary Ann Tighe. REBNY has advocated allowing developers to tear down existing structures and rebuild at the same FAR, an idea the planning department is analyzing. It would not be the first Midtown rezoning. In 1982, the city created the “Special 62 December 2011 www.TheRealDeal.com

ing, making it easier for developers and building owners to add green roofs, solar panels and other environmentally minded features.

rose into slender towers, allowing light to reach the street. By the 1950s, however, those rules were insufﬁcient. After years of consultation and revision, the city passed the Zoning Resolution in 1961, with the Amanda Burden, the chair of the City Planning Commission overall effect of increasing allowable bulk in commercial districts, while protecting residential neighborhoods. In the intervening decades, the city has made further additions and amendments, including introducing inclusionary zoning to encourage the construction of affordable housing, rezoning waterfront land to create parks (a priority for Burden), and requiring environmentally focused sidewalk features, such as street tree plantings and bicycle parking. Mayor Michael Bloomberg and his administration, in particular, have actively wielded zoning as a tool to remake the city. Under Burden, the city planning commission has overseen 114 rezonings in areas like the Hudson Yards and Willets Point, covering almost 37 percent of New York’s land area. It’s by far the most extensive reshaping of the city in decades, according to Robert Steel, deputy mayor for economic development. “Zoning is not planning,” Burden said at the conference. “Zoning is a tool to implement a vision and a plan.”

Mixing up mixed-use

“Zoning is not planning. Zoning is a tool to implement a vision.” Amanda Burden, City Planning Commission town, the rezoning imposed limits on height and FAR, as well as protections for theaters; it also created different bulk and density requirements for development on avenues and mid-blocks. “This city planning commission has been one of the most forward-looking, certainly in memory,” Tighe said in a brief interview. “They’ve got two more years to go, and I’m hoping in those two years they take this [proposal].” Another priority for the city is sustainability, which was not a consideration for 1960s-era planners. Later this month, the commission will unveil a plan to strip the zoning code of obstacles to green build-

The city is also using federal funds to study East New York and the Bronx Metro-North corridor with an eye to improve transportation access and, in the case of East New York, identify potential landuse changes.

Bloomberg’s legacy New York has come a long a way since 1916, when it became the ﬁrst city in the U.S. to enact a comprehensive zoning law. At the time, New Yorkers had begun to protest the loss of light and air as taller buildings began to appear in Manhattan. The early rules called for height and bulk limits for buildings, and favored those that

Despite the changes, however, some experts say the core of the 1961 Zoning Resolution is unsuited to the realities of modern life, and needs to be revisited. For one, critics say, it strictly regulates use at a time when property uses are becoming more ﬂuid. One example is the lobby of the Ace Hotel, where hotel guests lounge cheek by jowl with professionals busy at their laptops. “This is the world we’re moving into, a much more mixed-use world,” Rose said. But the stringent restrictions of the 1961 Zoning Resolution — which largely segregate neighborhoods into residential or commercial zones — inhibit this trend, he said. (Another outdated rule? The prohibition on four or more unrelated individuals living in a single apartment.) Advocates of “form-based” zoning, which has already been adopted in Miami, Denver and other U.S. cities, support an approach that weighs the characteristics

PLANNING

FOR

Zoning success and failures

ities use rezoning to nudge development in one direction or another, or to achieve policy objectives such as creating more housing or protecting certain industries. But not all rezonings accomplish the desired effect. Here’s a look at some of New York City’s zoning successes and disappointments.

NYC’S

FUTURE

Harvard professor Jerold Kayden, left, expects the city to loosen zoning restrictions. Developer Jonathan Rose, right, says the world is more mixed-use than it once was.

NYC rezonings since 2002

SUCCESS STORIES

Midtown Special District, 1982 These specialized zoning rules allow for major retail stores on Fifth Avenue and protected landmark theaters in an entertainment subdistrict around Times Square. Experts credit these rules with helping to transform the once seedy square into an international destination, and fostering development further west.

Downtown Brooklyn Special District, 2004 Since the City Planning Commission won approval to increase the allowable ﬂoorto-area ratio in Downtown Brooklyn, more than 1 million square feet of commercial space and more than 4,200 residential units have been added (or planned) in the city’s third-largest business district.

West Chelsea, 2005 The signature feature of West Chelsea’s redevelopment — prompted by a rezoning from light manufacturing to commercial and residential use — may be the former railway tracks, which is now, of course, an elevated park known as the High Line. But no less transformative is the $2 billion that private investors have plowed into this 16-block area. LETDOWNS

Garment District, 1987 Intended to protect New York’s apparel production industry, the Garment District’s zoning rules restrict the conversion of industrial buildings to residential, ofﬁce or hotel use in this swath of the West 30s. But critics say the zoning is outdated because it ignores the market’s demand for ofﬁce space, and also depresses rents.

Fourth Avenue, Brooklyn, 2003 The city rezoned Park Slope’s stretch of Fourth Avenue in 2003 (enlarging the rezoned area in 2005) to allow for 12-story buildings in the formerly low-rise corridor. Condominiums and hotels have sprouted along the avenue, but the area has failed to become the vibrant streetscape once imagined. Now, the City Planning Commission is recommending a 56-block-long, enhanced commercial district that would require ground-ﬂoor retail, which was absent from the last rezoning. TO BE DETERMINED

Greenpoint-Williamsburg, 2005 Rezoning 200 blocks in North Brooklyn from manufacturing to residential use paved the way for the development of 10,000 new housing units. So far, 3,600 units have been built — many of them on the eve of the market crash, leading some observers at the time to predict a condominium glut. But just because the area’s real estate market is on more solid footing, that doesn’t mean its future isn’t being watched as closely. By Leigh Kamping-Carder

Under Mayor Michael Bloomberg, the city has passed 114 rezonings in areas like the Hudson Yards, Willets Point and Fourth Avenue in Brooklyn, all pictured here.

of a development ahead of what it is used for, relying on standards for the physical form of buildings, rather than categories like “residential” or “manufacturing.” Even more elastic is “performance-based zoning,” which Kayden described as setting qualitative standards for buildings. Under performance-based zoning, for example, an industrial plant that meets proper noise, environmental and other controls could exist in an otherwise residential neighborhood. Of course, this idea doesn’t sit well with everyone. “I believe in mixed-use, but only to a certain extent,” said Brendan Aguayo, director of development at Brooklyn brokerage Aguayo & Huebener Realty Group. If a neighborhood is residential, it should stay residential, and if a neighborhood is commercial, it should stay commercial, he added. No proposals to adopt form-based zoning are currently on the table in New York,

but its inﬂuence is being felt here. The planning director who oversaw Denver’s zoning transformation, Peter Park, now a professor at Harvard, spoke about his experiences at last month’s conference, for example. And, others think the city is on the brink of making changes. “I wouldn’t be surprised if the city loosens up use restrictions,” said Harvard’s Kayden. For Paul Goldberger, the architecture critic for the New Yorker, it is also worth remembering the limits of zoning, and the effects of “serendipity” on transforming the landscape of the city. After all, he said, the streetscape provides its own template. “We don’t start with a blank canvas,” he said. “The ﬁnal challenge of the 21st century has to be to keep in mind that [New York’s] physical form needs to be managed and guided, but that it cannot be wholly controlled by planners,” he said. “Nor should it be.” TRD www.TheRealDeal.com December 2011 63

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Q&A

Waiting for Westchester’s rebound The suburban enclave sees a long-awaited uptick in sales, but prices are still down and obstacles remain BY MELISSA DEHNCKE-MCGILL estchester may be the suburb that’s home to some of the area’s biggest local celebrities — from Bill and Hillary Clinton to Martha Stewart — but that hasn’t prevented market forces from taking hold of the real estate market there. Just north of the city, the county has been struggling for the last few years and, like the market in the city, hasn’t fully rebounded yet. In this month’s Q&A, The Real Deal talked to brokers and market analysts about everything from Westchester’s super-luxury market to the rental market to the foreclosure situation. Our sources said that after several years of stagnation, there was ﬁnally an uptick in sales volume in the third quarter. But that improvement didn’t translate into prices, which are still down by as much as 10 percent from a year ago and by 30 to 40 percent from the boom.

Mufﬁn Dowdle

broker, Ginnel Real Estate How is the overall residential market in Westchester doing these days compared to a year ago and during the boom? The number of sales is up compared to a year ago by 10 percent. [Prices] are down 10 percent from a year ago. And prices are down 30 to 40 percent from the boom. Which Westchester towns are performing best right now in terms of residential sales volume and prices, and which are struggling the most? Scarsdale, Rye and Bedford have always been strong and consistent. [But] Pound Ridge and Lewisboro are secret jewels that are taking a little longer to rebound. They are struggling for no reason other than they are a little further away [from the city]. Who are the most active buyers in the Westchester market right now?

percent. I tell all the buyers not to be surprised if the house doesn’t appraise. We have had a few renegotiations. We are also having a lot of cash buyers who are reﬁnancing after they close.

P. Gilbert Mercurio

CEO, Westchester Putnam Association of Realtors How is the overall residential sales volume doing in Westchester these days? In our third-quarter report we found that there was an uptick in sales volume. That was encouraging because we haven’t seen much in the way of increasing sales in the market for a couple of years now. It showed an overall 8 percent increase compared to 2010. What’s going on with residential prices in Westchester these days? Prices are down. [In the third quarter, we found that] in the single-family-house sector prices were down by 6 percent compared to last year. The median sales price of a single-family house in Westchester was $684,005.

“Homes that are $5 million and up are having a pretty strong flurry of activity in the last six to eight weeks. There are currently six firmly in contract. A year ago at this time there weren’t any.” Chris Meyers, Houlihan Lawrence We have a consistent group of younger people and families moving north from New York City. Our weekend market is strong. I would say that 50 percent of my buyers are local people who have upgraded or made some kind of lifestyle change, and they have bought and sold houses within a 10-mile radius. What’s going on with financing for residential purchases in Westchester? The banks are definitely coming in with low appraisals, sometimes by 10 to 20 64 June 2011 www.TheRealDeal.com

We wrote early this year about the luxury market in Westchester picking up and how the number of homes priced above $1 million or more was climbing. So, which price ranges are performing best in Westchester right now? That price range, $1 million-plus, is accounting for 28 percent of all sales. That is a high ratio, [almost] as high as it had been during pre-recession times. It’s not so much that the high end is getting stronger — it’s that the moderately priced properties are having a harder time because

The market is, however, bifurcated when it comes to prices, with the high end and the low end holding relatively well and the mid-market struggling. For example, the $1 million-plus market accounted for 28 percent of all sales — which is almost as big a slice as it accounted for pre-recession. And, one source said the $5 million-and-up range has seen a ﬂurry of activity in the last six to eight weeks. Meanwhile, the towns closer to the city, such as Scarsdale and Rye, are generally doing better than towns farther north, like Pound Ridge and Lewisboro. There are still plenty of market obstacles, like perpetually low appraisals, a steady foreclosure inventory, and stubborn sellers who are unwilling to accept prices far lower than their properties would have fetched during the boom. For more on inventory, geographical division and the reshufﬂing of the brokerage community, we turn to our panel of experts.

they appeal to potential purchasers with lower incomes, who have a harder time gathering the cash needed for a down payment and getting financing. Are you still seeing distressed sellers? If you are talking about people going to foreclosure, the answer is yes. But Westchester doesn’t have anywhere near the problem that other parts of the country do. The county clerk reports foreclosure filings here, and this year they’ve been in the range of 130 to 150 foreclosure filings every month. That is actually not a lot in the context of the total housing stock in this county, and only a dozen or two actually get foreclosed [with] the bank [taking] ownership. Most of the others go through a short-sale process. What is inventory like and how does that compare to the recent past? There were 7,124 units for sale in the MLS database at the end of the third quarter, and that was a 3 percent decrease from last year at this time. The inventory has been in the range of 6,800 to 7,500 units for quite some time now. What we don’t have in Westchester is the overhang of inventory that’s driving prices down. What’s going on with financing for residential purchases in Westchester? It’s not that it’s difficult. I haven’t heard any stories of people being refused or unable to qualify. It’s just that it’s taking longer and the examination of their assets is more rigorous. The lenders look at employment more closely than they used to, but I can’t say that lending practices are blocking a recovery in the market. There’s been a lot of merging and reshuffling of offices in Westchester in the last few years. Is the number of residential brokers expanding or contracting in Westchester these days? The number of firms is about what it has always been. I hear larger ones are ac-

quiring existing ofﬁces, but there are also small shops starting up. In terms of numbers of agents, there has been a decrease over the last couple of years. Membership in a realtor organization is a kind of proxy for how many people are practicing. A couple of years ago, before the recession, this organization was on the edge of having 8,000 practicing realtors. Today it’s about 6,700. That’s a pretty big decrease over the past three years. Most of the realtor organizations in New York and nationally are also experiencing decreases.

Cathleen Smith

president, Coldwell Banker Residential Brokerage, Connecticut/Westchester Which Westchester towns and price ranges are performing best? We have seen some brisk sales activity in communities in central Westchester, particularly in towns like Rye, Scarsdale and Larchmont. Homes priced within the median price range are getting the most attention. Properties that are priced between $1 million and $2 million are also seeing increased attention. Are you still seeing distressed sellers in the market? Unfortunately, we are still encountering home sellers who must sell because they cannot keep up with mortgage payments or because they are in danger of losing their homes. Since banks are being slow to release the foreclosed inventory, we do feel we will see more distressed properties coming on the market. We also see those who owe more than their properties are worth trying to move their properties. This will be part of our business going forward for some time. How long are properties staying on the www.TheRealDeal.com December 2011 65

Q&A market in Westchester? The amount of time it takes for singlefamily homes to sell has remained steady for the last three years. The average days on market for single-family homes in Westchester [is] approximately 140 days. In 2005, it was closer to 119 days. What are the biggest challenges to selling residential property in Westchester? One challenge is getting homeowners to adjust their expectations when it comes to pricing. We are still seeing homeowners who want to overprice their homes. Those homes, unfortunately, sit on the market. In addition, we have encountered issues with appraisals, especially in this environment, where we are dealing with new rules and guidelines. Who are the most active buyers in the Westchester market right now? We’ve seen a signiﬁcant increase in investors. Young families are [also] looking for good deals, and we are also seeing [clients] who are deciding to rent because they are expecting prices to drop even further.

Chris Meyers

CEO, Houlihan Lawrence How are residential prices doing? The median price year-to-date is $615,000 for a single-family home. In 2009, at the low point, [it] was $580,000, so we’re up from two years ago. Which towns are performing best? Southern Westchester has performed better than northern. Towns like Bronxville, Scarsdale, Larchmont, Rye and Irvington are strong markets on a relative basis. What seems to be driving that is the proximity to the city. Even within those communities, the homes that are closer to the train station tend to outperform those parts of town where you have to drive farther to get to the train station. Which towns are struggling the most? Towns that don’t have close access to trains and outlying areas of town. For example, Katonah, which is just north of Bedford in northern Westchester, [is] one of the markets that’s been struggling. And yet, within the town of Katonah, homes that are right in the village have really done very well. Which price ranges are performing best and which are struggling? Homes that are $5 million and up are having a pretty strong ﬂurry of activity in the last six to eight weeks. There are currently six homes in Westchester ﬁrmly in contract that are over $5 million. A year 66 December 2011 www.TheRealDeal.com

ago at this time there weren’t any. And we have active negotiations going on a couple others in that price range. How negotiable are listing prices in Westchester these days? If you look at the data from the MLS, most homes are selling at roughly 95 percent of the last list price. [But] if you dig under that [to what] homes were originally listed at and marked down, there’s a big difference between homes that were priced properly when they ﬁrst hit the market and homes that have had to be marked down. Roughly one-third of sales are happening without having been marked down [much] at all. On average, those are selling at 97 percent of list price. Roughly two-thirds of the homes have been marked down at least once — they are selling on average at 78 percent of the original list price. What are the most surprising trends in the Westchester market right now? We have begun to see international buyers. Of those six deals I mentioned that are currently in contract above $5 million, three of them, that I am aware of, have buyers coming from overseas. A couple [of them are] from Asia, and both Russia and China are out there at the very high end. We haven’t seen that too much lately in the suburbs. Who are the most active buyers in the Westchester market? The families relocating from the city continue to be very important. In 2011, about 28 percent of all homes purchased were buyers coming from New York City. That is up from just under 25 percent at the peak of the market. The move-up buyers [within Westchester] are not as prevalent as they used to be. … Also, we have seen [that] White Plains and, more recently, New Rochelle — the cities of Westchester — have built a lot more condo product. Most notably, in White Plains there is the Ritz project in City Center and big growth in restaurants, shopping and theaters. There’s a lot more dynamic urban scene that is attractive to couples who are downsizing and young single people. There’s one project called Ridge Hill Village in Yonkers, which is unusual for this market. It’s a residential community that has a multiuse center and 1.2 million square feet of retail, with a Whole Foods, Lord & Taylor, L.L.Bean, Lands’ End and a cinema. The stores have just opened and there are 500 condominiums, which went on sale in the springtime. It’s already over 25 percent sold. Is the number of residential brokers expanding or contracting in Westchester? The number is down from where it had been. I think the last numbers there were 7,000 residential brokers active in Westchester today, and that is down from around 8,500 at the peak of the market. As

far as brokerages and the ofﬁces, the large players have been relatively stable. The companies who have, say, 5 percent or more of market share have held pretty steady.

Chris Raveis

managing partner, William Raveis Real Estate, Mortgage & Insurance How is overall residential sales volume doing in Westchester? With seven weeks remaining until the close of 2011, residential, single-family sales in Westchester are running pretty even to last year, with a 2 percent projected increase by year end. Unit sales are 21 percent up from 2009, but remain down 33 percent from the boom in 2005. Which towns are struggling the most? Katonah/Lewisboro and North Salem are the districts that [are struggling] the most. Which price ranges are performing best in Westchester right now? In terms of the over-$1 million home market, homes that might have sold just below $2 million in the past are now seeming to be a bargain in the mid-$1.5 million range. For those with high buying power, there are bargains to be had. The $300,000 to $500,000 range is also doing quite well. Are you still seeing distressed sellers? Westchester seems to have been hit last with the distressed properties. We are seeing them, not in major abundance, but at all ends of the spectrum. … The total number of short sales/foreclosures on the market in all of Westchester is 280 homes, or 7.4 percent of total inventory. What are the biggest challenges to selling residential property in Westchester? One of the biggest challenges today is convincing sellers to price their house fairly within recommended market ranges and to accept an asking price that may be 30 percent lower than at the peak of the market. The price of a house has to be sold four times — ﬁrst to the homeowner, then to the brokerage community, the buyer and ﬁnally the lender. Another challenge is to persuade the seller to invest in their home in preparation of placing it on the market. Who are the most active buyers in the Westchester market right now? There are young couples or families from New York City. There’s still activity within the towns, but at a lesser rate. … Professional relocations [are also] picking up again — with business families moving to our area from other parts of the country. This is a positive note, as little to no activ-

ity was seen in this category over the past two years. Can you tell us about a notable deal that illustrates the state of the market? William Raveis’s Rye agent, Nancy Everett, represented the buyers in the highest recorded Rye city sale in MLS history. Her clients purchased an 8,000-square-foot, Long Island Sound waterfront home on 1.5 acres. The list price was $12.5 million and [it sold for] $11.6 million.

Mark Nadler

president/principal broker, Prudential Centennial Which towns are performing best? Scarsdale and Larchmont are doing well, relatively speaking. Last year there were 184 sales in Scarsdale, and as of Nov. 10, there were 186. So it’s comparable. The average selling price last year was $1.47 million, and again this year it’s $1.51 million — a 2.3 percent increase for singlefamily houses. Which towns are struggling the most? The New Rochelle market is awful, one of the worst periods I have seen. It’s a big city with a strong school system, but the market there is not doing well. Edgemont is also in a slump. Which price ranges are struggling most right now in Westchester? Probably the middle segment of the market and some of the upper niche markets. New construction from a few years ago might have been selling for $3 to $3.5 million. A lot of those properties are now selling at between $2.5 and $3 million. The new-construction market has contracted. What are the most surprising trends you’re seeing in Westchester? One of the things I have seen this year and last year is the number of rental properties have increased. A lot of people who couldn’t sell properties are renting them. Buyers who didn’t see what they liked or weren’t confident rented with the intention and belief that they are going to buy in six months to a year. We just rented a property two weeks ago, a six-month rental that can’t be extended because the owner is selling and the tenant is renting to give himself six months to find a house to buy. Is the number of residential brokers expanding or contracting in Westchester these days? The number of offices has probably decreased. The number of agents has stayed about the same or had a slight decrease. But the expectation is that in the next year or two, the number will go down. TRD

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Tri-state briefs WESTCHESTER

Whole Foods, L.L.Bean now open in Yonkers After years of lawsuits and federal indictments, the largest mixeduse outdoor shopping center in the New York area has ofﬁcially opened for business in Yonkers. Named Westchester’s Ridge Hill, the 1.3 million-square-foot, $685 million project was developed by Forest City Ratner. Newly opened retailers include a 60,000-squarefoot Whole Foods, L.L.Bean, H&M, Old Navy and Sephora,

Forest City Ratner’s Andy Silberfein (left) and Bruce Ratner riding the “Westchester’s Ridge Hill Express” trolley at the grand opening of the new shopping center.

along with restaurants the Yard House and The Cheesecake Factory. Lord & Taylor is slated to open an 80,000-square-foot store in March, the Journal News report-

ed. The outdoor shopping center also features a trolley known as the “Westchester’s Ridge Hill Express.” The project also includes the 500-unit Monarch condomin-

iums, which are set to start sales this fall, and 84,000 square feet of ofﬁce space for the Westmed Medical Group. Ridge Hill has been controversial because of the tax breaks it received, and because it is the subject of an ongoing federal public-corruption probe involving Yonkers politicians Sandy Annabi and Zehy Jereis. But despite the obstacles, Yonkers mayor Phil Amicone called the development a game-changer for the region. Ridge Hill “will be a destination the likes of which we haven’t seen in Westchester County,” he said.

CONNECTICUT

Halloween snowstorm frightened insurers Connecticut struggled to recover last month from the crippling lateOctober Nor’easter now believed to be the worst storm in state history. The snowstorm, which came less than two months after Hurricane Irene, knocked out power in some 830,000 homes and closed businesses and schools, according to the Hartford Courant, while ice, snow and falling branches damaged buildings. The Connecticut Insurance Department estimated last month that the total regional insurance-covered damage from the storm would be $1 to $3 billion. Of that, Connecticut’s share is expected to be $500 to $750 million, though the department said the number of claims is expected to increase. President Obama approved federal emergency assistance to aid the state in its cleanup, and Northeast Utilities announced a $10 million fund to assist residents who suffered losses in the snowstorm.

NEW JERSEY

Novo builds new U.S. HQ Danish health-care company Novo Nordisk has broken ground on its new U.S. headquarters in Plainsboro, NJ. The project, a joint venture led by Ivy Equities and LCOR in partnership with Intercontinental Real Estate Corp., is a $215 million redevelopment of the 770,000square-foot former Merrill Lynch

Novo Nordisk’s headquarters

building, which was built in 1985. In New Jersey’s largest commercial real estate transaction so far this year, Novo Nordisk signed a longterm lease for the entire 800 Scudders Mill Road building, the company said. The project is expected to be completed in 2013, and will house employees currently located in three existing buildings. New Jersey lieutenant governor Kim Guadagno attended a groundbreaking celebration for the project on a rainy day recently, NJBZ reported. But, Guadagno said, “it’s not raining in New Jersey any day we get to announce jobs, construction and cranes going up.” Sherman Advertising Associates | shermanadvertising.com | http://shermanadvertising.com/holiday Sherman Ornament D REa Deal indd 68 December 2011 www.TheRealDeal.com

Compiled by Russell Steinberg

National market report Commercial and residential real estate news briefs from around the U.S.

The Houston skyline

building at 1918 Eighth Avenue in Seattle’s Denny Triangle, two ofﬁce towers in downtown Bellevue, and the 600,000-squarefoot Advanta Ofﬁce Commons in Bellevue’s Eastgate area. “We’ve always been an opportunistic seller when the market’s in our favor,” Ivanoff said. “It seems like a window has opened for us lately.”

Chicago

Houston The Houston office market is seeing a drop in available space, the Houston Business Journal reported. The Houston-area office market, which includes some 240 million square feet of space, saw a 12.2 percent overall vacancy rate at the end of the third quarter, according to a report released last month by Delta Associates. The direct vacancy rate was 11.7 percent, down from a cyclical high of 12.7 percent in 2010, the report said. Delta projected that each of the next two years would see 4 million square feet of net absorption, decreasing the overall vacancy rate to 9.8 percent. “It would be the lowest vacancy rate ever reported in Houston,” Delta CEO Greg Leisch told the Journal, pointing out that only 1.5 million square feet of office space is currently under construction in the area. About 2.3 million square feet of industrial space was under construction in the region at the end of September, the report said.

Los Angeles

Rihanna

Pop singer Rihanna has listed her Beverly Hills home for $4.5 million, substantially less than the $6.9 million she paid for the property two years ago, the Los Angeles Times reported. The 8,520-square-foot,

three-story house has eight bedrooms and 10 bathrooms, and sits on three-quarters of an acre with a swimming pool. But the home is a fixer-upper, with “extensive damage from moisture and water intrusion” on the roof, windows, doors and balconies, according to the listing, with John Woodward IV of Coldwell Banker and John Galich of Rodeo Realty. In fact, the leakage problems prompted Rihanna to file a lawsuit this summer against Prudential California Realty, her property inspector, and the former owner of the house, claiming that those involved with the sale failed to inform her that the residence was defective. According to attorneys for the Grammy-winning singer, the house sustained flood damage from a moderate 2010 rainstorm, when water pooled on the second floor and seeped downstairs.

the backyard. These are dangerous criminal groups doing this.”

Seattle 1918 Eighth Avenue in Seattle

Boston Boston-based Sonesta International Hotels has agreed to sell two of its hotels to Hospitality Properties Trust for $150.5 million, the Boston Business Journal reported. The sale, which includes the 400-room Royal Sonesta Hotel in Cambridge and the 483-room Royal Sonesta Hotel in New Orleans, is slated to close in the ﬁrst quarter of 2012. Including assumed debt and other liabilities, the total purchase price is about $174 million. Sonesta will continue to manage the two hotels. Hospitality Properties, based in Newton, Mass., is a real estate investment trust. “We are delighted to announce this transaction, which will provide

Las Vegas Las Vegas houses emptied by foreclosure are being turned into marijuana “grow houses,” the New York Daily News reported, as drug dealers take advantage of affordable real estate for rent. Last year, authorities dismantled 153 indoor grow sites in Nevada and seized more than 13,000 plants, compared with 18 sites and 1,000 plants in 2005, the U.S. Drug Enforcement Administration said. “You can’t have crime without opportunity,” University of Nevada criminologist William Sousa told the Daily News. “All those empty homes present an opportunity for criminal activity.” Growers can cultivate over 200 marijuana plants worth $3,000 each in a large home, the News said. Hydroponic marijuana grown indoors can sell for over four times what Mexican marijuana nets. “With this market, it’s almost a free-for-all right now,” Las Vegas police Lt. Laz Chavez told the Las Vegas Review Journal earlier this year. “These guys aren’t the fun-loving hippies with a small garden in

Developer Harper Court Partners and the Los Angeles-based Canyon Johnson Urban Fund have started construction on a mixeduse development in Hyde Park, after closing on a $65 million construction loan from Citigroup’s Citi Community Capital, Market Watch reported. The project, on a 3.3-acre site at the corner of 53rd Street and South Lake Park Avenue, will include a 150,000square-foot office tower, a three-story retail building and a Hyatt Place Hotel. Construction is scheduled for completion in 2013. “Citi Community Capital recognized the transformative nature this project will have on Hyde Park,” said Douglas Leezer, a director at Citi Community Capital. “[It will inject] fresh vitality into one of Chicago’s most vibrant communities.” Earlier this summer, the University of Chicago inked a 150,000-square-foot lease to occupy the project’s office tower. The transaction is anticipated to be among the largest office leases signed in Chicago in 2011.

Royal Sonesta in Cambridge

Seattle developer Schnitzer West last month sold its five-building Valley Avenue complex in Puyallup to International Airport Centers, the Seattle Times reported. The property, which includes office and warehouse space totaling 443,000 square feet on a 24.3-acre site, traded hands for $41.6 million, the Times said. The move prompted some industry insiders to wonder if Schnitzer might be getting out of development, an assertion firmly denied by the company’s founder and managing member, Dan Ivanoff. “Schnitzer isn’t getting out of the development game,” Ivanoff said. “It’s just reloading.” In the last 18 months, Schnitzer has sold most of what it’s built or bought since 2004, including the 36-story

our stockholders with signiﬁcant value,” said Stephanie Sonnabend, CEO and president of Sonesta. Compiled by Katherine Clarke

Visit us on the web: www.TheRealDeal.com

www.TheRealDeal.com December 2011 69

On the market The Milan in Chelsea hits the block A 15-story apartment building at 118-122 West 23rd Street is on the market with an asking price of $45 million. The elevator building, known as the Milan, contains 42 apartments and two stores. Each of the building’s one-, two- and threebedroom units has its own outdoor terrace and ﬂoor-to-ceiling windows. Nine of the larger apartments have working ﬁreplaces. Massey Knakal’s Paul Smadbeck, Brock Emmetsberger and James Nelson are handling the assignment.

UES apartment buildings on the market Three adjacent multifamily buildings at 329-339 East 94th Street are for sale with an asking price of $32 million. The prewar, walk-up properties have a combined 109 apartments, including 11 studios, 33 one-bedrooms and 65 two-bedrooms. The six-story buildings together have 63,770 square feet of space. There are 11,600 square feet of air rights for future development. Josh Frank and David Haley of Misrahi Realty are handling the sale.

Soho loft buildings asking $20M

21, 25-27 Mercer Street

A pair of loft buildings at 21 and 25-27 Mercer Street is for sale with an asking price of $20 million. The properties include a ﬁve-story building and an adjacent three-story building that have a combined 24,687 square feet of space above grade. Ten rental units and three stores, oc-

70 December 2011 www.TheRealDeal.com

Commercial properties recently placed on the market

cupied by retailer Nike, plumbing products manufacturer Toto and French boutique Surface to Air, are shared between the buildings. The apartments consist of ﬁve rentstabilized units and ﬁve free-market units, all of which are currently occupied. Peter Hauspurg, David Schechtman, Lipa Lieberman, Marion Jones and Gary Meese of Eastern Consolidated are marketing the buildings.

Garment District office building on the block A newly constructed office building at 256 West 36th Street is on the market with an asking price of $17.25 million. The 12-story limestone property, built in 2010, has 36,500 square feet of space. Each floor has been furnished with Brazilian oak flooring, marble bathrooms and weather-efficient windows. The seventh and 12th floors have their own terraces over the building’s 256 W. 36th Street setbacks. With the exception of the second floor, the property will be delivered vacant. Besen & Associates’ Ronnie Shaban and Okada & Co.’s Christopher Okada are marketing the property.

Brighton Beach development site for sale A partially developed parcel at 271 Sea Breeze Avenue in Brooklyn is available for sale or net lease with an asking price of $14.9 million. Straddling the neighborhoods of Brighton Beach and Coney Island, the development site has been approved for a mixed-use building of 157,794

square feet, with 97 condo units, a community facility and 165 parking spaces. The site was stalled as recently as this summer. Construction is underway, and about $4.5 million in hard costs have been put into laying the foundation. The current owners have al271 Sea Breeze Avenue ready acquired development rights from adjacent parcels for the site, which has a lot area of 28,540 square feet. Massey Knakal’s Brian Hanson, Robert Knakal, J. Matthew Dillon, Jonathan Hageman and Elysa Berlin are handling the sale.

West 86th Street apartment building for sale A six-story, prewar apartment building at 32 West 86th Street is on the market with an asking price of $8.5 million. The elevator building, located between Columbus Avenue and Central Park West, has 14 market-rate rental units, ranging from studios to two-bedrooms. Two of the penthouse units at the 32 West 86th Street 9,200-square-foot property have terraces, and there are 14 wood-burning ﬁreplaces in the building. The building was developed in the early 1900s by William and Thomas Hall. Gerald Crown and Burt Savitsky of Brown Harris Stevens are handling the sale. Compiled by Linden Lim

Deal Sheet summary

The Deal Sheet, on pages 72 to 78, covers transactions from 10/11/11 through 11/10/11. Please submit future deals to deals@therealdeal.com.

Sales

Overview

By type

Property sales Deals Dollars

31 $1,710,180,000

Financing

By dollar volume (in millions)

Development

Hotel

Industrial

Mixed-Use

Multi-family

59.97 54 123.9 41.35 112.68

Transactions

Office

1,294.28

Buildings

Retail

Aggregate value

$1,279,700,000

Leases Office

Retail

Total

116

Leases square feet Office

1,762,244

Retail

329,503

Total

2,091,747

Office leases Office leases by industry Industry

Office leases sf by industry Leases

Advertising & Marketing

Industry

Top tenant reps for office leasing by sf

Square feet leased 32,729

Tenant representative

Square feet leased 419,800

Advertising & Marketing

Architecture & Design

Entertainment

Fashion*

142,965

Financial

96,680

Newmark Knight Frank

Food & Beverage

56,073

Legacy Real Estate

Government

413,403

Legal

320,976

Media

86,250

Medical

16,299

Grubb & Ellis

23,321

NGO

The Ashtin Group

23,000

Other / n/a

Vicus Partners

13,000

Publishing

11,585

Centric Real Estate Advisors

10,908

Real Estate

38,716

Kalmon Dolgin Affiliates

10,000

Science & Technology

Transportation

100,568 25,800

251,520 29,384

134,137 5,159

Cassidy Turley Jones Lang LaSalle Cushman & Wakefield

257,817 225,704 191,847

Studley

158,259 100,000

CB Richard Ellis

61,041

Sinvin Real Estate

33,000

CBC Hunter Realty

26,820

Adams & Co.

8,750

Kaufman Organization

7,985

Retail leases Top tenant reps for leasing by sf

Retail leases by industry

Broker

Department Store

Square feet leased

Retail leases sf by industry 160,000

Task Realty

53,219

Fashion

34,225

NAI Friedland Realty

23,159

Financial

14,400

Newmark Knight Frank

17,200

Food & Beverage

24,435

Winick Realty

11,733

Health & Beauty

57,119

Other

PBS Real Estate

10,000

Robert K. Futterman & Assoc.

8,000

McDevitt Co.

7,000

Bond New York

2,200

Besen & Associates

2,000

Kalmon Dolgin Affiliaites

1,808

Tarter Stats Oâ&#x20AC;&#x2122;Toole

1,800

Millennium Realty Group

1,730

Halstead Property

1,600

00 May 2www.TheRealDeal.com (*includes showroom space)

39,324

www.www.TheRealDeal.com December 2011 71

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 10/11/11 to 11 /10/11. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

470 Vanderbilt Ave (Brooklyn)

400,000

New York City Human Resources Administration / Peter Hennessy, Cassidy Turley

GFI Development / Gary Kamenetsky, CBRE

The city agency signed a 20-year lease for six floors, the largest deal in Brooklyn this year, the New York Times reported. The HRA is consolidating its three locations, at 330 West 34th Street and 2 Washington Street in Manhattan and 210 Livingston Street in Brooklyn.

101 Park Ave

200,000

Morgan, Lewis & Bockius / L. Kiehl, B. Winter, Jones Lang LaSalle

Peter Kalikow / J. Cefaly, G. Field, C. Finney, D. McBride, C&W

The law firm signed a lease renewal, the New York Post reported.

555 West 57th St

112,941

Continuum Health Partners / J. Kuriloff, M. Rotchford, D. Heller, M. Quaintance, C&W

SL Green / Represented in-house

The nonprofit hospital network signed a 15-year lease renewal for the entire fifth and 19th floors, the New York Post reported.

452 Fifth Ave

105,803

Baker & McKenzie / M. Steir, J. Mambrino, D. Goldstein, M. Barlow, Studley

IDB Group / C. Reicher, H. Fiddle, J. Ackerson, Z. Freeman, S. Li, G. MaurerHollaender, CBRE

The law firm signed a 15-year lease for floors 15 through 20 as well as part of the 14th floor. Baker & McKenzie is now the second largest tenant in the building.

77 Water St

100,000

ARUP / Ken Fishel, Legacy Real Estate

Kaufman Organization / n/a

The engineering and design firm signed a 15-year lease for four floors. The transaction consists of a nine-year sublease and a six-year direct lease with the landlord. The company is relocating from Hudson Square.

Two Park Ave

86,000

Kate Spade New York / D. Falk, J. Greenstein, Newmark Knight Frank

Morgan Stanley Real Estate affiliate / T. Stacom, M. Arkin, D. Green, W. Morris, C&W

The fashion company signed a new, long-term lease for its corporate headquarters. The tenant will relocate from a smaller space at 48 West 25th Street in spring 2012.

40 Wall St

61,082

Weidlinger Associates / Joe Messina, Studley

The Trump Organization / J. Lichtenberg, J. Horowitz, A. Peretz, C&W

The engineering firm signed a lease on the entire 18th and 19th floors, the New York Post reported.

100 Church St

57,817

Healthfirst / B. Peters, D. Trulson, Jones Lang LaSalle

SL Green / J. Kuhn, Newmark Knight Frank; SL Green

The nonprofit signed an expansion lease on the 14th floor. The reported asking rent was $36 per square foot.

568 Broadway

56,000

Foursquare / n/a

568 Broadway Property LLC / n/a

The social-networking website signed a lease to relocate from smaller offices at 36 Cooper Square to two floors at 568 Broadway, the New York Observer reported.

280 Park Ave

40,000

Viking Global Investors / Michael Burgio, C&W

Vornado; SL Green / M. Tighe, P. Turchin, CBRE

The hedge fund sponsor signed a lease renewal and expansion, according to the New York Post. The reported asking rent was $120 per square foot.

556 West 22nd St

34,500

Hewlett-Packard / P. Murphy, J. Ogden, CBRE

Albanese Development Corp.; BD Equities / Jesse Rubens, Murray Hill Properties

The technology giant signed a 10-year lease with a five-year option for the entire three-story building, the New York Post reported.

48-09 34th St (Queens)

33,000

Amy’s Bread / Kristin McCann, Sinvin Real Estate

n/a / Jeffrey Unger, Kalmon Dolgin Affiliates

The baked goods company signed a long-term lease for its corporate headquarters.

386 Park Ave South

26,250

Sugar Publishing / W. Clark Finney, C&W

Savanna; Monday Properties / Jordan Berger, Monday Properties

The online media company signed a new, 10-year lease for the entire ninth and 10th floors.

1350 Sixth Ave

25,000

Adzinia Media Group / n/a

SL Green / n/a

Amazon’s online display advertising division signed an expansion lease, bringing its total occupancy to about 60,000 square feet, the New York Post reported.

529 Fifth Ave

24,962

International Federation of Accountants / D. Horowitz, J. Peck, G. Kerper, Studley

Silverstein Properties; Loeb Partners Realty / Represented in-house

The global organization for the accounting industry signed a long-term lease for the entire sixth floor and part of the fifth floor.

460 West 34th St

24,000

Leftfield Pictures of New York / Neil Murray, CBC Hunter Realty

Kaufman Organization / Ed Hart, Kaufman Organization

The television production company signed a new lease. The tenant is relocating its production, post-production, casting and development divisions from 16,000 square feet 545 Eighth Avenue.

260 Madison Ave

23,000

Akam Associates / Brett Rovner, The Ashtin Group

The Sapir Organization / B. Mosler, A. Wildes, R. Gallucci, L. Hayes, A. Aaron, E. Silverstein, C&W

The property management firm signed a lease on the 12th floor.

40 Wall St

20,000

Leslie E. Robertson Associates / Stephen Schofel, Newmark Knight Frank

The Trump Organization / J. Lichtenberg, J. Horowitz, A. Peretz, C&W

The engineering firm signed a lease for part of the 23rd floor, the New York Post reported.

300 Park Ave

20,000

William Grant & Sons / Eric Cagner, Newmark Knight Frank

Rockrose Development Co. / A. Peretz, J. Peters, M. Nahmias, C&W

The whiskey maker signed a 10-year lease on the fifth and sixth floors for its new U.S. headquarters, according to the New York Post. The reported asking rent was $51 per square foot.

65 Broadway

18,000

New York Cares / Carri Lyon, C&W

A.M. Property Holding Corp. / T. Kaufman, R. Murphy, C&W

The nonprofit signed an 11-year lease on the 19th floor. The tenant is relocating from a smaller space at 214 West 29th Street.

681 Fifth Ave

17,505

Belstaff USA / n/a

Metropole Realty Advisors / B. Mosler, A. Mirante, C. Foster, M. Mandell, E. Silverstein, A. Aaron, C&W

The Swiss luxury apparel retailer signed a lease for the entire eighth, ninth and 10th floors for its U.S. headquarters and showroom space.

280 Park Ave

17,000

Brencourt Advisors LLC / D. Madison, J. Moran, Newmark Knight Frank

Landesbank Baden-Württemberg / J. Johnson, C. McGratty, Studley

The investment advisor signed a new sublease on the 30th floor.

260 Madison Ave

17,000

Arik Eshel CPA / B. Mosler, A. Wildes, R. Gallucci, C&W

The Sapir Organization / B. Mosler, A. Wildes, R. Gallucci, L. Hayes, A. Aaron, E. Silverstein, C&W

The Israel-based accounting firm signed a lease for part of the second floor.

520 Eighth Ave

13,703

Systra Consulting / Larry Zuckerman, Grubb & Ellis

Newmark & Company Real Estate Inc. / M. Mandell, J. Fabrizio, Newmark Knight Frank

The engineering firm signed a 10-year lease.

1700 Broadway

13,403

UBIFRANCE / S. Anderson, R. Zimbalist, CBRE

Ruben Companies / Peter Shimkin, Newmark Knight Frank

The French Trade Commission in the U.S. signed a 10-year lease for the entire 30th floor. The tenant is relocating from 810 Seventh Avenue.

386 Park Ave South

13,138

Global Industries Ltd. / M. Geery, C. Stack, CBRE

Savanna; Monday Properties / n/a

The manufacturer of office furnishings signed an 11-year lease for the entire seventh floor.

205-215 Lexington Ave

13,000

GRACE Communications Foundation / B. Rosenblatt, A. Kaufman, Vicus Partners

Somerset Management / W. Miller, D. Hoffman, Cassidy Turley

The nonprofit signed a lease renewal and expanded in the building.

72 December 2011 www.TheRealDeal.com

www.TheRealDeal.net December 200

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

183 Madison Ave

10,908

Chantelle / Gregg Lorberbaum, Centric Real Estate Advisors

n/a / Harry Blair, C&W

The lingerie company signed a 10-year lease renewal and expansion for office space, the New York Post reported.

295 Lafayette St

10,500

Jand Inc. / n/a

Swanke Hayden Connell LLC / H. Grufferman, S. Santoro, J. Wechsler, M. Gottlieb, H. Springer, Grubb & Ellis

The eyewear company signed a five-year lease.

570 Lexington Ave

10,400

The Roosevelt Institute / R. Reichenstein, D. Lebenstein, D. Wollens, E. Kent, D. Lisowsky, Cassidy Turley

The Feil Organization / Brian Feil, the Feil Organization

The nonprofit signed a 12-year lease.

240 West 35th St

10,100

amNew York / Lee Kosmac, Newmark Knight Frank

Hidrock Realty / Robert Kaplan, Hidrock Realty

The newspaper signed a five-year lease.

87 Richardson St (Brooklyn)

10,000

Midnight Lick Inc. / Grant Dolgin, Kalmon Dolgin Affiliates

n/a / Grant Dolgin, Kalmon Dolgin Affiliates

The work-space provider for artists signed a lease for another Brooklyn location.

7 Penn Plaza

9,400

Wounded Warrior Project / R. Reichenstein, D. Lebenstein, D. Wollens, E. Kent, C. Soucie, Cassidy Turley

The Feil Organization / David Turino, the Feil Organization

The nonprofit signed a 10-year lease.

48 West 37th St

8,750

Allure Eyewear Inc. / D. Levy, J. Friedman, Adams & Co.

Forty Eight Thirty Seven Associates / D. Levy, J. Friedman, Adams & Co.

The eyewear designer signed a four-year lease renewal and expansion. The reported asking rent was $37 per square foot.

260 West 36th St

8,250

Wear Abouts Apparel / n/a

260 West 36 Associates / R. Magner, C. Oâ&#x20AC;&#x2122;Toole, Tarter Stats Oâ&#x20AC;&#x2122;Toole

The apparel company signed a lease. The tenant is relocating from 225 West 35th Street, the New York Observer reported.

205-215 Lexington Ave

7,500

ArchCare / n/a

Somerset Management / W. Miller, D. Hoffman, Cassidy Turley

The continuing-care network signed a lease.

488 Madison Ave

7,360

Crowe Horwath LLC / n/a

The Feil Organization / Paul Haskin, CBRE

The public accounting and consulting firm signed a lease expansion on the eighth floor.

242 West 36th St

6,500

Paramount Merchant Funding / Ian Norris, Kaufman Organization

n/a / Grant Greenspan, Kaufman Organization

The merchant-funding company signed a new lease. The tenant is relocating from 261 West 35th Street. The reported asking rent was $30 per square foot.

805 Third Ave

6,193

Polsinelli Shughart PC / M. Gottlieb, H. Springer, Grubb & Ellis

805 Third New York LLC / n/a

The law firm signed a five-year lease.

535 Eighth Ave

6,135

Invision Communications / J. McLaughlin, T. Murtha, Capstone Realty Advisors

535 Eighth Avenue LLC / Daniel Breiman, Olmstead Properties

The sales and marketing communications agency signed a lease for the entire 19th floor.

205-215 Lexington Ave

6,000

Allied Urological Services LLC / Brian Feist, C&W

Somerset Management / W. Miller, D. Hoffman, Cassidy Turley

The medical services provider signed a lease for the entire 15th floor.

200 Madison Ave

5,513

Peter E. Greenberg & Associates / Carri Lyon, C&W

George Comfort & Sons / Represented in-house

The athlete-representation agency signed a five-year lease renewal.

A T E S S L E R D E V E L O P M E N T W W W. T E S S L E R D E V E L O P M E N T S . C O M 3 2 3 PA R K AV E N U E S O U T H

www.TheRealDeal.com December 2011 73

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

40 Wall St

5,433

Rosabianca & Associates / n/a

The Trump Organization / J. Lichtenberg, J. Horowitz, A. Peretz, C&W

The real estate law firm signed a lease on the 30th floor, the New York Post reported.

545 Madison Ave

5,159

Universal Maritime / R. Eisenberg, B. Canella, Newmark Knight Frank

LCOR / S. Rhulen, G. Rothkin, R. Flippin, P. Milunec, CBRE

The yacht delivery service signed a five-year office lease.

205-215 Lexington Ave

5,000

GO Ventures LLC / n/a

Somerset Management / W. Miller, D. Hoffman, Cassidy Turley

The investment firm signed a lease renewal.

263 West 38th St

5,000

Puppies Behind Bars / n/a

Handler Real Estate Organization / S. Galin, P. Newman, Handler Real Estate Organization

The nonprofit signed a lease to relocate from 10 East 40th Street, the New York Post reported.

260 West 36th St

4,000

Salon Media / n/a

260 West 36 Associates / R. Magner, C. O’Toole, Tarter Stats O’Toole

The media outlet signed a lease, the New York Observer reported, to relocate from 15 West 37th Street.

101 Fifth Ave

3,820

FircoSoft / D. Starr, G. Versea, UGL Services

Eretz Group / E. Zar, R. Nizolek, Murray Hill Properties

The risk management firm signed a six-year lease. The reported asking rent was $45 per square foot.

40 Wall St

3,616

Prodigy Network NY / n/a

The Trump Organization / J. Lichtenberg, J. Horowitz, A. Peretz, C&W

The real estate company signed a lease on the 31st floor.

189 Montague St (Brooklyn)

3,547

Stephen Markman; Daniel Rausher; Raymond Raskin / Kraig Silver, the Treeline Companies

The Treeline Companies / Kraig Silver, the Treeline Companies

The affiliation of law firms signed a lease.

112 West 34th St

3,425

Taylor Consulting and Contracting / Ira Rovitz, Grubb & Ellis

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

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

386 Park Ave South

3,073

Dircksen & Talleyrand Inc. / n/a

Monday Properties; Savanna / n/a

The restaurant-operating company signed a lease on the 14th floor for its corporate office. The tenant had been subleasing space on the seventh floor.

39 Broadway

2,820

Doyle & Roth Manufacturing Co. / Neil Murray, CBC Hunter Realty

Cammeby Co. LLC / Thomas Hettler, the Lawrence Group

The designer and engineer for the chemical and process industries signed a lease.

600 West 57th St

2,500

n/a / Olga Ousmanova, Square Foot Realty

Bilgeo Realty / A. Gavios, H. Aaron, Square Foot Realty

The sign design and production company signed an eight-year lease for the entire third floor. The reported asking rent was $35 per square foot.

11 West 25th St

2,500

La Boutique LLC / Elie Reiss, Rice & Associates

Kew Management / Represented inhouse

The photography-retouching company signed a lease.

65 Broadway

2,100

The Bouklis Group / Taso Hatzmichael, RedRockNYC

AM-Properties / n/a

The real estate company signed a seven-year lease. The reported asking rent was $36 per square foot.

386 Park Ave South

2,032

Compliance Science / Elsa Gendall, GlenMark Realty

Monday Properties; Savanna / n/a

The technology service and products provider signed a lease on the 20th floor. The tenant is relocating from 419 Lafayette Street.

285 West Broadway

1,800

PFA LLC / n/a

285 West Broadway Associates LP / Joshua Salon, Salon Realty

The entertainment media and marketing firm signed a three-year lease.

1123 Broadway

1,719

Paul Curtis Bellman MD / n/a

Kew Management / Represented inhouse

The plastic surgery center signed a lease.

1133 Broadway

1,594

The Terri & Sandy Solution LLC / n/a

Kew Management / Represented inhouse

The advertising firm signed a lease.

237 West 35th St

1,485

Coed Media Group / Ian Norris, Kaufman Organization

n/a / Grant Greenspan, Kaufman Organization

The lifestyle publishing and marketing company signed a new lease. The tenant is relocating from 153 West 27th Street. The reported asking rent was $30 per square foot.

1133 Broadway

1,052

Edition 01 Inc. / n/a

Kew Management / Represented inhouse

The fashion e-commerce site signed a lease.

139 Fulton St

1,000

Career Choices Academy / Steve Landfield, Town Fifth Avenue

United New York Property Owners LLC / Represented in-house

The adult training school signed a five-year lease on the sixth floor.

1133 Broadway

630

Pretty Handsome Optometry PLLC / Marie Hammoudi, Own Manhattan

Kew Management / Represented inhouse

The optometry practice signed a lease.

1133 Broadway

610

Bradford Grafics LLC / n/a

Kew Management / Represented inhouse

The printing company signed a lease.

1150 Park Ave

450

n/a / n/a

n/a / Bill Pugh, Misrahi Realty

The medical office signed a lease. The reported asking rent was $95 per square foot.

1123 Broadway

391

Logocos America LLC / n/a

Kew Management / Represented inhouse

The skincare products company signed a lease.

1133 Broadway

324

Riscala Angese Design / n/a

Kew Management / Represented inhouse

The architectural and design firm signed a lease.

1133 Broadway

307

Greenline Publishing / n/a

Kew Management / Represented inhouse

The literary consulting firm signed a lease.

1123 Broadway

244

Liliane Hart Design LLC / n/a

Kew Management / Represented inhouse

The interior design firm signed a lease.

Retail leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

Bartow Ave and Baychester Ave (The Bronx)

160,000

Macy’s / n/a

Prestige Properties / n/a

The department store signed a lease at the Mall at Bay Plaza, Crain’s reported. The three-level store is slated for a spring 2014 opening.

1895 Bruckner Blvd (The Bronx)

18,000

IHOP / R. Herko, S. Lorenzo, D. Scotto, NAI Friedland Realty

Degregoria Enterprises / Michael Cervelli Real Estate

The restaurant chain signed a lease for another location.

575 Madison Ave

14,400

First Republic Bank / n/a

Steinberg & Pokoik / Amira Yunis, Newmark Knight Frank

The bank signed a lease for two levels of space, the New York Post reported.

495 Broadway

10,000

Levi’s / Laura Pomerantz, PBS Real Estate

Aurora Capital Associates; Alex Adjmi / Jared Epstein, Aurora Capital Associates

The denim retailer signed a lease to relocate its store from 532 Broadway.

4 Amsterdam Ave

9,613

Duane Reade / Steven Baker, Winick Realty

200 W. 60th Street Associates / Steven Baker, Winick Realty

The drugstore signed a lease for another location.

1030 Southern Blvd (The Bronx)

9,219

Ricky’s / Task Realty

n/a / Ralph Hanan, ACHS Management

The accessories chain signed a lease for a pop-up store.

74 December 2011 www.TheRealDeal.com

www

Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

312-316 First Ave

8,100

H. Brickman & Sons / Aaron Gurevich, Newmark Knight Frank

CWCapital Asset Management / B. Spiegel, B. Bergman, Rose Associates

The family-owned business signed a 15-year lease for another Ace Hardware location, its third in New York, at Peter Cooper Village/Stuyvesant Town. The deal includes 4,000 square feet on the ground floor and 4,100 square feet of selling space in the basement.

543 Broadway

8,000

Carlo Pazolini / K. Bellantoni, B. Rosen, RKF

Aurora Capital Associates; Alex Adjmi / Jared Epstein, Aurora Capital Associates

The designer shoe company leased retail space.

600 Fifth Ave

7,000

Free People / McDevitt Co.

Tishman Speyer / Represented inhouse

The division of Urban Outfitters signed a lease for duplex space at Rockefeller Center, the New York Post reported.

1133 Broadway

6,000

Ricky’s / Task Realty

n/a / n/a

The accessories retailer signed a lease for a pop-up store.

417 Fifth Ave

5,000

Ricky’s / Task Realty

n/a / Roxana Girand, Murray Hill Properties

The accessories chain signed a lease for a pop-up store.

52 West 8th St

4,700

Beth Israel Medical Center / Jeff Rosenblatt, Newmark Knight Frank

Friedland Properties / Aaron Prince, Friedland Properties

The medical center signed a lease for street-level space.

218 West 42nd St

4,400

Aldo Shoes / Amira Yunis, Newmark Knight Frank

Disney / David LaPierre, CBRE

The shoe retailer signed a lease for multilevel space, the New York Post reported.

14 West 14th St

4,350

Ricky’s / Task Realty

n/a / n/a

The accessories chain signed a lease for a pop-up store.

444 Park Ave

4,000

Ricky’s / Task Realty

n/a / Park Ave South Associates

The accessories chain signed a lease for a pop-up store.

2111 86th St (Brooklyn)

3,600

Ricky’s / Task Realty

n/a / Ralph Hanan, ACHS Management

The accessories chain signed a lease for a pop-up store.

1031 First Ave

3,500

Ricky’s / Task Realty

n/a / Cory Zelnik, Zelnik & Co.

The accessories chain signed a lease for a pop-up store.

550 Fifth Ave

3,500

Ricky’s / Task Realty

n/a / Richard Senior, Ripco Real Estate

The accessories chain signed a lease for a pop-up store.

2039 Broadway

3,500

Ricky’s / Task Realty

n/a / Stan Lindenfeld, Grubb & Ellis

The accessories chain signed a lease for a pop-up store.

665 Fifth Ave

2,877

Wempe / Represented in-house

Rolex / R. Abrams, A. Victor, Lansco Corp.; F. Gallo, Core Plus Partners

The luxury watch and jewelry retailer signed a 15-year lease for space on the ground floor and lower level. The asking rent for the ground-floor portion began at $2,200 per foot and rose to $2,400 per foot, sources familiar with the lease told The Real Deal.

121 Montague St (Brooklyn)

2,500

Ricky’s / Task Realty

n/a / The Midwood Group

The accessories chain signed a lease for a pop-up store.

1391 Sixth Ave

2,300

Ricky’s / Task Realty

n/a / Ralph Hanan, ACHS Management

The accessories retailer signed a lease for a pop-up store.

46 West 22nd St

2,200

Redsilk Catering / Joseph Robinson, Bond NY

46 West 22nd Street LLC / Joseph Robinson, Bond NY

The restaurant and caterer signed a lease.

374 East 149th St (The Bronx)

2,100

U.S. Army / J. Rivera, L. Klein, P. Cokin, NAI Friedland Realty

Gotham 149th Realty LLC / J. Rivera, L. Klein, P. Cokin, NAI Friedland Realty

The U.S. Army signed a lease for a recruitment center.

1357 Broadway

2,000

RadioShack / Barry Rothenberg, Olympia Court

n/a / R. Condren, E. Altschul, CPEX Real Estate

The electronics retailer signed a lease.

2033-2035 Grand Concourse (The Bronx)

2,000

99 Cents Alvina Inc. / R. Stassa, K. Mosberg, NAI Friedland Realty

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

The discount store signed a lease.

331 Sixth Ave

2,000

Ricky’s / Task Realty

n/a / Greg Ferrante, Jones Lang LaSalle

The accessories chain signed a lease for a pop-up store.

280 Broadway

2,000

n/a / Kelly Lin, Besen & Associates

Seco Inc. / Kelly Lin, Besen & Associates

The salon signed a lease.

263 Fordham Rd (The Bronx)

2,000

Ricky’s / Task Realty

n/a / Helm Equities

The accessories chain signed a lease for a pop-up store.

120 East 34th St

1,900

Dramatics 34 / J. Siegelman, A. La Centra, Winick Realty

120 East 34th Street Co. LLC / J. Siegelman, A. La Centra, Winick Realty

The salon signed a lease for a new location.

229-243 West 60th St

1,808

n/a / Josh Kline, Kalmon Dolgin Affiliates

West End Enterprises / S. Mann, S. Baker, Winick Realty

The veterinarian leased storefront space.

18 Jay St

1,800

Annelore / Greg Kim, Tarter Stats O’Toole

16 Jay Retail LLC / Greg Kim, Tarter Stats O’Toole

The fashion boutique signed a lease for its second Manhattan location.

70-49 Austin St (Queens)

1,750

Ricky’s / Task Realty

n/a / Crescent Properties

The accessories chain signed a lease for a pop-up store.

229 West 60th St

1,730

Modi Hart Pediatrics / Richard Hittman, Millennium Realty Group

West End Enterprises / S. Baker, S. Mann, Winick Realty

The pediatric office signed a lease.

223 East 58th St

1,600

Illumashade / T. Ghose, R. Gessin, Halstead

AV Realty of New York LLC / Barry Sanet, Sierra Realty

The designer of custom lampshades signed a long-term lease.

25-87 37th St (Queens)

1,500

The Bouklis Group / Taso Hatzmichael, RedRockNYC

Poseidon Condominiums / Stony Brook Realty

The real estate company signed a six-year lease for storefront space. The reported asking rent was $50 per square foot.

125 Wooster St

1,450

Monika Chiang / J. Podell, M. Seigel, C. Foster, C&W

Waterman Interests / B. Rosen, J. Totolo, RKF

The fashion and accessories boutique signed a lease.

903 Madison Ave

1,400

Parmacotto / Bella Hanna, International Brokerage Realty

Friedland Properties / Aaron Prince, Friedland Properties

The Italian restaurant signed a lease.

701 Burke Ave (The Bronx)

1,326

Felix Tareb Gourmet Deli / John Joseph, John Joseph & Associates

3200 White Plains Rd LLC / Steve Lorenzo, NAI Friedland Realty

The deli signed a lease.

1225 Madison Ave

1,076

Robert Marc / F. Consolo, J. Aquino, Prudential Douglas Elliman

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

The eyewear company signed a lease, the New York Post reported.

3683 Bruckner Blvd (The Bronx)

1,059

Subway / R. Herko, S. Lorenzo, D. Scotto, NAI Friedland Realty

Hampshire Companies / R. Herko, S. Lorenzo, D. Scotto, NAI Friedland Realty

The sandwich chain signed a lease.

77 West 68th St

680

Greatland NYC Inc. / S. Lindenfeld, H. Goldfarb, Grubb & Ellis

AIMCO / S. Lindenfeld, H. Goldfarb, Grubb & Ellis

The women’s apparel firm signed a 15-year lease.

320 East 11th St

500

Sohee Kang / Jean Bates, AC Lawrence & Co.

n/a / n/a

The designer signed a three-year lease for its first store. The reported asking rent was $84 per square foot.

405 West 44th St

450

Azman Dayakli; Dilaver Kocak / Sam Zagoren, Square Foot Realty

Silvershore Properties / A. Gavios, H. Aaron, Square Foot Realty

The tenant signed a 10-year lease, with a two-year option, for a wine bar. The reported asking rent was $120 per square foot.

1225 Madison Ave

395

Malia Mills / Judson Realty

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

The swimwear stylist signed a lease, the New York Post reported.

160 West 71st St

220

n/a / S. Baker, S. Mann, Winick Realty

South Pierre Associates / S. Baker, S. Mann, Winick Realty

The dry cleaner signed a lease.

For the best deal visit our website: www.TheRealDeal.com

www.TheRealDeal.com December 2011 75

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

55 East 42nd St and 49 East 52nd St

1.2 million sf office bldg and 41,837 sf office bldg

Soho China / n/a

Rockpoint Group / CBRE

Rockpoint Group received $569.1 million for its 49 percent share of Park Avenue Plaza, at 55 East 42nd Street, and the smaller office building at 49 East 52nd Street. Rockpoint first bought into Park Avenue Plaza last year for around $330 million, or $570 per square foot.

Two Gotham Center (Queens)

22-story, 670,000 sf office bldg

H&R REIT / n/a

Tishman Speyer / D. Stacom, B. Shanahan, P. Gillen, CBRE

The property sold for $415.5 million. The City of New York’s Department of Health and Mental Hygiene has occupied the building for 20 years.

21 Penn Plaza

17-story, 375,000 sf office bldg

Savanna; the Feil Organization / n/a

GHG Realty / n/a

The property, also known as 360 West 31st Street, sold for $137 million. The building is 95 percent leased.

Brooklyn portfolio

5 self-storage bldgs

CubeSmart / n/a

Storage Deluxe / Holliday Fenoglio Fowler

The self-storage properties sold for $123.9 million as part of a larger, $357.31 million sale of a 16-property storage portfolio in New York, Connecticut and Pennsylvania. The buildings are located at 481 Grand Avenue, 552 Van Buren Street, 464 Stanley Avenue, 2047 Pitkin Avenue and 2400 Cropsey Avenue.

16-18 West 57th St

5-story office bldg

Extell Development / n/a

Petra Capital Management / n/a

The property sold for $80 million. Residential broker Ilan Bracha and development partner Haim Binstock had acquired the building in 2007 for $60 million with plans to build a 28-story, mixed-use tower, but lender Petra Capital Management sold the loan.

635 Madison Ave

19-story, 149,881 sf office bldg

Ashkenazy Acquisitions / n/a

n/a / n/a

The purchase of the building’s ground lease closed for $60.78 million, the New York Post reported.

47 East 34th St

36-story hotel bldg

CIM Group / n/a

iStar Financial / n/a

CIM Group, which owned the defaulted note with a $93.2 million judgment, took control of the tower for $54 million. IStar Financial sold CIM the $84 million senior mortgage debt this year, after a final judgment was issued against the previous owner, Esplanade Capital. BridgeStreet Corporate Housing currently uses the building for extended-stay residences.

208, 214 and 216 East 14th St

3 development sites, 22,942 sf total

CM Developers / n/a

Builtgross Associates / n/a

The three vacant lots sold for $33.2 million. The seller had acquired the sites in 1986 for an undisclosed price.

301 West 130th St, 410 St. Nicholas Ave and 273 West 131st St

3 apt. bldgs, 355 units total

n/a / Aaron Jungreis, Rosewood Realty

Lionel Hampton Houses LLC / Aaron Jungreis, Rosewood Realty

The Lionel Hampton House complex sold for $31.5 million in an off-market transaction. The properties have a combined 10 retail units.

20 Bayard St (Brooklyn)

37 vacant apt. units

Fortis Property Group / n/a

W Financial Fund / n/a

The unsold shares at the building sold for $25 million after the seller, the senior lender at the project, settled a two-year-old bankruptcy case with developer Isaac Hager, president of North Development Group. W Financial had been planning to take over the project, until Fortis Property Group stepped in to buy the units.

307 East 53rd St

6-story, 40,000 sf office bldg

The Republic of Tanzania / n/a

Amerimar Enterprises / R. Garrish, P. Gillen, D. Stacom, CBRE

The Timekeeper Building near the United Nations sold for $24.5 million. The seller acquired the property for $15.45 million in 2005.

Bronx portfolio

5 apt. bldgs, 264 units total

Brooklyn investor / Marcel Fridman, Barcel Group

Paum Sales Corp. / Marcel Fridman, Barcel Group

The package sold for $21.15 million. The price represents a gross rent multiple of 7.5. The buildings are located at 4002, 4012, 4053, 4126 and 4136 Carpenter Avenue.

37-01 Junction Blvd (Queens)

6-story mixed-use bldg

Local investor / Leonid Mizukovski, Itzhaki Properties

Benjamin Wai / Leonid Mizukovski, Itzhaki Properties

The property sold for $14 million. The price represents a capitalization rate of 7.9 percent and a gross rent multiple of about 9.7.

163-30 Cross Bay Blvd (Queens)

1-story retail bldg, 9,767 sf total

American Realty Capital New York Recovery REIT / n/a

n/a / n/a

The freestanding fee-simple interest in the building sold for $14 million. The property is 100 percent leased to Duane Reade, and the lease is guaranteed by Walgreen Co., which purchased Duane Reade in 2010.

One Peck Slip

4-story, 70,800 sf comm. bldg

New York City School Construction Authority / H. Kesseler, J. Schwartzman, Newmark Knight Frank

U.S. Postal Service / P. Mas, D. Early, Jones Lang LaSalle

The former post-office building sold for $13.5 million.

Bronx portfolio

4 apt. bldgs, 180 units total

Fortress Cww LLC / n/a

n/a / n/a

The package of multifamily buildings sold for $13.25 million. The properties are located at 1085 Colgate Avenue, 1466 Watson Avenue, 1484 Watson Avenue and 1050 Wheeler Avenue.

248 North 8th St

17,500 sf development site

Rieder Holdings / Rosewood Realty Group

Van Benson Management / Rosewood Realty Group

The property sold for $12.3 million, or about $102 per square foot, Crain’s reported. The seller acquired the building in 1997 and took out a $31 million loan in 2008 to develop a residential structure at the site. But PropertyShark. com shows that in 2009, lender Banco Popular filed a $31 million lis pendens against Van Benson.

543 Broadway

8,000 sf retail condo

Aurora Capital Associates; Alex Adjmi / Jared Epstein, Aurora Capital Associates

n/a / n/a

The retail condo sold for about $10 million.

11 East 17th St

7-story, 20,000 sf mixed-use bldg

n/a / n/a

n/a / Angel Ramos, Berko & Associates

The elevator loft building sold for $9.7 million. The retail unit on the ground floor is leased out to Hale & Hearty.

Know your Market

ERGPA.com 76 December 2011 www.TheRealDeal.com July 2009 www. The

Buys continued Address

Size

Buyer/ Representative

Seller / Representative

Notes

142 Sullivan St

7-story apt. bldg, 28 units total

n/a / George Niblock, FriedmanRoth Realty

The walk-up building sold for $9.43 million, or $582 per square foot.

29-37 41st Ave (Queens)

205,000 buildable sf development site

E Home Real Estate / n/a

n/a / Al Holloman, Massey Knakal

The vacant, L-shaped parcel sold for $8.3 million, or about $40 per square foot.

712 West 176th St

40-unit apt. bldg

n/a / n/a

n/a / Robert Shapiro, Massey Knakal

The property sold for about $5.33 million, or $155 per square foot.

3 East 44th St

6-story, 14,175 sf office bldg

n/a / n/a

n/a / Clint Olsen, Massey Knakal

The building sold for $4.58 million, or $322 per square foot. A restaurant occupies the basement through the second floor, and the remaining floors are set up as office space.

505 St. Marks Ave

94,000 buildable sf development site

n/a / n/a

n/a / M. Amirkhanian, J. Shalom, Massey Knakal

The property sold for $4.5 million, or about $48 per buildable square foot. The buyer plans to knock down the existing one-story structure on the site and build 128 market-rate rental apartments.

99 East 7th St

5-story, 16,202 sf apt. bldg, 17 units total

n/a / n/a

n/a / G. Niblock, E. Lupo, Friedman-Roth Realty

The walk-up building sold for $3.6 million. The property has two stores.

149-34 35th Ave (Queens)

3-story, 9,000 sf school bldg

n/a / n/a

n/a / S. Preuss, R. Shapiro, Massey Knakal

The property sold for $3.15 million, or $350 per square foot. The price represents a capitalization rate of 7 percent.

131 East 38th St

5-story, 3,759 sf townhouse

n/a / n/a

n/a / J. Ciraulo, M. Azarian, Massey Knakal

The property sold for $2.82 million, or about $750 per square foot. The building was occupied by a law office for over 32 years. The buyer is planning a gut renovation in order to set up a dental office on the ground floor with a residence above.

159 Evergreen Ave (Brooklyn)

8-unit apt. bldg

Local investor / Marcel Fridman, Barcel Group

Brooklyn developer / Marcel Fridman, Barcel Group

The property sold for $1.82 million. The price represents a gross rent multiple of 9.

446-48 West 167th St

26,089 buildable sf development site

HAP Investments / n/a

BDN NY Management / V. Sozio, M. Tortorici, S. Shkury, Massey Knakal

The property sold for $1.67 million.

274 Court St (Brooklyn)

3-story, 2,667 sf apt. bldg, 2 units total

n/a / n/a

n/a / Ken Freeman, Massey Knakal

The property sold for $1.6 million, or $600 per square foot. The building has a store on the ground floor.

1800 Westchester Ave (The Bronx)

3-story, 6,750 sf mixed-use bldg

n/a / n/a

n/a / Nicholas Burns, Massey Knakal

The property sold for $1 million, or about $148 per square foot. The price for the building, which has an alternate address of 1254-1256 Beach Avenue, represents a capitalization rate of 8.6 percent.

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

157 West 57th St

90-story mixed-use bldg

Extell Development / n/a

Bank of America; Banco Santander; Abu Dhabi International Bank; Capital One / n/a

A $700 million construction loan was provided for the One57 development, GlobeSt.com reported. The $1.4 billion project will have 95 luxury condos and a Park Hyatt hotel.

1540 Broadway

44-story, 907,000 sf office bldg

Edge Fund Advisors; HSBC Alternative Investment / n/a

MetLife / n/a

A $350 million, five-year, fixed-rate mortgage was provided to the joint venture. The companies acquired a 49 percent stake in the building from CBRE Investors in a deal valued at $254 million, or $575 per square foot last year. It then bought out the remaining 51 percent stake in the building in an off-market transaction.

127-135 East 79th St

19-story apt. bldg, 30 units total

The Brodsky Organization / n/a

n/a / n/a

A $120 million construction loan was provided for a luxury condo building, which the developer plans to start building in January, Crain’s reported. The Brodsky Organization acquired the site from the Silberman Fund in 2008 for $48 million.

Two Fordham Square

250,000 sf mixeduse bldg

Houlihan-Parnes Realtors; the Jemal family / J. Cronin, M. O’Neill, J. Houlihan, K. Houlihan, Houlihan-Parnes Realtors; Q10 New York

n/a / n/a

A $50 million first mortgage was arranged for the office and retail building. The non-recourse loan was placed for a term of seven years. The interest rate was locked for the full term of the loan, at 3.94 percent.

373 Wythe Ave (Brooklyn)

11-story, 57,241 sf apt. bldg, 88 units total

n/a / n/a

Metropolitan Funding Corp. / n/a

A $22 million construction and permanent loan was provided for the project. The interest-only, non-recourse construction loan will automatically convert into a 40-year, non-recourse permanent mortgage with a fixed rate of 5 percent.

70-20 108th St (Queens)

251-unit apt. bldg

Continental Owners Corp. / n/a

NCB / n/a

An $8.5 million first mortgage and a $2 million line of credit were arranged for the building.

425 East 79th St

192-unit apt. bldg

79th Street Tenants Corp. / n/a

NCB / n/a

A $5.3 million first mortgage and a $500,000 line of credit were arranged for the building.

46-43 216th Place

277-unit apt. bldg

Jeffrey Gardens Apartments Corp. / n/a

NCB / n/a

A $4.3 million first mortgage and a $750,000 line of credit were arranged for the building.

13-21 East 22nd St

131-unit apt. bldg

13-21 East 22nd Street Residence Corp. / n/a

NCB / n/a

A $3.4 million first mortgage and a $750,000 line of credit were arranged for the building.

3515 Henry Hudson Pkwy (The Bronx)

78-unit apt. bldg

3515 Owners Corp. / n/a

NCB / n/a

A $2.8 million first mortgage and a $500,000 line of credit were arranged for the building.

36 East 23rd St

10-story, 23,350 sf office bldg

n/a / n/a

Southern Farm Bureau / A. Stewart, J. Proscia, Cronheim Mortgage

A $3.1 million permanent loan was arranged for the property. The financing was provided for a term of 10 years on a 25-year amortization schedule. Radio Shack is currently leasing the ground-level retail space on a long-term basis, and the upper floors are leased to several small businesses.

172-178 Dyckman St

10,000 sf retail bldg

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

Local bank / n/a

A $2.5 million first mortgage was placed for the six-unit retail building. The five-year, non-recourse loan has a fixed rate of 4.75 percent, with interest-only payments for two years.

10 East 43rd St and 40 East 43rd St (Brooklyn)

120-unit apt. bldg

Lenox Arms Cooperative Inc. / n/a

NCB / n/a

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

51 East 90th St

37-unit bldg

51 East 90 Apartment Corp. / n/a

NCB / n/a

A $750,000 first mortgage and a $250,000 line of credit were arranged for the building.

For the best deal, visit our website: www.TheRealDeal.com 000 October www.TheRealDeal.com 80 July 20092008 www.TheRealDeal.com

www.TheRealDeal.com December 2011 77

Other Deals Crown, Centurion purchase Soho’s Apple store for $75 million Crown Acquisitions partnered with Centurion Realty to purchase the site of the city’s first Apple store for $75 million last month, the New York Post reported. Apple is renovating and expanding the 30,000-square-foot space at 103 Prince Street and is currently operating out of a temporary location a block away, at 72 Greene Street. The building was previously owned by Westchester-based Ingersoll Realty, which had leased it to the U.S. Postal Service from 1975 through 2000. (The deal was announced after the deadline for the Deal Sheet.)

Moinian’s 54th Street hotel to rise even higher Midtown’s Community Board 5 approved an air rights transfer last month that will allow a Moinian Group affiliate’s new West Side hotel to rise higher than expected, DNAinfo reported. The Moinian Group, run by Joseph Moinian, conveyed its interests in the land at 237 West 54th Street, a Midtown lot for which Moinian has filed plans for a hotel, to a new anonymous joint venture last month. The new controlling members of the venture have provided financing. The board voted in favor of allowing the joint venture to purchase 24,000 square feet of development rights from the Booth Theater on West 45th Street, making way for a 34-story, 400-room hotel on the site, DNAinfo said.

Zell leads bidding for Archstone REIT Sam Zell’s Equity Residential has emerged as the leading bidder in a race to buy 53 percent of rival Archstone, offering more than $2.5 billion in cash for the stake, currently

Highlights from

Feature Going junior The Real Deal breaks the news that Adina Azarian stepped down as CEO at Keller Williams NYC after 7 months to take a junior post at the ﬁrm.

Video TRD forum highlights We show snippets from the 2011 annual forum including real estate pros debating on stage and execs chatting off stage.

held by Bank of America and Barclays, the Wall Street Journal reported. The rest of the company, a real estate investment trust, is owned by the bankruptcy estate of Lehman Brothers Holdings. The proposed sale to Equity Residential would value Archstone at about $16 billion, the Journal said. If sold as a whole company, Archstone currently could be worth as much as $18 billion.

Cooper Square Hotel to become Standard under Balazs André Balazs will transform the Cooper Square hotel into the Standard East Village, the New York Post reported last month. Balazs will spruce up the 105 rooms, renovate the public space and redo the recently opened restaurant on the 21-story building’s ground floor, now called the Trilby. Rumors of Balazs’ takeover of the hotel first surfaced in August and were confirmed in September when he applied to renew the liquor license at the hotel. He took control of the hotel less than a year after Westport Capital Partners bought it for $70.9 million.

NJ firm pays $20M for FiDi retail condos New Jersey real estate investment firm the Klein Group, which focuses on retail properties, paid $20 million for four retail condominiums at the residential building the District, at 111 Fulton Street in the Financial District. The four individual condos are comprised of 17,200 square feet of ground-floor space and 4,620 square feet on the lower level. Currently, about 45 percent of the total space is vacant, Jacob Klein, the president of Klein Group, said. He said the firm was in advanced discussions with various ten-

ants for the available space. The sold-out District is a 163unit residential condo developed by Africa Israel, Wonder Works Construction and Urban Equities NY. (The deal was announced after the deadline for the Deal Sheet.)

Billionaire Charney sells Midtown hotel site to national giant Billionaire Leon Charney last month sold a development site at 120 West 41st Street to Stanford Hotels. Stanford, which operates Hilton, Marriott and Sheraton hotels all over the country, paid $19.5 million for the property in a deal that closed Nov. 10, the source said. The company is said to be planning a 125-room hotel on the site, assembling air rights from a nearby theater. The acquisition is Stanford’s first foray into the New York market. (The deal was announced after the deadline for the Deal Sheet.)

Downtown building leased by Goldman Sachs gets $45M refinance The 26-story office building 77 Water Street in Lower Manhattan, which is net-leased in its entirety by financial giant Goldman Sachs, was refinanced with a $45 million loan from AXA-Equitable. The loan was arranged by the Singer & Bassuk Organization on behalf of the building’s owners, the William Kaufman Organization and Travelers Insurance, according to a statement from Singer & Bassuk. The refinancing on the 600,000-square-foot building closed Oct. 21, according to Singer & Bassuk CEO Andrew Singer, who negotiated the deal with senior managing director Kathleen McSharry. (The deal was announced after the deadline for the Deal Sheet.) TRD

.com

Feature Boards merge Reporter Leigh Kamping-Carder writes about three Hudson Valley real estate associations joining forces.

Video TRD on TV The Real Deal released a TV ad that airs during commercial breaks on CNBC, MSNBC and NY1, etc. See a preview on TRD’s website.

South Florida Casino talk TRD South Florida website reporter Alex Britell talks to Resorts World Miami’s prez about his company’s Miami casino plan.

Magazine Print online Read The Real Deal’s December issue online and share stories with a click of the mouse. We know you’ll enjoy it.

Don’t forget to follow The Real Deal on Twitter. You don’t want to miss our fun Tweets, such as these from last month: Dolly Lenz believes there’s a bubble right now in Manhattan in the 50s where several big projects are rising & targeting the same buyers.

Faith Hope Consolo from Elliman said retail “landlords are getting piggish again” at TRD’s annual forum. “If you’re a developer you have to be an optimist... If you’re not an optimist, try another business.” -- Richard LeFrak.

“In Manhattan the only opportunities today are on the courthouse steps,” HFZ’s Ziel Feldman says.

Billy Macklowe of William Macklowe Co. says gov’t should be razing distressed homes -- not facilitating more bad mortgages.

house ad

Panel keeps talking about “the four boroughs” so audience member asks about SI. Moderator Andrew Barrocas of MNS responds: What’s that?

78 December 2011 www.TheRealDeal.com 9

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Azarian steps down as CEO of Keller Williams NYC Switch comes after only seven months on job; brokerage hires Eric Barron to replace her

BY KATHERINE CLARKE AND LAUREN ELKIES dina Azarian has stepped down from her role as CEO of the real estate franchise Keller Williams NYC after just seven months, becoming executive director of new business development instead, the company told The Real Deal. While her new role is more junior than the CEO position, Azarian said she initiated the change and chose her replacement. Eric Barron, a former managing director at the New York Real Estate Institute, took over as CEO last month, according to the company. Azarian told The Real Deal she is “eagerly moving into [her] new role.” “This is absolutely not a demotion,” she said. “Sometimes in business, reorganization is needed so that everyone can do what they do best. That’s what I wanted for myself and for KWNYC. My new position is a better ﬁt for my professional and personal goals, and I get to do what I do best — grow the ﬁrm. I have known Eric

Adina Azarian

Eric Barron

Adina Azarian

“This is absolutely not a demotion.” Adina Azarian, Keller Williams NYC for many years and am really excited to be working together.” Before joining Keller Williams NYC in April, Azarian headed a four-agent ﬁrm, handling the leasing of 1,500 rental apart-

ments in small buildings throughout the city. She was recruited to the ﬁrm by Ilan Bracha, chairman of Keller Williams NYC, who had worked with her at the now-defunct brokerage Dwelling Quest.

As CEO, Barron is “responsible for overseeing Keller Williams NYC’s Manhattan growth while working closely with its international division,” the company said in a statement, noting that Barron would not be recruiting from NYREI to fill the ranks at the firm. Barron will work out of the company’s new office at 425 Park Avenue, a 36,000-square-foot, full-floor space in Midtown, slated to open this month. Until then, he is based in the franchise’s sole office, at Trump Tower at 725 Fifth Avenue. The new Park Avenue office, between 55th and 56th streets, will feature a large employee training room, community lounge, meeting space and an expansive lobby area, the company said. Keller Williams NYC, the local franchise of Keller Williams Realty, has expanded its workforce to more than 130 agents since launching in January, the company said. TRD

Changes downtown for Prudential Douglas Elliman

Firm plans Wall Street and East Village expansion, plus new leadship for Tribeca ofﬁce

BY LEIGH KAMPING-CARDER Chris Peters of Prudential rudential Douglas ElDouglas Elliman liman is planning major changes to its downtown operations, including opening a new office in the Financial District, expanding its East 10th Street office to a new location, and replacing the head of its Hudson Street office in Tribeca. “Basically, they want to do a little bit of reorganization of Elliman downtown,” said Chris Peters, a senior executive vice president at the firm and director of sales at its 26 West 17th Street office, who will take over as head of the Hudson Street office. “You don’t get growth without change.” To that end, the firm is scouting locations for its first Lower Manhattan location, a new office near Wall Street that will focus on rentals. Headed by Mark Menendez, Though he was unsure how many agents an executive vice president and the firm’s will ultimately work there, Peters said the director of rentals, the new office will likely office will stay small. Meanwhile, Elliman is close to signing open in the next six months, Peters said.

Become a fan of The Real Deal on 36 November 2011 www.TheRealDeal.com

a lease to move its growing office at 51 East 10th Street to a nearby ground-floor retail space at 774 Broadway, on the corner of East 9th Street, although nothing has been finalized yet. At roughly 4,200 square feet, the new space would nearly triple the size of the office’s existing location between Broadway and University Place, said Gary Cannata, an executive vice president and the office’s director of sales. “We maxed out,” Cannata said of the current space. “We’re doing gangbusters business.” Formerly the site of a Blockbuster video store, the new locale would take about four to six months to revamp, said Cannata, who expects to open in June. He anticipates nearly doubling the number of agents working there, to between 55 and 60 agents. The office is home to top-producing brokers Ra-

phael De Niro and Debra Kameros. Lastly, Elliman’s office at 90 Hudson Street between Leonard and Harrison streets will get new leadership, with Peters taking over the reins from Kenneth Malian, who helped found the office in the mid-1990s. Malian, a senior executive vice president and the Hudson Street office’s director of sales, notified the firm about a month ago that he would be leaving the position, Peters said, although he plans to stay on as a consultant and help with training activities. Malian did not immediately return a call seeking comment. Malian recently cofounded GreenRose Enterprises, a Glen Ridge, N.J.-based real estate firm that purchases and renovates “problem” residential properties. Peters will split his time between Hudson Street and the West 17th Street office, which he has headed up since joining Elliman 11 years ago. Christina Hanson, currently the West 17th Street branch manager, will act as assistant manager there. Menendez and the firm’s chief digital officer, Dawn Doherty — formerly of StreetEasy — will act as assistant managers at Hudson Street, Peters said. TRD

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www.TheRealDeal.com December 2011 79

Brooklyn land prices

from page 18

strong premium over the sale of a comparable building — just a block away — that sold for $86 per buildable square foot last year. Falsetta, meanwhile, said he knows of at least 12 land deals in Williamsburg alone in the last year.

It’s getting hot in here According to recent data from the U.S. Census, 69 percent of New York City households are renters — the highest of any metro area in the country. But because New York City condos go for much higher prices than rentals — in the third quarter, the median sales price in Brooklyn was $510,000 — developers have historically preferred them to rentals, especially during the mid-2000s real estate boom. But today’s shaky economic climate, combined with strong demand for Brooklyn rentals, has caused them to see things differently, brokers said. For one, developers feel conﬁdent they’ll be able to lease out new buildings in a matter of months, as opposed to the years it can take to sell out a condo project. “Condos produce a higher gross return, but it takes longer,” said Falsetta. In this market, he added, “any decent-size rental project can expect to absorb at least 20 units per month.”

Additionally, some Brooklyn rental buildings are now commanding rents high enough to make the proﬁt margin on them more appealing than in the past. The brokerage MNS estimated that the average one-bedroom apartment in Brooklyn rented for $2,299 in October, up from $2,073 in the same month of last year. At 184 Kent, apartments rent for just over $50 per square foot per year, according to Halpern. In Downtown Brooklyn, the Addison at 225 Schermerhorn Street goes for $51 per square foot, brokers said, while the Brooklyner at 111 Lawrence Street in Downtown Brooklyn is commanding about $56. “When you’re getting the $50s, then, yes, [developers] can do rentals,” said Alan Miller, a senior director and principal at Eastern Consolidated, though he noted that many developers still prefer condos.

Bigger increases ahead? The strong rental market is also popular with another key player — banks. “Primarily, the development today is going to be rental, because there’s going to be ﬁnancing for rentals,” said David Eyzenberg, managing director and head of commercial real

estate at NewOak Capital. He’s seen an increasing number of requests for ﬁnancing on deals along the Fourth Avenue corridor in Brooklyn at prices around $75 per buildable square foot — “lower than it used to be, but above two years ago,” he said. Banks are still cautious in their lending, and condo developments still carry the perception of risk, he said. Still, he expects that banks will eventually green-light condos and that will lead to an even bigger increase in land prices. “When you’re going to see a real pop in [land] value is when you’re going to see condo developments.” said Eyzenberg. “Condo guys can pay more for the land. Right now, today, everyone is still pricing out land as if it’s going to be rental.” Still, JMH’s Halpern cautioned that prices in Brooklyn — especially in Williamsburg — may already be too high. Some developers are currently “underestimating their construction costs and overestimating what their rents will be,” he said. Halpern said while he’d like to continue building in Williamsburg and is “a big believer” in the area, he’s already moved on to other areas. Land in Williamsburg, he said, is “overheated.” TRD

Commercial market from page 24 greater volume than they were in 2010, and looking to take space on higher floors. He also noticed a change in the mix of tenants who were on the hunt, with a noticeable drop in financial services firms. “The media, entertainment, legal and tech companies are leading the way and have led the way in 2011,” he said, speaking of the overall Manhattan market. The availability rate in Midtown, meanwhile, barely budged — tightening by only 0.1 point to 11.9 percent in November, Cassidy Turley statistics showed. However, the average asking rent rose by $0.74 per foot to $58.36 per square foot, the figures revealed. Robert Sammons, a vice president of research at Cassidy Turley, said much of the leasing activity this year appeared to be swapping space and right-sizing, instead of big moves. “Rather than new deals or expansions, [it was] renewals, relocations and consolidations [that] have characterized deal flow,” Sammons said.

Midtown South The story was a little different in Midtown South, the tightest of the city’s markets — which, unlike Midtown and Downtown, did not show any improvement over the prior month.

There were few large leases inked last month in Downtown, a review of deals in the CoStar database revealed, even as the market continued to show signs of improvement. Cassidy Turley ﬁgures showed the availability rate declining by 0.1 point to 10.3 percent and the average asking

rent rising by $0.29 per foot to $37.86 per square foot. Yet even as vacancy rates in the city are trending down, the weakness of the financial sector could spell trouble ahead. Lower Manhattan and Midtown are home to many of the city’s large financial firms. “You can see some cracks opening up — significant layoffs in the banking sector that will inevitably lead to higher vacancy and sublet space coming to market,” Lee & Associates’ Braus said. In addition, the largest deal last month was a relatively small one, for just over 50,000 square feet at 33 Whitehall Street. The tenant was an online advertising sales firm called Adprime Media, which was represented by the CBRE Group. The second-largest deal was tenant Artnet Worldwide, a global art sales and research firm, taking 28,098 square feet at the Woolworth Building at 233 Broadway, data from CoStar shows. The building’s owner, a partnership of Cammeby’s International and the Witkoff Group, was represented by the brokerage the Lawrence Group. David Ofman, executive managing director of the Lawrence Group, said Downtown is attracting more creative tenants because “you can lease space in a nice building and still pay in the mid-$30s [per square foot],” he said. TRD

that problem by eschewing the city’s top shopping neighborhoods, like Soho. The project, called Boffo Building Fashion, pairs up-and-coming clothing designers with architects, who then work together to create temporary “installations” in vacant storefronts in West Chelsea and Tribeca. For these pop-ups, which aim to promote both the designer and the architect, the landlords donate the space, with the expectation that the publicity could help draw more shoppers to the neighborhood. In September, Boffo orchestrated a pop-up featuring Nicola Formichetti, a designer who frequently works

with Lady Gaga, and Gage/Clemenceau Architects. The highly publicized display had a futuristic theme, with shifting, robotic mirrors on the ceilings and walls. Last month, Boffo debuted a pop-up for lingerie designer The Lake & Stars and architecture ﬁrm SOFTLab. Located at 57 Walker Street in Tribeca, the display’s boulder-like exterior allowed shoppers to peer at lingerie through tiny windows akin to kaleidoscopes. “Really, what they are is a sort of pop-up art installation,” said Faris Al-Shathir, executive director of Boffo Building Fashion. “It’s like a traveling museum.” TRD

In Midtown South, the availability rate was flat in November at 9.4 percent, and asking rents fell slightly, by $0.15 per foot to $41.10 per foot, according to Cassidy Turley numbers. But the market did tighten through 2011 and that was reflected, Sammons said, by the decline in the number of large blocks of space greater than 100,000 square feet in Midtown South (as was seen in Midtown as well). But smaller spaces continued to come on the market. For example, a prebuilt space on the ninth floor of 599 Broadway, at the corner of Houston Street, better known as the home to retailer American Eagle Outfitters, was put on the market last month. The 4,620-square-foot space, listed by Joseph Del Vecchio of ABC Properties, has an asking rent of $52 per square foot, information from the CoStar Group shows.

Downtown

Pop-ups from page 36 but was largely down across the board. It was 6.5 percent in Soho (down 1.6 percent from the second quarter), 5.1 percent for Times Square (down 2.3 percent) and 11.1 percent on Madison Avenue (down 1.7 percent). “Now you are starting to see [pop-ups] go down in numbers, as the spaces are starting to get leased,” Yunis said. That’s especially true because pop-ups are focused on high-visibility areas like Soho or Midtown, according to Rosenthal. The nonproﬁt arts organization Boffo gets around

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Residential market

from page 16

overs, and settling into what is, between the chilly weather and the string of holidays, typically the slowest season of the year. “Once the weather cools down, only the real estate ‘addicts’ take advantage of what’s on the market,” said Todd Lewin, managing director of Miami-based real estate services ﬁrm Good Property, which recently expanded to New York City.

Meanwhile, on the rental side, buyers on the sidelines continue to power the market, which is evidence that people still have money to spend, according to Scheff. In the rental market, “we haven’t seen the beginning of the usual slow season as we used to see [at] this time of the year in the last few years,” said Dmitry Daniel Kramp, a senior agent at City Connections Realty. Jason Fien, director of leasing at the brokerage Plati-

num Properties, said he has observed a drastic increase in demand for luxury rentals, as would-be buyers fail to find a “steal” and settle for renting. But he urged discouraged buyers to keep looking. “If you can afford to buy, buy,” he said. “You are only flushing hard-earned money down the really flashy and expensive self-cleaning toilet that your $20,000 rent affords you.” TRD

profits). To raise the money for its funds, CIM sometimes turned to well-connected players known as “placement agents” — a common practice in private equity, but one that would soon become controversial. In the late 1990s, CIM hired a firm headed by Alfred Villalobos, a former CalPERS board member, eventually paying $9.6 million in commissions. “CIM paid a portion of those fees in the form of a $1.1 million loan to Villalobos, to build a 9,100-square-foot mansion in Nevada overlooking Lake Tahoe,” according to the L.A. Times. Eventually, Villalobos became embroiled in a major scandal, which brought unwanted scrutiny to CIM in the pages of California newspapers. In May 2010, the California attorney general sued Villalobos, accusing him of attempting to bribe a former top CalPERS official. Villalobos denied the allegations, and the suit was put on hold by bankruptcy litigation. CIM, for its part, was just one of many private equity firms that hired Villalobos (Apollo was another), and was not accused of wrongdoing. Even so, in October 2010, CIM agreed to cut its fees for CalPERS by $50 million over five years, and promised to avoid the use of placement agents. According to the L.A. Times, the fee reductions were “intended to compensate CalPERS for any costs it may indirectly have paid because of large commissions paid by investment partners to placement agents.” Local industry insiders say the negative headlines tarnished CIM’s name. And, just this August, revelations of the firm’s connection to the case were trumpeted in headlines in Israel, as it attempted to negotiate a deal to buy distressed properties.

volvement in some of his former properties. CIM took control of Trump Soho, agreeing to pay down about $85 million of the senior loan held by iStar, and to provide a mezzanine loan. It also bought Sapir’s loan on the unsold condos at William Beaver, while simultaneously negotiating with the mogul to acquire a minority stake in Sapir’s healthy 11 Madison, a 2.25 million-square-foot office tower, anchored by Credit Suisse First Boston. At William Beaver, CIM bought more than $60 million in mezzanine debt held by a fund controlled by Blackstone, with iStar remaining in the deal as a senior lender. CIM then turned the high-end condos into rentals, transforming a negative drain into steady cash flow. “It’s a huge success,” said Robert Scaglion, managing director of Rose Associates, which is handling leasing at the building. “They created a rental portfolio within a stalled condo and now have a fully functioning building.” After the Macklowe and Sapir deals, CIM also went back to the well with iStar. Among its buys was the debt for $54 million on 49 East 34th, a 110-unit apartment building. Meanwhile, CIM has also teamed up with Madison Equities to develop a hotel at 140 Sixth Avenue, between Spring and Broome streets, to be run by hotelier Sam Nazarian’s SBE company. The private equity firm provided the bulk of the capital to purchase the $24 million defaulted first mortgage on the 11,470-square-foot building at a 16 percent discount. That collaboration may just be the start of another fruitful partnership. Sources say CIM has agreed to provide financial backing to Madison on a number of other potential deals, including a project at the old Domino Sugar site in Brooklyn. But not everyone in New York has greeted CIM as saviors. Last month, NMP, an investment group controlled by Russian developer Natalia Pirogova, filed suit, accusing CIM of “fraud and breach of trust.” The group claims CIM reneged on commitments it made to its local representative, Edward Mermelstein, before he shared “confidential intelligence” relating to a property at 21 East 33rd Street, including appraisals, feasibility studies and financial projections. Mermelstein, the lawsuit claims, shared the information on the understanding that CIM would pursue negotiations with Garrison Commercial Funding, a real estate investment firm that owned the debt, to purchase, restructure and refinance a $29 million loan on the property, and partner with Pirogova’s group. Instead, the suit alleges, CIM purchased the loan and continued foreclosure proceedings. “It’s unfortunate that outside entities entering the New York market are choosing to play by a different set of rules,” Mermelstein said. CIM spokesman Bill Mendel declined to respond. “We will be filing our response and, as a matter of corporate policy, do not comment on ongoing litigation,” he said. TRD

CIM from page 59 In the 1970s or 1980s (accounts vary), two former Israeli paratroopers, Avi Shemesh and Shaul Kuba, immigrated to the United States, launched landscaping and design businesses, and began investing their profits in West Hollywood real estate. The story goes that the duo met their partner in 1987, when they showed up at the home of Richard Ressler to discuss landscaping his property. Ressler was already a wellconnected player, with a track record for big deals. Armed with an MBA and a law degree from Columbia University, he had worked as an attorney at Cravath, Swaine and Moore, and as an investment banker at Drexel-Burnham Lambert, home of disgraced junk-bond king Michael Milken. Prior to forming CIM, Ressler had worked as the president of Brooke Overseas Limited, which developed Ducat Place, a mammoth office complex in Moscow, backed with private equity funds, according to CIM’s website. Ressler’s brother-in-law is Leon Black, another Drexel Burnham alum and head of private equity giant Apollo Global Management LLC, while his brother Tony is the cofounder of Ares Management LLC, another large, L.A.based private equity firm. In 1994, Ressler, Shemesh and Kuba launched CIM and set to work acquiring properties in Santa Monica, where, according to the Los Angeles Times, city officials were attempting to inject life into a dormant pedestrian mall near the Pacific Ocean. CIM’s nearby buildings “helped drive the transformation of the pedestrian-oriented district from a series of vacant storefronts into a bustling entertainment strip,” according to the paper. In the years that followed, the team gained a reputation as turnaround artists, moving into a wide array of other down-and-out areas. “They were absolute pioneers here in Santa Monica, Hollywood, the Center City and Downtown Los Angeles, and they’ve had one of the best track records in adaptive reuse, bringing retail to where it’s needed, and turning around very difficult situations,” said Cushman’s Muhlstein. “They were on the Third Street promenade doing projects at the most embryonic stages. ... They bought in Hollywood when no one would touch it. Now, [that part of Hollywood] is one of the hottest transit-oriented development areas in the city.” To finance its projects, CIM has sought and won financial assistance from government officials eager to accelerate revitalization. (In L.A., officials gave the firm a $30 million federal loan to help it recruit Cirque du Soleil to a theater in one of CIM’s redeveloped shopping centers.) But the firm’s ability to expand to its current size would not have been possible without the backing of large institutional investors. After establishing a track record working largely on project-by-project joint ventures backed and controlled by big institutional partners, CIM began raising money for larger independent funds that would give it the authority to move with the speed and decisiveness that only an independent entity can (not to mention the potential for greatly increased

New York arrival A hedge fund division of CIM arrived in New York in late 2009, moving into 515 Madison at a time when “the world was waking up and getting back in the game,” said Michael Joseph of Colliers International, the broker who helped the ﬁrm ﬁnd space. Though CIM’s fortunes at the Drake site remain to be written, some of the several other bets it has since placed already appear to be paying off. “It’s been very hard to acquire distressed assets in Manhattan over the last couple of years, and I would certainly put them there in the most successful groups,” said Dan Fasulo of Real Capital Analytics. “They were willing to pay more than others at that point in time. But you could easily argue that for many of the things they bought, they are well in the black.” In New York, CIM appears to have forged strategic relationships, which will likely pay dividends as they move ahead with the projects in the months to follow. Sapir — who was in trouble at the William Beaver House and Trump Soho — had been staving off creditors for months when CIM purchased his debts in December 2010 at the eleventh hour from iStar and others. Just as with Macklowe, instead of turning its back on the fallen titan, CIM reached agreements that allowed him to retain varying levels of inGet more real estate news at www.TheRealDeal.com

82 December 2011 www.TheRealDeal.com

Town

from page 26

nell O’Connell and Josh Sarnell have also come aboard.

Halstead: 5 hires. The Halstead contingent at Town is, thus far, much smaller than those from the city’s other major ﬁrms. Former Halstead vice president Suzun Bennet is marketing an apartment at 330 Spring Street for $2.8 million for Town. Other Halstead hires include Wendy Jodel, Kellee Buhler, Elisabeth Foriel and Lianne Graubart.

and Leasing as the on-site agent at ritzy 845 United Nations Plaza, where she listed Derek Jeter’s apartment last year for $20 million. Recently, however, she appeared on the Town website with two listings at the building, each over $3 million.

Stribling: 1 hire. Stribling alum Dennis Cusack is currently listing 101 Central Park West, #14/15F, for $23.5 million, with Swezey and Town representative Janis Aurichio.

Sotheby’s: 1 hire. Josh Frank, previously Trump Sales and Leasing: 1 hire. Debra Stotts previously worked at Trump Sales

a vice president at Sotheby’s, is now a senior vice president at Town.

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Other residential firms: 32 hires. Hires from other firms include Town’s director of listings, Hal Gavzie, who hails from Bond New York along with representative Dana Power. Marcus Louis Fien comes from Core, and Kevin Kelly, Town’s director of corporate relocation, previously worked at Rutenberg. Town also has representatives from MNS, Platinum Properties, Prime New York, New York Residence, and other small brokerages. Another 20 or so agents come from commercial firms or development companies, like the Jack Parker Corporation and Sierra Realty Corp.

New to NYC real estate: 114 hires. According to Town’s website and LinkedIn, a large number of Town reps hail from industries outside of real estate. Sage Galesi, for example, worked as an actress and singersongwriter before becoming a Town agent. Lauren Arpel spent 20 years in the beauty industry, founding Lauren Arpel Beauty. Danny Cohen played minor league baseball for the Atlanta Braves organization, then became a commodities trader. Sean Hughes was previously an actor and model. In March, he purchased Lower East Side hot spot the Eldridge with partner Matt Dino, reopening it in May as “EastBridge.” TRD

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DE C EMB ER 6

The Real Estate Lenders Association holds a breakfast featuring guest speaker Jeff Blau, president of Related Companies. Open to lenders and equity investors only. 8 to 9:30 a.m. The Yale Club, 50 Vanderbilt Avenue. Fee: Free for members, $50 for nonmembers. Information and registration: headquarters@RELA .org or (212) 692-9379.

The Real Estate Board of New York holds a “Crossfire” seminar on the current New York City leasing market and projected trends for 2012. Panelists include Tom Bow, senior vice president at the Durst Organization; Paul Glickman, a vice chairman at Jones Lang LaSalle; CBRE vice chairman Michael Laginestra; and Glen Weiss, senior vice president and director of leasing at Vornado Realty Trust. Steve Durels of SL Green Realty Corp. and Ackman-Ziff’s Simon Ziff will moderate the discussion. 5:30 to 7 p.m. REBNY Mendik Education Center, 570 Lexington Avenue. Free. Members only. Information and registration: www.rebny.com.

C A L E NDA R 1

2 3 4 5 6 7 8

The Real Estate Division of the Friends of the Israel Defense Forces holds a reception honoring Andrew Heiberger, the chairman of Town Residential and founder of Citi Habitats and Buttonwood Development. 7 to 10 p.m., New York Public Library, 455 Fifth Avenue. Fee: $500. Information and registration: www.fidfrealestatedinner.org.

The New York Chapter of the American Institute of Architects presents its monthly “Book Talk” with Bjarke Ingels, author of “Yes Is More: An Archicomic on Architectural Evolution.” Ingels, the award-winning founder of Copenhagenbased Bjarke Ingels Group, is currently designing a pyramid-shaped residential tower for Durst Fetner Residential on West 57th Street. 6 to 8 p.m. The Center for Architecture, 536 LaGuardia Place. Fee: Free for members, $10 for nonmembers. Information and registration: www.cfa.aiany.org.

10 11 12

The Building Owners & Managers Association of Greater New York hosts a holiday reception and luncheon followed by surprise entertainment. 11:30 a.m. to 2 p.m. Grand Hyatt New York, 109 East 42nd Street. Fee: $260 per ticket. Registration and payment must be received by Dec. 7. Information and registration: www.bomany.org.

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The National Jewish Health hospital and the Holliday Memorial Fund for Lung Cancer Research hosts “New York Real Estate Winter’s Eve Dinner,” a dinner and dance benefit event. The guest of honor is Marc Holliday, CEO of SL Green Realty Corp. 6:30 p.m. to midnight. Grand Hyatt New York, 109 East 42nd Street. Fee: $750 per ticket, $1,500 per couple. Information and registration: YoungJ@njhealth .org or (212) 297-0857.

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84 December 2011 www.TheRealDeal.com

The New York State Association of Realtors, in conjunction with the New Jersey and Pennsylvania state associations, hosts the annual “Triple Play” convention and trade show. Bill Rancic, the first-ever winner of Donald Trump’s TV show “The Apprentice,” will serve as the grand assembly keynote speaker, with an address entitled, “The Future of Real Estate in America as We Know It.” The largest annual convention and trade show of its type in the United States, the event will feature nearly 90 educational sessions and some 495 exhibitor booths. Atlantic City Convention Center, One Miss America Way, Atlantic City, N.J. Fee: $79 to $159 registration fee (depending on registration date); $20 to $299 for courses and events. Continuing education credits are available. Information and registration: www.realtorstripleplay.com.

13 Professional Women in Construction presents its annual Holiday Dinner Dance. The black-tie event will honor the former commissioner of the city’s Department of Buildings, Patricia Lancaster, now clinical professor at the NYU Schack Institute of Real Estate and president and CEO of the Lancaster Group. Entertainment to be provided by Stan Rubin and his orchestra. 7 p.m. to midnight. The Yale Club Ballroom, 50 Vanderbilt Avenue. Fee: $375; sponsorships available. Information and registration: www.pwcusa.org/ny.

6-8

The Real Estate Board of New York hosts its annual Commercial Holiday Luncheon, featuring guest speaker Ric Clark, CEO of Brookfield Properties. Noon to 2 p.m. The Waldorf-Astoria New York, 301 Park Avenue. Fee: $95. Members only. Information and Registration: www.rebny.com.

The Real Estate Division of the Diabetes Research Institute Foundation throws its annual Empire Ball, with cocktails, dinner and dancing. The event is chaired by Peter DiCapua, chief operating officer of ATCO Properties and Management. Three real estate division members will be honored: William Macklowe, chief executive and owner of the William Macklowe Company; Michael Rodriguez, president of Alliance Building Services; and Richard Laskowski, vice president of Vanguard Construction. 6:30 p.m. Grand Hyatt New York, 109 East 42nd Street. Fee: $950 per individual seat, $8,000 to $25,000 for tables of 10. Information and registration: www.diabetesresearch.org.

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Showroom Hours: Monday - Thursday: 7:30am - 5:00pm Friday: 7:30am - 2:00pm Sunday: 9:00am - 1:00pm

BROOKLYN – Crown Heights 172 Empire Blvd. (between Bedford & Rogers) Direct Showroom Number: 718-534-4510 Showroom Hours: Monday - Thursday: 7:30am - 5:00pm Friday: 7:30am - 2:00pm Sunday: 9:00am - 1:00pm

BRONX – South Bronx 962 Washington Ave. (between 163rd & 164th St.) Direct Showroom Number: 718-292-7300 Showroom Hours: Monday - Thursday: 7:30am - 5:00pm Friday: 7:30am - 2:00pm

MANHATTAN – Washington Heights 1662 St. Nicholas Ave. (corner West 193rd St.) Direct Showroom Number: 718-543-3184 Showroom Hours: Monday - Thursday: 7:30am - 5:00pm Friday: 7:30am - 2:00pm

MANHATTAN – Washington Heights 1028 St. Nicholas Ave. (corner West 162nd St.) Direct Showroom Number: 212-543-1121

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Showroom Hours: Monday - Thursday: 7:30am - 5:00pm Friday: 7:30am - 2:00pm

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