The Real Deal December 2013 by The Real Deal

421a fallout: Inside the tax-break probe

Co-ops where sellers can’t sell

Mayoral short list for real estate jobs

Grading new brokerages

124

Ben Levine’s knockout punch

Vol. 12 No. 12 December 2013 $3.00

www.TheRealDeal.com

p36

Real estate’s Going inside Mega-mansions biggest feuds Woo’s SuperPier in the ’burbs A look at the ugliest family battles over New York City property — from the Feils to the Macklowes p42

Developer Young Woo’s West Side project is trying to transform the retail world, but will his vision work? p47

A roundup of the priciest listings in the tony enclaves around NYC, including a $140 million estate p53

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Happy Holidays

2013 Highlighted Acquisitions:

Many Thanks to the Brokerage and Banking Communities For Over $1 Billion in Acquisitions in 2013

Here’s to Another Successful Year in 2014

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Happy Holidays

2013 Highlighted Acquisitions:

Many Thanks to the Brokerage and Banking Communities For Over $1 Billion in Acquisitions in 2013

Here’s to Another Successful Year in 2014

LONDON Old Spitalfields Market London, United Kingdom

625 Madison Avenue New York, New York

2.5 Acres of Retail in the Heart of London - “The SoHo of London”

One Stockton Street San Francisco, California For Leasing Information, Please Contact: A.J. Levine | 646.214.0245 | alevine@aacrealty.com

One Union Square San Francisco, California

For New York Area Acquisitions Information, Please Contact: Michael Ashkenazy | 646.214.0283 | mashkenazy@aacrealty.com

For National Acquisitions Information, Please Contact: Conor Soden | 646.214.0228 | csoden@aacrealty.com

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Highlights D E C E M B E R

REFLECTING PRESENCE

Comps get complicated

The abatement-gate fallout

2 0 1 3

In fast-paced residential market, even the pros are having trouble with pricing.

The probe into 421a tax breaks for Extell and other top developers wraps up this month. Find out what to expect.

rapidly rising retail market 24 The With the holiday shopping season in full swing, a look at what’s fueling New York City’s retail sector, including tourists.

Tourists are expected to spend $70 billion in NYC this year.

26 Ofer Cohen takes a ‘stand’ The founder of Brooklyn-based commercial firm TerraCRG talks about his ‘standing’ desk, his season tickets to the Nets — and Gandhi. Ofer Cohen founded TerraCRG in 2008.

As the only building officially on memorial grounds, the National September 11 Memorial Museum Pavilion must echo the somber dignity of its WTC environs while admitting thousands of visitors to its exhibits each day. To achieve these

words... 30 InThetheir month’s funniest and most insightful real estate-related comments.

diverse goals, Snøhetta teamed with consultant Front Inc.

Blackstone’s latest billionaire

to design an enclosure that both maximizes the building’s security and mirrors its placid surroundings. Through the changing days and seasons, it offers museumgoers a setting

How Jonathan Gray, the head of the private equity firm’s real estate division, amassed a fortune — and became a contender to take over the company.

for reflection on the past while looking to the future.

Transforming design into reality

Gray’s company stock reportedly tipped over the $1 billion mark this year.

Unveiled: World’s priciest hallway For help achieving the goals of your next project, contact the Ornamental Metal Institute of New York. Spanish starchitect Santiago Calatrava, and his newly designed West Concourse, below.

Part of the Santiago Calatrava-designed World Trade Center transit hub recently opened, with a $225M price tag.

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

Groundhog Day for federal taxes It’s déjà vu all over again. Congress is down to the wire, again, on a slew of relief programs for homeowners.

What’s ahead in 2014?

Architect: Snøhetta Photo: Snøhetta

8 December 2013www.TheRealDeal.com www.TheRealDeal.com October 2012

The hot issues that industry pros will be watching in the New Year — from big projects to little-known pieces of legislation.

www.TheRealDeal.com March 2012 00

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Highlights continued 42

ASTOR TURF

Real estate’s biggest family feuds The bitter battles that have pitted sibling against sibling and parents against children — from the Feils to the Macklowes.

Mega-mansions in the ’burbs

The other Hirschfeld

Newark: The end of neglect

A roundup of the priciest listings in NYC’s tony suburbs, including a $140 million estate.

Elie Hirschfeld calls his late father, Abe, a tough boss, and denies fighting with the Clintons.

Wooed by incentives, developers rush into the NJ city, prompting an unprecedented boom.

The indoor pool at Nassau County’s priciest listing, which is on the market for $15.9 million.

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

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Locked out

A TRD review found a number of buildings where sales are hampered thanks to sponsors hoarding units.

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

62 The skinny on NYC’s newest skinny tower A review of JDS and Property Markets Group’s pencil-thin building on 57th Street. Left, a rendering of the SHoPdesigned 57th St. tower.

Commercial Market Report

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

Government Briefs How the federal, state and local government impact real estate.

National Market Report

The mayor-elect’s short list

As inauguration day nears, sources point to the candidates ripe for real estate jobs in the new administration.

Reports from around the country on significant developments and trends.

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

Ronda Wist

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

100

Development Updates Kenneth Knuckles

Soon-to-be mayor Bill de Blasio.

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

10 October December 2012 2013www.TheRealDeal.com www.TheRealDeal.com

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

102

Vishaan Chakrabarti

Grading the new guys How are the newest commercial firms, from Lee & Associates to Avison Young, measuring up?

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

124

We Heard A lighter look at industry buzz.

www.TheRealDeal.com March 2012 00

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Highlights continued

Behind Young Woo’s SuperPier Developer Young Woo has pushed the envelope in recent years with cutting-edge projects. At his latest, the so-called SuperPier on the West Side Highway, he’s doing it again. This time he’s attempting to turn retail on its head. But will his vision work?

Last month, the Brodsky Organization leased the land adjacent to St. John the Divine.

Nonprofits sitting on gold Schools, cultural institutions and churches see new urgency to sell property as condo prices drive up values.

124

Ben Levine’s knockout punch Don’t be fooled by 28-year-old Ben Levine’s baby face. The Douglaston Development heir delivered a blow to his opponent in the boxing ring at a charity event last month.

Ben Levine at the Haymakers for Hope cancer charity event last month

12 December 2013 www.TheRealDeal.com

126 The Closing: Robert Ivanhoe The head of law firm Greenberg Traurig’s real estate practice talks about crashing on his office couch when working on mega-deals, golfing with Stephen Green and getting rejected by Bernie Madoff.

New York City’s (new) land rush Prices for developable land have skyrocketed in the city. In some cases, developers are shelling out 30 to 50 percent more than they were last year, a move sources say is leaving them with super-thin margins when they start construction on projects.

Robert Ivanhoe

Equal Housing Opportunity.

© 2013 Douglas Elliman Real Estate. All material presented herein is intended for information purposes only. While, this information is believed to be correct, it is represented subject to errors, omissions, changes or withdrawal without notice. All property information, including, but not limited to square footage, room count, number of bedrooms and the school district in property listings are deemed reliable, but should be verified by your own attorney, architect or zoning expert. Equal Housing Opportunity.

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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 Web Editor Leigh Kamping-Carder Art Directors Ronald Gross, Keziah Makoundou

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14 December 2013 www.TheRealDeal.com

The Real Deal is a registered trademark of Korangy Publishing Inc. Copyright © 2013. Call 212-2601332 or e-mail news@therealdeal.com. Warning: It is illegal to photocopy or reproduce any part of The Real Deal without express written consent. For reprints and duplication rights, call 212-260-1332. Principal office: 158 West 29th St., New York, NY 10001. The Real Deal is published monthly. Annual subscriptions cost $95. Send check or money order to 158 West 29th St., New York, NY 10001.

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EDITOR’S NOTE What you liked in 2013, and what’s ahead

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ill the good times roll, all the way into 2014? That’s the question on the minds of those in New York real estate, after a year in which price records were shattered in many areas of the residential and commercial markets. There are a lot of wild cards this coming year, from how the inauguration of a new mayor, Bill de Blasio, will impact real estate, to how far interest rates will rise, to whether the astronomical prices being asked for new condos will pencil out for developers. Check out reporter Kathy Clarke’s story on page 36 for a look at the key issues and projects set to make waves in the coming year. We also bring you a lot more to feast on during this holiday season. In this issue, we take a look at the biggest family disputes in New York City real estate (page 42), the priciest listings in the city’s suburban markets (page 53) and a look at new commercial brokerages and how they are faring (page 70). Also, check out our profile of developer Young Woo, who is looking to transform the West Side with his new massive retail project, SuperPier (page 47), and a piece on Blackstone’s head of real estate, Jon Gray, who is the latest billionaire from that prolific company and possible successor to CEO Steve Schwarzman. And, as we near the end of 2013, it’s a good time to take a look back at the most read issue stories of the past year, in case you missed them. You can check all of them out at therealdeal.com/archives. Topping the list was a roundup of condo development in bustling Brooklyn. (That was fitting, since topping our list of most read stories last year was “NYC’s new condo wave,” a look at new residential development on the drawing board in Manhattan and Brooklyn.) Rankings also did well, with “Manhattan’s top listing agents,” our survey of the most active residential brokers, finishing second on the most-popular list. There were also packages on the top real estate dynasties, top entrepreneurs, top upstart investors, and the top commercial brokerage firms to work for. A look at WeWork’s Adam Neumann was our top profile of the year. The founder of the trendy shared office space company has been snapping up space left and right — from the top of the Woolworth Building to a new plan for a 500,000 square foot location at the Brooklyn Navy Yard (that’s the size of a small office tower). The company is on track to become New York City’s fifth largest office tenant only three years after launching. The next most popular profile after Neumann’s was a look at Solil Management, the company that manages the assets of late real estate mogul Sol Goldman. The company has been sitting for decades on a huge but largely static portfolio of New York City properties worth more than $6 billion (including 240 buildings in Manhattan), but is finally starting to make moves. And finally, the third most popular profile was an exhaustive examination of Donald Trump’s net worth (surprisingly low in the rankings considering the typical popularity of all things Donald, perhaps). Here are the most viewed magazine stories of 2013: 1. Brooklyn’s building bonanza (March) 2. Manhattan’s top listing agents (June) 3. Where should real estate investors put their cash? (April) 4. Ranking NYC’s real estate dynasties (October) 5. Real estate’s hot new entrepreneurs (October) 6. WeWork’s Adam Neumann on top (January)

48 Bond Street

7. New York’s upstart investors find big profit (June) 8. Sol Goldman’s $6B portfolio in play (April) 9. What does Donald Trump really own? (July)

21 East 96th Street

10. New York City’s best commercial firms to work for (August) 11. Meet the Gen Xers taking over NYC real estate (September) 12. Real estate red flags: Amid market euphoria, are dark clouds looming? (August) 13. Aaron Jungreis, NYC’s busiest multi-family broker, courts clients and controversy (July) 14. Gary Barnett’s big buildout (February) 15. Not-so-outer borough: Brooklyn’s climbing prices make it nearly as costly as Manhattan (June)

48 Bond Street eet 48 Bond Str

21 East 96th Street

Enjoy the issue and the holiday season.

A full service General Contracting and Construction Management ﬁrm, providing Property Management, Real Estate Investment and Acquisition consulting services. Stuart Elliott 16 December 2013 www.TheRealDeal.com

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Re s i d e n t i a l Ma r k e t By Katherine Clarke ast month, development giant Extell Development pulled the condominium units at its new residential tower at One Riverside Park off the market temporarily to adjust pricing. The price tags at the 35-story glass-and-limestone building were simply too low, the developer said, and 70 of the property’s 219 units had flown off the shelf in the 10 days since the offering plan had been approved by the Attorney

Comps get complicated

In high-velocity market, brokers are having more difficulty pricing properties

General. The move by Extell goes to show that even master developers are having difficulties pricing for the velocity of the market, brokers told The Real Deal. Indeed, the brokerage community has had to readjust its pricing strategies significantly in the last year, as supply has continued to dwindle and sales activity has amped up, sources said. The limited inventory means there are fewer potential comps, or comparable sales and listings, to stack a listing

against. Plus, buyers are looking further afield at properties in different neighborhoods, opening up a whole new world of comps to factor into the pricing equation.

more challenging. “A year ago, I would nail [the price tag] every time,” said Jason Haber, the founder of boutique brokerage Rubicon Proper-

“A year ago, I would nail [the price tag] every time. What’s happened now is that pricing has become much more of an art form than a science. Brokers don’t need PropertyShark as much as they need a muse at this point.” Jason Haber, Rubicon Property As such, pinpointing the right price for a listing has never been

ty. “What’s happened now is that pricing has become much more

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hit historic lows, with just 4,567 total co-op and condo apartments available for sale, a 21.9 percent decrease from last year, according to a recent report by Douglas Elliman. That marked the tenth consecutive quarter during which inventory dipped. Meanwhile, sales volume was frenzied, hitting the second-highest level in Manhattan in 24 years, with 3,837 sales closing during the period. The quick pace of the market means that a comp could be here one day and gone tomorrow. “In the past, you’ve looked at the markets on a quarterly basis or even a biannual basis, but this is a monthly market,” said Todd Jacobs, founder of Noho-based full-service brokerage Bold New York. “What happened two months ago, or even last month, is not necessarily relevant this month. You have to look at it on a very micro basis, not macro.” Finding the right price tag is one of the most important elements of making deals happen in this market, brokers said. Price too low and you won’t secure an exclusive listing; price too high and your listing won’t get foot traffic and could linger on the market. “Pricing reductions in this type of market are frowned upon,” Jacobs explained. “When people see something that’s been on the market for even eight weeks, they say, ‘Wow, why has this not sold?’” Part of the confusion about pricing for brokers stems from the fact that prices in the luxury market are rising faster than those in the middle, said Samuel DeFranceschi, an associate broker at Nest Seekers International. While the median sales price of a Manhattan apartment jumped by 0.8 percent quarter-over-quarter to $872,000, according to Elliman, the average price of a luxury apartment (an apartment priced in the top 10 percent of the market) rose by 9 percent quarter-over-quarter. Continued on page 110

20 December 2013 www.TheRealDeal.com

Live an Iconic Life.

Thank you to our valued brokers for your support in the continued success of New York by Gehry.

Owner Developer: Forest City Ratner Companies Marketing & Leasing Agent: Douglas Elliman Development Marketing Marketing Consultant: Nancy Packes, Inc.

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The abatement-gate fallout OVER $700,000,000 OF FINANCING ARRANGED IN 2013

Probe into 421a tax breaks for Extell, Silverstein and Thor likely zero in on campaign finance reform By Guelda Voien he relationship between Albany lawmakers and real estate developers will be thrust into the spotlight this month. Indeed, the industry is anxiously awaiting the findings of the so-called Moreland Commission to Investigate Public Corruption, which is looking into whether tax breaks were improperly awarded to a handful of high-profile New York City developers for luxury projects. The commission was formed this summer by Governor Andrew Cuomo after

tower would have risen without a tax incentive, but because Extell associates donated $100,000 to Cuomo’s campaign the same day that the breaks were passed. Adding salt to the wound, three weeks after the bill became law, Extell head Gary Barnett gave an additional $100,000 to a state Democratic Party account that the governor was using to pay for advertising that touts his initiatives, according to published reports. Now the Moreland report, which is due to be released on Dec. 1, is looking to address some of the quid pro quo behavior

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22 December 2013 www.TheRealDeal.com

The Moreland report, which is due to be released early this month, is looking to address some of the quid pro quo behavior between politicians and real estate developers, sources say. news broke that Extell Development, Silverstein Properties, Thor Equities and other top developers were granted tens of millions of dollars in highly coveted 421a tax abatements breaks, which are intended to spur development in a stagnant market and to create affordable housing. Those abatements — which were discreetly tucked into a bill signed by Cuomo in January — were granted to the über-luxury condo One57, a planned Four Seasons hotel in Lower Manhattan, and a mixed-use project at 516 Fifth Avenue. At One57, where penthouses have reportedly sold for $90 million, Extell will save $35 million, according to published reports. That case incited the most intense outrage among critics — not just because the

between politicians and real estate developers that critics say is taking place behind the political scenes. Though the commission may issue policy recommendations, sources told TRD it would likely overlook the governor’s role and, perhaps, instead, zero in on campaign finance reform recommendations. Sources noted that the 25-member commission, which is chaired by Nassau County District Attorney Kathleen Rice, has issued subpoenas to get ahold of “relevant correspondence” between politicians and developers. Subpoenas were issued to Extell, Silverstein and Thor, according to the Wall Street Journal; spokespeople at each of those firms either declined to comment or did not respond to calls from TRD. Continued on page 112

www.TheRealDeal.com 2010 PHOTOGRAPH OF SILVERSTEIN BYMarch MAX DWORKIN

By the Numbers

NYC’s rapidly rising retail market

$18 billion

Total visitor spending from New York City tourism in 2003.

$70 billion

$1,000

Price-per-square-foot barrier broken by Prada when it renewed its lease on Broadway and Spring Street in Soho in April, setting a new record for Downtown Manhattan.

Projected total visitor spending from New York City tourism in 2013, up from $55 billion in 2012. Number of locations that New York City’s top five largest chain retailers (Dunkin’ Donuts, Subway, Value of Black Friday Starbucks, MetroPCS and receipts for the entire U.S. Duane Reade) had in 2008. over Thanksgiving weekend in 2012.

1,127

$59.1 billion

1,717

2nd place

ith the holiday shopping season now in full swing and retailer players gathering this month in

Midtown for the annual International Council of Shopping Centers convention, it’s a good time to stop and assess the ever-rising retail market in New York City. This month, TRD does just that, looking not just at escalating rents and values, but also at the factors fueling spending, including foreign tourists, the proliferation of chain stores, and the nonstop gentrification of farflung outer-borough neighborhoods. B y E van B leier

12 percent

New York City’s overall retail vacancy rate in 2009.

5 percent

New York City’s overall retail vacancy rate today.

$130

Average per-squarefoot retail asking rent in Manhattan, representing an 18 percent jump over the $110 average asking rent a year ago.

New Listing By the Numbers

Fifth Avenue’s ranking on the list of most expensive retail locations globally, with rents averaging $2,500 a square foot on the thoroughfare in the 50s.

1st place

Hong Kong Causeway Bay’s ranking on the list of most expensive retail locations globally, with rents averaging $3,017 a square foot.

100 percent

The four priciest retail locations in the U.S. are all in Manhattan, with Times Square, East 57th Street and Madison Avenue ranking after Fifth Avenue.

69 percent

Growth of retail rents on Broadway in the Financial District over the past year — a bigger rise than any other Manhattan neighborhood.

Number of NYC locations those same retailers had in 2012, constituting a more than 50 percent rise.

7-Eleven stores that were added to the city between 2008 and 2012, including locations on the Bowery, near Union Square and close to the Barclays Center.

Number of gyms in Brooklyn’s BedfordStuyvesant, after Planet Fitness inked a new 22,500 lease there in October.

42 percent

Growth in the number of restaurants in New York during the 2000s, from 5,610 to 7,966 citywide.

Sources: Douglas Elliman, Integra Realty Resources, Real Estate Board of New York, NYC & Company, NYC government, National Retail Federation, Cushman & Wakefield, Crain’s New York, Center for an Urban Future, Winick Realty, U.S. Census Bureau.

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the desk of:

fer Cohen founded TerraCRG in 2008 at the start of the recession. “They kind of laughed at us at first,” said Cohen, president of the Brooklyn-based commercial brokerage. But Cohen — who worked at Massey Knakal for all of three years before starting Terra — has by all accounts proven those skeptics wrong. The 16-broker firm is on track to close $200 million in business this year, Cohen said. And it’s created something of a niche selling midsize development properties, although the firm also does some leasing. (It leased the first Brooklyn outpost of

Ofer Cohen

Soul Cycle, the gym, last year in Williamsburg.) Cohen’s larger deals include a 12,690-square-foot site at 470 Fourth Avenue with 80,000 buildable square feet (currently in contract for $20 million) and a 200,000-square-foot Greenwood Heights site (sold for $19 million in September to CWN Property Management). This month, Cohen showed TRD around the company’s Park Slope office, which sits on a residential block, behind a parking garage. Let’s just say Cohen never sits down. Find out why below. By Guelda Voien

Cohen recently injured his back at the gym

and now works at this standing desk, where bricks from a development site Terra sold

in Clinton Hill prop up his keyboard. Cohen noted he hadn’t heard of the ergonomic fad of standing on the job, but said: “I actually kind of like it now.”

This blue, er, abstract painting was done by

Ocean, one of Cohen’s six-year-old twins. She and her fraternal twin sister, Daya, are also in the photograph below, at the family’s summer home in Montauk.

5 10

A photo of Cohen at the first Brooklyn Nets

Cohen came to the U.S. 18 years ago from

This City Planning Commission book

game at the Barclays Center last year. The arena,

Israel. While he doesn’t consider himself religious,

outlines zoning in every part of Brooklyn. Cohen

which is half a block from Terra’s Pacific Street

he observes Shabbat, but really only in spirit, he

said he checks it three or four times a day. One of

office, has “doubled [retail] rents on nearby

said. He keeps two phones — a BlackBerry for

his daughters wrote his name on it.

streets and tripled rents within a block.” The firm

business, and an iPhone for friends and family.

has season tickets.

Cohen said the real estate community

was skeptical when he launched Terra. He posts motivational expressions on his wall by visionaries like Mahatma Gandhi, which have helped him stay focused. One reads, “First they ignore you, then they laugh at you, then they fight you, then you win.”

Cohen’s office is adorned with good-luck

charms, including this knife and this Israeli hamsa, which is believed to ward off evil. His superstition extends to his professional life, too. He said Terra brokers have a tradition of not calculating their commissions until the check is physically in the bank. And, he said, “we don’t celebrate a deal before it closes.” 26 December 2013 www.TheRealDeal.com

The BlackBerry “goes off on Friday evening,” he

10 Until his recent back injury, Cohen regularly

said.

went for 30-mile bike rides on the weekends on

Mahatma Gandhi

a Specialized bike like the one pictured here.

This terrarium replaced one that was given to

Though he hopes to get back to biking soon, for

Cohen by an intern at the firm, but which died off

now he is doing Pilates to speed along his recovery.

after he went on vacation and failed to water it. Still, Cohen liked the idea of a mini-ecosystem so

much that he went to the same store and bought

his own. “It’s just nice to have something green on your desk,” he said.

This map shows Brooklyn in the 1930s.

Cohen bought it at the Brooklyn Flea, the yearround market populated by local vendors. It’s a reminder that the borough is in constant flux, he said.

9 Cohen in the front row of a Nets game at the Barclays Center.

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Manhattan office stats

Commercial Ma r k e t

AVAILABILITY RATE

Office market ends 2013 on high note

Total Manhattan leasing activity expected to be greater than in 2012 By Adam Pincus here’s no winter chill in the Manhattan office leasing market. Despite the distracting hubbub of parties and holiday dinners, transactions traditionally rise in the fourth quarter. “The deal flow is there. I think we are moving with some momentum that will carry us over to next year,” said Richard Bernstein, vice chairman with commercial firm Cassidy Turley. Bruce Mosler, chairman of global brokerage for Cushman & Wakefield, agreed. “I think December will be a strong month. I can only judge from my own activity, what I see and feel,”

he said. “[But] it will be one of the more active Decembers we’ve had from a closing perspective.” Indeed, Teach for America, the

where it will take up to 170,000 square feet, sources said. Commercial brokerage Colliers International projected that

“The deal flow is there. I think we are moving with some momentum that will carry us over to next year.” Richard Bernstein, Cassidy Turley nonprofit that places teachers in challenging schools around the country, is one of the tenants expected to sign a large lease in the coming weeks. It’s in late negotiations to relocate from the Garment District to Lower Manhattan,

2013 would conclude with a total of about 26 million square feet of Manhattan office lease deals inked for the year — more than 2 million square feet above last year, but still behind 2011, when nearly 28 million square feet was leased.

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Average asking rents for Manhattan rose by $0.04 per foot to $59.29 per square foot last month compared to October, and the availability rate — which measures space vacant now or available in the next 12 months — was unchanged last month at 11.5 percent, Colliers data revealed.

AVG. ASKING RENT

Manhattan Nov ’13 11.5% $59.29 Oct ’13 11.5% $59.25 Midtown Nov ’13 11.6% $69.49 Oct ’13 11.7% $69.37 Midtown South Nov ’13 9.2% $53.98 Oct ’13 9.1% $54.56 Downtown Nov ’13 14.4% $47.51 Oct ’13 14.7% $47.37 Source: Colliers International

Midtown The ever-more efficient use of office space by tenants allowed household products giant Colgate-Palmolive to put about 109,000 square feet on the market at its global headquarters at 300 Park Avenue. The move comes nearly six

years after the company, which has been a tenant in the building since 1956, inked a 15-year lease for more than 537,000 square feet, CoStar Group data showed. Indeed, according to CoStar, Colgate signed Continued on page 108

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In their words...

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

“You’ve got to

sell before you build. Sell the dream; then it doesn’t matter what kind of shit you build.” Architect and developer Cary Tamarkin, recounting advice he once received from a broker.

“It looks like something they would build in Canada.” Famed graffiti artist Banksy, on 1 World Trade Center’s uninspiring design. (Banksy’s website)

“It ended up costing me 400 effing dollars.” Hotelier Andre Balazs, on getting charged late fees by Citi Bike. (New York Post)

“I don’t think

anyone will kill the goose that laid the golden egg.” Broker Dolly Lenz, on why the de Blasio administration is unlikely to make dramatic changes to the city’s taxes that will affect real estate. (CNBC)

“Even Jon Mechanic thought it was complicated.” Related Companies’ Jay Cross, making a tonguein-cheek reference to the intricacies of financing the Hudson Yards development. (NYU Schack Institute of Real Estate panel) 30 December 2013 www.TheRealDeal.com

“The only market that is giving us heartburn is the acquisitions market for assets that we want to buy.” Vornado Realty Trust CEO Steven Roth, discussing the firm’s strategy to sell more than it will buy in 2014 because of the cutthroat market.

“They’re in the [hotel] discussing billiondollar deals. It’s just a matter of catching their attention.” Lawyer Edward Mermelstein, on builder Macklowe Properties trying to lure überwealthy buyers with sales presentations at Moscow’s Ritz-Carlton Hotel.

“These are the kinds of buildings that the robber barons built.” Thomas Bender, an NYU cultural historian, on how towers like Gary Barnett’s One57 accentuate the city’s income inequality. (New York Times)

“There’s a very serious family discussion that has to be had about what makes sense going forward.” New York City’s mayor-elect Bill de Blasio, when asked early last month if he would move from Park Slope to Gracie Mansion when he takes office. (New York Daily News)

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Pr o f i l e

Blackstone’slatest billionaire How Jonathan Gray, the unassuming head of the firm’s real estate division, amassed a fortune — and became a contender to take over the company

By Guelda Voien on Gray isn’t Warren Buffett, but he and the Oracle of Omaha do have a few things in common: Both are billionaires. Both are reportedly humble about their outrageous financial success. And both like to be in the thick of things. But Gray, who heads up the Blackstone Group’s real estate division, is a far newer member of the billionaires’ club. The 43-year-old’s 40.6 million shares of company stock reportedly tipped over the $1 billion mark this year as the private equity firm’s stock surged some 40 percent. In August, Bloomberg News put his stake at $914 million and noted that he received more than $120 million in additional bonuses and other compensation in the past two years. Gray’s wealth can be largely attributed to the real estate deals he’s pioneered. Indeed, sources say his real estate funds are now responsible for 60 percent of the private equity behemoth’s profits. So it’s no surprise that observers have been pointing to Gray as the obvious choice to take over as Blackstone’s next leader. While his name has been bandied about as a possible successor to 62-year-old Blackstone president Tony James for some time, he’s now also being referred to as a contender to head the firm, replacing CEO Stephen Schwarzman, 66, whenever he retires. While Schwarzman has said he has no desire to retire, last summer reports surfaced that he was grooming six possible successors. It now appears that Gray is leading that pack. Indeed, rumors are swirling that James doesn’t want Schwarzman’s job — earlier this year he was reportedly in talks with the Obama administration to take over as Treasury Secretary. But sources told The Real Deal that Gray is likely to shy away from the CEO post. He “plans to run [the] real estate [division] for the foreseeable future,” a source close to Blackstone said. Gray and Blackstone both declined to comment for this story, but a source inside the company said James, who sold about $88.6 million in company stock last month, as Blackstone shares traded at a near-six-year-high, “isn’t going anywhere.” And Sam Zell, who has worked with Gray on many deals — Black-

32 December 2013 www.TheRealDeal.com

Sources say Jonathan Gray is “focused on his business” and finds the fanfare over his wealth “a little awkward.”

stone bought Zell’s Equity Office Properties Trust in 2007 for $39 billion, then quickly sold a portion of it at a profit — said Gray likes to get his hands dirty in deals. He said he didn’t think Gray would necessarily like being the public face of the company. “If it [is] an administrative-type job, I can’t imagine him trading what he’s doing for that,” Zell told TRD. Gray, for his part, is “focused on his business,” not on his future role at the firm, said a source at Blackstone. And while he knows he’s often looked to as a possible leader for the company, attention to his success and wealth makes him uncomfortable, the company source added. But players inside and outside of Blackstone say that even if Gray, a numbers guy with a reputation for being a straight shooter and a methodical decision maker, is reluctant, he’d still be the best person for the job. One source, who asked to remain anonymous, said Gray’s squeaky-clean image would be an asset for Blackstone, which has sometimes been seen as a big, bad buyout firm. But that’s, of course, if he can be convinced to take the reins.

Nose to the grindstone

While Gray’s name has been bandied about as a possible successor to Blackstone’s president,Tony James, for some time, he’s now also being referred to as a contender to replace CEO Stephen Schwarzman when he steps down.

Since arriving at Blackstone from the University of Pennsylvania’s Wharton School in 1992, the unassuming Gray has engineered new ways to make the widely successful firm even more money. A managing director by age 30, Gray helped pioneer the use of commercial mortgage-backed securities to finance debt — before it came to be in vogue during this most recent real estate boom. He cut up and sold off debt, for instance, in Blackstone’s $3 billion acquisition of Extended Stay America, the long-term-stay hotel brand, in 2004. It was one of the first public companies taken private using CMBS, according to news reports. And the deal was a success. Blackstone sold the company to the Lightstone Group for $8 billion three years later. (In a twist, Blackstone teamed up with two partners to buy Extended Stay again in 2009 for $3.9 billion after Lightstone filed for bankruptcy. The trio is now preparing for an initial public offering that’s expected to triple their profits.)

www.TheRealDeal.com January 2011 25

Pr o f i l e It’s easy to see how the Extended Stay deal set the stage for Gray to take over Blackstone’s real estate division in 2005. And two years into running that division came Gray’s career-making Equity Office Properties deal. While in hindsight the deal may seem like a slam dunk, at the time there were plenty of industry observers who thought it was too risky a play, and warned that Blackstone could get stuck with overpriced properties with nobody to sell them to. But Gray was proven right. Not only did his all-cash bid famously outmaneuver mega-landlord Vornado, but he was able to quickly flip many of the properties before the market crashed. Blackstone, of course, did not come out of the crash unscathed. It reportedly had to restructure two deals: the Equity Office buy and the $26 billion purchase of Hilton Worldwide. But the firm fared the best of its cohorts — real estate funds at Morgan Stanley and Goldman Sachs have largely fallen by the wayside. Gray, meanwhile, launched an expertly timed mezzanine lending fund in 2008, which loaned out $1 billion in high-cost capital to developers who were scrambling to finance projects. The firm launched seven more real estate funds after that; today, the still-active funds have a massive $69 billion under management, according to the company’s website. However, in the last few years, the size of the funds had prompted some analysts to warn that his operation has become too big, and might no longer be nimble enough to keep up its impressive returns. “There was concern [he] could only buy things,” a source close to Gray said. And Gray was, in fact, buying all kinds of new assets. Unlike large conservative investors, such as pension and insurance funds, that often only go after trophy towers, Gray often looked at the least sexy real estate assets. Case in point: the $2 billion in New Jersey industrial properties Blackstone bought in 2010 and 2011. “He is obviously agnostic as an investor,” said Zell. “He looks at everything.” But by mid-2012, with internal rates of return of only 9 percent for its fifth and sixth real estate funds — its earlier funds had shown returns of between 14 and 40 percent — Blackstone needed to sell properties in order to keep investors happy, according to Bloomberg News. Blackstone did just that in late October, with its IPO of Brixmor Property Group, the once struggling national shopping mall owner, which it bought in 2011 as part of a $9 billion deal that included a bundle of other assets. The IPO valued Brixmor at $5.9 billion and raised $825 million — the second-largest real estate IPO of the year, after Empire State Realty Trust, which was valued lower at $3.2 billion, but raised $929.5 million. According to published reports, that success could pave the way for Gray and

28 March 2012 www.TheRealDeal.com

Blackstone to make similar moves with Hilton Worldwide and Extended Stay, situations where the firm is reportedly also looking to cash out at least a portion of its investment. “You can’t look at IPOs for us as exits,” Blackstone’s James said on a conference call with shareholders earlier this year. “You can look at it as the appetizer before

portunistic real estate investment firm.

Modest mode Despite Gray’s relatively low profile (for a billionaire, that is), his mind for numbers and analysis has helped him stay ahead of the pack. A year and a half ago, Gray pushed Blackstone to create an entity called In-

OTHER BLACKSTONE BILLIONAIRES

Stephen Schwarzman (Blackstone CEO) Net worth:

$7.7 billion TONY JAMES (Blackstone president) Net worth:

$1.3 billion PETER PETERSON (Blackstone cofounder; no longer at the firm) Net worth:

$1.5 billion Source note: Forbes

the meal.” Indeed, the company still owns nearly 75 percent of Brixmor, and sources say it expects to sell off shares at a significant profit over the next several years. Meanwhile, Blackstone is planning to take Hilton public with a $1.25 billion IPO later

vitation Homes, which bought up about $6 billion in single-family homes in troubled markets such as Phoenix, Las Vegas and Orlando with plans to fix them up, rent them out and securitize the revenue stream. Zell — who went to the same subur-

“[Gray] is obviously agnostic as an investor. He looks at everything.” Sam Zell, Equity Office Properties this year — which is slated to be the largest ever for a lodging company. “They took [Brixmor] effectively out of bankruptcy,” and turned it into a performing asset again in just two years, said a top REIT analyst who asked not to be named. “Blackstone has done an excellent job as sort of a macro bet on the housing recovery,” added Tom Shapiro, president and founder of GTIS Partners, a New York-based op-

ban Illinois high school as Gray, though several decades before Gray — and others have been skeptical about the financial prospects for the plan, noting that owning real estate in too many locations makes it difficult to fully understand the ins and outs of each market. But Gray was recently quoted by The Atlantic defending the practice. “The downturn created an opportunity to cre-

ate a business,” he told the magazine, adding that Blackstone could “professionalize” landlord-tenant relations. And the firm is already pioneering ways to monetize its new portfolio. In October, Blackstone took steps to securitize its revenue from those investments when Deutsche Bank, Credit Suisse and JPMorgan announced a $439 million bond offering on behalf of Invitation Homes. While securitizing income from rentals might be seen by some as a newfangled ploy, the securities offering is a good way to generate cash. Yet some bond investors are apprehensive about buying the AAA-rated products, as they don’t think Blackstone has enough skin in the game. Others have said Blackstone might be artificially inflating property values. But Gray denied that, telling The Atlantic that home prices are also up in Salt Lake City, where Blackstone owns nothing. A source who asked to remain anonymous said that the homes owned and operated by Invitation are currently 95 percent occupied. Regardless of whether Invitation Homes is successful, finding distressed properties is becoming increasingly harder for private equity firms like Blackstone and others. But sources close to Blackstone said the firm is ramping up investment in Europe, where Gray is shooting to raise $5 billion for distressed assets, and where the company has already begun snapping up underwater assets like apartment buildings in Madrid, according to the Financial Times. Meanwhile, Gray, whose net worth was estimated at a mere $550 million last year by Forbes, has kept a low profile since his 40.6 million shares of Blackstone hit the billion-dollar mark. One source said he finds the recent fanfare over his net worth “a little awkward.” And rather than making headlines for deploying his personal wealth on highpriced homes around the world, he’s done so for donating to philanthropic causes. Earlier this year, Gray and his wife, Mindy, who have four children, gave $25 million to fund research on ovarian cancer at Penn. That’s not to say Gray doesn’t live well, but compared to other billionaires, his personal real estate is actually modest. According to city records and published reports, he owns a co-op on Park Avenue that he bought in 2005 for $7.6 million, as well as a home in Sagaponack, which was purchased for $2.88 million in 2003. Analysts say Gray is poised to continue racking up returns for a while. Mike Kirby — a Green Street Advisors analyst who once told Bloomberg News that he had doubts about the real estate funds at Blackstone continuing to produce the best returns in the industry — said he now believes Gray will sell off assets at a significant profit. “They … are going to be wildly successful on the money they’ve deployed over the last four or five years,” he said. TRD

www.TheRealDeal.com December 2013 33

REGULATING REAL ESTATE

Groundhog day for federal housing taxes

Congress comes down to the wire, again, on slew of financial relief programs for homeowners By Kenneth Harney aven’t we seen this movie before? On Capitol Hill, for the second year in a row, key federal tax assistance for homeowners is heading for expiration within weeks. And there’s no sign that Congress plans — or has the minimal political will — to do anything about it. In fact, the prospects for extension of popular mortgage-forgiveness debt relief and deductions for mortgage insurance payments and home energy efficiency improvements appear to be more dire than they were last year at this time, when at least there was a formal bill pending to extend them. This year there is none at the moment. The House and Senate are spending their time trying to figure out a budget, but are also considering overhauling the entire federal tax system, which could mean that a long list of special-interest tax preferences — including for housing — might be sucked into the

it expires? It would mean that thousands of people who are in the process of doing short sales on their homes, but won’t close until 2014, may be subject to income taxes on the amounts their lenders cancel as part of the transaction. Underwater owners who sign up for short sales in 2014 — or owners who receive cancelation of debt as part of loan modifications —would all be subject to harsh taxes on their phantom “income.” Elizabeth Weintraub, a real estate broker in Sacramento, Calif., who specializes in short sales, has a client who illustrates the problem. The client faces a $60,000 tax bill from the federal government on a $400,000 mortgage debt if a short sale is not completed before the Dec. 31 deadline. Though Weintraub said “we are pushing” a short sale vendor working for Bank of America to get the deal done in time, it may not happen because “they move at their own speed” — far beyond Wein-

Remember last year’s New Year’s Eve “fiscal cliff” game of chicken? The tax benefits for homeowners were ultimately extended, but only for a year. Whether that’s possible again this December is in doubt. tax-reform vortex and never revived, if they expire as scheduled on Dec. 31. Robert Dietz, vice president for tax-policy issues at the National Association of Home Builders, said the name of the movie is “Groundhog Day” — the Bill Murray classic about déjà vu all over again. Remember last year’s New Year’s Eve “fiscal cliff ” game of chicken that wasn’t resolved until the wee hours of Jan. 1? The tax benefits for homeowners were ultimately extended, but only for a year. Whether that’s possible again in late December is in doubt. What’s at stake here? Begin with tax treatment of mortgage debt relief. Before Congress changed the law in 2007, any borrower who had a debt canceled by a creditor would have to report the amount forgiven as ordinary income, subject to federal taxation. If a mortgage lender chose to reduce a homeowner’s principal balance as part of a loan modification — say, by cutting $50,000 off the mortgage balance — the IRS would treat that $50,000 as fully taxable income. That’s despite the fact that the owner never actually received $50,000 in cash, and despite the fact that it was highly likely the owner was already in distress on the loan, facing financial challenges that made payments on the previous balance difficult. Congress carved out a special exception for owner-occupied housing for five years, and that exception was later extended through Dec. 31. What happens if 34 December 2013 www.TheRealDeal.com

traub’s or her client’s control. But mortgage debt relief is hardly the only real estate tax benefit set to disappear at the end of this month. Also scheduled to terminate unless extended: • The 10 percent credit currently allowable for energy-saving improvements made to a home, including qualified insulation, high-performance windows, doors and roofs. The credits have a lifetime cap of $500. • The $2,000 credit for newly constructed homes that meet federal standards for energy efficiency. • The mortgage insurance premium write-off for those who take out a home loan with a down payment below 20 percent. This includes conventional Fannie Mae-Freddie Mac loans, Federal Housing Administration-insured loans and VA guaranty fees. This may be particularly important next year for new buyers who use FHA loans, because that agency has recently raised its insurance premiums significantly and withdrawn its previous rule that allowed borrowers to cancel their insurance premiums, as is standard in private mortgage insurance. Best advice for anyone counting on one or more of these tax benefits in early 2014: Don’t. This time around, it’s possible that some of them may not come back. TRD

GOVERNMENT BRIEFS EDC solicits proposals for Crown Heights armory The city’s Economic Development Corporation is seeking a developer to transform the Bedford-Union Armory in Crown Heights into a community center, the Daily News reported. Brooklyn Borough President Marty Markowitz, whose office has pledged $1 million in capital funds for the project, is among the local polBedford-Union Armory iticians who’ve called for the 150,000-square-foot facility to house a range of athletic facilities, such as a skating rink, swimming pools, running tracks and gymnasiums; it could also include art exhibition space. Built in 1903, the Bedford-Union Armory has sat vacant since 2011. New York Governor Andrew Cuomo turned over the property to the city in August. Developers wishing to buy or lease the space must submit proposals by Jan. 23, 2014.

New WTC walkway to cost $225M to build Dubbed “the world’s most expensive hallway,” the World Trade Center Transportation Hub’s newly opened West Concourse cost $225 million to construct, a spokesperson for the Port Authority of New York and New Jersey told the website Next City. The high-concept underground pedestrian walkway is 100 feet long, and connects Brookfield Place, formerly the World Financial Center, with the Santiago Calatrava World Trade Center PATH terminal. The passageway can now be accessed via the temporary PATH station. The entire $4 billion Santiago Calatrava-designed transportation hub is slated for completion in mid-2015.

Bernanke will continue bond-buying program Federal Reserve Chairman Ben Bernanke pledged last month to continue the bond-buying responsible for record low interest rates, a move that could see interest rates hover at around the 4 percent mark until early next year. Demand for properties fell after Bernanke’s remarks in May that the stimulus program would begin to wind down, but the latest announcement could reverse that trend. “It’s clear the Fed became concerned about housing over the past month, and that’s why it came out so Ben Bernanke firmly on the side of bond buying,” Diane Swonk, chief economist at Chicago-based Mesirow Financial, told Bloomberg News in November. “After months of talking about ending the program, the statement was crystal clear it would continue.”

Union deal paves way for Staten Island project A last-minute concession from unions solidified Staten Island’s largest development deal in half a century. The agreement is expected to cut the developer’s construction costs some 20 percent. In exchange, developer BFC Partners will hire union workers for the entire $580 million St. George waterfront project, Crain’s reported. The development, which will include an outlet shopping center and the world’s tallest observation Ferris Staten Island Mall wheel, was approved by the New York City Council in October. The Bloomberg administration, eager for a legacy project on Staten Island, also played a role in pushing for the labor pact and offering up tax breaks. BFC, which has already poured some $6 million into the outlet mall portion of the project, took on more risk and higher costs than it said was tolerable. Developer Richard Marin will be responsible for erecting the Ferris wheel at the site. Compiled by Sanna Chu

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What’s Ahead

The big issues industry players are going to be following closely in the New Year

By Katherine Clarke n many ways, 2013 was an historic year for the New York City real estate industry, as price records were shattered in both the commercial and residential sectors. Hedge funder Bill Ackman and a group of investors reportedly paid more than $90 million for a unit at Extell Development’s luxury condo tower One57, for instance. If the sale closes at that price, it will set a record for the most expensive Manhattan condominium. On the commercial side, $1 billion became a regular benchmark, with several deals breaking that barrier, including a partnership between Beijing-based developer Soho China and banking giant M. Safra & Co buying a piece of General Motors Building in a deal that valued the property at $3.4 billion. 36 December 2013 www.TheRealDeal.com

Meanwhile, the New Year will be rung in with the inauguration of a new mayor, Bill de Blasio. So, what can the real estate industry expect from 2014? Read on for a closer look at the key issues and projects set to make waves in the coming year.

Interest rate jitters Speculation that the Federal Reserve could begin to wind down its signature easy-money program has fueled unease in the real estate market in recent months, with buyers feeling a renewed sense of urgency to take advantage of historically low rates before the cost of borrowing shoots up. That anxiety was eased somewhat in October when President Obama nominated

Janet Yellen — a key supporter of the bondbuying program that’s partially responsible for keeping interest rates down — to replace Ben Bernanke as chairman of the Federal Reserve. But ironically, last month’s release of strong job numbers for October stoked concerns that the administration might determine that the economy is strong enough to survive a tapering down in quantitative easing as early as this month. The interest rate for a 30-year fixed-rate loan is currently hovering slightly above 4 percent, but experts predicted rates could reach as high as 6 percent in the next year. As a point of reference: an $800,000 apartment, with a 20 percent down payment and a 30-year fixed rate mortgage at 4.13 percent, will cost the owner about $3,104 in

monthly payments, according to StreetEasy’s mortgage calculator. If the rate were to rise to 6 percent, those monthly payments would rise to $3,837. Brokers, developers and buyers will be eyeing how the interest rate situation unfolds early next year, sources said. Over the past few months, industry insiders have begun to see an uptick in buying — which was already going strong despite the relative lack of residential inventory on the market — as interest rates have inched up, said Jordan Roth, a senior branch manager at GFI Mortgage Bankers, a residential mortgage provider in Manhattan. “If rates had stayed where they were in the first part of this year, buyers might have stayed on the sidelines,” he said. “Now, we’re illustration by D.Studio

What’s Ahead seeing people get into the game.” If the rates increase significantly, “you’ll see people start to be more creative to get deals done and maybe take a second look at homes they previously passed up,” Roth said. Still, an increase in interest rates might dampen activity in the long-term, slow the growth of home prices and impede commercial investors’ ability to refinance property, sources said. But not everyone thinks the Fed will wind down the bond-buying program soon — there have been false alarms about them doing so several times over the last year. “In order for the Fed to slow down its purchase of mortgage-backed securities, there has to be another mechanism in place. Before the government really starts to wind down [the troubled financial agencies] Fannie and Freddie, which have more than 20 percent of the overall mortgage pool, there has to be something else to replace it,” Roth said. Fred Peters, CEO of Warburg Realty Partnership, said he’s not worried that interest rates will increase significantly in 2014. “Unless the economy really picks up steam, I would be surprised if we saw any dramatic shift in rates,” he said. “And while buyers may grumble about increases, I do not believe small increases will impact buyer behavior too much.”

The de Blasio agenda When Mayor-elect de Blasio takes the reins at City Hall at the start of next month, the real estate industry will, of course, be closely watching to see which of real estate-related issues he raised on the campaign trail gets tackled first. “Whenever there is a change in administration, there’s understandable trepidation,” said Seth Pinsky, executive vice president at RXR Realty and the former president of the NYC Economic Development Corporation under Mayor Michael Bloomberg. “But there are also opportunities that come with change.” Among the agenda items on the industry’s watch list are de Blasio’s pledge to push for mandatory inclusionary zoning, which would change the rules on affordable housing for developers.

“Can a developer build a residential building under a new [affordable housing] formula and still make a reasonable rate of return? There is a line — is it 60/40 or 70/30? I don’t know — but there is a line that’s going to not allow everyone to develop.” Ross Moskowitz, Stroock & Stroock & Lavan One of the industry’s biggest concerns is that residential projects now planned as 80/20 buildings — a program through which developers receive taxexempt financing in exchange for making 20 percent of their units affordable — would suddenly not pencil out if the requirement were to change to, Ross Moskowitz say, 70/30 or even 60/40, especially if no additional tax incentives or development rights are provided in return. Indeed, the 80/20 model has been around so long that it’s been “priced into the development equation,” Pinsky said. “If the [de Blasio] administration alters those models, it’s possible that development will become more challenging,” he said. “That doesn’t mean it’s going to be impossible. There are many different ways to skin a development cat. If it turns out that the old models no longer work, creative people will figure out new models.” The real estate industry “needs to be a little patient and see what specifically the new administration is proposing before jumping to the conclusion that it’s going to be too much,” Pinsky said. Still, some developers are already factoring in the possibility that they may have to include a higher percentage of affordable units when scoping out new projects, said Kevin Davis, chief investment officer of Taconic Investment Partners, speaking at a panel last month. “The big risk is if you’re buying, and assuming that you’re going to build 20 percent affordable and all of a sudden it changes to 40 percent, that’s where it’s important to tread lightly,” he said. Ross Moskowitz, a real estate partner at the law firm of Stroock & Stroock & Lavan,

said that’s not an irrational concern. “Can a developer build a residential building under a new formula and still make a reasonable rate of return?” he asked. “Rightly or wrongly, there’s this perception that everyone’s making a lot of money on every project. That’s not the case. There is a line — is it 60/40 or 70/30? I don’t know — but there is a line that’s going to not allow everyone to develop.”

Midtown East rezoning In the middle of last month, the Bloomberg administration dropped a bombshell when it withdrew its sweeping proposal to rezone Midtown East, citing a lack of City Council support. The industry-supported proposal would have eased restrictions on how air rights are traded, paving the way for developers to increase the height and bulk of office towers between 42nd and 57th streets and Madison and Third avenues. Critics of the proposal — which Bloomberg said was needed in order to upgrade the aging stock of Midtown office towers and make New York more globally competitive — argued that the city was undercharging developers for air rights, and that developers were not required to earmark enough money towards infrastructure improvements. Either way, the rezoning of Midtown East will now be left to de Blasio, who’s pledged to present a revised proposal by the end of 2014. With millions of dollars in development rights on the line, de Blasio’s reworked proposal could be one of the first major issues the industry and new mayor tangle over. While de Blasio has said that Midtown East should be “rezoned to allow for the creation of a world-class 21st-century commercial district,” he’s also raised eyebrows in the industry for wanting to put more restrictions on Bloomberg’s proposal. “It needs to be done right,” de Blasio said in a statement last month. “We need to address the many unanswered questions

Once you start reopening the Midtown East rezoning issue, it’s likely it would go through substantial change. It’s hard to predict whether, once you start moving pieces around, it would end up being successful.” Seth Pinsky

Seth Pinsky, RXR Realty

about this plan, including how to build the infrastructure needed to accommodate the additional density created by the rezoning, and how to ensure that new development rights are appropriately priced to create the best possible value for the city.” Meanwhile, Bloomberg, who first proposed the rezoning in 2012, said the failure of the council to back the proposal had cost the area “hundreds of millions of dollars in badly needed subway and street improvements” and $1 billion in additional tax revenue. Pinsky, who as a Bloomberg administration alumni is a strong proponent of the rezoning, said the uncertainty surrounding the revised proposal would cause the market to pause going into 2014. Still, the short-term impact on office rents will be negligible because the change wouldn’t have filtered into the market until 2019, said Mark Weiss, a principal at commercial brokerage Newmark Grubb Knight Frank. Pinsky said the rezoning is a “small down payment” on upgrading the city’s office stock, and that while it wouldn’t “be sufficient alone … it’s an important step forward in modernizing the city’s office inventory.” “Once you start reopening the issue, it’s likely it would go through substantial change,” he said. “It’s very hard to predict whether, once you start moving the pieces around, it would end up being successful or not.”

The condo concern This year was undoubtedly the year of Extell Development’s One57 and Macklowe Properties’ 432 Park Avenue. But, according to brokers, 2014 will be the year when the industry finds out whether the batch of luxury towers conceived in the wake of those two high-profile condos can survive. Residential brokers told TRD that rather than watching in awe as properties break price records as many did in 2013, that in 2014 industry insiders will be watching to see whether the new projects can achieve the prices needed to justify the high costs for land their developers paid. “It will be interesting to see those projects that were conceived out of [today’s] irrational exuberance,” said Shaun Osher, CEO of real estate brokerage CORE. “There are going to be those buildings that come out of the ground that should not necessarily have been built,” he added. “Developers are looking at those projects [like One57 and 432 Park] as benchmarks, but they’re on a different playing field.” Osher predicted that new units coming to market with exaggerated price tags will linger. “Buyers are not going to be foolish,” he said. Pamela Liebman, CEO of residential brokerage the Corcoran Group, echoed that point. “I’m worried about all the new condo inventory hitting the Midtown corridor that expects to trade in excess of $6,000 a foot,” she said at an event hosted by Haute Living magazine last month. “When you look at historically what that market has done and then you see what’s coming to market, you do tend to get a little nervous. How deep is that market? I think we’re all about to find www.TheRealDeal.com December 2013 37

What’s Ahead out in the next couple of years.” And power broker Dolly Lenz, head of Dolly Lenz Real Estate, agreed: “If I were the banks financing on those projects, I’d be really very watchful as to what’s going on,” she said at the same event. Land prices have reached previously untested heights, according to a recent report by commercial brokerage Avison Young. The price per buildable square foot averaged roughly $400 in Manhattan in the first half of this year, the brokerage reported, while prices for land suitable for prime luxury residential development soared to $700 or $800 a foot in some instances. For example, broker-turned-developer Michael Shvo paid $23.5 million, or around $800 per square foot, for a High Lineadjacent site in Chelsea earlier this year. That acquisition price will require him to secure $3,000 a foot for the condos he’s planning to build in order to turn a profit, sources said. In an October interview with the New York Times, the developer said, however, that it’s “not about the dollar per square foot.” “When you go buy a Birkin bag at Hermès, you’re not calculating how much you’re paying for every inch of your bag. It’s truly looking at real estate as a luxury brand,” he said. “The only way these deals are being financed is that the developers are really betting on condo sellout prices that are higher than current comps,” Josh Goldflam, managing principal of HighCap Group, told TRD for this month’s Q&A (see page 77). “Hopefully they have no unexpected delays or problems, because their margins are so thin that one little thing can put your entire project under water.” Among the most anticipated projects set to go up in Midtown — either onto the market or out of the ground — in 2014 will be JDS’ so-called “skinny” tower at 107 West 57th Street, which is slated to rise to 1,350 feet (see architecture review on page 62) and the 1,423-foot glassy skyscraper Extell is building at 225 West 57th Street. Developer Michael Stern said he’s not concerned about the price he paid for the land, since he acquired a piece of the lot at a low cost basis before land prices started to escalate. While a partnership led by Stern’s JDS and Property Markets Group invested $177.8 million to acquire both the Steinway building at 109 West 57th Street and its accompanying land lease in 2013, a key part of the site was acquired in 2012, for $40 million.

Redevelopment of the South Street Seaport

With its redevelopment of the famed South Street Seaport, the Howard Hughes Corporation is betting that it can lure New Yorkers to a neighborhood long seen as a tourist-only destination. Indeed, the Texas-based company broke ground on a new $200 million, 300,000-square-foot retail complex at Pier 17 in Lower Manhattan in October. The new multi-level glass building, which will have a rooftop event space, will replace the existing dated retail complex. And the retail brokerage and investment 38 December 2013 www.TheRealDeal.com

A rendering of a $200 million, 300,000-square-foot retail complex being built by the Howard Hughes Corporation at Pier 17 in Lower Manhattan

“I’m worried about all the new condo inventory hitting the Midtown corridor that expects to trade in excess of $6,000 a foot. How deep is that market? I think we’re all about to find out in the next couple of years.” Pamela Liebman, the Corcoran Group community will be watching closely in 2014 to see whether that bet pays off. Specifically, observers will be looking to see whether the complex can attract a world-class tenant roster that can compete with the new retail portions of Brookfield Place (formerly known as the World Financial Center) and the World Trade Center. While a slightly different mix of tenants is expected at the Seaport, all three complexes will likely be pitching a few of the same international brands, sources said. Howard Hughes is currently in negotiations with several high-profile prospective anchor tenants, its principals told TRD last month. The firm declined to identify them, saying only that major leases would be announced in 2014 and would likely include international and local brands. One source told TRD that the company was in talks with hospitality magnate Danny Meyer for the rooftop restaurant space. RKF, the retail brokerage, is marketing the project but declined to comment. “South Street has always suffered because it’s never been a true destination,” said Stroock & Stroock & Lavan’s Moskowitz, who is not connected with the project but whose firm has offices in the neighborhood. “Howard Hughes has to erase that history. The fate of that project will really be decided depending on the anchor.” Christopher Curry, senior vice president of development at Howard Hughes, said the tenant roster will be completely different from the pier’s previous incarnation.

“We’re building for the New York customer,” he said. “This will not be geared towards the tourist. I don’t even know if we’ll have any tenants coming back. This will no longer be the South Street Seaport that most New Yorkers think about.” The rapid rise in the residential population Downtown in the last five to 10 years has not been coupled with the addition of enough local retail, he added. While Curry declined to comment on asking rents at the complex, sources told TRD that they are between $200 and $350 a foot, depending on the level of the building. That’s substantially lower than the World Trade Center, which is asking up to $500 a foot plus a percentage of the stores’ revenues. With the anticipation of these three major retail projects, rents have already inched up Downtown in the last six months, said Robin Abrams, executive vice president at retail brokerage Lansco. Only two years ago, rents on Lower Broadway were closer to $200 a foot, she said. Now, they’re topping $500 a foot near the World Trade Center. Meanwhile, tenants of both the World Trade Center retail spaces and the Brookfield Place retail slots will also be announced next year.

The renewal of Seward Park Investors and developers are expected to zero in on the Lower East Side in 2014. That’s thanks in no small part to the $1.1 billion dollar investment in the neighborhood being made by a partnership led by L+M

Pamela Liebman

Development Partners, BFC Partners and Taconic Investment Partners. In September, following a competitive RFP process, the trio was selected by the city to construct a 1.65-million-square-foot, mixed-use project in and around Seward Park, a public park and playground slightly north of East Broadway. The six-acre site is the largest swath of undeveloped city-owned land in Manhattan below 96th Street. The developers will pay the city $180 million for the development rights. The project will include 1,000 units of housing (half of which must be permanently affordable) as well as a 15,000-square-foot open space, a school, a community center, 250,000 square feet of office property, and a mix of retail spaces. Arik Lifshitz, president of DSA Realty, a Lower East Side-based landlord and investor, said he’s hopeful that the massive nature of the Seward Park project will “spur [other nearby] owners to invest in renovations and upgrade their buildings.” Charles Bendit, co-CEO of Taconic, told TRD he expects to make announcements about retailers signing onto the project in the second quarter of 2014.

What’s Ahead

“There’s a huge void between the north side of Grand Street and the north side of Delancey Street. There’s no life, there’s no vibrancy. I can’t see how this project is not going to have a dramatic impact on the area.” Charles Bendit

“There’s a huge void between the north side of Grand Street and the north side of Delancey Street,” he said. “By building these buildings, we’re going to create more traffic on the streets. At the moment, you have these vacant lots that are fenced in and have all these cars on them. There’s no life, there’s no vibrancy. I can’t see how [this project] is not going to have a dramatic impact on the area.” So far, retail brokers said they’ve seen little increased interest in the neighborhood. That’s likely because the project has not yet been widely publicized, Abrams said. “I haven’t heard a heck of a lot about it yet,” she said. On the investment sales side, however, there’s been an uptick in activity. Along Orchard Street, near the redevelopment area, an investment boom already appears to be underway. Earlier this year, a partnership between Joel Schreiber’s Waterbridge Capital and developer Jackie Jangana paid $27 million for the former Ridley Department Store as part of a package of buildings (including 57 and 59-63 Orchard Street, as well as 319 Grand Street). A separate 100-plus-room hotel at the corner of Orchard and Canal streets, formerly home to the Jarmulowsky Bank, is also set to open in 2014. That project is being spearheaded by global investment firm DLJ Real Estate Partners. “Smart people are buying in the area before this million-plus square feet of retail, commercial and residential is built,” said Stephen Kliegerman, president of Halstead Property Development Marketing. “This is potentially the most exciting mass new development to happen in the city. In some

Charles Bendit, Taconic Investment Partners ways, it’s more exciting than the Hudson Yards because this is a neighborhood with such rich culture and history and this will tie it together. You’re going to see values in that area jump by 50 percent over the next five years.”

Legislative issues There are several little-known but potentially important pieces of legislation that real estate players will be following in 2014. Among them is the slated expiration of the Terrorism Risk Insurance Act. Sources say the federal program — which financially subsidizes insurers in the event an act of terrorism leads to exceptional damages on a property — is crucial for New York City landlords because it provides them with reasonably priced terrorism insurance. Without it they might be left with few — if any — options for where to buy insurance, and might only be able to secure it at exorbitantly high prices. At a NYU panel discussion last month, developer William Rudin called the scheduled

expiration of TRIA “one of the scariest things” he was facing as a landlord. But the industry is not sitting back and waiting to see how things unfold. The Real Estate Roundtable and the National Association of Real Estate Investment Trusts, both industry organizations, are not just lobbying to have the legislation extended but are also pushing to reform the way terrorism insurance is issued generally. (They’ve created the Coalition to Insure Against Terrorism to do so.) Ric Clark, chairman of commercial landlord Brookfield Properties, told TRD he was concerned that lenders would not issue loans without terrorism-risk coverage on the collateral. “Property owners depend on their ability to obtain adequate all-risk insurance coverage for financing,” Clark said. “Approximately $1.7 trillion of commercial real estate loans are scheduled to mature over the next five years. Without terrorism-risk insurance, these loans face the risk of not being eligible for refinancing and going into default. Given

the scale of this market, the financial markets face serious safety and soundness issues if TRIA is not renewed.” TRIA was, not surprisingly, introduced in the wake of the 2001 terrorist attacks to address a shortage of available terrorism insurance. Congress has renewed it twice since it first passed in 2002, but a recent congressional poll found that it might not have enough support to win another renewal. Clark said post-9/11 lenders would only offer terrorism insurance at “exorbitant prices,” and even then it was “woefully inadequate.” “We remember all too well what happens when terrorism coverage is not available,” he said. “Commercial borrowers lose their ability to get financing, billions of dollars in real estate-related transactions stall or get canceled, hundreds of thousands of jobs [are] lost.” Another potentially transformative piece of legislation set to go before Congress in 2014 is the Marketplace Fairness Act. New York City retail brokers say the bill — which would force web-based retailers to collect sales taxes on Internet purchases even in states where they don’t have a physical presence — would remove a big financial advantage for retailers to be online only. That might mean increased interest in bricks-and-mortar spaces from Internet-commerce companies. “In an effort to remain competitive, the behemoth online retailers like Amazon, eBay, and other online companies will get even more serious about moving into shopping centers once their sales-tax advantage is gone,” said Adelaide Polsinelli, head of retail brokerage at commercial firm Eastern Consolidated. “Many web retailers are already anticipating

“In an effort to remain competitive, the behemoth online retailers like Amazon, eBay and other online companies will get even more serious about moving into shopping centers once their sales-tax advantage is gone.” Adelaide Polsinelli, Eastern Consolidated

A rendering of the $1.1 billion Seward Park project that L+M Development Partners, BFC Partners and Taconic Investment Partners are planning on the Lower East Side.

Adelaide Polsinelli

the change and seeking out retail stores and warehouses in advance of this legislation.” Until now, those kinds of companies have largely steered clear of renting stores or showrooms in New York. However, if the playing field is leveled on the sales-tax front, they might opt to get serious about securing city locations. The bill has already passed in the Senate and will likely go before the House of Representatives in 2014. TRD www.TheRealDeal.com December 2013 39

Related taps Corcoran Sunshine to market $5B worth of apartments

Indeed, the developers of the city’s two most noted residential towers in recent years — 432 Park Avenue and One57 — both opted to use their own in-house teams to market their projects. (Extell Development, the company behind One57, did, however, collaborate with Corcoran Sunshine, which is headed by Kelly Kennedy Mack, behind the scenes.) Some high-profile brokers have criticized the shift toward in-house marketing, saying it has eroded transparency in the marketplace. For Related, the company’s wide-reaching plans to build in New York City as well as nationally and internationally are likely keeping the company busy, noted Andrew Gerringer, managing director at the Marketing Directors, the new developRenderings of two of the many Related projects that Corcoran Sunshine will be representing. Left, 520 West 28th Street, just outment marketing company. side the Hudson Yards site, and 15 Hudson Yards, on the site. Insets, Kelly Kennedy Mack, president of Corcoran Sunshine, and That might be one reason Related’s CEO, Jeff Blau. the company has opted to id-designed condominiums at 520 West “It shows that this short wave of devel- bolster the efforts of its in-house sales diviopers who thought that going in-house was sion with the help of an external company. 28th Street. “I would assume they have a lot on their Though brokerage executives could be more cost-effective and more productive than forgiven for flinching upon hearing about working with the brokerage community is plate these days,” he said. “It’s really good a competitor landing such a plum assign- potentially turning back to the brokerage to stick with what you’re really good at, and ment, industry pros insisted that the news community,” said Stephen Kliegerman, pres- they’re good developers. If they can outsource was positive for the city’s new development ident of Halstead Development Marketing. and not have to have a whole staff of people to do [sales], it’s beneficial.” TRD “I think it’s a great thing.” marketing sector overall.

Industry experts say deal signals that developers may shift away from in-house sales By Katherine Clarke he Related Companies’ unusual decision to collaborate with outside marketing pros at Corcoran Sunshine to sell the residential units at its mammoth Hudson Yards project will be a boon for the new development marketing sector, industry experts told The Real Deal. Indeed, sources said the move signals a reversal of a recent trend towards marketing big-ticket projects in-house. Related, which is headed by Jeff Blau, announced the partnership last month, surprising some in the real estate community, since the giant developer has historically handled sales internally. Corcoran Sunshine, the new development marketing wing of the Corcoran Group, will handle about $5 billion worth of projects in Related’s New York City pipeline in partnership with Related Sales, the company’s in-house sales division. Those projects include the Zaha Had-

40 December 2013 www.TheRealDeal.com

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Family Feuds

lings b i s t s n i a ngs ag i l b i s d e t wes it o p l e k c v a a h M t to the les tha s t l t i a e F b e y l i h rom t f er fam t t i — b n e e h r t d A look at rents against chil and pa

By C. J. Hughes arlier this year, the Feil Organization, one of the oldest family-owned real estate firms in the city, made headlines when a feud blew up between its siblings over the company’s $7 billion portfolio. The dispute pitted Jeffrey Feil, who is currently running the company, against his three sisters, who claimed their brother was attempting to buy them out at a discounted rate and that he wasn’t fairly sharing the family fortune. Though that kind of family dispute is not unique to the real estate business, brokers, developers and lawyers say many of New York’s real estate families come undone because

42 December 2013 www.TheRealDeal.com

they don’t heed basic financial advice: Plan successions carefully. “What’s the best way to avoid problems? To not have any children,” joked Jonathan Mechanic, chairman of the real estate department at law firm Fried, Frank, Harris, Shriver & Jacobson. He added that making sure assets are transferred fairly and cleanly can require intensive legal planning. The story of the Elghanayan family is

also an instructive one. In 2009, brothers Henry, Thomas and Frederick split their firm, Rockrose Development, into two separate companies in order to head off what some have said might have been a messy fight among the brothers’ children. Though the family debated for a year about how to carve up assets fairly, in the end, they flipped a coin to decide who got first pick of the buildings in the portfolio, Henry’s son,

“It goes all the way back to Cain and Abel. At some point, it is very likely that bad blood will develop.” LAWYER AARON SHMULEWITZ

Justin Elghanayan, now president of Rockrose, confirmed. Meanwhile, Scott Resnick also broke off from his family’s business, Jack Resnick & Sons. In 2007 he left to form SR Capital, which focuses on luxury condos. The company is currently developing 551 West 21st Street, a 44-unit project in West Chelsea designed by starchitect Lord Norman Foster. His family’s third-generation firm, which owns 5 million square feet of office space and about 1,000 apartments, is being run by Scott’s brother, Jonathan, and his father, Burt. Scott, who retains an interest in the family’s portfolio, said there was no bad blood, a fact Jonathan reaffirmed.

Family Feuds its children. It also protects against possible revolt. Company chairman Douglas Durst explained the firm’s operating structure to TRD for October’s story. He said the trusts are “generation-skipping,” meaning each generation has a limited say over the properties that directly benefit it. He also noted: “The shares of the corporations From left: Brothers Henry, Thomas and Frederick Elghanayan split Rockrose Development into two separate companies in 2009. are owned by the [family members’] trusts. The “We have a very loving, highly functional Elliman — which the family firm owned, corporations run the buildings, and they family,” Scott said. “I just wanted to do things but sold in the late 1990s — to try to buy decide how much money has to go into the on my own.” the Washington Redskins. In retaliation, buildings or new ventures [and how much In a story in TRD’s October issue on how Howard went after Philip to have him booted gets] distributed to the trusts.” much real estate New York City’s top family out as CEO of the family-owned Emigrant dynasties own, Scott had said: “I wanted my Savings Bank. Cheated out of fortunes father to be my father, and not my senior To help ensure more peaceful transitions When the rules about how money and partner.” between generations, most real estate families properties must be passed down are not set up basic trusts, specifying exactly how explicitly spelled out, skirmishes often erupt. ‘All hell can break loose’ properties must be transferred and eliminating For example, the recent sale of Williams The loving dynamic that Resnick described room for debate. Real Estate to FirstService Corp. (which later in his family is, however, not always present In addition, families can structure became Colliers International) led to an ugly in other real estate families — as lawyers decision-making in a way viewed as fair by court battle. can attest. siblings and cousins, whether it requires a In 2009, Candace Carmel Barasch, a “All hell can break loose unless there is simple majority vote or greater approval by, daughter of the late Robert Carmel, a Williams some sort of preemptive, voluntary and say, 10 of 12 members, attorneys say. principal, sued Colliers, claiming she was amicable divvying up of properties,” said Aaron Shmulewitz, a real estate attorney, speaking in general about family feuds in real estate. Shmulewitz added that rifts are Jonathan Mechanic, REAL ESTATE ATTORNEY commonplace after a few generations, as descendants look to take companies in different directions, or just cash out from The Durst Organization, which was cheated out of her stake of the sale, according to the family properties to park the money into founded in 1915 by Joseph Durst and is now the suit. This year, she was awarded $4 million. run by his descendants, makes many of its different types of businesses. Similarly, after the 1999 death of William He cited the well-publicized travails of key decisions through a so-called board of Gottlieb, who owned a large amount of the Milstein family, which involved nasty managers comprised of 11 family members property in Greenwich Village, his heirs began bickering between cousins Philip and Howard. from the same generation. That arrangement, jousting over the family’s portfolio. Indeed, Philip, son of Seymour, sued a company spokesperson said, keeps the Much of that battle stemmed from Howard for improperly using funds from the power relatively concentrated, since the older confusion over the fact that Gottlieb’s will Milford Plaza Hotel and the sale of Douglas generation of Dursts has fewer members than was vague.

“What’s the best way to avoid problems? To not have any children.”

Macklowe One of the more recent and high-profile cautionary tales involves the Macklowes. Harry Macklowe, the family patriarch, made a huge wager during the boom, buying seven office buildings from the Blackstone Group for $7 billion, personally guaranteeing a $1.2 billion loan in the process. After Macklowe lost much of his portfolio — including the trophy General Motors building — in the latest financial crisis, his son William “Billy” Macklowe publicly blamed him, calling his father out in the Wall Street Journal for reckless investing. Billy then took control of the family business, Macklowe Properties, before breaking off and forming his own firm in 2010: the William Macklowe Company. In addition, the family firm sold most of its stake in 400 Madison Avenue and 610 Broadway,

but left Billy 10 percent of those buildings along with management rights, according to news reports. His firm also has stakes in a few office towers, including 386 Park Avenue and 636 Avenue of the Americas. And Billy seems to be cementing his own legacy; last month, he purchased 156 William Street, in the Financial District, for about $63 million, according to reports. Though father and son appear to have reconciled somewhat — “We have holiday meals. We have family brunches, stuff like that,” Billy told TRD last year — Billy does not, sources say, have a role with 432 Park Avenue, a ground-up condo project that Harry has said will define his career. Meanwhile, more dramatically, Macklowe has been battling his former sonin-law, developer Kent Swig, for sever-

Real estate insiders say sloppy estate planning is not uncommon in the industry. Real estate attorney Adam Leitman Bailey said, however, that it can be rectified by involving children in the process early. “As your kids get older, you want to be able to say that if you want ‘z,’ you must do ‘x’ and ‘y,’” he said. “There must be open conversations.” While most of the city’s big real estate families are savvy financial players, lawyers stress the importance of planning for hefty inheritance taxes before a death in the family forces properties to be passed down. That’s why many New York owners give their kids a piece of their portfolios before they die in the form of a stake in a company LLC, Bailey said. He added that he regularly sees family elders pass down stakes of 25 percent or more before retiring. Real estate families are also encouraged by the current tax structure to transfer small sums to the next generation, but the $14,000 annual gift tax exemption — per parent, as of 2013 — is seen as far too low to help transfer any significant property portfolio. Yet the lifetime tax-free amount has climbed sharply in recent years, creating another option for parents who want to pass down property while they’re still alive. In 2014, that exemption will be $5.25 million, up from $1 million in 2010. “It’s always a balance of give now or give later,” said Luigi Rosabianca, a real estate attorney. He also joked that wealth in real estate families tends to follow a predictable path: The first generation builds it; the second generation spends it; and the third generation destroys it. Of course, some family relations have been smoother. Analysts say the Rudins and the LeFraks have consistently managed to pass the baton between generations without a hitch. But others say that conflicts, in sometimes Biblical scope, are inevitable. “It goes all the way back to Cain and Abel,” Shmulewitz said. “At some point, it is very likely that bad blood will develop.” Below is a look at some of the bitterest feuds within New York real estate families.

Billy Macklowe split off from his father, Harry, after the family firm got into financial trouble during the recession.

Harry Macklowe

al years. Over the summer, a Manhattan judge ordered Swig, who was married to Macklowe’s daughter Elizabeth, to repay a $200,000 loan that his father-in-law gave him in 2009. Needless to say, the two will probably not be breaking bread together over the holidays. Representatives for the Macklowes declined to comment.

A rendering of Harry Macklowe’s 432 Park Avenue, which son Billy is not involved in

www.TheRealDeal.com December 2013 43

Family Feuds

Williams Real Estate

Gottlieb When William Gottlieb died in 1999, his heirs swiftly began fighting over his estate. And the dispute continued for more than a decade, until its resolution in the late aughts. Gottlieb’s portfolio — which according to published reports includes nearly 100 buildings in Greenwich Village, the Meatpacking District, the East Village, Soho and elsewhere — was valued at $1 billion during the boom. It includes well-known (and long-empty) sites like the triangular Northern Dispensary on Waverly Place, as well as the former Keller Hotel on West Street. While Gottlieb did not have any children of his own, his heirs organized into two opposing camps: those aligned either with Gottlieb’s sister, Mollie Bender (who is now deceased), brother Arnold, and Mollie’s son, Neil — or with Mollie’s daughter, Cheryl Dier, and her husband, Jerry. The two sides duked it out in court in a years-long brawl over financial control. The fighting even got physical, according to news reports, as a lawyer hired by Arnold allegedly punched and kicked Cheryl and Jerry shortly after Gottlieb’s death. A four-page will, drafted in the early 1970s, when Gottlieb was starting out, seemed to give the Benders the strongest claim to run the empire. The Diers, however, countered in Surrogate Court papers in 2007 that Neil Bender had a drinking problem and should not be allowed to manage the properties, which sit in some of the most desirable neighborhoods in the city, but whose development potential is mostly untapped. But in 2010, Bender defeated a final appeal by the Diers, putting him squarely in the driver’s seat. Almost immediately, Bender started making moves. He sold a six-story building at 79 Horatio Street for $6 million. (Last fall, it changed hands again, for $10.5 million, according to real estate website StreetEasy.) In 2012, two adjacent lots, at 327 and 329 East Houston Street on the Lower East Side, were also sold, for a combined $12.4 million. And, the firm has indicated that it wants to begin marketing the Dispensary building, which has been mostly empty since Gottlieb bought it in 1998.

Ring The Ring siblings, too, did not see eye to eye on how to handle their 1 million-squarefoot Manhattan portfolio. Leo Ring, along with his sons Frank and Michael, began amassing properties in 1968, with each owning a one-third stake in what ultimately became a 15-building portfolio, a source familiar with the ownership structure told TRD. After Leo’s death in the late 1980s, Frank and Michael restructured their ownership, with each getting a 50 percent interest. The portfolio includes an impressive collection of prime Manhattan office buildings — such as 212 Fifth Avenue, 157 West 23rd Street and 251 Park Avenue South — though most of them are now famously empty. Though both Rings had an equal inheri44 December 2013 www.TheRealDeal.com

Frank Ring, left, and Michael Ring, right, disagreed about how to handle their 15-building Manhattan portfolio.

tance, they were not equally involved in managing the portfolio. Frank handled the properties, through his F. M. Ring Associates, while Michael worked for four decades for the landlord Helmsley Spear. Perhaps unsurprisingly, in recent years differences began to emerge between the brothers about how to lease or manage the increasingly empty towers. On the outside, the vacancies confounded local brokers. And the pressure began to mount from would-be investors. In 2011, much to his brother’s chagrin, Michael decided to partially cash out of much of his 50 percent share in the portfolio, signing a contract to sell a controlling interest of his stake to investors, including brothers Joseph and Eli Tabak, for about $112 million. Though Michael later changed his mind about that sale and fought it in court, the Tabaks flipped the contract to Gary Barnett of Extell Development — who had tangled with the Rings a few years earlier — for $65 million earlier this year. And Barnett didn’t stop there. In an effort to buy Frank out, Extell sued him earlier this year to force a sale of the portfolio. But in October, Extell inked a deal to buy Frank’s stake in the portfolio. (The portfolio is estimated at about $700 million.) Frank declined to comment through a spokesperson, and Michael did not respond to a request for comment. But last year a lawyer for Frank told TRD: “Frank will neither initiate nor participate in exchanges with Michael in the media.” Still, Frank seems eager to put the family drama behind him. “We’re very excited about the freedom this sale will provide us,” he said earlier this year about the blockbuster deal. “Having built this portfolio with my father, I’m especially looking forward to building another portfolio together with my sons.”

argue that Jeffrey is paying them too little revenue for their stakes in the firm’s buildings. They’re accusing him of scheming them in an effort to undervalue those stakes, so that they seem to be worth less when Jeffrey seeks to acquire them, which he reportedly wants to do, the Wall Street Journal reported. In simultaneous battles in three courts in New York and Louisiana, the sisters also claim that Jeffrey has hidden records, and has deprived them of funds from new prop-

Andrew Roos, left, and Michael Cohen, the grandsons of Williams Real Estate’s founders, battled with the late Robert Carmel’s daughter over the sale of the company.

erties purchased during the recession. They also say those new properties will be slapped with a huge inheritance tax bill upon the sisters’ death because they were purchased with family money. That bill, they claim, will cause financial grief for their children. The sisters claim that they get about $300,000 a year each from the family business, according to the Wall Street Journal. But Jeffrey disputes that figure, arguing it’s about $1.5 million each when factoring in tax credits. “The binding of the book became loose when my father died,” Jeffrey Feil told the Journal in September. “The pages fell out after my mother died.” The Feil Organization did not return calls for this story.

Feil The Feil dispute involves one of the most valuable portfolios in the city (estimated at $7 billion), and it’s currently raging in three separate courts. At stake is ownership or control of about 26 million square feet of New York City apartments, offices and retail space, including the Fred E. French Buildings at 551 Fifth Avenue, as well as the General Electric Building at 570 Lexington Avenue. Louis Feil died in 1999; his wife, Gretchen, in 2006. It didn’t take long for their four children to go at each other once they were gone. Sisters Marilyn Barry, Judith Jaffe and Carole Feil accuse their brother Jeffrey Feil, whom their father Louis put in charge of the estate, of trying to orchestrate a takeover. They

Sometimes battles erupt between executives who are like family, even if they are not flesh and blood. That was the case at Williams Real Estate — the development company behind One Dag Hammarskjold Plaza, 979 Third Avenue and 1700 Broadway. In 2009, the firm’s principals decided to sell their firm to FirstService Corp., a Canadian company that purchased commercial firm Colliers International in the early 2000s. But board member Candace Carmel Barasch, whose father, Robert Carmel, was a principal at Williams from the 1950s until he died in 1996, voted against the sale. Barasch, who inherited a stake in Williams and became a board member when her father passed away, opposed the company being taken over by a multinational corporation. The $27 million sale of the company — whose principals include Andrew Roos and Michael Cohen, the grandsons of the firm’s

The Fred E. French Buildings at 551 Fifth Avenue, one of a number of buildings the Feils are fighting over

founders, who were like family to Robert Carmel, sources say — went through anyway. (The following year, in 2010, Williams was rebranded as Colliers.) As a result of her opposition, Barasch claimed in court that she was stiffed out of her fair share of the sale. In her 2009 suit, she said her 10 percent stake should have been worth $4 million; instead, she was offered $2.2 million by Cohen and Roos, with the possibility of future payments, according to her suit. “The entire transaction is tainted with fraud, illegality and self-dealing,” Barasch said in the suit. After five years of legal wrangling, the case, which had reached the Appellate Court level, was finally settled last year, with Barasch getting her $4 million payout. A spokesman for Cohen and Roos, who serve as Colliers’ president and vice chairman, respectively, downplayed the fight in the Wall Street Journal this year, saying that “the sale of any business with multiple shareholders frequently causes disputes to arise.” TRD Additional reporting on Ring by Adam Pincus

Jeffrey Feil and his sisters are fighting over the family’s $7 billion portfolio.

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Pr o f i l e

Behind Young Woo’s ‘SuperPier’ The envelope-pushing developer is attempting to turn retail on its head at his new West Side project. But will his vision work?

Young Woo says he is looking to create “a powerhouse for all creative people in one location.”

By Adam Piore n a brisk November day, developer Young Woo headed towards a pair of hay-covered shipping crates just inside the entrance to a vast, cavernous structure on the 15th Street pier. With his neatly coiffed, salt-and-pepper hair and conservative blue blazer, the trim 61-year-old could have been mistaken for a Wall Street CEO on his way to brief investors. But the scene inside the shipping crates could hardly have been further removed from the staid corporate world. Inside, the walls and a fireplace were encased in white wax, emitting an eerie backlit glow. Nearby was a floor-to-ceiling display of jet-black feathers, while a twin bed, forming something like a misshapen heart, jutted into the center of the room. The art installation — by designer Michael Bastian and architecture firm Bittertang — was just a small morsel of the mind-bending creativity that will soon be on display in the 12-acre space, Woo said as he stepped inside. In 2015, a multi-tiered, 560,000-square-foot retail complex is slated to open on the property. Woo claims

it will be nothing like anything anyone has ever seen before. “What we want is to create a powerhouse for all creative people in one location,” Woo, the CEO and founder of Youngwoo & Associates, said. “We call it the ‘SuperPier.’” It’s an ambitious vision. But it would not be the first time Woo has done something cutting-edge. Indeed, while he may not be the most active developer in the city,

ties and give consumers something they wouldn’t … get from other developers,” Shvo said.

Curating tenants Woo envisions the SuperPier as a place where a Williamsburg chef making the world’s smallest donuts sets up shop next to a Japanese entrepreneur hawking square watermelons. To ensure his vision comes to fruition,

to $5,000 a month.) Woo’s goal is to remove the barriers to entry that normally prevent emerging talent, and international designers, from gaining a foothold in New York. The incubators will be housed on the two main stories of the complex. But Woo also plans to mix in 20 larger spaces, ranging from 3,000 to 20,000 square feet. These retail “superspaces” will have 28-foot ceilings and custom-designed con-

While he may not be the most active developer in the city, in recent years Woo has moved the needle with cutting-edge development projects. in recent years he’s pushed the envelope with projects like the headline-grabbing Sky Garage, a luxury condo in Chelsea where each unit comes with a personal car elevator. Broker-turned-developer Michael Shvo said Woo has done some “groundbreaking” projects. “[We] do share a belief that your competitive advantage is there when you think out of the box, develop unique proper-

Woo has hired a team of retail specialists to “curate” the mix of tenants. When complete, Woo’s floating $200 million Hudson River complex will be populated by 430 uniquely decorated shipping crates, each roughly 160 square feet (some of which will be subdivided or combined) to create hundreds of retail “incubators” with low rent, and non-traditional leases. (Lease terms range from one to 10 years, at prices as low as $3,000

figurations that will be offered under longer lease terms. (Still, they will be priced at about $100 to $150 a square foot, compared with $400 to $550 in the nearby Meatpacking District.) Though official leasing of the smaller spaces has not yet started, the company has already received 70 applications, said Zachary Beloff, Woo’s head of leasing. They range from a top Cape Town shoe designer to an online company that’s created a gel

www.TheRealDeal.com December 2013 47

Pr o f i l e that can waterproof anything — from an iPhone to a piece of tissue paper, he said. For now, however, the team is focused on inking deals in the larger “superspaces.” Woo announced the first anchor tenants in September: a Riverfront Spa and Beach Club by hotelier Andre Balazs, the trendy clothier Opening Ceremony, and a Brooklyn Boulders rock climbing facility. “We are not looking for tenants that

ment bank of cutting him out of a deal after using his name and connections to acquire the AIG building at 70 Pine. (The lawsuit was referred to an international arbitration panel, which dismissed it this spring.) Whatever the outcome of the newest lawsuit, the SuperPier is already generating excitement among retail brokers. “If it’s successful, it’s obviously going to change the traffic flow of the entire [Meat-

Origin story Woo embodies the classic American pullyourself-up-by-the bootstraps immigrant tale. But even today, he’s deeply reluctant to discuss much of it publicly. As has been reported before, Woo was born in Seoul, Korea. In 1953, at the age of 12, he immigrated with his family to Paraguay and later moved to Argentina. The family was part of a mass exodus of Kore-

Woo’s floating $200 million Hudson River complex will include 430 shipping crates, each about 160 square feet, and 20 “superspaces.” Woo said he’s planning to roll out similar templates in five other major cities.

A rendering of Pier 57, or the SuperPier, on the West Side Highway, where Woo and his firm are currently “curating” tenants.

would do something in a mall type of environment and we are not looking for tenants who are looking to replicate what they have on Fifth Avenue, Broadway or any other high street in the world,” Beloff said. Woo’s ambitious plans have already generated a small-scale controversy. In October, Robert De Niro’s Tribeca Film Festival filed a $100 million lawsuit claiming that Woo suckered the organization into giving its backing to the project during the bidding process, but then backed out of a deal to give the film festival naming rights and use of the 450,000-square-foot rooftop once it was selected by the city to develop the pier. “[Young Woo] apparently wanted to take the opportunity to use this public space as more of a profit center rather than for the public use that was contemplated in the agreement,” the lawsuit said. Officials from the Tribeca Film Festival did not respond to request for comment and Woo downplayed the dispute. “It’s like [a] typical deal, at the last minute … everybody gets stressed out and excited,” he said. “It’s like brother and sister: sometimes we fight, next day we become better friends.” Woo chuckled when asked if he had been in contact with De Niro, saying, “I’ve never met Robert De Niro. I don’t think he knows anything about this.” It’s not the first controversy Woo has faced in recent years. Ironically, in 2011, as part of a lawsuit, Woo accused a Korean invest-

48 December 2013 www.TheRealDeal.com

(Left) Robert De Niro’s Tribeca Film Festival filed a $100 million lawsuit claiming Woo backed out of a deal to give the film festival naming rights and use of the rooftop. (Right) Woo’s Sky Garage in Chelsea grabbed headlines for its personal car elevators.

packing District],” said Kelly Gedinsky, a director at Winick Realty. “People would be driven to go past 14th Street, cross 10th Avenue and the highway,” But convincing people to cross the highway is no small task, Gedinsky noted. And the larger barrier is Woo’s untested concept. Nonetheless, Woo told The Real Deal he’s planning to roll out similar templates in five other major cities, and eventually bring it to “ghost towns” like Syracuse, which are starved for retail.

ans who moved to South America in the early 1960s when South Korea was encouraging emigration in an attempt to reduce unemployment and control the population. Woo arrived in the U.S. alone in 1972 at the age of 19. Upon arriving in Irvington, N.J., he got a job working at a Jewish butcher, and began saving money. A few months later, he moved to the city, and enrolled in NYU language school. To make ends meet, he drove a taxi and

worked other jobs. Eventually, he enrolled at the New York Institute of Technology and went on to study at Pratt University where he majored in architecture. Meanwhile, he sent for his family, who, upon arrival, pooled their nest egg with Korean friends, and opened a green grocery in the Gramercy Park area, where Woo worked in his spare time. As a junior at Pratt, Woo opened his own architecture firm, brought on a retired architect with a license and went out on jobs himself. He began approaching Korean restaurant owners, grocers and even dentists, offering to redesign their spaces. These clients would only have to pay, he told them, if they liked his work. “I was pretty good getting the jobs, but I didn’t like it,” Woo recalled. “The creative side I studied in school had very little thing to do with the real world where there’s a budget. And it was very tough to collect the fee.” By the time Woo graduated from Pratt in 1979, he’d decided he didn’t want to be an architect. Instead, he began searching for a property to buy. In those initial months, Woo estimated, he looked at 20 buildings before settling on a small office building at 45 West 33rd Street, right by the Empire State Building. To Woo, the building seemed ideally located. The financing was favorable, too. The owners had recently purchased the building for $400,000 and were looking to flip it. And though they were asking double what they’d paid, they were willing to offer a $500,000 “peer mortgage”— figuring that if they made back the $400,000 they had nothing to lose. That meant Woo only needed to raise $300,000. He approached two friends, who each agreed to pony up $100,000. Woo and his family provided the final third. Less than a year later in 1980, after spending about $50,000 on renovations, Woo said he sold the building, for $1.8 million. Finding investors for future projects was never a problem after that, he said. Between 1981 and 1988, Woo estimated, he purchased, renovated and flipped an average of two properties a year, looking at an average of 80 properties for every one he bought. Woo purchased his first large “avenue” building — 655 Sixth Avenue at 23rd Street — in 1985. Thirteen artists were living there and were protected by the “artists in residence” law. Woo recalled Barry Gosin, of Newmark, scoffing when he heard what Woo hoped to garner in rent — far above comps in the area. But after buying out the 13 tenants, and renovating the building, Woo claimed he achieved the highest neighborhood rents in the area, luring Elsevier the book publisher. Gosin has a slightly different recollecContinued on page 104

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R EAL E STATE H ISTORY A look back at some of New York City’s biggest real estate stories 1971: Women’s lib triumphs in case against landlord

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state judge rejected an attempt by an Upper Manhattan landlord to evict an unmarried female tenant because of her sexual activity in the building, 42 years ago this month. The case — which involved a rent-regulated unit — was considered to be the first test case of its kind in New York State and came in the midst of the women’s liberation movement. A ruling in favor of the landlord could have had far-reaching, negative ramifications for female tenants and strengthened the hand of property owners against renters. Women’s lib rally circa 1971 The decision was handed down as women were calling for greater personal, political and sexual freedom, and came the same month as the groundbreaking feminist magazine Ms. published its first issue, which ran as an insert in New York magazine. The landlord, who was identified only as a physician that lived in the building, testified that he was offended by the 20-something woman’s “illicit relations” with her boyfriend. The State Supreme Court Justice wrote in his ruling that “The question for decision is whether chastity is a requisite to maintenance of a landlord-tenant relationship.” While he noted there was evidence to support the landlord’s argument that the couple was having sex out of wedlock, he said that the activity was not a reason to evict her, “given the ethical standards of the day,” the New York Times reported.

1947: Zeckendorf’s Flushing “Dream City” dies

visionary plan advocated by the colorful William Zeckendorf Sr. to convert a large swath of downtown Flushing, Queens, into a modern $50 million shopping-and-theater complex was dashed 66 years ago this month. The city effectively killed Zeckendorf ’s project, known as Dream City, by refusing to invoke eminent domain to help Zeckendorf get his hands on the property he needed to move forward. Zeckendorf and others looking at a Dream Zeckendorf — president of the real estate City model company Webb & Knapp — had proposed the project, which was to be privately financed, on 20 acres bounded by 38th Avenue, Barclay Avenue, and Main and Bowne streets. At the time, the land was occupied by smaller properties, roughly 90 percent of which were owned by the Astor estate. Zeckendorf, whose grandsons Williams Lie and Arthur are now high-profile developers in the city, was looking to get in on the post-World War II boom taking place in Queens and Long Island. The plan was hailed in a Long Island City paper as “the world’s largest and most beautiful shopping center.” But to complete the project, the developers needed to get ahold of the properties by either buying out the owners or having the city condemn them through eminent domain, which would pave the way for Zeckendorf to buy them at a public auction. But the city balked and the project never got built.

1922: Traffic proposal calls for ‘super-streets’

radical plan to ease vehicular and pedestrian travel in Manhattan — which included demolishing a dozen or more full city blocks — was proposed 91 years ago this month. The plan would have created four “super-streets” running from the East to Hudson rivers, between 59th and Chambers streets. The highways would each be 360 feet wide — more than double Manhattan’s widest major street, Park Avenue, which is 140 feet wide in most places. John Harriss, a high-ranking police official, today remembered for installing the city’s first traffic signal towers, estimated it would cost about $50 million (roughly $700 million in today’s dollars) to acquire the land for the first such road, a figure some said seemed low. The plan was designed to prepare for a population that some projected would more than double from 6 million in the mid-1920s to Traffic expert John Harriss (right) 16 million by 1950. Harriss predicted it would hit 25 million in 2022. His wide-street plans were met with skepticism and were never implemented. Compiled by Adam Pincus

50 December 2013 www.TheRealDeal.com

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Suburbs

Mega-mansions in the ’burbs

A roundup of the priciest listings in the tony enclaves around NYC

This month, The Real Deal brings you a roundup of the priciest s the Manhattan luxury market continues climbing, pric- listings in New York City’s toniest suburbs: Nassau, Bergen, Fairey homes outside the five boroughs are seeing plenty of field and Westchester counties. They may not break Manhattan action of their own. records, but they have plenty of luxury cachet.

By Julie Strickland

The indoor pool inside this $15.9 million Upper Brookville home, Nassau County’s priciest listing

With new foreign buyers, Nassau’s luxury sales boom

oreign investors are a growing presence in the luxury residential market in Nassau County. And the priciest listings those buyers have to choose from are all about the bling — including indoor basketball courts, home movie theaters, and the like. Nassau’s five most expensive listings range in price from $15 million to $15.9 million, with several ties to boot. Many of the buyers eyeing properties with price tags

and Estates. “Because of the language barrier in most of these cases, they want it all there.” Nassau County’s Gold Coast — which includes Sands Point as well as the Oyster Bay villages of Old Westbury, Muttontown, Centre Island, the Brookvilles and Mill Neck — is drawing most of the high-end buyers, said Elliott, who has the county’s priciest listing. Long Island sales overall grew 4.1 percent in the third quarter, with median prices also up 6.6 percent since the start of the year, according to Douglas Elliman’s latest

Nassau’s priciest listings Address

Town

Listing Brokerage

Listing price

Chestnut Hll Drive

Upper Brookville

Shawn Elliott Luxury Homes & Estates

$15.9 million

Vista Lane

Brookville

Coldwell Banker

$15.8 million

5 Frost Mill Road

Mill Neck

Douglas Elliman

$15 million

203 Store Hill Road

Old Westbury

Daniel Gale Sotheby’s International Realty

$15 million

6120 Northern Boulevard

Muttontown

Douglas Elliman

$15 million

Source: Realtor.com and Shawn Elliott Luxury Homes and Estates

of $10 million or more are Chinese customers purchasing homes that can also serve as corporate retreats or entertainment venues for overseas guests, sources say. “Foreign investors don’t know a great landscaper, who to call to put a pool in, who to call to furnish,” said Shawn Elliott, founder and CEO of Shawn Elliott Luxury Homes

market report. And like in the Manhattan market, inventory in Nassau County is tightening, feeding into the urgency to buy. Indeed, year-over-year, inventory shrank 13.5 percent to 15,652 homes countywide. Properties are also moving faster than they did a year ago, with listings spending an

average of 102 days on the market in the third quarter, down from 116 days in the comparable quarter last year. Specifically, Elliott said that properties priced over $10 million are moving much faster than in the past. Nassau County’s second priciest listing — a $15.8 million contemporary home finished in 1994 — belongs to Teenage Mutant Ninja Turtles creator Mark Freedman. Freedman purchased three adjacent, two-acre vacant lots in 1992 in a subdivision called Broad Hollow for $1.5 million. He then constructed a 15,000-square-foot home. The property is decked out with all the trimmings a youthful ’90s cartoon creator might want, from a movie theater to indoor basketball courts. (When reached late last month, the listing broker said the property was “in the process” of being taken off the market.) Another quirky high-end offering is the so-called Twinight estate at 103 Centre Island Road in Centre Island. It is owned by the world’s foremost porcelain collector, Richard Cohen, and modeled after Versailles’ Le Petit Trianon. The home did not make the top five list, but does come with a hefty $14.98 million price tag. The home’s Napoleon room, decorated in the general’s favorite colors (purple and green) and accented with his crest, pays homage to the leader, who housed his mother at Le Petit Trianon after he came to power. Twinight spans more than 21,000 square feet and the porcelain collection housed there is itself worth $15 million, according to Elliott, the listing broker. www.TheRealDeal.com December 2013 53

Suburbs

Best school districts draw Bergen’s high-end sales

hile the luxury market in Bergen County is strong — with the most expensive listing clocking in at $29.9 million — brokers say there is no Manhattan-like madness there. The market in New Jersey is municipality-sensitive, meaning that buyers are especially keen (and willing to pay top dollar) for areas with excellent school districts, such as Alpine, according to Dennis McCormack, a broker with Prominent Properties Sotheby’s International Realty,

Cresskill and Englewood fall into that category, he said, though the latter is actually home to the county’s priciest listing — the $29.9 million Gloria Crest estate, once home to actress Gloria Swanson. Kennedy family patriarch Joseph Kennedy, who owned the property and for years maintained a public affair with Swanson, sold it to the Wassil family, heirs to a trailer-park fortune, before Kennedy died in 1969. Current owner Edward Turen, chairman and CEO of the property management and security firm Control Equity Group, paid Wassil $4.6 million for the estate

Bergen’s priciest listings Address

83 North Woodland Street

Town

Listing Brokerage

Listing price

Englewood

Prominent Properties Sotheby’s International Realty

$29.9 million

5 Buckingham Drive

Alpine

Prominent Properties Sotheby’s International Realty

$14.5 million

1 Autumn Terrace

Alpine

Prominent Properties Sotheby’s International Realty

$14 million

11 Autumn Terrace

Alpine

Prominent Properties Sotheby’s International Realty

$14 million

44 Rio Vista Drive

Alpine

Prominent Properties Sotheby’s International Realty

$13.9 million

Source: Miron Properties

who currently has two of the county’s five most expensive listings. (The other three are also listed by his firm.) “I think that in the mid-to-late 2000s, even in 2007 and 2008, it seemed to be widespread where the luxury scope of the market was fruitful in all the municipalities — but that’s not the case today,” said McCormack, who’s worked in the area for 18 years. “Alpine is very strong because the school system is excellent, and prices are higher than they’ve been in past years,” he added. “I find that the towns with the higher taxes, and not-as-good schools, are the ones that have sat out the uptick in the market.”

in 2000, according to New Jersey’s Multiple Listings Service. Since Turen took ownership, the property has undergone a gut renovation and complete system overhaul, according to McCormack, who has the listing. Meanwhile, Alpine’s $49 million Stone Mansion (also known as the Frick Estate) was Bergen County’s priciest listing until it was taken off the market in June. The property — which was originally listed in 2010 for $68 million and has been on and off the market — was co-listed by McCormack and Oren Alexander, a Manhattan-based Douglas Elliman agent, in its last go-round. But owner Richard Kurtz

Fairfield County’s astronomical prices top the suburban heap

Address

airfield County tops the New York area suburban luxury market by a long shot. Overall sales are booming, while luxury market prices are stratospheric, sources say. Indeed, the Connecticut county’s priciest listing was at one point the most expensive listing in the country. Copper Beech, a massive 50-acre estate, was listed for $190 million when it came on the market in May, but has since been chopped to $140 million. However, it may not be a listing for long. At press time, rumors were swirling that an offer had been made on the property — which is owned by timber magnate John Rudey — and that it may even be in contract. That’s despite the fact the industry observers said they thought the property seemed wildly overpriced.

told TRD that he will re-list the property before the end of the year. (He said he is currently interviewing agents.) Kurtz’s $58 million purchase of the Frick Estate in 2006 still ranks as the state’s priciest-ever sale, according to published reports. (Kurtz subdivided the land and built the Stone Mansion.) Overall, Bergen County saw a 26.3 percent jump in sales activity in the third quarter year-over-year, with a total of 1,973 single-family homes changing hands, according to New Jersey-based residential brokerage NRT, parent company to firms including Coldwell Banker, Sotheby’s and the Corcoran Group. The median sales price rose as well, up 6.7 percent to $480,000.

Fairfield’s priciest listings Town

Listing Brokerage

Listing price

499 Indian Field Road

Greenwich

David Ogilvy & Associates

$140 million

1143 Sasco Hill Road

Fairfield

Nicholas H. Fingelly Real Estate

$62 million

124 Old Mill Road

Greenwich

Joseph Barbieri Sotheby’s International Realty $32.9 million

207 Byram Shore Road

Greenwich

Coldwell Banker

$32 million

Darien

Halstead Property

$30 million

188 Long Neck Point Road Source: Houlihan Lawrence

“It’s been well-documented that Copper Beech is leveraged to the gills,” said one source who asked to remain anonymous. “People are snarking that it’s the biggest short sale in the country, so it will be interesting to see what happens with it.” According to public records, a lis pendens was filed by the bank in 2011, but was dropped in December 2012. Listing broker David Ogilvy of David Ogilvy & Associates did not respond to a request for comment. Meanwhile, the other listings rounding out the top five most expensive for-sale properties in the county range in price from $30 million to $62 million. Of those, 207 Byram Shore Road in Greenwich, which is listed for $32 million, has the most interesting history. The 1916 Greenwich mansion, owned by the Weinstein Company’s Bob Weinstein, measures nearly 13,000 square feet and is located on a Movie bigwig Bob Weinstein, inset, is listing this Greenwich home at 207 Byram Shore Road street dotted with grand “summer cotfor $32 million. tages” that served as vacation homes

54 December 2013 www.TheRealDeal.com

Kennedy family patriarch Joseph Kennedy (below, left) once owned this Englewood, N.J., home. Actress Gloria Swanson (below, right), who had a public affair with Kennedy, once lived there.

for the wealthy industrialists of a century ago. Should the home, listed by Coldwell Banker’s Tamar Lurie, fetch its full asking price, Weinstein would land a hefty profit. He paid $16 million in 2000. In Greenwich overall, sales have increased steadily since 2009, according to David Haffenreffer, manager of Houlihan Lawrence’s new Greenwich office. The two hottest neighborhoods are Old Greenwich and Riverside, where young New York City families often come for what Haffenreffer calls a “smaller lot experience.” Many of those areas are zoned for quarterand-half-acre lots, which Haffenreffer said encourages communities where “more people are meeting at the mailbox than those in a four-acre zone.” Many of these neighborhoods are also within walking distance to the Metro North train. While the number of high-end home sales rose 13.2 percent throughout Connecticut, it leapt by even more — 20.1 percent — in Fairfield County in the third quarter from the same time last year. Within the county, Greenwich led the way with 492 property sales in the third quarter. It also registered a median price of $1.6 million. Continued on page 106

Vital Stats Name: Elie Hirschfeld Age: 64 Title and company:

President, Hirschfeld Properties Hometown: Great Neck, N.Y. Currently living in:

Manhattan (Also has homes in East Hampton and Sun Valley, Idaho)

BUILDING BLOCKS How much property does Hirschfeld Properties own? In the New York metro area, we have somewhere over 1 million square feet of commercial space and over 1,000 residential units. You’ve been involved in several significant Manhattan developments, such as the Manhattan Mall and the Hotel Pennsylvania. Do any deals stand out? Yes. Riverside Place is the development anchored by Trump Boulevard [on the West Side.] We originally acquired those 100 acres in 1980, and subsequently partnered with Donald Trump on the first phase of development. We then sold our interest [more than two decades ago], and the developers now are completing that project. How much did you sell for? Too little. How did you get started in real estate? I graduated from NYU Law School and worked at a firm called Milbank, Tweed and McCloy. Based on my [family’s] background [in real estate], I asked to join the real estate part of the firm. Then, in 1976, I decided to join my father [real estate mogul Abraham Hirschfeld] in his business. Your father was a very public figure, who took over the New York Post for two weeks and had a public feud with actor Jackie Mason. What was it like to grow up in his shadow? An honor and a challenge. He was always sweet to me outside the office … but he was very, very tough to me as a boss. He would basically say to me, ‘Get this done.’ And he’d give me very little guidance on how to get it done. Fortunately, I learned at Milbank Tweed that a boss has a prerogative to be demanding. And that saved me working for my dad. Your father served two years in prison for hiring a hit man to kill his business partner. What was that like for you, and is that when you took over? I had been running the business for some time before that. But that was a dark period. It was a very, very painful period — more so for me than for him. He seemed to accept it in stride.

What’s your response to reports that you and the Clintons had a dispute over the security deposit for your East Hampton home, which they rented? The whole story is funny because the real backstory is that the Clintons enjoyed two wonderful summers in my home and I very much enjoyed having them. It was absolutely unbelievable that the former President and the Secretary of State were enjoying my home two years in a row. They were very considerate; hospitable, warm and lovely. There is no security deposit dispute that I’m aware of. I have no idea how that story [got out.]

BOTTOM LINE What do you have in the pipeline? We have a few development sites that we’re in the very, very early stages of planning. We have two sites on the Upper East Side where we’re in the initial planning stage. And we also have a site in the Times Square area that’s in the early, early planning phase. The East Side sites will be residential and the other will be mixed-use. Your sister, Rachael, filed a lawsuit claiming you took advantage of your father’s ailing health to cheat his estate out of more than $300 million. What’s your response to that? It’s a painful matter and it’s very disappointing that my sister would choose this regrettable tactic now, 10 years after my father passed away. The decisions from the court have recently been favorable to us and we’re hopeful we’ll have a favorable outcome.

LANDLORD LIFE Tell us about a challenging project you’ve worked on. The development of Herald Center Mall. We partnered with Bill Zeckendorf and Larry Silverstein. [It was the late 1980s], and the market was beginning to get soft and the partnership began to suffer. So with many partners — all strong players — it was a challenge to come to an agreement of how to [deal with the problems at the property.] But we did, and we restructured it in about 1990. What is the best part of the job? Seeing my tenants happy. My wife [Sarah Schlesinger] is a doctor. Every time she sees a patient, she gets thanks and respect. We in real estate don’t get it as often. How often have I received a letter from a tenant that says, ‘Thank you for providing me a home’? Or, ‘Thank you for giving me an office’?

56 December 2013 www.TheRealDeal.com

You’re also a Broadway producer. How did you get involved in theater? I’ve long been a lover of theater. I had an opportunity through [Broadway producer] Jed Bernstein, who said, ‘Would you like to invest in theater?’ And I did invest in some Broadway productions [including ‘Equus’ and ‘Passing Strange’]. Even won a Tony nomination. You have an impressive art collection, including works by Andy Warhol, Ben Benn and Johann Berthelsen. What is your most prized painting? That’s like asking me which is my favorite child. I have a Thomas Arvid. In some sense, it’s my favorite. It’s not my most expensive piece, but it’s my first. By Hayley Kaplan

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Commercial

Newark: The end of the neglect Lured by incentives, developers rush into the New Jersey city, prompting an unprecedented wave of new building

The Newark skyline, which is about to see a slew of new additions

By David Jones he long-blighted city of Newark, New Jersey, is undergoing its biggest economic growth period since the 1950s. Indeed, in mid-September, the city opened its first new office tower in 20 years: the new North American headquarters of electronic giant Panasonic. And a week later, Teachers Village, a $150 million housing, retail and education complex, opened its first two buildings. Those two projects are just a sign of things to come. More than a third of the state’s new economic development is taking place in Newark, including a long-anticipated Whole Foods supermarket, a 23-story residential tower backed by basketball legend Shaquille O’Neal, and a new Marriott hotel. Ron Shapiro, the head of Rutgers University’s Center for Real Estate Studies, said Newark’s turnaround can be largely attributed to a few investors who’ve taken a risk on the city and paved the way for others. “I think people were waiting on the sidelines, waiting for someone to lead them through the maze,” said Shapiro, who was also a former executive at several banks, including Union Center National Bank and Wells Fargo.

Penciling out Newark The groundwork for Teachers Village started in 2005, when developer Ron Beit’s RBH Group partnered with billionaires Warren Lichtenstein and Nicolas Berggruen, in ad58 December 2013 www.TheRealDeal.com

From left: Rendering of French drug company Biotrial’s new building; basketball great and developer Shaquille O’Neal; a rendering of the new Prudential Financial building; Governor Chris Christie, who has streamlined incentives for Newark developers; and the Prudential Center arena in downtown Newark.

Newark is undergoing its biggest economic growth period since the 1950s, with more than a third of the state’s new economic development taking place there. dition to other investors, to buy a cluster of ard Meier-designed project to turn the area parcels in a distressed commercial district into a 24/7 destination. The transformation across from Newark City Hall. started in 2007, when the $375 million PruThe investors sat on those properties dential Center — home to the New Jersey — burned-out storefronts, bankrupt land Devils NHL team and the New York Liberty, and parking lots — for two years before the WNBA team — opened. approaching lenders and government However, in recent months, new deofficials in late 2007. velopments have been popping “We always knew it was going to up on an almost weekly basis. be difficult,” Beit told The Real Deal Experts attribute the growth to last month at his Newark constructwo factors: first, increased deNewark tion trailer. “We never knew when mand for urban development; we would be able to get buildings out and second, economic incentives of the ground.” from the city, state and federal However, the investors found a government. willing lender in Goldman Sachs Mayor Cory Booker — who in and shaped a project with an October was elected to the U.S. education theme. The complex Senate and was replaced by an inwill ultimately include three terim mayor who is serving until a charter schools, 65,000 square feet May 2014 election is held — aggressively of retail, and 205 residential units tarcourted businesses when he was in office. geted largely toward teachers. He claims to have brought in $1 billion in Newark officials are banking on the Rich- economic development so far, with an ad-

ditional $2 billion in the pipeline. The former mayor worked closely with Gov. Chris Christie, a Newark native, who has argued that the economic growth of Newark, the biggest city in New Jersey, is good for the state overall. For Scott O’Neil, the president of Devils Arena Entertainment, the sudden interest from developers in the area around the Prudential Center comes as no surprise — and is no coincidence. “The state of New Jersey has clearly made development in Newark a priority,” he said. In September, for example, Christie signed a bill to streamline the state’s five economic incentive programs to retain and lure companies to targeted communities, including Newark. A company relocating to Newark might qualify for up to $15,000 in tax credits per job, per year, for up to a decade, Timothy Lizura, president and CEO of the New Jersey Economic Development Authority, told TRD. Goldman Sachs — through its Urban Investment Group arm — is one of the lenders that has bet on the city. Goldman’s willingness to risk its capital there has, in turn, led other, more jittery, lenders and investors to do the same. Continued on page 106

www.TheRealDeal.com March 2012 00

E K C O

By Mark Maurer wning a co-op or condominium unit sometimes carries a caveat: You might not be able to sell it. A building sponsor’s refusal to sell units can make it difficult, or even impossible, for residents to unload — or even refinance — their homes at market rates. The problem lies with the current mortgage lending market. According to Federal Housing Administration guidelines, condo buildings are required to be at least 50 percent occupied by owners in order to get FHA-backed loans. In addition, for condos and co-ops, no one investor can own 10 percent or more of the building. Since most mortgage lenders follow the FHA guidelines, potential purchasers in buildings with a higher concentration of investors, or a higher percentage of sponsor holdings, are likely to be denied mortgages. A would-be buyer is then left with the option of an all-cash purchase — not always feasible — or seeking a mortgage lender who will go outside the guidelines, but charge a higher rate for doing so. As a complicating factor, all-cash buyers are commonly drawn to high-end buildings, and high-end these buildings typically are not. The net effect on current owners can range from a slight chill to a deep freeze. In a lawsuit filed in August, for example, 13 owners of condo units at the Empire in

T U O D

A TRD review found a number of NYC buildings with a dangerously low number of sales — thanks to sponsors hoarding units

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60 December 2013 www.TheRealDeal.com

Nolita say that their building’s high sponsor concentration “effectively trap[s]” them in their current apartments. The group sued in an effort to compel sponsor Katherine Chou of Chou Manage-

ings, few prospective buyers qualify for mortgage loans and the unit values have been diminished, according to the lawsuit. “The guidelines and restrictions on loans in buildings with a high number of

ger adequate for their growing families, the suit stated. The unit owners were allegedly “lied to and defrauded” into believing that all of the apartments in the building would be sold.

during the conversion boom between 1982 and 2003, and with remaining unsold units between 2011 and this fall. The information was provided to TRD by the New York Attorney General’s office through a Freedom

NYC co-ops where few units sell Address

43-30 48th Street, Queens 360 Ocean Parkway, Brooklyn 43-25 43rd Street, Queens 240 Ocean Parkway, Brooklyn 2181 Starling Avenue, Bronx 3245 Perry Avenue, Bronx 8835 23rd Avenue, Brooklyn 54 Bay 29th Street, Brooklyn 208-210-214 Thompson Street, Manhattan 1001 Grand Concourse, Bronx 15-20 202nd Street, Queens 41-25 44th Street, Queens 1803 Riverside Drive, Manhattan

Sponsor and/or principal

Year converted

Labe Twerski Labe Twerski Labe Twerski Labe Twerski Dirot Realty Corp. (c/o Alice Soto) n/a CB Management (USA) LLC Nicholas & James Hagipetros A.B. Ilibassi Realty Co. Daejan (NY) Limited Bay Pointe Associates LLC and BSI Queens LLC Labe Twerski J and D Associates

1991 1987 1991 1989 1990 1989 1989 1988 1988 1989 1991 1991 1986

Total units

91 41 59 53 42 42 58 31 81 75 66 51 70

Sold

5 6 9 9 8 8 11 7 20 19 17 14 20

% WITH NO SALE

94.5 percent 85.4 percent 84.7 percent 83 percent 81 percent 81 percent 81 percent 77.4 percent 75.3 percent 74.7 percent 74.2 percent 72.5 percent 71.4 percent

Source note: New York Attorney General’s Office Real Estate Finance Bureau, building filing plans and amendments, StreetEasy and ACRIS. Buildings were at least 10 years old, with at least 30 units. They all had offering plans filed during the conversion boom between 1982 and 2003, and had remaining unsold units between 2011 and this fall.

ment to sell units at the 32-unit building at 259 Elizabeth Street, which was converted and declared effective in 1988. Chou owns “more than 37 percent of all units, with a declared intent not to sell,” the suit said. Given Chou’s high percentage of hold-

sponsor-owned units have a tremendous impact on the overall mortgage market,” the suit said. In many cases, owners want to sell because they can no longer afford to live in their units or because the units are no lon-

Even while the residential market in New York City is strong, an examination of nearly 1,000 buildings showed there are dozens with dangerously few sales. The Real Deal reviewed a list of buildings that were at least 10 years old, with offering plans filed

of Information Law request. Of the nearly 1,000 buildings, at least 75 buildings had less than 50 percent of their units sold. Among these, there are 13 buildings in which more than three-quarters of Continued on page 112

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Architecture Review

Ja m e s G a r d n e r

The skinny on SHoP’s new skinny tower

The JDS and Property Markets Group’s 57th Street project is ushering in a new era of spindly and iconic structures

n the course of reviewing architecture in New York City and elsewhere, I find that most buildings inspire in me either appreciation of their beauty, anger at their ugliness, or indifference to their banality. But the new condo tower planned on 57th Street between Sixth and Seventh avenues inspires something very different in me: fear. From a 43-foot-wide base (roughly the width of two row-house lots), this structure will rise 1,350 feet and will be 100 feet taller than the Empire State Building, whose base — let us remember — stretches the full block from 33rd to 34th streets. I suppose that SHoP Architects (the firm that designed 107 West 57th Street), as well as the developers (Kevin Maloney’s Property Markets Group, Michael Stern’s JDS Development and Atlantic Investors LLC), know what they are doing. But it’s difficult to look at the renderings of this pencil-thin structure without imagining that a strong wind might cause the entire thing to come tumbling down. Heretofore, SHoP, which designed the Barclay’s Center in Brooklyn, has been more apt to build wide than tall. Nearby, at Extell Development’s high-profile One57, the base is far wider and sturdier, as is the case with 432 Park Avenue, which is cast in a concrete frame. But this newest project looks to be confected of little more than some twig-like bits of steel and glass. That said, since I am not likely to be able to inhabit the building, given the astronomical prices it will command, I do hope that this latest project reaches completion in something like the form of the renderings. It will be something to see! Heretofore, one had to go to places like Hong Kong to find such a pencil-thin ratio of width to height. Indeed, our local authorities had prohibited it, precisely because of the dangers involved. But now that construction techniques have advanced, we’re starting to see more of these super-tall and ultrathin structures. Perhaps the best example to date in the city is the unfairly maligned One Madison on 23rd Street. Completed, more or less, in 2010, this fine structure from the architecture firm Cetra/Ruddy looks almost squat compared to what is now being planned. And One Madison is nothing compared with 432 Park Avenue, which is being developed by the CIM Group and Harry Macklowe and designed by Rafael Viñoly. The Park Avenue building is already on the rise, and though it’s far from being topped out, once com-

62 December 2013 www.TheRealDeal.com

pleted, it will stand out with a distinctiveness that will immediately command attention. Surely 107 West 57th Street will be very different from 432 Park Avenue. It consists of glass curtain walls rather than a mod-

A rendering of the skinny tower that JDS Development and Property Markets Group are planning on 57th Street. Inset, left: a street-level view.

ular concrete frame, with setbacks rather than the uniform ascent of the Park Avenue building. But 107 West 57th Street promises to be equally distinctive and, when completed, will be only 48 feet shorter. The developers of this planned skinny tower purchased Steinway Hall, which neighbors it immediately to the west. Designed by Warren & Wetmore, this landmark structure afforded them the air rights to build a 1,350-foot building, and although they could have built it as-of-right, they designed it to recede in stages above the midpoint. The Landmarks Preservation Commission voted almost unanimously to approve the design. According to the renderings, the skyscraper will have a luminous, eight-story glass-enclosed atrium with a view of the eastern flank of Steinway Hall. (This was never possible before, but it is now that the neighboring building has been demolished to make way for the new skyscraper.) Once the eastern façade of Steinway Hall has a few new windows punched into its side, and a lovely expanse of dressed stone fitted into its base, it will look better

surface as well. Together with the likes of 432 Park, this planned building suggests that, for the first time in nearly 80 years, we are at the dawn of a new age like the one that Rem Koolhaas described in a book titled “Delirious New York.” Published in 1978, the book was referring to the Art Deco aesthetic that accounted for some of the most exorbitant and distinctive structures of the early 1930s, among them the Empire State and Chrysler buildings, as well as the Waldorf Astoria on Park Avenue and the Squibb Building at 745 Fifth Avenue. In fairly short order, I expect the skyline of Manhattan, certainly of Midtown, will begin to look very different, and to be defined by the spindly and iconic structures. They will stand out not only by virtue of their perilous thinness, but also by virtue of rising in relative isolation. If the high-rises of the past amounted to a forest of clashing and competing structures, the newest crop will suggest something more in the nature of a Japanese garden in which each of the plants seems to rise in glorious isolation, with its place in the sun and all the air and light it needs to live. It’s always been one of the paradoxes of skyscrapers that their aesthetics can best be appreciated when they are allowed to rise — like the 2,700-foot-tall Burj Khalifa in Dubai — alone, with no tall buildings near them. In Manhattan, where it’s most necessary to build vertically, it’s usually impossible — because of the density of tall buildings — to see any building but the tallest. That, however, is unlikely to be a problem in New York in the future, certainly not along Central Park South, which is being redefined by such tall and skinny towers as 107 West 57th Street. Because of their thinness, and because of the abundance of landmarked buildings in their midst, they will never be clustered together with the same denthan ever. The skyscraper Top, PMG’s Kevin Maloney. sity that we see near Wall Street. itself will be a con- Bottom, JDS’s Michael Stern. Indeed, 57th Street, especially west of Fifth Avenue, is being tinuous curtain wall with views in all difundamentally transformed. Quite aside from the developrections, articulated by the strong texment that’s taken place west of tural presence of its Eighth Avenue, the area from bronze-and-white Park to Eighth Avenue is — a few terra-cotta infill. exceptions aside — not only beOther than the buildcoming far more residential, but ing’s staggered set-backs, the treatment apt to be the most expensive residential of the surface promises to be uniform area in the city. Into this new environthroughout its height. Though the great ment, 107 West 57th Street will be shoeaesthetic thrust of the new building will horned, and will contribute greatly to the consist in its height and thinness, there appeal of this crucial stretch of Manhatpromises to be skill in the detailing of its tan. TRD

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POLITICS AND REAL ESTATE

The mayor- elect’s short list

As inauguration day nears, sources point to the candidates ripe for real estate jobs in the new administration

Mayor-elect Bill de Blasio has assembled a 60-member transition team.

By C. J. Hughes ill de Blasio promised a bold new approach to running New York. However, based on the names being bandied about for the City Hall jobs that matter the most to the real estate industry, the new boss might look a lot like the old boss. Indeed, on the short list for chair of the Department of City Planning (which arguably has the most direct impact on the real estate business) are three people who are on the 13-member City Planning Commission now under Mayor Michael Bloomberg, according to several industry sources. The candidates mentioned to The Real Deal are: Anna Hayes Levin, Michelle de la Uz and Kenneth Knuckles. “The changes are not going to be nearly as great as people assume,” said Fred Siegel, a senior fellow at the Manhattan Institute, a New York-based think tank, who worked on Rudy Giuliani’s 1993 mayoral campaign. De Blasio’s 60-member transition team — which is coheaded by real estate veteran Carl Weisbrod and Jennifer Jones Austin, the head of a nonprofit social services agency — is tasked with vetting potential appointees.

The team, which was announced last month and also includes developer Douglas Durst and Forest City Ratner CEO MaryAnne Gilmartin, is expected to start naming commissioners in early December. But some positions might not be filled until after de Blasio takes office on Jan. 1, sources familiar with the process said. De Blasio, sources added, believes that a person with seasoned knowledge of the mi-

the commission in 2009 not by Bloomberg but by Manhattan Borough President Scott Stringer, who will be inaugurated as the city’s comptroller in January. As a result, she’s not seen as a holdover from the current administration, sources said. Levin — a Yale graduate with a law degree — has a bit of grassroots appeal, too. She came to City Hall via Community Board 4 on Manhattan’s West Side, which grappled with

Based on the names being bandied about for the City Hall jobs that matter the most to the real estate industry, the new boss might look a lot like the old boss. nutiae of zoning codes would be a tremendous asset. “Amanda Burden herself was a commissioner before she became the chair,” said one former Bloomberg administration official. “The thought is that you need somebody who knows the ropes.” Of the three contenders, sources say, the front-runner is Levin, who was appointed to

numerous redevelopment plans while she chaired the land-use committee. “She gets a lot of points for her work on the Hudson Yards rezoning,” the former administration official said. Levin opposed Bloomberg’s earliest redevelopment proposal for the rail yards site, which included a stadium for the Jets football team, while pushing for elements of the of-

fice-building-focused plan in place now. She did not respond to a request for comment. De la Uz, meanwhile, could satisfy different political aims for de Blasio. As executive director of the Fifth Avenue Committee, a social justice group that builds affordable housing in South Brooklyn, de la Uz could presumably help advance de Blasio’s goal of creating 200,000 affordable units. She also lives and works in the 718 area code, which is the natural power base of de Blasio, a Park Slope resident who represented that area on the City Council. De Blasio had appointed de la Uz to the City Planning Commission in 2012, but the pair reportedly had a falling out over the rezoning of Roosevelt Island. De Blasio supported the rezoning, but de la Uz voted against it, casting the sole “no” vote on the commission. “That was not well-received,” one former official said of de Blasio’s reaction, though he added that de Blasio appears to have forgiven her. Indeed, de la Uz is also said to be a strong favorite to lead the Department of Housing Preservation and Development, the city’s affordable-housing-creation arm, which is expected to be more active under the new www.TheRealDeal.com December 2013 67

POLITICS AND REAL ESTATE mayor. (It should be noted that HPD has served as a stepping stone of sorts in recent years; former Commissioner Shaun Donovan is now U.S. Secretary of Housing and Urban Development.) De la Uz did not return a call for comment. Others are placing bets that Knuckles, who has served as the commission’s vice chairman for the last decade, is tapped for chair. Knuckles — an attorney with an architecture degree who served in the Dinkins administration — runs the Upper Manhattan Empowerment Zone, an investment group that’s been a major force in Harlem’s recent revitalization. For his part, Knuckles said he had not yet been approached by de Blasio, but would be

THE REAL ESTATE PLAYERS ON DE BLASIO’S TRANSITION SQUAD

Bloomberg administration, when he, too, worked to rezone the West Side. But he may not be willing to give up his current roles as a partner at SHoP Architects and professor at Columbia University to reenter the public sector, sources said. Chakrabarti, who also previously worked at Related Companies, was heavily involved in that firm’s plans to create a mixed-use development at the James A. Farley Post Office with Vornado Realty Trust, as part of the redevelopment of Penn Station. Earlier this year, Related reignited interest in the project with a revised proposal, which a former state official said might just convince Chakrabarti to head back into the

bor unions for not using them to build at the park, according to published reports. That may have put her in disfavor with de Blasio, who drew key support from unions. A Myer spokeswoman did not return a call for comment. Another name popping up to head the Planning Department is Meenakshi Srinivasan, chair of the Board of Standards and Appeals, a lower-profile agency that nonetheless can block certain zoning changes issued by the Planning Department and reverse Department of Buildings decisions. Srinivasan, who has master’s degrees in city planning, urban design and architecture, worked in the Planning Department

CONTENDERS FOR REAL ESTATE JOBS UNDER DE BLASIO

Carl Weisbrod

kenneth knuckles

REGINA MYER

DOUGLAS DURST

vishaan chakrabarti

DAVID BURNEY

MARYANNE GILMARTIN

ronda wist

MEENAKSHI SRINIVASAN

honored to be considered. “The mayor-elect has very clearly stated what his priorities are around planning,” with affordable housing being at the top of the list, Knuckles said. “I assume he wants to continue to see growth in the city, but in a way that can better address income inequality.”

public sphere. “If he could pull together all the pieces to a transformative project of this type, I could see him coming back,” the source said. Chakrabarti declined to comment on whether he’s been approached by de Blasio, but did offer that “the new Penn Station is an extremely important agenda item.” Brand-new faces could turn up to lead the Planning Department too, like Regina Myer, the president of Brooklyn Bridge Park Corporation, which relies partially on private developers to fund its upkeep. However, Myer ran afoul of the city’s la-

from 1990 to 2003. In that capacity, she too worked on the master plan for Hudson Yards, according to news reports. A spokesman for Srinivasan declined to comment. Meanwhile, several sources said de Blasio is zeroing in on Ronda Wist to run the Landmarks Preservation Commission, where he appoints all 11 members. Wist, a vice president of the Municipal Art Society of New York, the design watchdog group, would replace Robert Tierney, who’s chaired the LPC since 2002. She is no

Other contenders Less likely, but still a hat in the ring, sources say, is Vishaan Chakrabarti, who was director of the City Planning Department’s Manhattan office during the early part of the 58 December December2013 2013 www.TheRealDeal.com www.TheRealDeal.com 68

stranger to Landmarks; she was executive director of the LPC at the end of the Giuliani administration, and previously worked at the Planning Department. She did not return a call for comment.

Lost in transition Some preferred candidates may have slipped through de Blasio’s fingers, however. Sources say the mayor-elect would have been keen to have Andrew Kimball, the former CEO of the Brooklyn Navy Yard Development Corp., as president of the city’s Economic Development Corp., the powerful agency that handles the developing and leasing of city land. Under Kimball’s watch, the 300-acre shipbuilding facility was converted into an industrial park that employs more than 6,000 people. Millions of square feet of new commercial space are also being developed there. But last summer, Kimball took a job in the private sector as a director with developer Jamestown Properties. Kimball did not return a call for comment. Sources also say Brad Lander, a City Council member from Brooklyn, would fit the de Blasio mold and could qualify for several positions. An affordable housing advocate who previously directed the Pratt Center for Community Development, where he led campaigns for inclusionary zoning, Lander also formerly led the Fifth Avenue Committee. But Lander has said he wants to stay on the Council and help push the body leftward, according to news reports. If de Blasio were to keep some of Bloomberg’s cabinet, sources say that one logical choice might be David Burney, who since 2004 has run the 1,200-employee Department of Design and Construction, a relatively noncontroversial agency that oversees construction of new city buildings. With the city expected to embark on huge storm-protection projects, Burney’s expertise could come in handy, said Ron Shiffman, who teaches urban planning at Pratt and has been a critic of the Bloomberg administration. “Burney can weave in the planning and design in a comprehensive way,” Shiffman said. Meanwhile, several sources said de Blasio is considering Howard Glaser as the deputy mayor for operations, which is not entirely real-estate-centric, but intersects with the industry because it involves day-to-day happenings in the city. Glasser currently holds a similar post in Governor Andrew Cuomo’s administration. For de Blasio, having somebody with an upstate Rolodex could help the mayor with issues that require state approval, like raising taxes. “If your agenda runs through Albany, it makes sense,” a former city official said. One name that should probably be scratched off any list, however, is Mitch Rudin, the CEO of Brookfield Office Properties. After he walked with de Blasio in Manhattan’s Veterans Day Parade last month, rumors heated up that de Blasio might consider a private-sector developer for a top job. But according to a Brookfield source, “it was truly apolitical” and the two were only thrust together at the last minute. TRD

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Grading Brokerages

the new guys

A look at how the commercial market’s most recent contenders are measuring up

By Adam Pincus uilding a commercial brokerage business in New York City is a slow, patient game. Success, real estate executives say, is measured in years, not months. But since the credit crunch, a slew of national (and international) commercial firms have jumped into the fray in New York, launching offices here or significantly changing up the ownership structure of existing companies to give them new life. Real estate insiders say that these firms — each of which reported more than $5 billion in national or international transactions last year — need to have a New York presence in order to be credible on a larger stage, and to service clients who either are in the Big Apple already or have business here. This month, The Real Deal looked at the crop of these firms that have made the most serious inroads here in the last five years — those with at least 15 brokers or salespeople — to evaluate just how well (or not so well) they are performing. Using transaction information from CoStar Group, we looked at the leasing and sales volume the firms have handled and then, based on standard commission rates, estimated how much revenue they’ve raked in locally. We also factored in each firm’s global transaction revenue, which was self-reported to the trade publication National Real Estate Investor. The firms that TRD examined — Avison Young, Lee & Associates, Cresa, Transwestern, DTZ and Coldwell Banker Commercial Alliance (CBC Alliance) — have all taken different approaches to tackling the New York market. Some, like CBC Alliance, have purchased existing firms with the goal of building on a local brokerage infrastructure. But in other cases, existing local firms have partnered with national companies and tapped into their name recognition and financial resources. For example, Sierra Realty, a small local firm, partnered with the Los Angeles-based Lee & Associates and adopted the national firm’s name and model. Then there are firms like Avison Young, DTZ and Transwestern, which have simply opened New York offices and started from scratch. “Each firm is coming to New York with a different objective and different plan,” said Peter Hennessy, who runs the New York Tri-State office for commercial firm Cassidy Turley. “Some may be looking to establish a highly productive, although relatively small, office, and others maybe are looking to establish and gain a significant market penetration.”

Real estate professionals said launching or revamping a commercial brokerage in New York often starts slowly. “Barriers to entry are high in New York brokerage,” said Joseph Harbert, the president of the eastern region for commercial brokerage Colliers International. “[Some of ] the new firms that are trying to grow in New York are doing it organically through recruitment of individuals and teams. Historically that turns out to be a long process.” Hennessy — who was on the launch team for the New York office of the Staubach Company in 1997 — said it took seven years before that office generated $15 million in revenue. But once it did, it doubled that and generated $30 million within two years. (Staubach was considered a success; the firm was bought out in 2008 by Jones Lang LaSalle for $613 million.) Nonetheless, all of these new firms have serious competition on their hands. Long-entrenched companies like Cushman & Wakefield and CBRE Group dominate the top of the market, and other players, like Colliers and Newmark Grubb Knight Frank, hold tight grips on the market slightly below that. Yet the lock those long-established firms have on the market often provides an incentive for junior brokers to join the newer firms. “In the large firms, some people [effectively] have exclusives on market share,” said Jason Meister, a vice president at Avison Young, where he noted that he has greater freedom to pursue accounts than at a more established firm. But regardless of whether new firms can go head-to-head with market stalwarts right away, they must find a way to earn their keep. One insider said a firm needs to generate about $150,000 per broker just to keep the lights on. Arthur Mirante, the president of the Tri-State Region for Avison Young and a principal at the firm, pegged the average revenue per broker at an established commercial brokerage in the city at about $300,000, with some making far more, of course. Newmark— the only firm that publishes its revenue-per-broker statistics — reported earlier this year that its average for 2012 was $489,000. Below is a look at how the new firms are measuring up in terms of activity and revenue, and what their strategies are going forward.

Avison Young has made the most aggressive (and costly) plunge into Manhattan real estate of any commercial firm in nearly a decade.

A Firm: Avison Young Launched in NYC: April 2012 Total office revenue (self-reported): $10 to $15 million Estimated commissions (past 12 months): $9.5 million 70 December 2013 www.TheRealDeal.com

vison Young — the largest privately held brokerage in Canada — has made the most aggressive (and costly) plunge into Manhattan real estate of any commercial firm in nearly a decade. The firm, which opened its New York City office in April 2012, has paid out millions of dollars to develop its local presence. In order to do that, it turned to the Vancouver-based private equity firm Tricor Pacific Capital, which gave the company a $40 million infusion in 2011. The Manhattan office at 623 Fifth Avenue is just one of roughly 40 Avison Young has

launched nationally since 2009. All are part of independent regional partnerships that will be rolled up into the Canadian-based firm once they reach a certain level of stability, said Mirante. Principals receive a greater financial return once that happens, Mirante said, because they are then entitled to a share in profits for all of the other “rolled up” Avison offices. Mirante, a former CEO at Cushman, anticipated that it would be another “two to three years” for the New York office to reach that level. Nevertheless, he told TRD that the office is

profitable. He said it’s on pace to bring in about $10 to $15 million in 2013, with about half of that coming from leasing and sales commissions. (The balance comes from other services the firm provides, such as loan sales, advisory work and investment banking.) A review of deals in CoStar, supplemented with deals provided by the firm, amounted to roughly two dozen Avison Young transactions totaling about 250,000 square feet of leases and $208 million in investment sales. That included the firm’s largest completed deal to date this year, for a 56,794-square-foot, 15-year

Brokerages lease inked by law firm Meister Seelig & Fein, which could have brought in a hefty commission of more than $1 million. The firm is also expecting to close its biggest deal of 2013 by year’s end, Mirante said. That’s the sale of the United Cerebral Palsey building in the Flatiron District, which sources said would trade for about $150 million. One source said it would yield an unusually high commission of about $4 million. The firm declined to comment. However, most of the deals were smaller. And if standard commission rates are applied, the firm will pull in about $9.5 million in total commissions. Avison, one longtime industry executive said, is attractive to brokers who work at larger firms, but are restricted from canvassing buildings their colleagues represent. Since launching here, it’s grown to 30 brokers and agents. Yet it’s still been a slow process of winning landlord agencies. Today it has just two, including its largest, the 788,897-square-foot 1501 Broadway, which Mirante landed through a relationship with the landlord. However, Mirante has at least two more in the works, he said. By comparison, in the last year, JLL landed about a dozen new agencies. Mirante expects the Manhattan office to bring in some $80 to $100 million annually in four to five years.

Firm: Lee & Associates Launched in NYC: November 2011 Total office revenue (self-reported): $10 to $15 million Estimated commissions (past 12 months): $6.5 million

he Los Angeles-based Lee & Associates has done more deals in Manhattan over the past year than any of the other new firms. However, that’s partly because it gained its foothold by teaming up with Sierra Realty — a local player that had a dozen brokers and an active book of business. Sierra’s two principals, James Wacht and Peter Braus, opened Lee & Associates’ New York office in November 2011, with a modest portfolio of company-owned mixed-use buildings. The new office, headquartered at 600 Madison Avenue, was bankrolled by senior Lee & Associates brokers throughout the U.S. who own shares of other offices within the company’s national network. To join that network, each firm pays a fee. Today the New York office has 40 brokers and agents, according to the firm. Wacht said only about half of the original Sierra team stayed. “Most did not measure up,” he said. The new brokers were recruited from firms including Grubb & Ellis, where Principal John Cannon worked, and George Comfort & Sons. Wacht said he’s targeting brokers near the end of their careers with “another 10 years left,” as well as younger agents who are at the PHOTOGRAPH FOR THE REAL DEAL BY CHRISTIAN FERNANDEZ

James Wacht, left, and Peter Braus opened Lee & Associates’ New York office in 2011.

start of theirs. Nationally, Lee & Associates and Avison are neck and neck, with both completing just over $7 billion in transactions company-wide, according to data from National Real Estate Investor. Wacht estimated that the New York office would rake in about $10 to $15 million in total revenue this year. “That is certainly enough for us to be comfortably profitable,” he said. Some of the firm’s larger Manhattan deals include a 10-year, 42,200-square-foot lease for the financial investment-software developer Vitech Systems Group at 401 Park Avenue South. CoStar shows just over 200,000 square feet of deals for the firm, but Lee officials said they closed 159 deals totaling 426,000 square feet so far in 2013. However, the vast majority of the office and retail leases the firm has brokered here since it launched are less than 5,000 square feet, according to CoStar. Wacht said the firm is not going after mega-deals, and instead is targeting deals between 10,000 and 50,000 square feet. “I am very happy hitting doubles,” he said.

Firm: Cresa Overhaul in NYC: July 2012 Total office revenue (self-reported): $10 million Estimated commissions (past 12 months): $3 million

resa has been open in New York since 1989 — far longer than any other firm on this list. However, last year the tenant-rep company brought on industry veteran Mark Jaccom to overhaul its local presence. Jaccom, who has butted heads with a number of his colleagues throughout his ca-

reer, spent 14 years at Studley and then at the helm of GVA Williams when that company became part of Colliers in 2006. Sources say he was “eased out” of Colliers. For his part, Jaccom said he was “miserable over there.” He added, “there were too many rules. There was the issue of who is yelling at who,” he said. “It is not something I enjoyed, but … I took a mom-and-pop company and got them a brand name.” Now Jaccom is trying to turn an under-the-radar firm — which does few deals but has some top clients, like Amazon — into a major New York player too. Jaccom — the CEO and principal equity holder in the Cresa New York office (he has a controlling stake) — called landlord-rep business the “dark side.” Since joining the firm in July 2012, he’s doubled the number of brokers to 20 in the Manhattan office at 450 Lexington Avenue. Cresa confirmed deal information for about 150,000 square feet of transactions over the past year. (Although company officials said the figure actually topped 200,000 square feet when factoring additional deals that they cannot reveal because of confidentiality agreements.) Jaccom estimated office revenue at about $10 million for 2013, and TRD estimated Cresa’s leasing commission at about $3 million based on deals in CoStar. In addition, about 30 percent of the office revenue comes from project management and consulting fees, Jaccom said. But Jaccom predicted that would soon change. He said next year, the office is expecting to close a few deals between 250,000 and 300,000 square feet each. The Boston-based Cresa, which did $7.8 billion in business company-wide in 2012, according to NREI, has 54 offices in the U.S. and four in Canada. The New York office, like the others, is independently owned, and pays an annual fee to Boston for administration and other expenses, Jaccom said. Jaccom and Marcus Rayner control about 60 percent of the New York office’s shares.

The other 40 percent has been (and will be) allocated to other senior brokers as they hit certain dollar targets. In addition, each partner gets a cut of the annual office profits, which Jaccom said helps in recruiting brokers. As for the competition, he said many of the second-tier firms in New York, like Colliers or DTZ, are in a tough position trying to compete with the main four national firms: CBRE, JLL, Newmark and Cushman. “They are all trying to grow and one day be CB or JLL. But I don’t believe they have the dollars to do that,” he said. But he said Cresa, like his former firm Studley, has a niche because it’s a tenant-rep firm. “We are competing head-on with Studley,” said Jaccom, who had a falling out with senior management before leaving that firm.

Firm: Transwestern Launched in NYC: February 2011 Total office revenue (self-reported): $5 million Estimated commissions (past 12 months): $2 million

atrick Robinson is an old hand at launching real estate firms. His latest has been creating and ramping up a New York office for Transwestern, the 35-year-old, Houston-based full-service firm. Robinson, the president of the Northeast region for Transwestern, opened the Manhattan office, which is located at 400 Park Avenue, in February 2011. He told TRD his staff is on pace to bring in about $5 million this year. The firm has, however, ramped up at a slower pace in New York than rivals like Avison Young and Lee & Associates. Since 2011, it’s grown from four to 19 brokers and agents in Manhattan, firm officials said. It also has www.TheRealDeal.com December 2013 71

Brokerages four principals, including Robinson. “We are going to grow in a methodical way, to reach profitability sooner rather than later. It looks like 2014 is going to be our break-even year,” said Robinson, who (along with Hennessy) was also on the team that launched Staubach in New York. Transwestern’s New York office has completed about 183,000 square feet of deals in the past 12 months, company officials said. It also manages and leases about 2 million square feet in New York for the Metropolitan Transportation Authority, as well as for property owner Brause Real Estate and others. (Nationally, the company reported $6.2 billion in transactions in 2012, according to NREI.) David Brause, a principal at Brause, said the decision to hire Transwestern to represent 254 West 31st Street was prompted by the fact that he’s known Transwestern principal Lyndsay Ornstein for years. “When we are making a decision, it is all about the people,” he said. Robinson touted the fact that Transwestern is a privately held company, owned by the employees, with no outside investors to report to. The office has no specific expansion plan: “There is absolutely no growth target or revenue or number of people,” Robinson said, when asked about the company’s planned benchmarks. “There is no goal to be big. The goal is to be highly relevant — and to be profitable.”

David Gialanella was tapped to lead the New York Tri-State division of DTZ earlier this year.

Firm: DTZ Launched in NYC: 2008 Total office revenue (self-reported): n/a Estimated commissions (past 12 months): $2 million

TZ’s Manhattan office has been ramping up its head count over the past year — even as the firm began the process of breaking off from its parent company, a public engineering and property firm known as UGL. Unlike the other new firms included here, DTZ wholly owns its local offices. The firm’s Manhattan office — which opened in 2008 — added 11 new brokers and agents over the past year, bringing its total brokerage head count up to 39. Yet despite beefing up its staff and its affiliation with the Australia-based UGL — a 72 December 2013 www.TheRealDeal.com

Industry veteran Patrick Robinson, the president of the Northeast region for Transwestern, opened the firm’s Manhattan office in 2011.

massive, fully integrated firm that puts DTZ on par with global companies like CBRE, JLL and Cushman — DTZ has not gained much traction when it comes to office leasing in the New York market. The firm handled just 93,000 square feet of deals in Manhattan in the last year, according to data in CoStar, which is most certainly an under-count. Using a standard commission formula, those deals would bring in about $2 million in revenue. However, David Gialanella — who was tapped in July to lead the New York Tri-State region for the Los Angeles-based company — said those revenue numbers may be deceiving. “You can’t look at us as a local brokerage company,” he said. “Our entrance into this market is part of a global strategy.” Globally, the firm reported brokering a massive $25.8 billion in transactions, according to NREI. Gialanella, a former New Jersey CBRE executive, said that in addition to its Manhattan transactions, the local DTZ office, which is located at 1271 Sixth Avenue, also generated revenue through its involvement in deals outside of the city and country. “That business starts in New York and goes elsewhere, and the revenue clears through New York,” Gialanella said. Today local transactions comprise about 25 percent of the revenue for the office, but that should increase in the coming years as the firm moves from exclusively tenant-rep business to representing landlords, Gialanella said. Dirk Hrobsky, a managing member of DTZ’s New York office, said the office was “nominally profitable.” “We have been very smart in managing our spending,” he said. In the Americas, the company only expects to earn about 13 percent of its total $1.1 billion in revenue for fiscal year 2013, or $143 million, from its brokerage, the company reported in October. The balance will come from facilities management. But there are changes afoot that will impact the New York office. Last month, DTZ replaced its global chief with Tod Lickerman. The former JLL executive will be at the helm

as the company spins off into an independent public firm, a process that’s slated to be completed by 2015. “We have about two years to aggressively grow … and get as favorable a valuation of the real estate group [as possible],” Hrobsky said, referring to the initial IPO.

Firm: Coldwell Banker Commercial Alliance (CBC Alliance) Launched in NYC: August 2012 Total office revenue (self-reported): n/a Estimated commissions (past 12 months): $4.5 million

ichard Selig and Peter Sabesan have led their brokers through two significant changes over the past three years. The two were longtime principals with the local brokerage Hunter Realty Organization. Then, in January 2010, they purchased the franchise rights for Coldwell Banker Commercial in New York City from the global public company Realogy. CBC, according to NREI figures, did $6.8 billion in transactions nationally last year. (The duo declined to dis-

close the purchase price.) “[We wanted] a national presence so our clients could have a one-stop shop in the country,” Selig said, speaking from his office at 1430 Broadway. The pair did not keep exclusive ownership of the franchise for long. In August 2012, they sold their franchised office to the Midtown-based private equity firm Waterfall Asset Management, which kept them on as principals. Waterfall renamed it Coldwell Banker Commercial Alliance and went on to buy (or open) three more offices nationally — one in Denver and two in California. And it now has plans to open offices in Dallas and Miami. Each CBC Alliance office is a separate partnership, but Waterfall is the majority shareholder of each office. The national CBC Alliance office, which is headed by Obie Walli, is based in Waterfall’s Midtown headquarters. Selig said the duo sold to Waterfall because the private equity firm had the financial resources to turn the brokerage into a force in New York. “And there is a lot of money behind us now,” he said. “We have better packages to offer [new hires].” In addition, as a hiring and retention incentive, the company provides brokers an option to gain an ownership stake in the broader Waterfall business. Walli called that the firm’s “secret sauce.” Since Waterfall took over, Selig said the firm has hired about a half-dozen brokers, although others have also left, so the headcount has remained somewhat steady. As of last month, there were 23 brokers and agents, according to DOS data. One of those hires, Steven Pressler, formerly of Promenade Real Estate, brought with him the agency to high-profile buildings like 720 and 724 Fifth Avenue in the Plaza District. Selig said the firm, with Waterfall’s backing, plans to hire an additional 10 to 15 brokers over the next year and add more building agencies — either though individual hires or buying smaller firms. That should boost transaction revenue at the full-service commercial firm from what TRD estimated is $4.5 million for the past year. Walli said the company, like Lee & Associates, is targeting smaller deals, between 5,000 and 40,000 square feet. “We are not in the business of chasing elephants,” Walli said. TRD

Richard Selig, left, and Peter Sabesan of CBC Alliance

ROBINSON, SELIG AND SABESAN PHOTOGRAPHS FOR THE REAL DEAL BY JEREMY WILLIAMS

Nonprofits sitting on gold

A look at which churches, schools and cultural institutions are selling off sites as condo prices drive up values Last month, the Brodsky Organization leased the land adjacent to St. John the Divine from the Episcopal cathedral. The developer is planning a project with 428 apartments on the site.

W By Guelda Voien

ith Manhattan real estate prices on the rise, a slew of major religious, cultural and government institutions — some of which are cash-strapped — are looking to offload properties in the five boroughs. While the trend is not new — The Real Deal first reported on it last September —the pace and urgency of sales has increased significantly lately, as prices for luxury housing in Manhattan have skyrocketed. Indeed, much of the churn is being driven by the high demand for residential condominiums, which has driven up the prices for all developable properties, said Michael Weiser, executive vice president of Manhattan-based commercial brokerage GFI Realty Services, who has worked with nonprofit and other institutions selling New York City buildings. “Organizations don’t need to be on whatever corner they’ve been on for the last 20 years to fulfill their mission,” he said. “They can turn [cash from a sale] into millions and millions in their endowment.” That is particularly true for nonprofits with swanky addresses, especially on Fifth or Park avenues. And those organizations are snapping up cheaper commercial condo-

74 December 2013 www.TheRealDeal.com

miniums Downtown, said Peter Hauspurg, chairman and CEO of investment sales brokerage Eastern Consolidated. The high ceilings and ornate interiors that many of these buildings are known for make them particularly attractive for adaptive reuse, Weiser said. Another factor fueling the trend is that the city and state governments around the country, including in New York, are cracking down on the tax-exempt status of some

rent fiscal year 2014 booted roughly 1,000 nonprofits off the list of tax-exempt properties, saving the city nearly $31 million, according to the New York Post. This month, The Real Deal looked at which nonprofits are turning their bricks and mortar into cold hard cash.

Jehovah’s Witnesses The Jehovah’s Witnesses have been making headlines for selling chunks of their siz-

“Organizations don’t need to be on whatever corner they’ve been on for the last 20 years to fulfill their mission.” Michael Weiser, GFI Realty buildings owned by nonprofits, said David Blum, head of the real estate department at the Philadelphia-based law firm Montgomery McCracken. (According to data from the Urban Land Institute, nearly a tenth of landlords in New York City are exempt from paying into the tax base.) And a city Department of Finance crackdown between fiscal year 2012 and the cur-

able Brooklyn holdings in preparation for a move upstate. The organization, which has been headquartered in Brooklyn Heights since 1909, owned 42 Brooklyn buildings before it began selling them off in 2004. And according to city records, it’s sold $425 million worth of New York City property since then — not including around $100 million of properties

in contract, according to published reports. (By comparison, the organization’s new 253acre campus in Warwick, N.Y., will cost an estimated $11.5 million to build.) According to a spokesperson for the Witnesses, 18 properties remain. Those properties include 25 Columbia Heights and a large parcel between Vine Street and Columbia Heights in the Brooklyn Heights area, as well as massive Dumbo site 85 Jay Street, which is zoned for residential development. The group’s $1 billion portfolio of buildings — which also includes holdings in the East Village — has been marketed variously by Massey Knakal, Cushman & Wakefield, and Eastern Consolidated. This past July, a partnership led by Jared Kushner’s Kushner Companies and Aby Rosen’s RFR Holdings announced that it was buying six Dumbo buildings totaling 1.2 million square feet from the Witnesses for $375 million. The industrial buildings will be developed into loft-style office space. The deal is set to be Brooklyn’s largest this year.

Yeshiva University Colleges and universities have seen endowments dwindle since the recession, and some have started trading buildings in upscale Manhattan locations for larger or Continued on page 110

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Q&A

NYC’s land rush

Developers play with thin margins as Manhattan land prices skyrocket By Melissa Dehncke-McGill all it New York City’s new land rush. In the last year, prices for land and developable sites in the city — particularly in Manhattan and prime Brooklyn — have skyrocketed. In this month’s Q&A, The Real Deal talked to investment sales brokers, new development marketers and other experts and analysts to get, well, a lay of the land. Those sources described a frenzy of activity and said that prices have jumped by as much as 30 to 50 percent in the last year or two. In in many cases, they said, buyers are tangling in bidding wars and paying well above asking prices. Indeed, broker turned developer Michael Shvo made headlines when he bought the former Getty gas station in West Chelsea for a record $850 per buildable square foot. But he is not the only one. “There is nowhere that I’m not hearing of [records] being broken,” said Andrew Barrocas, CEO of brokerage MNS. Those high land prices have made it virtually impossible for developers to build Man-

hattan rentals, which usually come with lower returns. And the Manhattan condos that are being built are skewing further and further toward the luxury market, with larger, pricier units than comparable projects would have had just a few years ago. That, of course, means fewer units that first-time buyers can afford. It also means that many developers are on the hunt for cheaper land in Brooklyn and Queens. Some said that land prices have gotten so out of control that it’s hard, at least from the outside, to figure out how deals pencil out. “The only way these deals are being financed is that the developers are really betting on condo sellout prices that are higher than current comps,” said the Highcap Group’s Josh Goldflam. “Hopefully they have no unexpected delays or problems, because their margins are so thin that one little thing can put your entire project under water.” For more on where there are still deals to be had and on who is buying and selling these sites, we turn to our panel of experts.

Josh Goldflam

can put your entire project under water.

managing principal, Highcap Group TRD and others have reported on the ballooning prices for developable land in NYC. What are you seeing in terms of prices for developable land in the city today? How much are prices up (or down) compared to a year ago, two years ago and during the recession? The words “historical” and “trendsetting” best describe what’s going on right now. Some development sites in prime areas of Manhattan have gone up 30 to 40 percent since a year ago, and many locations are starting to demand pricing that’s never been seen before. Furthermore, some neighborhoods that many developers would have turned a cold shoulder to in the past are starting to get major attention because of the serious lack of inventory and incredible amount of capital on the street right now. Some of the biggest developers in the city would laugh at me when trying to pitch them a site in Gramercy for over $450 per buildable square foot in the recent past, and then Toll Brothers strolls in and closes at $750 per buildable. Granted, their recent purchase on 23rd Street has a major retail component that can justify a higher price. What is going on in terms of trading activity for Manhattan and Brooklyn land? How much is buying activity up (or down) in the last year, two years and since the recession? During the recession, there was very little land trading outside of Manhattan and not too much trading inside. In 2008 nobody was really interested in raw land to build on, and no bank would even look at a land acquisition or construction loan. In the last one to two years, activity has gone up significantly both in Manhattan and Brooklyn, but only 64 July 2013 www.TheRealDeal.com

in the recent past have Brooklyn’s B and C neighborhoods been seeing more sales. What is the competition like for land and other development sites in NYC, and how does it compare to the recent past? We are seeing bidding wars on a daily basis for sites with “real sellers.” We’re negotiating a contract right now on a Soho loft building that the seller was happy to get $14 million for. A contract is out at $16 million and there’s a backup buyer ready to go if the current buyer can’t pull it off. We know banks have started warming up to financing condos again and that high land prices have made it more difficult to pencil out rentals. What type of properties are the developers planning for most of the land they are buying? I really don’t see much being bought in Manhattan or prime Brooklyn that’s being underwritten as a rental unless the buyer has a basis in the land that’s lower than typical market value of the property. The rental projects being built are on bigger swaths of land that have been bought at “non-booming” prices, and many are 80/20, so they have inclusionary housing bonuses and 421a tax abatements in order to make them feasible. Sources have said lenders might soon pull back on financing because land prices have gotten so high. Are you seeing that? I don’t necessarily see lenders pulling back on financing, but I do think things have gotten a little loose again since the crash, and banks will start getting a little more conservative once some of the guys paying high prices start getting in trouble. I have seen numerous deals that I cannot make any sense of. The only way these deals are being financed is that the developers are really betting on condo sellout prices that are higher than current comps. Hopefully they have no unexpected delays or problems, because their margins are so thin that one little thing

Bill Picoli

senior managing director, Landauer Advisory What are you seeing in terms of prices for developable land in the city today? For residential land sales that have closed in the second half of this year, we’re seeing an average of maybe $600 a [buildable] square foot. For the first half of the year, the numbers were closer to $400 a square foot. So year-todate, the Manhattan average is about $475 square feet. … The 2013 numbers are a little more than 10 percent higher than 2012 and over 30 percent higher than 2011, so values have gone up significantly. Who are the most active buyers of developable land in NYC right now? They are the more high-profile developers. For example, Extell Development has been buying lots of land and air rights over the last few years for a variety of different sites. Currently they have One57 under development, and 225 West 57th Street. Meanwhile, JDS [Development] recently purchased 105-107 West 57th Street, where it’s proposing an extraordinarily high 1,000-foot-plus tower. The celebrated premier sites seem to be these Midtown sites with a long view of Central Park because they attract the ultra-wealthy and foreign buyers and command extraordinary prices. Former broker Michael Shvo just spent a record $850 per buildable square foot to buy the former Getty gas station in West Chelsea. Are you seeing records being broken for land prices elsewhere in NYC? Absolutely. [We’re seeing that] down in

the Meatpacking District. There were two sales there that had extraordinary prices. One was the purchase of 860 Washington Street by Taconic. They paid about $1,300 a square foot to build retail and office. Retail is a big driver of value today. Developers are realizing they can rent stores for upward of $400 to $500 a square foot and that … basically underwrites the rest of the value of the site. It’s enabled developers to pay over $1,000 a square foot. [Another site is] 17 East 12th Street, which sold for $1,030 a [buildable] square foot. There are a variety of other sites achieving these kinds of numbers. … Another driver of the value is condo prices. Many areas in Tribeca and Chelsea have the opportunity to sell condos for over $2,000 a square foot. The Extell and JDS sites [will likely see] condo prices are anywhere from $3,000 to over $8,000 a square foot. What prices per square foot do developers need to charge to make today’s land prices work? It varies from project to project. In the case of some of these ultra-luxury projects, you are talking about a developer paying perhaps $1,000 a square foot for a development site and maybe another $1,000 a square foot to build the project. If they’re selling units at upward of $4,000 to $5,000 a square foot, they’re going to make an extraordinary amount of money.

Andrew Barrocas CEO, MNS

What are you seeing in terms of prices for developable land in the city today? They’ve doubled and tripled in certain instances from a year ago. A year ago you could find things www.TheRealDeal.com December 2013 77

Q&A at $300 to $400 a square foot in Manhattan south of 96th Street. That is nonexistent now. Who are the most active sellers of developable land and other sites these days? People who recently purchased. We have a lot of people that have seen significant increases in property prices over the last year or two. For those property owners, [it isn’t worth the] risk of developing. They are more willing to take their profits from selling the land and move on. For instance, you have developers who bought sites for $10 million who were thinking of building and hoped to make X dollars when all was said and done. If the land is now worth $20 million and the X is $10 million, do you go through the risk of developing to make that money, or do you take your profits off the table? Former broker Michael Shvo just spent a record $850 per buildable square foot to buy the former Getty gas station in West Chelsea. Are you seeing records being broken for land prices elsewhere in NYC? There is nowhere that I’m not hearing of them being broken. [Shvo] was extremely successful marketing other peoples’ properties and I think he will do extremely well there; it’s an incredible location. What other development trends are you seeing in Manhattan these days? There is nobody buying land that’s planning rentals in Manhattan. We do have a lot of projects coming to Manhattan on the condo side, but compared to 2006, the unit mix is more heavily on the larger side and there are fewer units in the buildings. Buildings that might have been 100 units are now 50-unit buildings. Prime areas of Manhattan are seeing premium land prices, but where are there still deals to be had in Manhattan, Brooklyn and Queens? A lot of Manhattan landlords are looking to go to Long Island City, Astoria and Brooklyn, and get into markets where they can buy land anywhere from $100 to $300 a square foot and get very good rents anywhere from $50 to $70 a foot. As you move further out into Brooklyn to Crown Heights, Prospect Lefferts Gardens and areas of BedStuy, you can still get things in the low $100to $150-a-foot range. Those are markets where we are doing a lot of business right now. In Long Island City, you can get stuff in the $150- to $175-a-square-foot range for desirable areas where you can achieve $55 a foot for rents and $900 a foot for condos. That’s an area where you will see a lot of retail and growth. [In Queens generally], we are hearing about deals from maybe a year ago that were as low as $100 and are now as high as $200 a foot. East Harlem is [also] a great market. You can get stuff there in the $150-a-foot range.

78 December 2013 www.TheRealDeal.com

What are the prices per square foot developers need to charge with today’s land prices? That depends on the site. If you use the example of the United Cerebral Palsy headquarters on 23rd Street … [a developer would] need to be achieving in the range of $2,500 a foot to justify buying the land at $750. What concerns, if any, do you have about the high cost of NYC land? We are not going to see new product that comes at affordable prices for first-time buyers like studios and one-bedrooms. They aren’t being built south of 96th Street right now. For a new two-bedroom condo, we aren’t seeing anything under $2 million anymore.

Nicholas Silvers

founding partner, Tavros Capital Partners What are you seeing in terms of prices for developable land in the city today? Pricing has exploded over the past two years, in lock step with the recovery of the new development condo market. We were buying land in 2011 for $300 to $400 a square foot in good Downtown Manhattan locations. That land is now priced at $850 to $1,200 a foot. What’s going on in terms of trading activity for Manhattan and Brooklyn land and development sites? Activity is moderate. Nothing is cheap anymore and sellers have unrealistic expectations. [That’s even given] developers who believe that everything has the potential to sell out at $2,500 a foot as a condo. Who are the most active buyers of developable land in NYC right now? Large developers who need to feed the beast and those who are trying to make up for lost time because they missed the market. Who are the most active sellers of developable land these days? Many sold at the end of last year due to the tax-regime change. These had been longterm family owners. Now, the other sellers are flippers. Prime areas of Manhattan are seeing premium land prices, but where are there still deals to be had in Brooklyn or Manhattan? Downtown Brooklyn still has opportunities. There is a massive amount of supply on the horizon, which is keeping pricing in check. Sources have said lenders might soon pull back on financing because land prices have gotten so high. Are you seeing that? Not yet, but I don’t know many commer-

cial banks who are comfortable lending to $1,500 a foot. What concerns, if any, do you have about the high cost of NYC land? Manhattan will only be left for the wealthy condo buyer and tourists.

James Nelson

partner, Massey Knakal Realty Services What is the competition like for land and development sites these days? In my 15-year career, I’ve never seen demand and pricing at this level for land. Specifically in Manhattan, land prices are up over 50 percent from 2010. On the high end, residential sites are reaching close to $1,000 per building square foot. In some instances, we are achieving well in excess of that. We are seeing bidding wars on most assignments. For example, we had priced 239 10th Avenue at $18.95 million, which was almost 50 percent above the last Chelsea land sale. After two dozen offers, we ended up over $4.5 million above the asking price. How long is developable land staying on the market in NYC these days? We are typically only on the market for three to four weeks before calling for bids. This is a lot quicker than a year or two ago and a fraction of the time it took during the recession. Former broker Michael Shvo just spent a record $850 per buildable square foot to buy the former Getty gas station in West Chelsea. Are you seeing records being broken for land prices elsewhere in NYC? We were fortunate to have brokered the Shvo sale, which was a record for Chelsea. We also achieved a record level on the Upper West Side, at $750 per buildable square foot on 77th Street. We are working on something right now in the West Village that should sell for well more than double this level, which will also substantially raise the bar. What concerns, if any, do you have about the high cost of NYC land? Without 421a [tax abatements], rental development is virtually impossible. To create more affordable and rental housing, the 421a program must be brought back.

Vincent Carrega

principal, Capital Markets Group, Avison Young What are you seeing in terms of prices for developable land in the city today? How much are prices now, on average? During the reces-

sion, land was trading at prices that were mind-boggling, they were so low. Good parcels were trading at under $200 a foot. There was a lot of debt being traded from lenders who wanted these properties off their books, so there were terrific deals to be had. Over the last five years, the market has steadily increased. What is the competition like for land and development sites these days? It seems like every time we see a sale, it has sold at a higher price than the last. We have traded above what we thought in our own minds that property would achieve. I think that will continue because there is a real shortage of developable land. Even in M zones, there is a lot of hotel activity, and there is demand for property that traditionally didn’t have much appeal. We’ve recently written about all of the new development projects taking place in Queens. What are you seeing in terms of land prices there? Most of Queens, like Forest Hills and Kew Gardens — not including Long Island City— is still in the $200-a-foot range and is mostly rental. You need to be mindful of what you can achieve in rents so there are relatively low land prices, relative to Manhattan and Brooklyn.

Kelly Kennedy Mack

president, Corcoran Sunshine Marketing Group What type of properties are the developers planning for the land they are buying? Residential development in New York is moving further toward luxury product. In Manhattan, over 60 percent of condo units planned for the next three years will be in the luxury sector. What concerns, if any, do you have about the high cost of NYC land? The luxury boom and soaring rental rates pose a unique challenge. We need affordable housing to meet the needs of working New Yorkers, and we need to figure out how that can be offered in prime areas. Mayor Bloomberg’s microhousing initiative is a tremendous step. Within the next year, buildings like My Micro NY, the winning proposal that was selected by the administration, will offer 265- to 360-square-foot apartments with high-end finishes and condo-style amenities in Kips Bay. It’s an entirely new concept and price point, and cities around the world are looking to see how it works in practice here. TRD www.TheRealDeal.com July 2013 65

Sam’s been busy getting deals done.

Give him a call at: 212-409-1259

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SOUTH FLORIDA

Real estate news in the Sunshine State TheRealDeal.com/miami

REPORT

Related, Dezer team up on Armani-brand condo Related Group and Gil Dezer are linking up to put another South Florida condominium tower in the ground: the Armani Residences by Cesar Pelli in Sunny Isles Beach. The developers haven’t formally announced the project, named for Italian fashion designer Georgio Armani, but Dezer has talked publicly about a joint venture with Related’s head, Jorge Perez.

Jorge Perez

The tower will have two-, three- and four-bedroom homes, with price tags that start at $1.4 million, insiders told the South Florida Business Journal. The

sources did not disclose the total number of units or other building details. Dezer and Perez have teamed up before on other skyscrapers in Sunny Isles — under the Trump brand. Related just broke ground on a two-tower condo complex in Miami Beach’s swanky South of Fifth neighborhood; Dezer is closing out sales of his Porsche Design Tower in Sunny Isles Beach.

Whitman proposes $200M makeover for Bal Harbour Shops Whitman Family Development wants to increase its already mammoth Bal Harbour Shops by more than half over the next three years. The $200 million project calls for adding 250,000 square feet to the 450,000-square-foot mall less than 10 miles north of Miami Beach. The space would include 100,000 square feet of de-

Featured In Our February 2014 Issue

Bal Harbour Shops

partment stores and more than 20 specialty retailers, the Miami Herald reported. Whitman CEO Matthew Whitman Lazenby presented two sets of redevelopment plans to the village of Bal Harbour, which must sign off on the expansion. “The objective of the plan is to respond to the needs of the market and to make sure Bal Harbour Shops remains as compelling a destination tomorrow as it has been for the last 50 years,” Lazenby told the newspaper.

Coconut Grove set for $18M waterfront project Coconut Grove’s waterfront is going to get an overhaul: Seven acres of the Miami neighborhood will be cleared and rebuilt under a plan approved on Nov. 5 by voters. Grove Bay Investment Group now has the go-ahead to sign a 50Coconut Grove waterfront

FOR AD RESERVATIONS PLEASE CALL 212-260-1332 OR EMAIL DATABOOK@THEREALDEAL.COM

80 December 2013 www.TheRealDeal.com

year lease with the city for the land, where the Grove Key Marina, two popular restaurants and two historic Pan American Airways hangars now stand. The developer must spend $18 million to upgrade the marina, replace the restaurants with three new ones, restore the hangars and construct a promenade, the Miami Herald reported. Grove Bay also must give $5 million to the Miami Parking Authority for a three-story parking garage with 40,000 square feet of ground-floor retail space. Three lawsuits accusing the city of improperly awarding the project to Grove Bay are pending, however. Grove Bay was the only bidder when Miami commissioners approved its proposal in July. By Mark Maurer and Eric Kalis

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

NATIONAL MARKET REPORT

General Growth Properties bought 830 North Michigan Avenue for $166 million.

Chicago Mega mall owner General Growth Properties closed on a $166

Beverly Hills

million purchase of a 126,000-square-foot building on Chicago’s famed Magnificent Mile in late October. The deal for the six-story retail building — which is located at 830 North Michigan Avenue and is anchored by apparel companies Topshop and Columbia Sportswear — was first reported by Crain’s Chicago Business. The building has about 60,000 square feet of empty, upper-floor space, a fact that GGP CEO Sandeep Mathrani said on a recent conference call was a “significant value-creation” opportunity, according to Chicago Real Estate Daily. The $166 million sale is the priciest for a retail building in Chicago since January 2008, according to Real Capital Analytics. However, Thor Equities also closed on a purchase of the pricey Barney’s building around the corner last month for $154.5 million, according to Newmark Grubb Knight Frank. Scott Brody, of the London-based investment firm Grosvenor Group, which sold to General Growth, said: “This property was not for sale, but [General Growth] came to us with a compelling offer.”

San Francisco Internet giant Google, which recently saw its stock price soar to a stunning $1,000 a share, is in real estate expansion mode. The company upped its office space in San Francisco’s Hill Plaza building

Google expanded its office space in San Francisco’s Hill Plaza building by 350,000 square feet.

by 350,000 square feet, according to Bloomberg News. That’s in addition to a slew of deals it made this year for more office space in other markets, including for 901,000 square feet in Silicon Valley near its Mountain View headquarters, for 232,000 square feet in Chicago, and a doubling of its space in Seattle, officials from Cushman & Wakefield told Bloomberg. The company, which bought 111 Eighth Avenue for $1.9 billion in 2010, is also reportedly taking 360,000 square feet at the Related Companies’ 85 10th Avenue. Insiders said Google’s expansion is boosting the office market nationally because it’s prompting more growth in the tech sector. One analyst from Green Street Advisors told Bloomberg that the company’s expansions in San Francisco, Silicon Valley and Seattle are a “key driver of strength” of those markets.

Portland The micro-apartment craze that’s generated headlines in New

A rendering of Footprint Investments’ planned micro-apartment in Portland

82 December 2013 www.TheRealDeal.com

York has made its way to the West Coast. Developer Footprint Investments has started construction on a four-story, 56-unit micro-apartment building in Portland, Oregon, with plans to build a second one across town, according to The Oregonian newspaper. The demand for these tiny apartments (they come in sizes as small as 200 square feet) is, not surprisingly, being driven by rising rents in Portland. The newspaper cited data from Multifamily NW, a rental-industry association, which found that rents in the Portland area have jumped 6 to 7 percent a year since 2010. Footprint founder Jim Potter told The Oregonian that his apartments will rent for about 60 percent of what new apartments in the area rent for. “We’re at a price point that no one else is delivering,” said Potter, who has also built micro-units in Seattle.

Detroit

Madonna sold her Beverly Hills home.

Madonna has unloaded her Beverly Hills home. The “Material Girl” has sold her 1.25-acre compound for $19.5 million, the Los Angeles Times reported. The property includes a nine-bedroom house, two guesthouses, a resort-size swimming pool and a tennis court. The singer purchased the property in 2003 for $12 million.

Santa Barbara

Drew Barrymore sold her California home.

Actress Drew Barrymore and her husband, Will Kopelman, have sold their California home for $6.35 million, the Los Angeles Times reported. The couple was married at the 6,258-squarefoot Montecito home about a year and a half ago, and first listed it in May for $7.5 million. Barrymore bought it in 2010 for $5.7 million.

Las Vegas

The residential market in notoriously depressed Detroit has posted strong gains.

The city of Detroit — which made national news in July for the largest municipal bankruptcy filing in U.S. history — is not exactly associated with a strong real estate market these days. But Detroit is actually seeing a housing rebound. The residential market posted a 44 percent year-over-year median price gain and saw a 24 percent drop in residential inventory, according to a Realtor.com report cited by the Detroit Metro Times. Those statistics, however, need to be taken with a grain of salt, given that the median price for a home in metro Detroit in September was only $13,000. In addition, the Standard & Poor’s/Case-Shiller Home Price Index found that the area’s home prices are still 27 percent lower than they were during the market’s peak. The Detroit region was also the only metro area in the country tracked by the index where prices have yet to surpass January 2000 levels. And local real estate players say the tonier parts of the Detroit metro area are driving the overall gains. Other areas are “still pretty bleak despite an uptick,” one broker told the Metro Times. TRD

The former estate of entertainer Wayne Newton saw a price cut from $70 to $48 million.

The former 36-acre Las Vegas estate of entertainer Wayne Newton has been price-chopped. The home — which was bought by a development firm after Newton declared bankruptcy in 2010 — was listed for $70 million in September. But the price of the home, known as Casa de Shenandoah, was cut to $48 million, according to Curbed. The property has eight homes, a “car museum,” 37 horse stables, an “equestrian pool,” and a “jumbo jet and terminal.”

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The Real Deal_fullPage.indd 1

11/26/13 5:21 PM

ON THE MARKET Jeff Greene asks $150M for 100 Vandam Billionaire Jeff Greene has switched tactics in Hudson Square. Rather than build a 140,000-square-foot condominium project at 100 Vandam Street, as he told The Real Deal he would do, he has decided to sell the parcel for $150 million, or three times what he paid last year. The move follows a contentious rezoning of the area that will allow for bigger residential developments. The property, which includes twin sites, is being marketed with the option to demolish the existing buildings and replace them with a 290-foot-tall residential development as big as 150,000 square feet, Crain’s reported. Massey Knakal Realty Services is marketing the property.

Cornell Realty selling Williamsburg rental building Cornell Realty Management is asking $38.5 million for a 61,000-squarefoot multifamily rental building in Williamsburg. Of the 49 units, 41 are one-bedrooms that aver76-80 Meserole Street age 990 square feet. The rest are two-bedrooms averaging 1,283 square feet. The four-story building, located at 76-80 Meserole Street near Leonard Street, is 89 percent leased. Amenities include a parking garage, a virtual doorman, fitness center and furnished rooftop terrace. Eastern Consolidated’s David

Commercial properties recently placed on the market

Schechtman, Lipa Lieberman, Gabriel Saffioti, Nicole Rabinowitsch, Abi Kassin and Gary Meese are marketing the property.

Mixed-use Dumbo building asks $34.5M A mixed-use building at 25 Jay Street in Dumbo has hit the market for $34.5 million, according to a news release from investment sales brokerage the Highcap Group, which is marketing the property. The 25 Jay Street five-story building on the corner of Jay and John streets has 29 apartments and five ground-floor commercial spaces, one of which is occupied by coffee shop Brooklyn Roasting Company. Approved plans for a 15,000-square-foot rooftop addition that can accommodate an additional 15 apartments will be delivered with the building, according to the release. Constructed in 1920, the building was converted to mixed-use from industrial in the early 2000s.

LES conversion site on the market again

75 Essex Street

The former Eastern Dispensary building, which houses the clothing retailer Eisner Brothers, is up for sale again, at a higher price of $21 million. The detached, 12,464-square-foot prewar

building at 75 Essex Street, between Broome and Grand streets, last hit the market in 2010, when the asking price was $18 million, as listed by Bond New York broker Lisa Bornstein. Bond has the listing again, but the broker is now Janine Young. The property has a parking lot and 31,776 square feet of air rights. But its fate could be as a residential property, since it is being marketed as a potential condominium conversion.

Macklowe puts UES retail up for sale Macklowe Properties is looking to sell the retail condominium at the base of its new residential condo conversion at 150 East 72nd Street. The company has tapped a Cushman & Wakefield team, including Helen Hwang, Nat Rockett, Steve Kohn, Karen Wiedenmann, Gideon Gil and John LiGreci, to market the prop150 East 72nd Street erty, the brokerage told TRD last month. The condo, on the southeast corner of Lexington Avenue and East 72nd Street, is currently configured as four individual retail storefronts, totaling 4,000 square feet of ground-floor space and 1,300 square feet of below-grade space. There is no official price tag on the property, according to a spokesperson for the company, who indicated that the unit was expected to get around $20 million. Other sources told TRD that number was too high. Compiled by Linden Lim

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Deal Sheet summary

The Deal Sheet, on pages 88 to 98, covers transactions from 10/11/13 through 11/10/13. Please submit future deals to deals@therealdeal.com.

Sales

Overview

By type

Property sales

Deals Dollars

$802,500,000

Financing 8 8

Buildings Aggregate value

Development

Hotel

Industrial

Mixed-use

Multi-family

Transactions

By dollar volume (in millions)

Office Retail

4.10 28.50 0 5.25

Multi-family

414.72

Office

322.90

Retail

27.03

$276,100,000

Leases Office

Retail

Total

113

Leases square feet Office

1,083,428

Retail

217,669

Total

1,301,097

Office leases Office leases by industry Industry

Leases

Office leases sf by industry

Top tenant reps for office leasing by sf

Industry

Tenant representative

Square feet leased

Advertising & Marketing

21,064

CBRE Group

293,570

Antiques

42,232

Newmark Grubb Knight Frank

140,730

Consulting

9,350

Education

23,730

Entertainment

260,990

Fashion*

52,315

Financial

290,204 11,116

Health & Beauty

Medical

NGO

17,667

Other

25,300

Jones Lang LaSalle

67,097

Adams & Co.

37,899

Cushman & Wakefield

36,874

Colliers International

26,721

Avison Young

26,400

DTZ

25,758

New York Realty Group

24,302

Rice & Associates

21,996

Other

79,024

Lee & Associates NYC

16,356

Publishing

71,000

Sinvin Real Estate

15,699

Real Estate

88,031

Richards Barry Joyce & Partners

Retail

47,763

Handler Real Estate

Science & Technology

28,724

CBC Alliance

5,085

Transportation

14,918

Winslow & Co.

4,365

8,511 8,300

Retail leases Top tenant reps for leasing by sf

Retail leases by industry

Broker

Entertainment

Education

24,000

Fashion

20,895

Square feet leased

Retail leases sf by industry

Ripco Real Estate

68,473

Fashion

Charter Realty

27,832

Food & Beverage

74,245

Kalmon Dolgin Affiliates

24,000

Health & Beauty

37,057

Newmark Grubb Knight Frank

23,628

Other

31,472

Manhattes Group

13,125

Winick Realty

9,920

Isaacs & Co.

9,655

SCG Retail

8,835

NYCRS

5,225

RedRock NYC

2,500

Pan Brothers Associates

2,100

PD Properties

850

City Square Group

400

(*includes showroom space)

Sporting Goods

13 1

Sporting Goods

30,000

www.www.TheRealDeal.com December 2013 87

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 10/11/13 to 11/10/13. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

1755 Broadway

242,505

Universal Music Group / Scott Gottlieb, CBRE

Jack Resnick & Sons / n/a

The music corporation signed a lease renewal.

230 Park Ave

144,000

ING US Inc. / n/a

Monday Properties; Invesco / F. Doyle, P. Glickman, J. Fanuzzi, D. Kleiner, Jones Lang LaSalle; B. Robin, J. Berger, Monday Properties

The financial firm signed a lease renewal.

230 Park Ave

71,000

Reed Elsevier / n/a

Monday Properties; Invesco / F. Doyle, P. Glickman, J. Fanuzzi, D. Kleiner, Jones Lang LaSalle; B. Robin, J. Berger, Monday Properties

The publishing company signed a lease.

230 Park Ave

71,000

Clarion Partners LLC / n/a

Monday Properties; Invesco / F. Doyle, P. Glickman, J. Fanuzzi, D. Kleiner, Jones Lang LaSalle; B. Robin, J. Berger, Monday Properties

The real estate investment manager signed a lease renewal.

919 Third Ave

47,763

Bloomingdaleâ&#x20AC;&#x2122;s / S. Gottlieb, M. Laginestra, CBRE

SL Green / Represented in-house

The retail company signed a new office lease for the entire sixth floor.

51 Astor Pl

42,232

1stdibs / G. Wang, E. Cagner, D. Falk, Newmark Grubb Knight Frank

Edward Minskoff / P. Glickman, M. Konsker, C. Wasserberger, P. Riguardi, Jones Lang LaSalle

The tenant signed a 15-year lease.

277 Park Ave

38,249

Sumitomo Mitsui Banking Corporation / Bill Peters, Jones Lang LaSalle

The Hartford / J. Roundell, R. Stella, Cresa

The bank signed a sublease on the 15th floor, the New York Observer reported.

767 Fifth Ave

38,100

Continental Grain Company / M. Sukenik, E. Zemachson, Newmark Grubb Knight Frank

General Motors; Boston Properties / P. Riguardi, L. Desatnick, M. Shenot, Jones Lang LaSalle; A. Levin, Boston Properties

The grain trading firm signed a short-term sublease and extended the agreement long-term with the landlord for the entire 15th floor.

101 Park Ave

26,400

Federated Investors Inc. / G. Kraut, B. Totten, Avison Young

H.J. Kalikow & Co. Inc. / J. Cefaly, C. Finney, C&W

The investment management firm signed a new lease for the entire 41st floor. The tenant will take occupancy in December 2014 after the space is built out.

31 Penn Plaza

20,958

Dewberry Engineers / Chris Helgesen, DTZ

Savanna / Represented in-house

The professional services firm signed a new lease for part of the third floor.

20 West 55th St

20,000

Kynikos Associates / B. Cohen, R. Kass, A. Weisz, Newmark Grubb Knight Frank

Skyline Developers / B. Cohen, R. Kass, A. Weisz, Newmark Grubb Knight Frank

The investment company signed a 10-year lease extension and expansion for the entire seventh, eighth and ninth floors, Real Estate Weekly reported.

Hutchinson Metro Center (The Bronx)

17,000

Fresenius Medical Care North America / n/a

Simone Development / n/a

The dialysis service provider signed a lease at the mixed-use complexâ&#x20AC;&#x2122;s Metro Center Atrium.

80 Broad St

15,170

Loyalkaspar / O. Hanes, M. Nevins, C&W

Savanna / H. Stein, A. Leshowitz, T. Stracci, Newmark Grubb Knight Frank

The entertainment-branding agency signed a new 10-year lease on the entire eighth floor.

100 Wall St

14,918

El Al Airlines Ltd. / Albert Duryea, New York Realty Group

Savanna / Represented in-house

The Israeli airline signed a new 10-year lease for part of the fourth floor.

157 Columbus Ave

14,319

Fusion Learning Inc. / P. Ferraro, J. Malone, B. Niehaus, Jones Lang LaSalle

The Brodsky Organization / J. Kuriloff, J. Roberts, D. Braver, C&W

The education company signed a new lease on the third floor.

157 Columbus Ave

11,116

CrossFit / Mitchell Kunikoff, Lee & Associates

The Brodsky Organization / J. Kuriloff, J. Roberts, D. Braver, C&W

The fitness studio signed an office lease.

460 West 34th St

11,000

EcoHealth Alliance / J. Emden, M. Fishman, Colliers International

Kaufman Organization / Represented in-house

The non-profit signed a lease renewal on the 17th floor.

540 Madison Ave

10,900

Orchard First Source Capital / B. Waterman, B. Ozarowski, Newmark Grubb Knight Frank

n/a / Jones Lang LaSalle

The business development firm signed a 10-year lease.

155 Sixth Ave

10,699

Now What Research / James Costello, Sinvin Real Estate

DwellStudio / R. Kornblatt, T. Etienne, Sinvin Real Estate

The marketing firm signed a sublease on the seventh floor.

230 Park Ave

9,411

Cornell University / n/a

Monday Properties; Invesco / F. Doyle, P. Glickman, J. Fanuzzi, D. Kleiner, Jones Lang LaSalle; B. Robin, J. Berger, Monday Properties

The university signed a lease.

463 Seventh Ave

9,384

Pico Manufacturing Sales Corp. / Newmark Grubb Knight Frank

The Arsenal Company / David Levy, Adams & Co.

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

17 State St

8,511

National Liability & Fire Insurance Company / J. Barry, Richards Barry Joyce & Partners; M. Shakespeare, Colliers International

RFR Realty / Represented in-house

The insurance firm signed a new lease on the 22nd floor. The reported asking rent was in the $60-per-square-foot range.

675 Third Ave

8,496

Stempel Bennett / Chris Mongeluzo, Newmark Grubb Knight Frank

Durst Organization / Represented in-house

The tenant signed a 10-year lease renewal.

157 Columbus Ave

8,335

Citi Habitats / Eric Zemachson, Newmark Grubb Knight Frank

The Brodsky Organization / J. Kuriloff, J. Roberts, D. Braver, C&W

The real estate firm signed a lease on the second floor.

253 West 35th St

8,300

Daniel H. Cook Associates Inc. / P. Newman, D. Handler, Handler Real Estate

n/a / Marvin Shulsky, Shulsky Properties

The healthcare insurance claims administrator signed a long-term lease renewal.

31 Penn Plaza

7,417

CHS Builders / S. Cahaly, K. Young, Jones Lang LaSalle

Savanna / M. Konsker, M. Astrachan, M. Polhemus, Jones Lang LaSalle

The construction management firm signed a 10-year lease for part of the fourth floor.

To view more deals visit our website: www.TheRealDeal.com 88 December 2013 www.TheRealDeal.com

www.TheRealDeal.net December 200

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*Picture is not actual property

HIGH VISIBILITY CORNER BUILDING DESIGN DISTRICT: 3801 N MIAMI AVE FOR SALE | $4,600,000 || 4,211 SF

TWO DEVELOPMENT SITES AVAILABLE BISCAYNE CORRIDOR: 7460, 11620 BISCAYNE BLVD FOR LEASE/SALE | PRICES UPON REQUEST

RENOVATED FLEX CREATIVE WAREHOUSE WYNWOOD: 2049 N MIAMI AVE FOR SALE | $2.5 M || 6,163 SF

DESIGN DISTRICT: 70-74 NE 40 ST FOR SALE | $9 M LEASE | $125 PSF NNN

FREE STANDING CORNER RETAIL DESIGN DISTRICT: 3600 N MIAMI AVE FOR LEASE | $75 PSF NNN || 6,001 SF

PRIME STREET RETAIL / WILL BUILD TO SUIT DESIGN DISTRICT: 4030 N MIAMI AVE FOR LEASE | $65 PSF NNN

CREATIVE RETAIL LOFT SPACE DESIGN DISTRICT: 3819 N MIAMI AVE FOR SALE / LEASE | UPON REQUEST || 5,635 SF

5 CUSTOMIZABLE RETAIL SPACES DOWNTOWN: 1657 N MIAMI AVE FOR LEASE | $25 PSF NNN || 1,074-7,339 SF

PRIME CORNER LUXURY RETAIL DESIGN DISTRICT: 101 NE 40 ST FOR LEASE | PRICE UPON REQUEST || 5,000 SF

NO ONE SELLS OR LEASES MORE PROPERTIES IN THE URBAN CORE THAN METRO 1. Completing more than $400 million in sales transactions, 300+ deals and more than 2 million square feet in the past 3 years alone.

METRO 1 IS MIAMI’S URBAN REAL ESTATE LEADER VISIT METRO1.COM FOR A COMPLETE LIST OF MORE THAN 130 EXCLUSIVE LISTINGS. TONY CHO, president/ceo | 305.571.9991 | info@metro1.com | metro1.com

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

31 Penn Plaza

6,822

Compass Group USA / T. McNeil, M. Burlant, C&W

Savanna / M. Konsker, M. Astrachan, M. Polhemus, Jones Lang LaSalle

The food-service management firm signed a new 10-year lease for part of the sixth floor.

463 Seventh Ave

6,739

Comint Leather Goods Inc. / David Levy, Adams & Co.

The Arsenal Company / David Levy, Adams & Co.

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

8 West 40th St

6,667

Panthera Corporation / James Saunders, Newmark Grubb Knight Frank

Jack Resnick & Sons / n/a

The nonprofit signed a new lease.

10 West 33rd St

6,003

Harvic International LTD. / David Levy, Adams & Co.

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

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

650 Fifth Ave

6,000

NH Bank / B. Weitzman, G. Linder, Newmark Grubb Knight Frank

n/a / R. Stillman, P. Haskin, Z. Freeman, L. Cross, CBRE

The bank signed a 10-year lease for part of the 25th floor.

306 West 37th St

6,000

Bluelink Marketing / Jeffrey Anderson, Rice & Associates

37th Arcade Co. / Barbara Yagoda, Newmark Grubb Knight Frank

The marketing firm signed a lease.

157 Columbus Ave

5,984

Quinlan Development / C&W

The Brodsky Organization / J. Kuriloff, J. Roberts, D. Braver, C&W

The real estate developer signed a lease on the second floor.

225 West 37th St

5,600

Nu Loom Inc. / Jeffrey Anderson, Rice & Associates

Jlj Bricken LLC / James Caseley, ABS Partners

The rug company signed a lease on the ninth floor.

463 Seventh Ave

5,376

Knoles & Carter / David Levy, Adams & Co.

The Arsenal Company / David Levy, Adams & Co.

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

254 West 31st St

5,240

Concepts in Staffing / Mitchell Kunikoff, Lee & Associates NYC

Brause Realty / L. Ornstein, J. Grotto, A. Kaufman, Transwestern

The IT consulting and executive search firm signed a lease on the sixth floor.

31 Penn Plaza

5,085

RMJM / T. Sullivan, W. Siegel, CBC Alliance

Savanna / M. Konsker, M. Astrachan, M. Polhemus, Jones Lang LaSalle

The architecture firm signed a new lease for part of the sixth floor.

304 Hudson St

5,000

CLM-US / R. Betesh, J. Costello, Sinvin Real Estate

Overseas Media Inc. / Dmitry Levkov, Colliers International

The artist representation agency signed a sublease on the fifth floor.

120 Wooster St

5,000

Commune Hotels & Resorts / B. Levitsky, A. Peretz, C&W

120 Wooster LLC / C. Owles, J. Costello, Sinvin Real Estate

The hospitality company signed a five-year lease with a five-year option on the third floor. The reported asking rent was $75 per square foot.

530 Seventh Ave

4,800

BWG Strategy / K. Woodruff, M. Fisher, D. Hrobsky, DTZ

n/a / B. Neugeboren, N. Goetz, Savitt Partners

The professional networking company signed a lease. The reported asking rent was $65 per square foot.

27 West 24th St

4,464

YPlan / C. Gerace II, B. Higgins, Jones Lang LaSalle

n/a / G. Greenspan, I. Norris, A. Margolin, Kaufman Organization

The tech company signed a lease on the ninth floor. The reported asking rent was in the $50s per square foot.

80 Broad St

4,365

Labelium / Daniel Schwartz, Winslow & Co.

Savanna / H. Stein, A. Leshowitz, T. Stracci, Newmark Grubb Knight Frank

The online marketing agency signed a new five-year lease on the 13th floor.

254 West 31st St

4,110

Universum / Sheena Gohil, Colliers International

Brause Realty / L. Ornstein, J. Grotto, A. Kaufman, Transwestern

The strategic consulting services provider signed a lease on the 12th floor.

10 West 33rd St

3,924

Outerpoint Sportswear Inc. / David Levy, Adams & Co.

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

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

17 State St

3,898

Hale Capital Management LP / J. Luttwak, W. Overlock, C&W

RFR Realty / Represented in-house

The investment advisory firm signed a lease on the 32nd floor. The tenant is relocating from 570 Lexington Avenue. The reported asking rent for the new space was in the $60-per-square-foot range.

9 East 19th St

3,750

Incorporate Architecture / Elissa Groh, Rice & Associates

GAM Real Estate / Doug Rice, Rice & Associates

The architecture firm signed a lease on the ninth floor.

821 Broadway

3,315

Deluxe Entertainment / M. Mathias, E. Schmall, Studley

Apple Tree Partners / Matthew Kurzban, Rice & Associates

The entertainment company subleased space on the fifth floor.

27 West 24th St

3,302

Mark43 / Ben Fastenberg, CBRE

n/a / G. Greenspan, I. Norris, A. Margolin, Kaufman Organization

The management software company signed lease. The reported asking rent was in the $50s per square foot.

138 Spring St

3,100

Bovitz Inc. / Phillip Amarante Jr., Colliers International

138 Spring Owners LLC / Michelle Styer, Rice & Associates

The research and strategy firm signed a lease on the fourth floor.

1 Grand Central Pl

3,046

Earthport North America / Matthew Kurzban, Rice & Associates

One Grand Ctrl Place LLC / R. Kass, J. Christiano, Newmark Grubb Knight Frank

The financial services company signed a lease on the 11th floor.

561 Seventh Ave

2,900

NIC+ZOE / n/a

n/a / S. Galin, D. Handler, Handler Real Estate

The knitwear company signed a lease on the 10th floor.

49 West 38th St

2,800

Ivy Exec Inc. / Nick Dullea, Corbett and Dullea Realty

Heskelâ&#x20AC;&#x2122;s Properties LLC / A. Udis, R. Zimmerman, I. Weiss, ABS Partners

The executive recruitment firm signed a five-year lease. The reported asking rent was $40 per square foot.

485 Madison Ave

2,712

Bloom Real Estate Group / Represented in-house

Jack Resnick & Sons / n/a

The real estate firm signed a lease renewal.

27 West 24th St

2,648

Xerox Corporation / M. Higgins, B. Pickrell, Jones Lang LaSalle

n/a / G. Greenspan, I. Norris, A. Margolin, Kaufman Organization

The business process and document management firm signed a lease on the third floor. The reported asking rent was in the $50s per square foot.

10 West 33rd St

2,627

Tres Joli Accessories LTD. / David Levy, Adams & Co.

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

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

10 West 33rd St

2,234

PAVANA USA Inc. / David Levy, Adams & Co.

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

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

231 West 39th St

2,184

360NYC Sweater Company LLC / James Buslik, Jeff Buslik, Adams & Co.

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

The apparel company signed a lease renewal.

27 West 24th St

2,065

Wilkins Media / I. Norris, A. Margolin, Kaufman Organization

n/a / I. Norris, A. Margolin, Kaufman Organization

The media agency signed a lease. The reported asking rent was in the $50s per square foot.

17 State St

2,000

Charlestown Capital Advisors / Michael Elkin, Interactive Properties

RFR Realty / n/a

The private investment and merchant banking firm signed a lease on the 38th floor. The tenant is relocating from 1325 Sixth Avenue. The reported asking rent for the new space was in the $60-per-square-foot range.

10 West 33rd St

1,993

Global Way Accessories LLC / David Levy, Adams & Co.

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

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

231 West 39th St

1,783

ODVision / James Buslik, Jeff Buslik, Adams & Co.

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

The apparel company signed a new lease.

231 West 39th St

1,770

Denim Lounge Inc. / James Buslik, Jeff Buslik, Adams & Co.

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

The apparel company signed a new lease.

27 West 24th St

1,424

East Media Group / I. Norris, A. Margolin, Kaufman Organization

n/a / I. Norris, A. Margolin, Kaufman Organization

The digital company signed a lease. The reported asking rent was in the $50s per square foot.

270 West 39th St

1,400

Stone Song Press / Matthew Kurzban, Rice & Associates

270 W. 39th St. Co. / Stephanie Moore, Tarter Stats Oâ&#x20AC;&#x2122;Toole

The literary agency signed a lease on the third floor.

90 December 2013 www.TheRealDeal.com

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

27 West 24th St

1,226

Translate Media / I. Norris, A. Margolin, Kaufman Organization

n/a / I. Norris, A. Margolin, Kaufman Organization

The translation agency signed a lease. The reported asking rent was in the $50s per square foot.

247 West 36th St

1,200

New York Natives / Matthew Kurzban, Rice & Associates

247 Realty Associates LLC / Elie Reiss, Skylight Leasing

The online media and production company signed a lease on the third floor.

463 Seventh Ave

1,132

BONAPARTE-NY LLC / Balmer Parc LLC

The Arsenal Company / David Levy, Adams & Co.

The bridal dress company signed a new lease. The reported asking rent was $38 per square foot.

231 West 39th St

1,070

Volume Distribution LLC / James Buslik, Jeff Buslik, Adams & Co.

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

The apparel company signed a lease renewal. The reported asking rent was $40 per square foot.

231 West 39th St

1,005

BUTIK / James Buslik, Jeff Buslik, Adams & Co.

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

The apparel company signed a lease renewal.

260 West 35th St

1,000

18th and Walnut LLC / Gregory Rogers, Rice & Associates

260 West 35th Street LLC / Represented in-house

The handbag company signed a lease on the third floor.

10 West 33rd St

684

22 Print Studio / David Levy, Adams & Co.

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

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

10 West 33rd St

507

Pure Element Apparel LLC / David Levy, Adams & Co.

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

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

463 Seventh Ave

291

ESB Electric LLC / n/a

The Arsenal Company / David Levy, Adams & Co.

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

Retail leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

171 230th St (The Bronx)

30,000

Sports Authority / J. Howard, B. Schuster, Ripco Real Estate

n/a / J. Howard, B. Schuster, Ripco Real Estate

The sporting goods retailer signed a lease.

31 Penn Plaza

27,832

Blink Fitness / Peter Levine, Charter Realty

Savanna / A. Zhen, M. Frankel, Newmark Grubb Knight Frank

The fitness chain signed a 15-year lease for the entire second floor and part of the ground floor.

29 Norman Ave (Brooklyn)

24,000

Brooklyn Night Bazaar / J. Wadler, V. Lopez, Kalmon Dolgin Affiliates

n/a / J. Wadler, V. Lopez, Kalmon Dolgin Affiliates

The flea market and entertainment venue signed a lease.

84 Third Ave

18,817

Westside Market / Stu Morden, Newmark Grubb Knight Frank

YYY Third Avenue LLC / A. Schuster, Z. Winkler, T. Talmadge, RKF

The supermarket signed a lease.

171 230th St (The Bronx)

17,973

Aldi / E. Bukai, J. Howard, Ripco Real Estate

Equity One / E. Bukai, J. Howard, Ripco Real Estate

The supermarket signed a lease.

215 East 68th St

13,125

Grace’s Marketplace / David Kevelson, Manhattes Group

Rudin Management / M. Rudin, Rudin Management; M. Gleicher, Winick Realty

The supermarket signed a 15-year lease for a new location.

90-04 Metropolitan Ave (Queens)

12,700

Metro Woodhaven Builders LLC / R. Senior, H. Reichenbaum, Ripco Real Estate

Vandeveer Management Co. / R. Senior, H. Reichenbaum, Ripco Real Estate

The developer signed a 49-year lease to build a strip mall.

70 Wooster St

9,655

Band of Outsiders / J. Lewin, J. Isaacs, Isaacs & Co.

Wooster Realty LLC / C. Owles, S. Shannon, Sinvin Real Estate

The fashion retailer signed a 10-year lease.

48-50 West 14th St

7,800

Famous Footwear / A. Mandell, R. Skulnik, Ripco Real Estate

CB Developers / Kelly Gedinsky, Winick Realty

The footwear retailer signed a lease.

404 Park Ave South

4,811

New York Community Bank / Kenji Ota, Newmark Grubb Knight Frank

n/a / E. Gelber, M. Chmielecki, A. Healey, CBRE

The bank signed a retail lease.

260 West 26th St

4,500

World of Beer / Diana Boutross, Winick Realty

Artimus Development / Alexander Hill, Artimus Development

The Florida-based restaurant chain signed a lease for its first New York location.

226 West 116th St

4,150

n/a / n/a

n/a / David Chkheidze, Massey Knakal

A liquor store signed a lease.

463 Seventh Ave

3,366

FedEx Office and Print Services / n/a

The Arsenal Company / David Levy, Adams & Co.

The business services provider renewed its retail lease.

40-28 College Point Blvd (Queens)

3,090

OshKosh B’Gosh / n/a

Onex Real Estate / n/a

The children’s apparel retailer signed a lease for space at the Shops at SkyView Center.

969 Third Ave

3,000

UBS Universal Spa / J. Famularo, R. Idnani, NYCRS

Friedland Properties / Represented in-house

The spa signed a five-year lease.

53rd St and Madison Ave

2,600

Starbucks / David Firestein, SCG Retail

Eric Gural / Gregg Gropper, Newmark Grubb Knight Frank

The coffee chain signed a lease for a new location.

4804 Broadway (Queens)

2,500

Dollar Plus / Taso Hatzimichael, RedRock NYC

n/a / Taso Hatzimichael, RedRock NYC

The discount chain signed a 10-year lease. The reported asking rent was $60 per square foot.

23rd St and First Ave

2,200

Starbucks / David Firestein, SCG Retail

Rose Associates / n/a

The coffee chain signed a lease for a new location.

451 Lexington Ave

2,150

GRK Fresh / J. Isa, B. Tregerman, Winick Realty

Regency Development / D. LaPierre, S. Moran, S. Sjurset, CBRE

The Greek restaurant signed a lease.

512 Broome St

2,100

Artopolis / Yancy Foster, Pan Brothers Associates

n/a / Steven Hidary, Hidrock Realty

The Greek bakery signed a 10-year lease.

1407 Fulton St

2,100

n/a / n/a

n/a / Andrew Clemens, Massey Knakal

A discount retailer signed a lease.

1142 Madison Ave

1,820

Teavana Fine Teas + Tea Bar / David Firestein, SCG Retail

n/a / Scott Edlitz, Manhattan Skyline Management Corp.

Starbucks signed a lease for part of the ground floor for its first tea-bar concept store.

723 11th Ave

1,800

n/a / n/a

n/a / Dylan Murphy, Massey Knakal

A hardware store signed a lease.

805 Columbus Ave

1,770

European Wax Center / K. Gedinsky, C. Rapuano, Winick Realty

n/a / K. Gedinsky, C. Rapuano, L. Shabtai, Winick Realty

The waxing salon signed a lease for a new location.

195 Bleecker St

1,725

Stieber’s Candy Store / J. Famularo, R. Idnani, NYCRS

n/a / B. Abramson, E. Diaz, Buchbinder & Warren

The candy store signed a 12-year lease.

463 Seventh Ave

1,559

Galina’s Center Inc. / n/a

The Arsenal Company / David Levy, Adams & Co.

The salon signed a lease renewal. The reported asking rent was $135 per square foot.

To view more deals visit our website: www.TheRealDeal.com 92 December 2013 www.TheRealDeal.com

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Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

2409 Broadway

1,500

European Wax Center / K. Gedinsky, C. Rapuano, Winick Realty

2409 Broadway Associates / J. Pruger, R. Kaplan, Newmark Grubb Knight Frank

The waxing salon signed a lease for a new location.

401 East 80th St

1,396

Escape Nail Spa / n/a

Jack Resnick & Sons / n/a

The nail salon signed a lease renewal.

155 Bleecker St

1,200

Bark Hot Dogs / Jordan Cohn, SCG Retail

Trevi Retail / Alan Napack, C&W

The hot dog shop signed a lease.

West 99th St and Broadway

1,015

Starbucks / David Firestein, SCG Retail

ABC Properties / E. Ruster, A. Victor, Lansco Corp.

The coffee chain signed a lease for a new location.

369 Mother Gaston Blvd (Brooklyn)

875

Metro PCS / n/a

n/a / David Chkheidze, Massey Knakal

The wireless services provider signed a lease.

1122 Bedford Ave (Brooklyn)

800

n/a / n/a

n/a / Andrew Clemens, Massey Knakal

A home goods store signed a lease.

994 Fourth Ave (Brooklyn)

800

n/a / n/a

n/a / J. Colista, D. Chkheidze, Massey Knakal

An auto repair shop signed a lease.

156 East 33rd St

500

Juice Box / J. Famularo, R. Idnani, NYCRS

n/a / J. Famularo, R. Idnani, NYCRS

The tenant signed a 10-year lease.

844 Amsterdam Ave

470

Tatz Gourmet Sweetz / n/a

n/a / David Chkheidze, Massey Knakal

The bakery signed a lease.

250 West 14th St

450

Metro PCS / Jonathan Eshaghian, PD Properties

n/a / Ilan Rosenthal, Living NY

The wireless services provider signed a lease.

1760 First Ave

400

Metro PCS / Jonathan Eshaghian, PD Properties

Joseph Cvek / n/a

The wireless services provider signed a lease.

1 West 8th St

400

Maison Adam / Thibaud Vieulle, City Square Group

Benchmark 10 LP / Steve Rappaport, Sinvin Real Estate

The French baked goods retailer signed a 10-year lease. The reported asking rent was $203 per square foot.

205 West 57th St

370

An American Craftsman / Francine Kayden, Midtown Commercial Realty

Jack Resnick & Sons / n/a

The art gallery signed a new lease.

1315 St. Nicholas Ave

350

1356 Sportswear Inc. / Jose Terrero, Terrero Homes

n/a / Jose Terrero, Terrero Homes

The sportswear retailer signed a 10-year lease.

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

Worldwide Plaza

49-story, 1.8 million sf office bldg

American Realty Capital New York Recovery REIT / n/a

George Comfort & Sons; RCG Longview; DRA Advisors LLC / n/a

A 48.9 percent equity interest in the property sold for $220.05 million. The building is 91 percent leased to tenants such as Nomura Holding America and Cravath, Swaine & Moore LLP.

489, 493 and 495 Third Ave and 203, 205, 207 and 211 East 33rd St

7 apt. bldgs, 146 units total

Silverstone Property Group; RWN Real Estate Partners / Yosef Katz, GFI Realty

n/a / Barak Jacobov, GFI Realty

The properties sold for $71.5 million.

530-540 East 169th St and 480 East 188th St (The Bronx)

2 apt. bldgs, 490 units total

n/a / Aaron Jungreis, Rosewood Realty

530 East 169th St. Owner LLC / Aaron Jungreis, Rosewood Realty

The properties sold for $51.5 million.

7 West 54th St

6-story, 20,000 sf comm. townhouse

n/a / Shari Scharfer-Rollins, Corcoran

Lehm Holdings / A. Ellison, Jones Lang LaSalle; C. Chiang, Corcoran

The property sold for $40 million.

40-42 Elizabeth St and 159165 Canal St

2 office bldgs, 29,425 sf total

The Oved Group / n/a

n/a / P. Massey, R. Burton, N. Petkoff, Massey Knakal

The adjacent properties sold for $33.6 million, or about $1,142 per square foot.

62 Madison Ave

12-story hotel, 72 rooms total

MAve Investors LLC / n/a

n/a / Savills LLC

The MAve Hotel sold for $28.5 million.

100-102 Christopher St

5-story, 21,849 sf apt. bldg, 37 units total

DelShah Capital LLC / n/a

Stone Street Properties / n/a

The property sold for $26.75 million.

351-57 West 45th St

Five 4-story apt. bldgs, 88 units total

n/a / Aaron Jungreis, Rosewood Realty

West 45th Street Venture LLC / Aaron Jungreis, Rosewood Realty

The property sold for $22 million.

Brooklyn portfolio

Seven 4-story apt. bldgs, 199 units total

n/a / David Berger, Rosewood Realty

n/a / Aaron Jungreis, Rosewood Realty

The package of walk-up buildings sold for $21.1 million. The properties are located at 2406 Newkirk Avenue, 1536 and 1546 St. Johnâ&#x20AC;&#x2122;s Place, 1633-1647 Sterling Place, 2709 Clarendon Road and 3420 Clarendon Road.

150 West 225th St

32-story apt. bldg, 318 units total

Global One Real Estate Fund; NYAH Preservation Fund / A. Polsinelli, S. Ellard, Eastern Consolidated

n/a / A. Polsinelli, S. Ellard, Eastern Consolidated

The property sold for $18.5 million.

750-760 Pelham Pkwy South (The Bronx)

6-story apt. bldg, 138 units total

2206 Realty Corp. / Aaron Jungreis, Rosewood Realty

148-09 Northern Boulevard Corporation; Pelham Holdings 123; Ask Properties / Michael Guttman, Rosewood Realty

The property sold for $18 million.

162 and 164 East 82nd St

Two 5-story apt. bldgs, 37 units total

Harbor Group International / Jonathan Birnbaum, Rosewood Realty

East 82nd Street Investors LLC / Aaron Jungreis, Rosewood Realty

The properties sold for $16.15 million.

1014 and 741 Gerard Ave (The Bronx)

Two 6-story apt. bldgs, 135 units total

Parkash 751 LLC / Aaron Jungreis, Rosewood Realty

751 Gerard Ave Owner LLC; 1014 Gerard Avenue Owner LLC / Aaron Jungreis, Rosewood Realty

The properties sold for $15.7 million.

725 Eighth Ave

2-story, 7,000 sf retail bldg

Thor Equities / n/a

725 Eighth Avenue Realty / Aaron Gavios, Square Foot Realty

The property sold for about $12 million.

330 East 73rd St and 309 East 93rd St

Two 5-story apt. bldgs, 30 units total

n/a / M. Kerwin, D. Scheer, Rosewood Realty

330 East 73rd LLC; 309 East 93rd LLC / Aaron Jungreis, Rosewood Realty

The properties sold for $10.5 million.

146 Waverly Pl

5-story multi-family townhouse

n/a / n/a

n/a / J. Nelson, M. Nickerson, Massey Knakal

The property sold for $10.2 million.

17 West 24th St

5-story office bldg

Prime Hotel Management LLC / Colby Swartz, Suzuki Capital LLC

17 West 24 Street LLC / T. Li, D. Pereira, Suzuki Capital LLC

The property sold for $10 million.

94 December 2013 www.TheRealDeal.com

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Buys continued Address

Size

Buyer / Representative

Seller / Representative

145 Greene St

3,000 sf retail condo

Ashkenazy Acquisition / n/a

Costa Land / D. Schechtman, L. Lieberman, A. Kassin, Eastern Consolidated

The property sold for $9.75 million.

209 West 18th St

5-story, 11,000 sf comm. bldg

n/a / n/a

n/a / G. Garvin, B. Emmetsberger, Massey Knakal

The property sold for $9 million.

307 East 60th St

6-story office bldg

n/a / n/a

n/a / J. Nelson, C. Olsen, Massey Knakal

The property sold for $8.25 million.

193 Spring St

3-story, 3,678 sf apt. bldg, 4 units total

n/a / n/a

Bapple Real Estate / n/a

The property sold for $7.4 million.

85 Pitt St

12,000 sf apt. bldg, 21 units total

85 Pitt LLC / n/a

n/a / n/a

The property sold for $7.4 million, the Lo-Down reported.

1193, 1199 and 1205 Eastern Pkwy (Brooklyn)

Three 4-story apt. bldgs, 49 units total

1193-1205 Eastern Residences LLC / Michael Guttman, Rosewood Realty

Eastern Parkway Corp. / Aaron Jungreis, Rosewood Realty

The contiguous properties sold for $7.3 million.

3000 Brighton 12th St (Brooklyn)

4-story, 33,800 sf apt. bldg, 41 units total

Brighton 12 LLC / Aaron Jungreis, Rosewood Realty

Seaview Realty NY LLC / Michael Guttman, Rosewood Realty

The property sold for $6.5 million.

229 East 67th St

5-story apt. bldg, 22 units total

n/a / n/a

n/a / G. Garvin, Paul Massey, Massey Knakal

The property sold for $6.43 million.

315 East 196th St (The Bronx)

6-story apt. bldg, 60 units total

n/a / Aaron Jungreis, Rosewood Realty

The property sold for $6.3 million. The price represents a gross rent multiple of 8.2.

34-27 74th St and 34-20 75th St (Queens)

2 apt. bldgs, 36 units total

n/a / Ami Efrati, Entrepreneur Properties

Werber Management / Ami Efrati, Entrepreneur Properties

The properties sold for $5.85 million.

213 West 238th St

5-story apt. bldg, 59 units total

n/a / Aaron Jungreis, Rosewood Realty

213 West 238 LLC / Aaron Jungreis, Rosewood Realty

The property sold for $5.7 million.

156 West 15th St

5-story apt. bldg, 10 units total

n/a / n/a

n/a / B. Emmetsberger, A. Essick, J. Nelson, Massey Knakal

The walk-up sold for $5.65 million.

2675 Creston Ave (The Bronx)

6-story, 65,250 sf apt. bldg, 49 units total

n/a / Aaron Jungreis, Rosewood Realty

2675 Creston Avenue / Aaron Jungreis, Rosewood Realty

The property sold for $5.3 million.

50-01 Queens Blvd and 50-18 Roosevelt Ave (Queens)

2 retail bldgs, 28,400 sf total

n/a / n/a

n/a / S. Weiner, M. Piskun, Greiner Maltz

The properties sold for $5.28 million.

711-715 East 231st St (The Bronx)

6-story, 44,982 sf apt. bldg, 56 units total

The Morgan Group / Aaron Jungreis, Rosewood Realty

711 East 231 Owner LLC / Aaron Jungreis, Rosewood Realty

The property sold for $5.17 million.

608-612 West 184th St

Two 5-story apt. bldgs, 45 units total

n/a / Ryan Perkoski, Rosewood Realty

St. Nicolas 184 Holding LLC / Aaron Jungreis, Rosewood Realty

The properties sold for $4.9 million.

2474 Valentine Ave (The Bronx)

5-story, 44,590 sf apt. bldg, 53 units total

n/a / Aaron Jungreis, Rosewood Realty

2474 Valentine LLC / Aaron Jungreis, Rosewood Realty

The property sold for $4.62 million.

124 East 177th St (The Bronx)

6-story, 39,360 sf apt. bldg, 42 units total

The Morgan Group / Aaron Jungreis, Rosewood Realty

124 E 177 St. Owner LLC / Aaron Jungreis, Rosewood Realty

The property sold for $4.2 million.

55-57 Clifton Pl (Brooklyn)

Two 4-story apt. bldgs, 16 units total

n/a / Michael Guttman, Rosewood Realty

The properties sold for $4.18 million.

3041-3043 Ocean Ave (Brooklyn)

Development site

n/a / Erik Yankelovich, GFI Realty

The property sold for $4.1 million.

654 East 224th St (The Bronx)

5-story, 37,361 sf apt. bldg, 47 units total

n/a / Aaron Jungreis, Rosewood Realty

654 E. 224 Owner LLC / Aaron Jungreis, Rosewood Realty

The property sold for $4.1 million.

2940 and 2950 Ocean Ave (Brooklyn)

Two 4-story apt. bldgs

n/a / Aaron Jungreis, Rosewood Realty

n/a / Michael Guttman, Rosewood Realty

The properties sold for $4 million.

142-144 Decatur St (Brooklyn)

4-story, 15,520 sf apt. bldg, 20 units total

n/a / Michael Guttman, Rosewood Realty

142 Decatur Ft. LLC / Aaron Jungreis, Rosewood Realty

The property sold for $4 million.

558 West 193rd St

6-story apt. bldg, 31 units total

n/a / L. Mavashev, J. Aronov, Besen & Associates

The property sold for $3.92 million, or $161 per square foot.

1464 First Ave

Mixed-use bldg

n/a / C. Portelli, J. Weiss, Highcap Group

The property sold for $3.9 million.

2330 Ryer Ave (The Bronx)

5-story apt. bldg, 36 units total

n/a / David Gerstel, Friedman-Roth Realty

n/a / George Niblock, Friedman-Roth Realty

The property sold for $3.15 million.

1239 and 1243 36th St and 159 Tehama St (Brooklyn)

3 apt. bldgs, 28 units total

n/a / David Scheer, Rosewood Realty

n/a / Jonathan Birnbaum, Rosewood Realty

The properties sold for $2.9 million.

2530-2536 Foster Ave (Brooklyn)

4-story apt. bldg, 24 units total

n/a / Raphael Toledano, Weissman Realty

n/a / Aaron Jungreis, Rosewood Realty

The walk-up building sold for $2.8 million.

2420 Davidson Ave (The Bronx)

6-story, 30,200 sf apt. bldg, 26 units total

n/a / Aaron Jungreis, Rosewood Realty

2420 Davidson Avenue Owner LLC / Aaron Jungreis, Rosewood Realty

The property sold for $2.48 million.

24-26 Covert St (Brooklyn)

16-unit apt. bldg

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

The property sold for $2.4 million, or $154 per square foot.

369 Ocean Ave (Brooklyn)

4-story, 11,036 sf apt. bldg, 16 units total

n/a / A. Jungreis, Rosewood Realty; R. Toledano, Weissman Realty

369 Ocean Properties LLC / Aaron Jungreis, Rosewood Realty

The property sold for $2.4 million.

534 West 178th St

5-story apt. bldg, 20 units total

n/a / n/a

n/a / Robert Shapiro, Massey Knakal

The property sold for $2.35 million.

Notes

To view more deals visit our website: www.TheRealDeal.com 96 December 2013 www.TheRealDeal.com

NOW LEASING

POOLSIDE PARKSIDE NORTHSIDE INSIDE STUDIOS FROM $2,900 // 1-BEDROOMS FROM $3,225 // 2-BEDROOMS FROM $4,600 OVERSIZED LIVING SPACES // CONDOMINIUM QUALITY FINISHES PARKING // BIKE STORAGE // TWO ROOF DECKS

64 Bayard Street WIlliamsburg 6 4 B AYA R D.C O M 7 1 8 - 8 78 - 1 78 1 E XC L U S I V E L E A S I N G AG E N T: H A L S T E A D P R O P E RT Y D E V E LO P M E N T M A R K E T I N G

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Buys continued Address

Size

Buyer / Representative

Seller / Representative

Notes

240 Prospect Park West (Brooklyn)

4-story, 5,880 sf apt. bldg, 6 units total

240 Ppw Residences LLC / Michael Guttman, Rosewood Realty

240 Ppw. LLC / Aaron Jungreis, Rosewood Realty

The property sold for $2.15 million.

1471-1477 Fulton St

2-story comm. bldg

n/a / n/a

n/a / Michael Amirkhanian, Massey Knakal

The property sold for $2 million.

664 East 213th St (The Bronx)

5-story, 17,000 sf apt. bldg, 22 units total

n/a / Aaron Jungreis, Rosewood Realty

664 East 213 Owner LLC / Aaron Jungreis, Rosewood Realty

The property sold for $1.85 million.

516 47th Rd (Queens)

4-story, 6,600 sf apt. bldg, 8 units total

Silvershore Properties / n/a

n/a / n/a

The property sold for $1.71 million.

497 Dean St (Brooklyn)

4-story, 7,152 sf apt. bldg, 8 units total

n/a / Michael Guttman, Rosewood Realty

497 Dean LLC / Aaron Jungreis, Rosewood Realty

The property sold for $1.66 million.

36-05 Vernon Blvd (Queens)

4-story, 10,500 sf apt. bldg, 8 units total

Silvershore Properties / n/a

VAT Realty Inc. / n/a

The property sold for $1.4 million.

1297 St. Marks Ave (Brooklyn)

3-story apt. bldg, 6 units total

1297 St. Marks LLC / Jonathan Birnbaum, Rosewood Realty

1297 St. Marks 1 LLC / Jake Blatter, Rosewood Realty

The property sold for $1.35 million.

85 Montrose Ave (Brooklyn)

3-story mixed-use bldg

n/a / n/a

n/a / Brendan Maddigan, Massey Knakal

The property sold for $1.35 million, or $329 per square foot.

1802 Avenue U (Brooklyn)

3-story apt. bldg, 4 units total

n/a / David Berger, Rosewood Realty

1802 Realty LLC / David Berger, Rosewood Realty

The property sold for $1.3 million.

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

25 Broad St

308-unit apt. bldg

LCOR / J. Mikula, J. Cadranell, HFF

Northwestern Mutual Life Company / n/a

A $110 million permanent loan was provided for the property.

529 Fifth Ave

19-story, 282,696 sf office bldg

Silverstein Properties; Loeb Partners Realty / S. Kohn, D. Karson, A. Hernandez, S. Vankayala, C&W

Wells Fargo / n/a

A $85 million loan was arranged for the property.

12 East 13th St

12-story apt. bldg

DHA Capital; Continental Properties; Ramius / M. Gigliotti, A. Scandalios, HFF

Apollo Commercial Real Estate Finance / n/a

A $62.4 million construction loan was provided for the redevelopment of the parking garage into a luxury residential condo.

3105 Avenue V (Brooklyn)

306-unit apt. bldg

Brigham Park Coop Section #3 Inc. / n/a

NCB / n/a

An $8 million first mortgage and a $1 million line of credit were arranged for the building.

102-21 63rd Rd (Queens)

85-unit apt. bldg

Van Burn Owners Inc. / n/a

NCB / n/a

A $3 million first mortgage and a $300,000 line of credit were arranged for the building.

20 East 9th St

324-unit apt. bldg

20 East 9th Street Corp. / n/a

NCB / n/a

A $3 million third mortgage was arranged for the building.

13 West 13th St

82-unit apt. bldg

13 West 13 Apartments Corp. / n/a

NCB / n/a

A $2 million unsecured line of credit was arranged for the building.

55 Flatbush Ave (Brooklyn)

13-story apt. bldg, 38 units total

n/a / Adam Luysterborghs, AVANT Capital Partners

n/a / n/a

A $1.4 million bridge loan was originated for the project.

Other Deals Moody’s adds 130,000 square feet at Silverstein’s 7 World Trade Center Credit rating firm Moody’s is taking the top three floors of Larry Silverstein’s 7 World Trade Center, a 129,000-square-foot expansion for the anchor tenant of the first tower to be rebuilt after the Sept. 11, 2001 terrorist attacks. The sublease deal with portfolio services provider Portigon gives Moody’s a total footprint of about 790,000 square feet at the 52-story, 1.7 million-squarefoot office tower. Asking rents for the space were $65 per square foot, a premium for top Lower Manhattan office space, which has average asking rents of $46 per square foot, according to Newmark Grubb Knight Frank. (The deal was announced after the deadline for the Deal Sheet.)

Washington Heights apartment building sells for $32 million A Washington Heights multi-family building has traded for just over $32 million, according to records filed with the city last month. The 91-unit property at 780 Riverside Drive, called the Vauxhall, was sold to landlord Mendel Mendlowits, a source said. The prewar building has no units available for rent, but StreetEasy shows apartments asking between $2,600 and $3,800 per month rented in the last year. George Niblock of Manhattan-based commercial brokerage Friedman-Roth Realty Services represented the buyer, he confirmed to TRD. (The deal was announced after the deadline for the Deal Sheet.) 98 December 2013 www.TheRealDeal.com

Chetrit ramping up Williamsburg hotel hybrid

Infor expands at SL Green’s 635-641 Sixth

A 14-story combination hotel and apartment building is coming to Williamsburg’s Metropolitan Avenue, thanks to Meyer Chetrit of the Chetrit Group. The development at 500 Metropolitan Avenue, near the Lorimer subway stop, will have 56,584 square feet of commercial space, 89,186 square feet of residential space, and a 182-spot parking garage. The residential portion will include 238 units, according to Department of Buildings filings, with a division between hotel rooms and apartments at the eighth floor. A recreation area and 50 of the units will be located on that floor and above, while 188 units, including duplexes, will be on the lower floors.

Business software provider Infor is doubling its space at SL Green’s 635-641 Sixth Avenue after a year. Infor has agreed to expand to 92,246 square feet in the Chelsea building, at 19th Street, where asking rents range from the high $70s to the high $90s per square foot, the New York Observer reported. Renovations of the company’s space will coincide with SL Green’s work to combine the two properties by early next year. Cushman & Wakefield brokers Ethan Silverstein, Doron Etzioni and Mark Mandell represented the tenant, while Jones Lang LaSalle brokers Benjamin Bass, Jonathan Fanuzzi, Diana Biasotti and Paul Glickman represented the landlord. (The deal was announced after the deadline for the Deal Sheet.)

Gotham, Grid Properties snap up Bronx parcel for $31 million The Metropolitan Transportation Authority has nabbed a healthy chunk of change with the sale of a 550,000-square-foot site in the Bronx. The Pelham Gardens site next to the Bay Plaza Shopping Center, once pegged to become an extension of the nearby Gun Hill bus depot, sold for $30.5 million to two developers who will build a retail center on the site, Crain’s reported last month. A proposal to create 260,000 square feet of leasable retail space, along with the possible construction of 100 units of senior housing, was submitted by developers Grid Properties and Gotham Organization and selected by the city. (The deal was announced after the deadline for the Deal Sheet.)

Fledgling developer LIVWRK buys in Gowanus, plans retail LIVWRK Holdings, led by Asher Abesera and Aaron Lemma, bought two former industrial buildings in Gowanus with plans to convert them into office and retail space. The vacant structures at 68 and 80 3rd Street, near Hoyt Street, once housed the New York Vitrified Tile Company. They feature a total of 80,000 square feet, the first two floors of which will hold shops. Abesera told the New York Daily News he is looking at tailors, bread bakeries, J. Crew, Restoration Hardware or concept stores for national brands as possible retail tenants. (The deal was announced after the deadline for the Deal Sheet.) TRD

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LEASING UPDATES

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4545 Center Boulevard The 41-story, 820-unit rental building, developed by TF Cornerstone, is now more than 80 percent leased. Studios are fully taken, but prices start at $2,750 for one-bedrooms, $2,950 for one-bedrooms with a home office, $3,650 for two-bedrooms and $4,890 for three-bedrooms. Amenities include two tennis courts, a volleyball court, dog run, sundeck, children’s playroom, bicycle storage, indoor parking and a 24-hour concierge and valet. Contact: www.4545centerblvd.com.

Williamsburg Hosted at

101 Bedford Avenue The first two buildings in the 351-unit rental complex, developed by Halcyon Management Group, are now 80 percent leased. The third tower, which opened last month, is nearly 50 percent leased. The

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from $2,673 to $6,491. Building amenities include a fitness center, indoor basketball court, outdoor bocce court, work and play lounges, landscaped courtyards and rooftop, and doorman. Contact: www . 50north5th.com. SALES UPDATES

Central Park South 22 Central Park South Sales have launched at the seven-unit, nine-story landmark condo building developed by the Elad 22 Central Park South Group. The six full-floor residences start at 2,021 square feet, with the top two floors occupied by a 2,943-square-foot duplex penthouse. The penthouse has three private outdoor terraces totaling 909 square feet. Units at the doorman building range in price from $6.7 million to $26.5 million for the penthouse. Brown Harris Stevens Development Marketing is the marketing agent. Contact: www.22centralparksouth.com.

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studio, one- and two-bedroom units range in size from 459 to 812 square feet, and rents range from $2,500 to $6,000 per month. Building amenities include a doorman and concierge, a fitness center, indoor pool, hot tub, sauna, wine vault, party room, screening room, recording and photography studio, and on-site parking. Contact: www.101bedford.com.

www.LandlordsNY.com 100 December 2013 www.TheRealDeal.com

The Greenwich Lane

50 North 5th 50 North 5th Street Leasing has launched at the 299-unit, seven-story condominium project developed by Mack Real Estate Group and designed by SLCE Architects, with interiors

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The Greenwich Lane West 11th and West 12th streets Sales have launched at the 200-unit, five-building and five-townhouse complex. The FXFOWLE-designed project,

50 North 5th Street

by CLO-TH Interiors. The studio, oneand two-bedroom residences range in size from 506 square feet to 1,035 square feet. Monthly rental rates, meanwhile, range

which is being developed by Rudin Management and Global Holdings, is located on the former St. Vincent’s Hospital site. It includes one- to five-bedroom units, which range in price from $2 million to over $20 million and in size from 1,000 to 7,300 square feet. Building amenities include a 24-hour attended lobby, a staffed fitness center with sauna rooms, an indoor swimming pool, a resident’s lounge and entertaining room, a children’s playroom, screening room, golf-simulator room, guest chef ’s kitchen, and private underground parking. Corcoran Sunshine Marketing Group is the agent. Contact: www .thegreenwichlane.com. TRD

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Flatiron $2.1 million 11 East 29th Street, Apt. 9A

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$6,500,000 The Marcum LLP SIZE: 53,750 SF CITY: LONG ISLAND, NY

Two-bedroom, two-and-a-half bath, 1,596-square-foot unit in a postwar condo building, Sky House; apartment has floorto-ceiling windows, granite countertops and a washer/dryer; building has 24-hour doorman, a fitness center and a playroom; common charges $1,381 per month; taxes $984 per month; asking price $1.99 million; five weeks on the market. (Brokers: Amanda Rosenberg, Corcoran; John Farrell, Citi Habitats) “Price per square foot was [my buyers’] number-one priority. For the Chelsea/Flatiron neighborhood, most of the units we were viewing were in the $1,800-a-foot range, with new developments well over $2,000. When [this unit] became available for $1,250 a foot, we knew we had to act quickly. The negotiations were very difficult. There were six other offers in the first two weeks. We decided to submit an above-ask offer at $1,318 a foot, $110,000 over the asking price, but still well below the comparable units in the area. We won the bid.”

LENDER: LIFE COMPANY

$6,000,000 Staples SIZE: 29,457 SF CITY: COLLEGE POINT, NY LENDER: LOCAL BANK

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There is no time more fitting to say Upper West Side $3.5 million 27 West 72nd Street, Apt. 214-215

From all of us at Liverpool Carting Co., Inc. 718.993.4525, liverpoolcarting.com

102 December 2013 www.TheRealDeal.com

Artwork by: Lee Erikson

Thank You to our Customers and to wish you a Happy Holiday Season and a New Year of Health, Happiness and Prosperity.

Three-bedroom, three-and-a-half bath, 1,730-square-foot unit in a prewar condo building, the Olcott; apartment has split-bedroom layout, integrated sound system and a large private terrace; full-service building has 24-hour doorman, concierge, fitness room, playroom, refrigerated storage and bicycle storage; common charges $1,445 per month; taxes $1,735 per month; asking price $3.5 million, two weeks on the market. (Brokers: Brian Lewis, Halstead Property; Patricia Gilman, City Solutions)

do luxury building by Central Park. They were not looking for very long at all. They swiftly offered full asking price in cash, and the sellers took it. The sellers were cashing in on the [strong] market and decided to rent for a while before moving to the suburbs. Although this home is in a condo building, this condo’s waiver application is quite thorough. The buyer was from another country. Logistically, getting a foreign buyer to get all that is needed for a package takes some time and effort, but it was not that bad. The sale broke a price-per-square-foot record for a lower-floor home in the building.” Brian Lewis, Halstead Property

Upper West Side $1.29 million 275 West 96th Street, Apt. 9D

Two-bedroom, two-bath, 1,026-squarefoot unit in a postwar condo building, the Colombia; apartment has walk-in-closet, crown moldings and terrace; building has doorman and concierge; common charges $1,265 per month; taxes $811 per month; asking price $1.29 million; six weeks on the market. (Brokers: Mark Eidgah, Charles Rutenberg Realty; Yosefa Galchen, Douglas Elliman) “I have known the seller for several years. She bought the apartment during the peak of the market, so this was the perfect time to sell and recoup her money. The apartment is one of the largest two-bedroom units in the building. The buyer [liked the property] because there was already a solid tenant in place, making it an easy investment property. The purchaser will be inheriting the tenant for the remainder of the lease term, which is not ending for another year. So the pool of buyers was limited to investors or purchasers willing and able to wait for the lease to expire to move in. I believe the price is the highest price for a two-bedroom in the building since the recession hit. If we had put the apartment on the market a year or two ago, most likely we wouldn’t have received anything close to the closing price.” Mark Eidgah, Charles Rutenberg Realty TRD

“I was a co-broker [on the seller’s side]. The buyer loved the layout and outdoor space. They liked the concept of a prewar con-

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Young Woo

from page 48

tion. “I don’t remember telling him he was crazy,” Gosin said. “I remember getting him a really good rent — I do remember that. It was a special building.” (Woo said he sold the building at a large profit to a Japanese investor, though he said he can’t recall the price at which he brought or sold at. Broker sources say he paid $7.5 million. However, it’s difficult to determine what he sold it for because public records indicate he sold the ownership corporation rather than the building.)

ping malls to disappear in the next 10 years. At the same time, the consultants he spoke to stressed that the flood of young adults into the cities was only going to increase. What was needed, Woo concluded, was a new kind of marketplace to cater to these individuals — an urbanized version of Main Street, where the young and talented could hawk their wares. To provide that, however, required a new business model that eliminated the barriers to entry. Woo planted his flag on the West Side pier after beating out Related Companies and the Durst Organization in a competitive RFP. While some have criticized him for not moving fast enough at the site, Woo’s team has fanned out across the city and globe interviewing potential merchants, brand executives, and other entrepreneurs to come up with a viable approach. In the last year, Beloff said he’s been to Germany, Spain, the UK, Korea, Japan, Hong Kong and Argentina. The team decided to target four types of tenants: hip, local entrepreneurs (similar to those who populate Brooklyn’s DeKalb Market, a temporary bazaar which uses shipping containers); global retailers with unique brands that are having a hard time breaking into the U.S. because they lack the credit and resources; established brands looking to try new things; and online companies looking for small brick-and-mortar outposts. To attract the desired tenants, Woo’s firm offers a manner of in-house services, including insurance, accounting and sales-tracking. Also included is design work: Woo’s firm is showcasing prototypes of different configurations of new shipping crates (they are currently building them). It’s also contracted with a Tokyo-based company to facilitate shipping and help deal with legal obstacles for Japanese tenants.

Big profits In recent years, Woo gained attention for racking up big profits even when the economy was tanking. But on one of his projects, his high-profile approach backfired. In the midst of the financial crisis in 2009, he was widely reported to have purchased the 63-story AIG tower, along with the neighboring 72 Wall Street for $150 million. Shortly after the purchase, Woo told an audience at an NYU forum that he had a bold plan to rehab 70 Pine and convert it into condos, which he hoped to then sell for about $2,000 a square foot. But Woo and partner Kumho Investment Bank were silent until 2011 when a KIB official was quoted in the New York Post disavowing Woo’s early plan. The official claimed the building was “100 percent” owned by KIB and said Woo was merely “one of the unit holders of the asset management company that we created to manage the building.” Woo, meanwhile, said he was the driving force behind the deal. “I went to Korea to find the money and I convinced the Korean investment bank to invest with me.” In late 2011, KIB flipped the two buildings for $101 million more than it paid. Woo filed a lawsuit against KIB, claiming an employee misappropriated confidential information which the bank used to oust the developer from the deal. A lower court upheld Woo’s complaint, but on appeal, an arbitration panel ruled in favor of KIB, rejecting Woo’s claim to 4.95 percent of the sales’ profits. It noted that Woo breached his contract and engaged in “willful misconduct and negligence.” He did so, the panel said, by refusing site access to representatives from Samsung, which was interested in acquiring the AIG building, but indicated that they would not hire Woo as the developer. Greg Carney, a principal at Youngwoo, maintained the firm’s instrumental role in the AIG transaction. “Youngwoo sourced the deal, acquisition funds and concept,” he said. “It’s no coincidence that in mid-2009 when U.S. investment activity had collapsed, a Korean investment bank was introduced to the deal.” In terms of Woo’s overall activity, Real Capital Analytics credits him with involvement in sales at six properties since 2000 in New York and Texas, and one refinancing. (Those figures don’t include some projects Woo is associated with in the media.) For their part, Youngwoo officials would only say that, during that period, their firm had developed over a dozen projects across the city, in other parts of the U.S. and in Latin America.

Operation innovation There has been less controversy and more plaudits for Woo’s role in two cutting-edge projects in Chelsea. In 2006, he and his partners, the Chelsea Development Group, completed the Chelsea Arts Tower, on West 25th Street. The 20-story glass tower was built to appeal to gallery owners and artists, many of whom had been priced out of Soho. Woo and his partners developed commercial condos and unloaded them at prices ranging from $700 to $2,000 a square foot, according to published reports. Then, in 2007, Woo developed the Sky Garage at 200 11th Avenue. The Annabelle Selldorf-designed building

104 December 2013 www.TheRealDeal.com

Success not guaranteed

Top, Woo battled with partner Kumho Investment Bank over the AIG Building at 70 Pine in Lower Manhattan. Above, Woo’s Chelsea Arts Tower was an outside-the-box development.

garnered international headlines for its groundbreaking innovation: private elevator garages for each individual unit. Woo sold the 2,598-square-foot penthouse for $23 million, a spokeswoman said. Woo’s name was also in the news as one of the two final bidders to redevelop the Knightsbridge Armory in Queens. But he lost out to a rival bidder. Meanwhile, Woo and his team say they’re developing major projects abroad, including a “gentleman’s winery” in Mendoza, Argentina, where global investors can grow their own grapes on three-to-10 acre lots and produce wines in a professionally managed winery. In recent years, as Woo has come up with new concepts for projects, he said he’s consulted with artists, scientists and trend experts. Indeed, the Pier57 idea stemmed from a discussion Woo had with a scientist at Bell Labs, who said he expected shop-

Dan Fasulo, managing director at Real Capital Analytics, called the Pier57 concept “brilliant.” “There is so much generic luxury in Manhattan today,” he said. “If he could put together something really unique, it will be a huge winner.” Lisa Rosenthal, a managing director at retail brokerage Lansco, said she toured the space and was “blown away.” But she sounded a cautious note. “It is just a phenomenal space, and it’s different. You’re on the water and you’re in the city. It’s kind of surreal,” said Rosenthal, who is on the board of BOFFO, which sponsored the art installation currently at the pier. “But it will all depend on client demand. And it isn’t yet on tenants’ radar. There has to be a lot more education.” Success, she noted, “really depends on who signs onto the project,” and the “challenge is filling in the first couple tenants.” Beloff, the leasing director, said the company has planned for those challenges. The firm is close to announcing a couple more anchor deals, he said. They include a boutique cinema, with an “authentic movie theater experience,” and a home goods brand that will have a restaurant in its space, Beloff told TRD. The team, he said, is also talking to a “really big fashion company” that would use the space as a permanent installation for collaboration with prominent designers and fashion shows. In addition, the firm is said to be in the final stages of negotiating with a prominent restaurateur for an Asian marketplace that will rent space to many small merchants and create an atmosphere similar to Mario Batali’s Italian-themed Eataly in the Flatiron District. “It’s going to be an extremely exciting atmosphere, creative and chaotic with lots going on,” Beloff said. TRD

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Suburbs

from page 54

Westchester draws priced-out New Yorkers

he real estate market in Westchester County is a “tale of two cities,” according to Houlihan Lawrence’s Anthony Cutugno. The market in lower Westchester, in New York City-adjacent towns like Bronxville, Rye, Scarsdale and Mamaroneck, is much busier than it is in upper Westchester. The former areas, he said, account for 70 percent of Houlihan Lawrence’s luxury business. “Our theory is that because the [Manhattan] condominium market has pushed itself to such a height, more people are selling at top dollar in New York City right now who are

Westchester’s priciest listings Address

17 Cowdray Park Drive

Town

Listing Brokerage

Listing price

Armonk

Renwick Sotheby’s International Realty

$24.9 million

48 Haights Cross Road

Chappaqua

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not able to buy back into the market and get the size of apartment that they actually need,” said Cutugno, director of the firm’s Bedford-based Luxury Country Properties division. “Once they sell, it’s not so easy to buy back in, and they’re coming [here] because Bronxville’s only 20 minutes to New York,” he added. The majority of properties these exiles pick up, he said, are in the $2- to $4-million range. But those, of course, aren’t the priciest properties in Westchester. Indeed, 17 Cowdray Park Drive near Armonk, which came on the market in October and is listed for $24.9 million by Missy Renwick of Renwick Sotheby’s, is currently the most expensive house on the market in Westchester. 58 Cat Ridge Road in North Salem is on the market for $18.5 million. It was originally designed for Woolworth heir Richard Woolworth. Other homes rounding out the top five

range in price from $17 million to $24.7 million. Cutugno and Houlihan colleague Linda Gracie have one of those listings: 58 Cat Ridge Road in North Salem, which is asking $18.5 million. The 9,000-square-foot home was designed by architect Mott Schmidt. It’s been dubbed “the last of the Georgians” in reference to the signature American Georgian Classic style Schmidt employed in designing early 19th-century grand homes for the likes of the Vanderbilts and Rockefellers. The home, designed for Woolworth heir Richard Woolworth in 1934, sits on a 26-acre estate, has indoor and outdoor pools, a horse stable and paddock. The property came on the market in March 2012 at its current asking price. Overall, Westchester sales were down 3.2 percent in October from the same time last year. The average sales price was $723,490 — down 12.3 percent from the same time a year prior. TRD

Newark from page 58 The bank “believes Newark has incredible fundamentals,” Goldman’s Margaret Anadu told TRD. “We’re double bottom-line investors, so we’re looking to create demonstrable social impact in everything we do,” said Anadu, the vice president of Goldman’s Urban Investment Group. Given the city’s long history of economic struggles, however, most projects require public subsidies to pencil out. “In many instances, [new projects] need some type of subsidy to make the numbers work,” said Adam Zipkin, a Newark deputy mayor, who also headed economic development under Booker. For example, Teachers Village received roughly $49 million in tax credits and $33 million in loans, bonds and grants from a host of sources, largely because the market-rate office and retail rents do not meet normal underwriting standards. (According to Jones Lang LaSalle, in the third quarter, the average asking rents in Newark were $24.53 overall and $33.73 for Class A space. By comparison, the average asking rents in Manhattan in October were $59.25 overall and $62.91 for Class A space, according to Colliers International.) Panasonic, meanwhile, received a $100-million-plus tax credit to stay in New Jersey. Its co-developer, New Jersey-based SJP Properties, said the incentives were critical to financing the development. “Construction costs are so high today, that without some type of incentive, the cost of new construction [could not] be justified,” said Jeff Schotz, SJP’s executive vice president of leasing and marketing. Today, Panasonic is moving more than 800 employees from Secaucus — and Newark is using the deal as a way to market the city to new investors. Meanwhile, Manhattan-based L&M Development is teaming up with Newark-based Hanini Group on a $120 million renovation of the landmark Hahne & Co. department store at 609 Broad Street. Built in 1901, the 400,000-squarefoot building is being converted into a mixed-use complex. Whole Foods will anchor the site, which includes another 106 December 2013 www.TheRealDeal.com

80,000 square feet of office and community space and 180 (market-rate and affordable) loft-style rental apartments. And in one of Newark’s more controversial deals, Prudential Financial was awarded $211 million in state tax credits to develop a new $444 million, 20-story office tower. However, the owner of the city’s nearby four-building Gateway Center office complex, where Prudential currently has space, sued to block the 787,000-square-foot office-and-retail development. Lawyers for two of the Gateway landlords — Manhattan-based C&K Properties and Tahl Propp — have argued that moving thousands of employees out of Gateway to the new complex would flood the market with over 900,000 square feet of vacant space and undermine Gateway rents. “The state is supposed to look at the net benefit of creating a tax incentive,” said attorney Paul Josephson, who represents the landlords, which own three of the four buildings. “The result would be that much supply coming onto the market all at once.” Prudential officials, who settled with a third Gateway landlord, declined to comment on the new office tower. But they noted that incentive programs are necessary to help drive new development in the city. “Like many urban markets there’s a significant amount of complexity to doing business here,” said Ommeed Sathe, Prudential’s vice president and head of social investments.

Uncle Sam’s helping hand Since 2010, the New Jersey EDA has provided more than $525 million in tax credits and grants to spur more than $749 million in projects, including Teachers Village, Panasonic’s headquarters, the Shaquille O’Neal project, a Courtyard by Marriott hotel, a 125,000-square-foot retail-and-residential project from Tucker Development, and a 106-room Hotel Indigo, which is being co-developed by InterContinental and Hanini. In addition to the state incentives, New Market federal tax credits, which are available to low-income communities,

are helping close the financing gap for real estate projects. For example, Biotrial, a French pharmaceutical research firm, is getting a 20 percent federal tax credit to help finance its $25 million, 70,000-square-foot North American headquarters in Newark’s University Heights Science Park, which is set to open in 2014. (Another 20 percent is coming from state and local subsidies.) Scott Singer, executive vice president at Manhattan-based financial broker Singer & Bassuk, said the government incentives and gap financing are finally allowing Newark, which has been economically blighted for 40 years, to reach its full potential again. “People that go to Newark now with their eyes wide open, and walk the areas that have started to be transformed by these developments, see it’s readily apparent that the city has dramatically changed.” TRD CORRECTIONS A N D C L A R I F I C AT I O N S In the November magazine story, “Where are the rentals?,” TRD misstated the address of Glenwood’s new condo development. It is at 60 East 86th Street. TRD also misidentified the head of the company. It is being run by Carole Pittelman, the daughter of founder Leonard Litwin. In addition, the story included the wrong name and number of units at the Moinian Group’s under-construction rental. It is called 605 West 42nd Street and is slated to have 1,669 apartments. In the November magazine story, “Brooklyn’s Heights,” TRD misstated the broker Rhea Cohen’s firm. It is Brown Harris Stevens. The story also misidentified a photograph of 374 Pacific Street. In the November story “EB-5 in overdrive,” TRD inaccurately described Shalom Segelman’s role at Extell Development’s regional center. His title is senior vice president of international affairs at Extell’s New York Regional Center. www.TheRealDeal.com January 2012 00

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Commercial market

from page 28

a lease near the peak of the market in early 2008 for more than $100 a square foot, for 15 floors in the Plaza District building. But in 2010, Colgate returned the 16th floor to the building’s landlord, Tishman Speyer. And in 2011, it did the same with the 15th floor. In more than three years, however, those floors have yet to be spoken for, even as the Plaza District has been active recently. So far this year, more space was leased in the Plaza District (as of the start of last month) than any other Midtown submarket, Colliers data showed. Now, Colgate has put floors 12, 13 and 14 on the sublease market, represented by a Colliers leasing team. Unlike the previous floors, however, the company is still on the hook for the space. There is no asking rent, but one insider estimated a tenant would pay about $85 to $90 a foot for the lease, which still has 10 years left, depending on landlord contributions. Further south, in Midtown, the law firm Wollmuth Maher & Deutsch inked a renewal lease for 15 years at 500 Fifth Avenue, a 687,565-square-foot office building at the corner of 42nd Street, information from leasing data tracking firm CompStak shows. Cushman & Wakefield’s Stephen Baker, Mitchell Barnett and David Malawer represented the law firm, and Cushman’s Harry Blair and Sean Kearns represented the landlord. The asking rent for the space was $60 per square foot — far below the average asking rent for Midtown, which was $69.49 per foot in November, up 12 cents per foot from the prior month, Colliers statistics showed. The availability rate for Midtown fell by 0.1 points to 11.6 percent last month compared to the prior month.

Midtown South The heavy concentration of tech tenants in Midtown South is not breaking news, but new data from commercial firm Jones Lang LaSalle shows just how intense interest from those tech firms actually is in the area. Since the start of the year, 66 percent of the square footage that was rented in the Greenwich Village submarket was leased by tech firms, JLL reported. That amounted to 244,610 square feet of the total 371,095 square feet leased. The largest Greenwich Village deal was Facebook taking nearly 100,000 square feet at 770 Broadway. Meanwhile, 45 percent of the space leased in Chelsea was taken by tech firms this year. In Midtown South overall, 38 percent of the deals were with such firms. For example, the website 1stdibs.com, an online antique store, inked a deal for about 42,232 square feet at developer Edward Minskoff ’s spec tower 51 Astor Place. According to Crain’s, Twitter was also looking at the building. But it’s mostly the old buildings luring tech tenants. One factor is that the old loft-style structures tend to have the open layouts favored by start-ups. A new large block of space in a 1925 building, 79 Madison Avenue, was listed last month. The 287,000-squarefoot building is just north of Madison Square Park, one of the city’s big tech hubs. “We are targeting a single user for this large block, which includes the possibility for a ‘building-within-a-building’ option,” said Robert Getreu, executive vice president at Colliers. That would give a single user a private lobby and interior elevators. Colliers declined to disclose an asking rent. But the average asking rent in Midtown South fell by $0.58 per foot to $53.98 per square foot in November, and

the availability rate rose by 0.1 points to 9.2 percent last month, Colliers figures show.

Downtown Another big block of space hit the market in Lower Manhattan, and it might already be spoken for, insiders said. The brokerage CBRE Group put floors 11, 12 and 13 at ACTA Realty’s 25 Broadway, an 858,000-square-foot office building at Morris Street, on the market last month, CoStar showed. The floors have a combined 130,037 square feet. Several industry sources said the nonprofit Teach for America, represented by CBRE’s New York Tri-State CEO, Mary Ann Tighe, was negotiating a lease last month for that space at the building. It could take as much as 170,000 square feet in the building, insiders said. Teach for America and the landlord did not respond to requests for comment. CBRE declined to comment. The asking rent for the space was $34 per foot, CoStar data showed. That was significantly below the average asking rent for the market, which rose by $0.14 per foot to $47.51 per square foot, as the availability rate fell by 0.3 points to 14.4 percent, last month, the Colliers statistics showed. TRD

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Residential market

from page 20

“On top of it being a tricky environment, you’ve got owners who’ve got their egos amped up by the fact that the market is amping up,” DeFranceschi said. “They justify a price in their mind that’s unrealistic [based on the luxury market]. The owners start to think that it’s 2020 when it’s still only 2013.” With a recent listing at the Lucida, a luxury condominium at 151 East 85th Street, Jacobs said he took a new strategy with pricing the property. “Instead of pricing it based on where we saw the market today, we accounted for the ramp-up period [between securing the exclusive and actually putting the property on the open market],” he said. “We said to ourselves, ‘Let’s price this where we think the market is going.’ By the time we were ready to go, the market caught up to us.” The deal for the two-bedroom apartment closed in July for $3.2 million, setting a record for the building.

Haber said he employed a similar strategy at a listing he had at 108 East 66th Street recently. He priced a one-bedroom co-op unit at the building at $829,000, despite all logical calculations pointing to a lower price, after the seller said she felt the demand was sufficient to attain a higher number than he had initially suggested. The most recent apartment in the same line at the building traded for $599,000 18 months ago. “I had brokers calling me saying, ‘Jason, what were you thinking? This apartment is worth $730,000 max, even if you go up 20 percent [over the last comp in the building].’” Two months later, Haber had the unit in contract for just short of the asking price. “I preferred it when I could be very analytical [about pricing],” Haber said. “I would create these spreadsheets with price per square foot and days on the market and I could come up with a price we felt confident about. Now, it’s

a little more about instinct. There’s greater room for error when you have to get creative.” One solution to finding comps is to look further afield, in other similar neighborhoods buyers might be scoping out, said Elliman broker Michael Graves. “You have to expand the field of your comps,” Graves said. “You have to imagine that that person would hopscotch between properties that fit the mold but aren’t necessarily within a specific location. ”What is the buyer that I’m going to be showing to going to see 15 minutes before walking through the door? … If I’m showing in Gramercy, they might be coming from comparable apartments in Chelsea or the Flatiron or even Tribeca.” Other brokers argued that looking for comps outside a few-block radius of the listing “degrades” the quality of the comp. If a broker is depending on a substandard comp, pricing starts to get a little off-base, Haber said. TRD

Institutions from page 74 more up-to-date facilities outside of prime Manhattan. Yeshiva University, a modern orthodox Jewish institution, is a case in point. It began selling late last year, when an undisclosed developer bought the 18,000-square-foot 237-241 East 34th Street, a lecture hall, for $15.5 million. This past February, the school unloaded two more buildings, both office buildings in Midtown South between Fifth and Sixth avenues, for a combined $115 million. The following month, the school sold another two office properties to a partnership of ClearRock Properties and Juster Properties for $87.5 million. The duo is now planning to redevelop 9 East 38th Street and 14 East 39th Street into high-end office space, reports show. When asked if the university would sell additional sites, a spokesperson told TRD “there’s nothing we can discuss at this time.” Yeshiva’s properties and land are worth about $602 million, according to public tax filings. The filings also show a gift of $175 million in commercial real estate bequeathed to the school in 2011 by an unnamed benefactor, and note that the school is looking to the sell the properties — whose addresses are not given in records — as soon as possible.

Episcopal Church The Episcopal Church might just be the longest-tenured landlord in the city. Much of its property was given to it by the Queen of England centuries ago. The church owns about 14 acres of land in the Financial District, Hudson Square and Soho, which it revealed in court papers earlier this year is worth an estimated $2 billion. Just

Freemasons

U.S. Postal Service Like travel agents or local newspapers, the U.S. Postal Service has seen its business contract dramatically in recent years. But the federal agency sits on some very lucrative New York City real estate, and in the past few years it’s begun selling some of it off. In 2011, the USPS sold its 1 Peck Slip postal facility, a 70,800-square-foot Financial District outpost, for $13.5 million to the city, which will convert the building into a school. Then, in July, the USPS announced it would sell the historic 175,000-square-foot Bronx General Post Office at 558 Grand Concourse. Area residents have, however, protested, arguing that since the structure was built with taxpayer dollars, it should not be sold to a private party without taxpayers’ consent. One opponent filed suit to stop a sale. But the USPS has countered, saying it needs the money from the sale. In October, the agency defaulted on a $5.6 billion payment to the U.S Department of Treasury. Despite the lawsuit, CBRE Group, which represents the USPS portfolio, is still marketing the Bronx property as well as two other New York City post offices: one at 167 East 124th Street in East Harlem and another at 322 West 52nd Street in Hell’s Kitchen. CBRE declined to comment.

110 December 2013 www.TheRealDeal.com

20th, three nearby townhouses, and the parcel of land on which Brodsky’s cond-op building Chelsea Enclave sits at 177 Ninth Avenue — for a total of $47.5 million, according to published reports. (Brodsky had a land lease on the Enclave site before buying it.) Brodsky will build rentals and condos on the plots in coming years. In addition, in 2012, Brodsky bought 445 West 20th Street for $18.5 million, and 180 Tenth Avenue for $16 million, both from the seminary. Brodsky is converting 445 20th Street into 23 condos, and built the High Line Hotel on the Tenth Avenue spot. According to a source who asked to remain unnamed, the Episcopal Church and its affiliates are expected to sell other plots. The seminary was facing declining enrollment and high cost of debt service, but Brodsky said the church is in better financial shape now because of its property sales. However, a spokesperson for Trinity said the group currently has no plans to sell any more of what she described as a “6 millionsquare-foot portfolio.” A spokesperson for the seminary did not return calls.

Top, Chelsea Enclave at 177 Ninth Avenue; bottom, 14 East 39th Street

last month, publishers Pearson and Penguin Books moved into newly revamped spaces at 330 Hudson Street, which Trinity Real Estate, the property arm of the church, leased in 2011 for 99 years to Beacon Capital Partners. That deal complements the church’s other main moneymaker: land and air rights it’s sold or leased long-term to developers like the Brodsky Organization for residential development. In a deal finalized last month, Brodsky leased the land at Amsterdam Avenue and 113th Street, which is owned by the Episcopal cathedral St. John the Divine. The developer will build a 330,995-square-foot project with 428 apartments at the site, which is adjacent to the church. Meanwhile, the General Theological Seminary, an Episcopal affiliate, has also been in selling mode. In 2011, Brodsky bought six Chelsea plots — 422 and 455 West

This country’s forefathers had pretty good taste in real estate, generally building the elaborate, gilded lodges where Freemasons gather in conveniently located downtown areas across America. But their buildings started to fall into disrepair when membership in the fraternal organization starting shrinking in the second half of the 20th century. Still, the sturdy bones of former Masonic lodges make the buildings particularly attractive for residential conversions, as the Wall Street Journal reported earlier this year. At 71 West 23rd Street, the Freemasons own a 243,000-square-foot “Grand Lodge,” built in the Neoclassical style. While the property is not on the market, the Freemasons have been divesting properties nationally. (The fraternal organization sold its only other Manhattan property, 253 West 73rd Street, in the early 1980s to Orsid Realty, which converted it into the Level Club condominiums.) But Upstate, it sold a Masonic temple in Bath, N.Y., to developer Chip Klugo two years ago. The developer converted the building into four apartments, the Journal reported, spending $2.1 million on the acquisition and redevelopment. The high ceilings and loft-like spaces are attracting much higher rents —$1,000 to $1,100 — than the average for the area, in Steuben County. The Masonic Grand Lodge of New York did not respond to a request for comment. TRD

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Locked out

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the units have gone unsold, far below the typical unit turnover seen in apartment buildings. Admittedly, these are outliers: Most sponsors exit after developing or converting a building. Problems arise, however, when the sponsor stays and manages rental operations without the consent of the new unit owners. Residents are often wary to share their experience outside of a lawsuit, for fear of being blacklisted by lenders, said Arthur Weinstein, co-op lawyer and co-founder of the Council of New York Cooperatives & Condominiums, a membership organization for co-ops and condo board members. For someone seeking financing for a unit at a building with low sales, banks will only offer an adjustable-rate mortgage instead of a coveted fixed-rate mortgage. People are quick to say “no” to an adjustable-rate mortgage because they’re riskier and involve unpredictable rate increases over time, according to Robbie Gendels, vice president and senior loan officer at the Washington, D.C.-based National Cooperative Bank. The buyer can escape this risk altogether by paying for his home entirely in cash. But, as Gendels pointed out, allcash buyers are often wealthy and not making purchases in low-sold buildings. The buildings that TRD examined with a high percentage of unsold units are largely co-ops and are concentrated in Brooklyn, Queens and the Bronx, the review found. Labe Twerski, who heads up Daejan (NY) Limited, was the most recurring sponsor and/or principal for these types of buildings in those boroughs, according to information in the real estate finance database run by the AG’s office. Daejan controls the landlord Residential Management. Neither Twerski nor other officials at Daejan could be reached for comment. In 2008, Daejan faced a suit over the Bronx co-op at 2215-75 Cruger Avenue, in which tenant-shareholders claimed it refinanced the building’s underlying mortgage

without board approval and affixed signatures to legal documents not actually signed by duly elected board members. Twerski, president of Residential Management, has had a checkered past, running up the third-most infractions of all Bronx landlords on the NYC Public Advocate’s Landlord Watchlist, with 644 since the list was launched in 2010. He has, however, cleaned up his act — as of the middle of last month he had 64 infractions. One of the most glaring examples of low sales is 54 Bay 29th Street, a 31-unit, four-story co-op building in Bath Beach, Brooklyn, where only seven units have been sold since a 1988 conversion, according to city property records. James Hagipetros, who serves as sponsor at the co-op with Nicholas Hagipetros, told TRD that sponsors opt not to sell in order “to decontrol rent-stabilized apartments. The city doesn’t regulate co-op buildings.” (After the original renter moves out, rent control and rent stabilization laws do not apply to a co-op.) Another reason sponsors hold onto units is to hold out for the market to come back, renting their units out at market rates in the interim. This way, they dodge an owner’s income tax. When sponsors or others rent, they usually offset all of their expenses of holding the rental units against the rental income received. As a result, they usually only pay tax on the difference between their rental income and their costs, said attorney David Berkey, who represented residents of a Riverdale, Bronx co-op in a landmark 2002 case. Some sponsors have turned their units into “mini-hotels or [even] brothels,” said lawyer James Samson of Samson Fink & Dubow. “If there never was an intention to sell, at the introduction of an offering plan, then it was a sham conversion,” he said. “The rates are low, inventory is small — wouldn’t you think this would be a good time to sell?” Gendels added. In the 2002 case of 511 West 232nd Owners Corp vs. Jennifer Realty, the court ruled that the sponsor had a contractual duty to sell apartments in a “timely” fashion. Since

then, the AG’s office has required nearly all offering plans to contain a promise by the sponsor not to “control” the coop for a specific amount of time. The timeframe is often five years from the first closing, or on the sale of 50 percent of the shares of stock offered for sale — whichever comes first. Still, the AG’s definition of “control” doesn’t automatically prevent a sponsor from voting for board directors who are his or her friends. The AG’s office, which does not actively track these situations, declined to comment for this article. “We work to negotiate with the sponsor to sell units over time — five to 10 years, or while the building’s in a state in which banks will lend,” Berkey said. “But they rarely agree.” Although the problem is less frequent in Manhattan and Staten Island, it still exists. Litigation is ongoing in the case of an Upper East Side co-op board against Frost Equities, which alleges the firm controls nearly 33 percent of the shares of 1160 Third Avenue 25 years after the conversion, as TRD reported last year. Many cases result in settlement, Samson said. The defendants in the Nolita case — including Chou and her husband, Robert Chou, the property manager — moved to have the complaint dismissed. Their response alleges that any claim of longstanding domination of the board by the Chous is “demonstrably false.” Richard Resnik, the attorney representing the defendants, could not be reached for comment. Despite buyers’ limited mortgage options under FHA guidelines, there is hope, Gendels said. At least once a week, a would-be borrower or real estate broker approaches her for a mortgage in a low-sold building, she said. National Cooperative Bank will sometimes lend in these situations on unfavorable terms. “I can only do what I can,” Gendels noted. “If they really want the apartment — if their heart is set on it — then they’re going to go for it.” TRD Adam Pincus contributed to this report.

The subpoenas have also spawned at least one legal battle. Last month the law firm Hiscock & Barclay filed a petition to squash a subpoena issued to a legislator who works at the firm. While it’s unclear who the legislator is, State Senator Neil Breslin and State Assemblyman Will Barclay, both from Upstate, are employed there, according to published reports. Among other things, Silverstein’s 30 Park Place, which will the suit argues that the include a Four Seasons, received 421a information requested tax breaks. is privileged because the politician is an attorney whose discussions with clients are legally protected. Some political insiders said they do not expect the commission to push for substantive policy changes, especially since the REBY communications were not subpoenaed. Richard Brodsky, a former assemblyman and now a senior fellow at think tank Demos, said the commission should be looking beyond just campaign finance. He said the Moreland commission should also be fo-

cused on ethical gray areas like “legal corruption” — the exchange of favors between lobbyists, politicians and business leaders — that while inappropriate, do not technically violate the law. He said campaign support is sometimes exchanged for “contracts or [other] benefits,” such as tax abatements. But the commission isn’t the only body trying to rein in developers in the wake of abatement-gate. A bill proposed by Brooklyn City Council Member Diana Reyna last month would require a number of additional disclosures from any developer getting more than $1 million in tax breaks for projects over 100,000 square feet. Developers, of course, are not happy with this new wave of scrutiny. They say almost every project gets some type of tax break, and argue that such requirements would lengthen what they describe as an already burdensome process of getting a project approved and started. Still, critics argue that these types of laws are necessary in an environment where developers regularly, albeit legally, seek political favors. After a law was passed in 2006 changing some of the requirements to receive 421a abatements, the program, which had helped many boom-time projects get in the ground, was used less often. However, according to Common Cause, over the last 10 years, use of abatements overall has spiked, jumping from $130 million to $1 billion now. “421a originated in the 1970s,” Paul said. “It’s a creature that’s kept alive with infusions of real estate money.” TRD

421a from page 22 (Interestingly, Rice has received more than $100,000 in donations from real estate developers in the last two years, including from RXR Realty’s Scott Rechler and the Feil Organization’s Jeffrey Feil, a review of Nassau County campaign finance records shows. Rice’s office did not respond to requests for comment.) Nonetheless, the commission, which declined to comment, has not revealed exactly what it has subpoenaed. And the governor’s office deferred questions to the commission. The public relations nightmare for developers comes at a time when the industry’s influence on city elections has been a prominent topic. That influence, sources say, was highlighted by the donations made to Cuomo and by the amount of money the Real Estate Board of New York-backed political action committee, Jobs for New York, deployed to support industry-friendly candidates during the most recent city elections. A politically connected source said a repeal of the socalled LLC loophole, which allows a company to form a number of entities and donate from each of them, is one possible course of action for the Moreland commission. “The lowest-hanging fruit might be the LLC loophole,” agreed Brian Paul, policy coordinator at Common Cause, a group that lobbies for government transparency. “That really has no defense.” According to Newsday, a bid by watchdog groups to have REBNY’s correspondence with politicians subpoenaed was stymied by Cuomo last month. The governor denied ordering any action, the paper reported. 112 December 2013 www.TheRealDeal.com

www.TheRealDeal.com January 2012 00

DelShah inches closer to control of Flatiron Hotel A court order forces Robert Chan’s Smart Apartments to pay DelShah rent at the 65-room hotel By David Jones elShah Capital, which owns the debt on the Flatiron Hotel, has won a court order effectively forcing the property’s owners and manager, Smart Apartments, to pay any rent owed directly to the firm. A New York State Supreme Court judge granted DelShah a temporary restraining order last month. The ruling also requires Smart Apartments to turn over maintenance contracts and other documents to DelShah by Dec. 9. Smart Apartments, led by Robert “Toshi” Chan, had operated the 65-room hotel at 1141 Broadway under a prior lease agreement with the property’s owners, Main Team Hotel and Ming Chu Company. An affiliate of DelShah, led by CEO Michael Shah, sued in September, claiming Smart Apartments had violated a lease agreement and racked up 15 code violations at the property. The firm sought $618,000 in damages, including alleged back rent. The ruling, according to lawyers for DelShah, prevents Smart Apartments from paying rent to the owners or anyone else. “We are pleased with the court’s ruling

The Flatiron Hotel

Left, DelShah CEO Michael Shah; right, Smart Apartments head Robert “Toshi” Chan

effectively enjoining defendants from paying their rent to anyone but [DelShah] and turning over documents so that we can ensure public safety,” said Scott Loffredo, an attorney for the firm. Lawyers for Smart Apartments and the hotel owners did not return calls. Chan could not be reached for comment. DelShah is still working to take full control of the building, and was previously named as the new plaintiff in a foreclosure suit against the hotel. DelShah acquired the $8 million debt in the hotel from Brick Realty Capital, which acquired it from First Central Savings Bank, the senior lender at the property. Loffredo declined to comment on DelShah’s next move, including whether it would try to bring in a new operator or convert the property. “As of now, everything is resolved until another motion is made or it’s scheduled for a trial,” he said. The ruling comes just days after Smart Apartments reached a $1 million settlement with New York City over its widespread business of operating illegal hotels in condos and rental buildings around the city. TRD

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New York Commercial Real Estate Women presents its Annual Gala and Vanguard Awards Celebration. Co-chairs for the gala are Faith Hope Consolo, chairman of Douglas Elliman’s Retail Group, and Christine Chipurnoi, a senior vice president at Wells Fargo Insurance Services. 6:30 to 8:30 p.m. Columbus Citizens Foundation Townhouse, 8 East 69th Street. Fee: $95 for members at the door, $125 for chapter members, $150 for nonmembers. Information and registration: www. nycrew.org.

The Real Estate Board of New York hosts Taking Action After Sandy, in conjunction with the Urban Green Council. Featured speakers include Sukanya Paciorek, vice president of corporate sustainability for Vornado Realty Trust, and Angela Pinsky, senior vice president of management services and government affairs at REBNY. Topics on tap include how owners can comply with the new post-Sandy legislation, and how the new laws will affect buildings and tenants. 6 to 8 p.m. REBNY, Mendik Education Center, 570 Lexington Avenue. Fee: $10 for council members, $15 for nonmembers. Information and registration: www. aiany.org.

The Real Estate Lender’s Association presents an NYC Breakfast Meeting. Charles Bendit, co-CEO of Taconic Investment Partners, will be the featured speaker. 8 to 9:30 a.m. The Yale Club, Grand Ballroom, 50 Vanderbilt Avenue. Fee: $50. Only open to lenders and equity investors. Information and registration: www.rela.org.

CapRate Events hosts the New York Winter Apartment & Five-Borough Retail Summit. John Horowitz, regional manager for Marcus & Millichap’s Brooklyn office, will be the featured speaker. Other speakers include RXR’s Seth Pinsky, the former president of the city’s Economic Development Corp.; East River Partners’ Jody Kriss; Silverstone Property Group’s Martin Nussbaum; Invesco’s Rob Neiffer; and Treetop Development’s Adam Mermelstein. The agenda will include Brooklyn’s investment outlook, emerging Northern Brooklyn submarkets, Downtown submarkets, financing multifamily investment and development, and the outlook for retail in the five boroughs. 8:30 a.m. to 4 p.m. Skylight One Hanson, 1 Hanson Place, Brooklyn. Fee: $295. Information and registration: www.cre-events.com.

The American Institute of Architects presents the Land Use Law Center 12th Annual Land Use & Sustainable Development Conference. Majora Carter — urban revitalization strategist, developer and Peabody Award-winning broadcaster — will deliver the keynote address. Panel topics will include urban revitalization, solar-panel permitting, green infrastructure, urban agriculture and property rights. 8 a.m. to 6:30 p.m. New York State Judicial Institute, Pace Law School Campus, 78 N. Broadway, White Plains, NY. Fee: $75 for members, $125 for nonmembers. Information and registration: www. law.pace.edu/ annual-conference-2013.

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Professional Women in Construction hosts the 33rd annual Black Tie Holiday Dinner Dance Gala. Member Clarelle DeGraffe — the program director of the World Trade Center Construction site and manager of the PATH’s Accessible Station Program, Goethals Bridge Project, and Newark Airport’s AirTrain Extension Program — is the honorary guest. 7 p.m. to midnight. The Yale Club Ballroom, 50 Vanderbilt Avenue. Fee: $385. Information and registration: www.pwcusa.org.

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The International Council of Shopping Centers presents the New York National Conference & Deal Making. Speakers include Danny Meyer, CEO of the Union Square Hospitality Group; Whitaker Leonhardt, real estate analyst at commercial capital intermediaries firm HFF; Michael Kercheval, president and CEO of the International Council of Shopping Centers; David LaRue, ICSC chairman; and Elliman’s Faith Hope Consolo. Topics will include the retail outlook for 2014, digital marketing strategies, and building in the boroughs. 7:30 a.m. to 4 p.m. The Hilton New York, 1335 Avenue of the Americas, and Sheraton New York & Tower, 811 7th Avenue. Fee: $595 for members, $795 for nonmembers. Information and registration: www. icsc.org.

The Appraisal Institute’s New York chapter hosts an Installation Dinner & Holiday Party. The new officers and board of directors will be installed, and Appraisal Institute president Richard Borges will welcome the new president, who will speak about goals for the coming year. 6 p.m. The Robert restaurant, Museum of Arts & Design, 2 Columbus Circle. Fee: $200. Information and registration: www.aimetrony.com.

The real estate division of the Diabetes Research Institute Foundation is hosting its 30th annual Empire Ball. Andrew Cooke, vice president of property management at Hines; Jay Badame, president and COO of New York, New Jersey and Pennsylvania at Tishman Construction; and Joseph “Dee” Dussich, CEO and president of the JAD Corporation, will all receive awards. 6:30 to 10:30 p.m. Grand Hyatt Hotel, Empire State Ballroom, 109 East 42nd Street. Fee: $950. Information and registration: www . diabetesresearch.org/Empire-Ball-2013.

REBNY hosts a Commercial Holiday Luncheon. Featured speakers include Jonathan Gray, global head of real estate for the Blackstone Group. (See related profile on page 32.) Noon to 2 p.m. The Waldorf Hotel, 301 Park Avenue. Fee: $95. Information and registration: www.rebny.com.

The New York Building Congress presents The New York Building Foundation Annual Theatre Benefit. Guests will proceed from dinner to one of two Broadway shows: “Kinky Boots” or “Matilda.” 5:30 p.m. Barbetta Restaurant, 321 West 46th Street. Fee: $1,250 for a sponsor ticket, $1,000 for a benefactor ticket. Information and registration: www.buildingcongress.com. 0

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Swig rejected in bid to stop 90 Broad Street sale By David Jones Developer Kent Swig lost the first round in a lawsuit to block JPMorgan Chase from selling 90 Broad Street, a 393,000-square-foot Lower Manhattan office tower he purchased in 2005. Swig claimed the lender, which controls the entity that owns the building, blindsided him by inking a $126 million deal with Princeton International Kent Swig Properties — without giving him a chance to make a counteroffer. Swig said he learned of the terms of the sale in TRD. Last month, a judge blocked Swig’s request to extend a temporary restraining order, allowing JPMorgan to proceed to a Dec. 22 closing. However, a hearing is scheduled for Dec. 13 to decide whether Swig can stop the sale before it closes. JPMorgan, which declined to comment, said it called in a default on Swig in 2010. “Obviously we’re disappointed,” said attorney Thomas Mullaney, who represents Swig in the case, noting that they plan to present new evidence at the next hearing.

Singer sells $340 million portfolio to Rainbow Estates Group By Katherine Clarke Rainbow Estates Group, a Brooklyn-based investment firm headed by Irving Langer and Leibel Lederman, has purchased a portfolio of multifamily properties in Upper Manhattan owned by landlord Baruch Singer. Sources told TRD that the group paid close to $340 million. With this deal, the under-the-radar Rainbow now controls a large amount of property in Northern Manhattan and Baruch Singer the Bronx. The 84 properties in the Singer portfolio include large swaths of buildings between West 111th and 141st streets. Rainbow took out a $214 million mortgage to finance the transaction, which appears to have closed on Nov. 14, records show. Neither Rainbow nor Singer was available for comment. It’s unclear if a broker was involved in the deal. Massey Knakal’s Robert Shapiro, who brokered a $45 million sale of four Hamilton Heights buildings last month, said the transaction shows that the Northern Manhattan multifamily market is heating up.

118 December 2013 www.TheRealDeal.com

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