The Real Deal January 2012 by The Real Deal

Occupy Wall St. and real estate

Are construction loans back in vogue?

N EW YO RK

R E AL E S TAT E N E W S

Hello again, 3 Columbus

Brokers get grayer

101

Real estate players wager on White House

THEREALDEAL

www.TheRealDeal.com

Vol. 10 No. 1 January 2012 $3.00

FACT The number of NYC hotel rooms hit a record high of 90,000 in 2011, while tourists topped a record 50 million. See page 46.

AT A GLANCE A ‘Weill-d’ winter

A round-up of developers, brokers, listings, projects and more to keep an eye on this year ects like Gary Barnett’s One57 — slated to have a penthouse with a $110 BY LEIGH KAMPING-CARDER Now that the ball has dropped and the New Year has begun, it’s time million asking price — to the under-the-radar condo conversion of 18 Gramercy Park South, where 15 Central Park West dynato toss aside the “Best of 2011” lists and turn to 2012. This FEATURE STORY mos Robert A.M. Stern and the Zeckendorf brothers are month, The Real Deal did just that, culling together a compendium of the most interesting people, projects and companies to watch teaming up again. We also included REITs like Brookﬁeld Properties, this year in NYC real estate. The list ranges from highly publicized proj- Andre Balazs’s new Standard hotel and more. See story on page 43

Taking the Fifth

Joe Sitt is buying up Fifth Ave., but is he overpaying?

Private equity, unwrapped NYC’s 10 biggest real estate spenders and what they bought

BY ADAM PIORE Investor Joe Sitt snapped up a half dozen buildings on Fifth Avenue below 49th Street in 2011 alone. The move is a SPECIAL REPORT big bet on retail rents surging on the stretch, and in the city. But some say he vastly overpaid, while others are skeptical of his development plans.

BY C.J. HUGHES For years, private equity firms have been lavished with huge sums of money by investors looking to own New York buildings. Recently, however, there have been fewer high-yielding deals that those firms are finding attractive. Still, a handful of private equity firms have pulled away from the pack in the past year. Inside are profiles of the biggest spenders.

See story on page 48

See story on page 56

Buildings sprout in Garden State

Residential developers opt for rentals on Gold Coast

Tara Stacom shoots to kill (birds, not Bambi) See page 102.

PHOTO CREDITS ARE HERE

Huguette’s homes revealed

Unlocking the secrets of the Clark apartments

BY CANDACE TAYLOR When copper heiress Huguette Clark died last May, her 17,000square-foot, three-apartment spread on Fifth Avenue had already sat empty for 20 years. With the apartments expected to hit the market early this year, The Real Deal investigated what lies behind those long-locked doors. See story on page 28

NYC’s leasing legends A ﬁrst-ever ranking of the city’s top ofﬁce brokers

BY LEIGH KAMPING-CARDER New Jersey’s Gold Coast presents a tale of two residential development markets. On the one hand, brandnew rental projects are now being built and quickly leased, while on the other, new condo developments are thin on the ground. The Real Deal checks in with 10 of the coast’s most recent projects.

BY ADAM PINCUS Real estate insiders can easily tick off Manhattan’s top office leasing brokers, but the total amount of business they do is hard to pin down. This month, we created a first-ever Senior brokers involved in ranking of the city’s top agents. The greatest sf of NYC deals, 2011 broker with the most senior title on 2.24M each team was given credit for each Mary Ann Tighe, CBRE Scott Panzer, JLL 1.94M deal because of the inherent diffiTara Stacom, Cushman 1.87M culties of deciphering who deserves 1.57M credit on big leasing teams. The top John Cefaly, Cushman (Only the most senior-ranking broker on each 10 powerbrokers were involved, eideal was given credit; Data through Dec. 27) ther on the landlord or tenant side, in more than 15 of the 25 million square feet of deals we examined.

See story on page 60

See story on page 64

Sandy Weill’s $88 million apartment sale at 15 CPW rocked the residential market last month. While sales volume was down for the fourth quarter, brokers say the deal was part of a burst of activity at the very end of the year. See page 16.

Buried Treasurys Treasury notes and real estate have long gone head-to-head for investment dollars. But with the spread between Treasury yields and cap rates hitting a decadelong high, real estate, especially in NYC, has become the investment of choice. See page 18. Atlantic Yards prefab tower

Atlantic Yards: Can prefab be fabulous? At 32 stories, Bruce Ratner’s ﬁrst residential building at his Atlantic Yards site in Brooklyn promises to be the tallest prefabricated structure ever built. Critic James Gardner weighs in on whether it will look like real architecture or like a Lego tower. See page 62.

Hester’s yin and yang A real estate breakdown of one Hester Street block in Chinatown, where an immigrant past collides with a hipster future. See page 40.

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Highlights J A N U A R Y

2 0 1 2

‘Weill’-d winter 16 ASandy Weill’s $88 million apartment

sale provides burst of heat for market.

get buried 18 Treasurys With yields dropping to record lows, real estate investment pulls ahead.

real estate 20 Occupy New York’s 99 percent versus its 1 percent in all things property related.

real drama 22 Cohen’s At the desk of New York City developer

and movie producer Charles Cohen.

words ... 26 InThistheir month’s funniest and most Charles Cohen

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insightful comments.

28 Huguette’s homes revealed As the copper heiress’s relatives ﬁght to get a piece of her estate, TRD uncovers the secrets of Huguette Clark’s three famous Fifth Avenue apartments.

Huguette Clark

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Construction lending loosens Money starts ﬂowing in NYC, albeit slowly, and only for select projects.

3 Columbus 32 Remaking With Young & Rubicam locked in, SL Green turns to leasing up rest of tower.

��

��Metals in Construction ��

Brokers get grayer New York City ﬁrms see unexpected beneﬁts from older agent pool.

A market in real estate fraud Today’s low prices may be setting the stage for a new wave of crime.

argument for audits 38 The Financial forensics on rise for real estate players in the Big Apple.

40 ��

Hester Street

8 January 2012 www.TheRealDeal.com

Hester Street’s yin and yang

What to watch in 2012

For the (real estate) record

A look at a block where an immigrant past collides with a hipster future.

Developers, listings, REITs and more to keep an eye on in the New Year. From tallest towers to priciest sales, the NYC records shattered in 2011.

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Highlights continued

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the Fifth 48 Taking Investor Joe Sitt has ramped up

Developer Joe Sitt

his building buys on Fifth Avenue, but is he paying too much?

vacation 50 European Countries on the continent to take 2012 NYC investing holiday.

the landlord 54 Meet It’s a family affair for Christopher Athineos, whose company has 150 apartments in Bay Ridge, Park Slope and Brooklyn Heights.

Private equity, unwrapped A look at the 10 biggest New York City real estate spenders in the pack and what they bought in 2011.

month in real estate history 58 AThiscrackdown on building-industry corruption heats up, and more. ��

State sprouts towers 60 Garden A market roundup of 10 projects along New Jersey’s Gold Coast.

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��Metals in Construction ��

Forest City’s building blocks

National Market Report

Will the Atlantic Yards prefab tower look real or Lego-like?

Reports from around the country on signiﬁcant developments and trends.

The Deal Sheet A roundup of ofﬁce and retail leases, building buyers and ﬁnancing. A rendering of the so-called B2 tower

Leasing legends A ﬁrst-ever ranking of the city’s most senior commercial brokers.

The state of the unions “Closed-shop” construction model loses luster among developers.

101

Calendar of Events Check out this month’s activities.

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

Residential Deals

For NYC real estate players to get political.

10 January 2012 www.TheRealDeal.com

’Tis the season ...

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

Brokers dish on how they made it to the closing table.

Lawyer Phil Rosen (left) with GOP hopeful Mitt Romney

102 Cushman & Wakeﬁeld’s Tara Tara time

Stacom talks One World Trade, bird shooting and burgers.

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Comings & Goings New ventures and companies.

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

wishing all of our readers a

DEPUTY MANAGING EDITOR Candace Taylor WEB EDITOR Lauren Elkies ART DIRECTORS Ronald Gross, Derek Zahedi SENIOR REPORTER Adam Pincus REPORTER Leigh Kamping-Carder WRITERS Catherine Curan, Melissa DehnckeMcGill, Ken Harney, C.J. Hughes, David Jones, Adam Piore PRODUCTION MANAGER & RESEARCHER Linden Lim EDITORIAL ASSISTANTS Adam Fusfeld, Katherine Clarke, Guelda Voien ILLUSTRATORS David Cole, Yishai Minkin PHOTOGRAPHERS Max Dworkin, Michael Toolan, Marc Scrivo DIRECTOR OF MARKETING OPERATIONS Yoav Barilan ADVERTISING SALES Eran Evron, Ross Fox, Abi Laoshe, Joseph Paci, Robert Stearns WEBMASTER Nima Negahban ACCOUNT COORDINATOR Andrea Moreno ADMINISTRATOR Junaid Zahid CIRCULATION Hamed Heidari DISTRIBUTION Mitchell Newman, Michael Presto VIDEOGRAPHER Toni Comas ATTORNEY Barry J. Friedberg Trachtenberg Rodes & Friedberg

let’s do this. 12 January 2012 www.TheRealDeal.com

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here is an old adage that says, “An optimist stays up until midnight to see the New Year in. A pessimist stays up to make sure the old year leaves.” In our main cover story in this issue, “What to Watch in 2012,” we have our feet ﬁrmly planted forward, gazing ahead toward the exciting new properties, people and companies on the horizon. Who knows what we’ll be saying about 2012 at this time next year (some are predicting it could be a repeat of 2011’s market). But going into 2012, at least, there is much to anticipate in New York, especially given that we are still experiencing a more lackluster economy nationally, as our reporter Leigh Kamping-Carder writes. To take just a few examples: • We’ll see the city’s tallest condo ever, One57, hit the market on West 57th Street, with a $110 million penthouse — the highest price tag of any apartment in the city (whether it actually fetches that price is another story). • We’ll see the developer-architect pair of the Zeckendorf brothers and Robert A.M. Stern, responsible for the city’s most successful condo project to date, 15 Central Park West, team up again for a project in Gramercy Park. • We’ll also see the tallest hotel project ever built in the city, on Broadway and 54th Street, as well as the city’s ﬁrst gay-branded hotel. There were some high points in 2011 as well, with a few of them coming late in the year, such as the sale of former Citigroup chairman Sandy Weill’s penthouse at

Who knows what we’ll be saying about 2012 at this time next year. But going into 2012, at least, there is much to anticipate in New York. 15 CPW (see pages 16 and 46). If it ends up closing anywhere near the $88 million listing price, it will be the most expensive apartment sale in NYC history. Ekaterina Rybolovleva, the 22-year-old daughter of Russian fertilizer magnate Dmitry Rybolovlev, is the reported buyer, and plans to stay there while studying at a U.S. university. That situation — a foreign mogul buying the city’s most expensive apartment for his twentysomething daughter — sounds like the premise of a novel, maybe akin to Anthony Trollope’s portrayal of arrivistes in “The Way We Live Now.” Illustrating the importance of foreign buyers, and the prominence of Russians in particular, we also write about a purchase by Alexander Rovt, another Russian fertilizer magnate in another record deal: Rovt spent $40 million to buy the Henry T. Sloane Mansion at 18 East 68th Street — the city’s costliest residential foreclosure auction ever. With so much foreign fertilizer money around, it’s no wonder it wasn’t a crappy year for high-end sales (sorry, had to go there). Elsewhere, I’m excited about our first-ever ranking of NYC’s top office-leasing brokers (see page 64). The ranking was a tough nut to crack because of the inherent difficulties in determining who deserves credit on big leasing teams (to say nothing of how commissions are divvied up). We credited each deal to the most senior broker on each team (in terms of their title). Reporter Adam Pincus came up with an impressive list, in which the top 10 brokers collectively had a hand in more than a third of the total square footage of office leasing deals in 2011 on either the landlord or tenant side. Mary Ann Tighe of the CBRE Group, perhaps not surprisingly, finished in first place with the most square feet of transactions, with much of her total coming from the blockbuster deal to bring Condé Nast to One World Trade Center. In another story, we ranked the most active private equity firms in Manhattan in 2011 (see page 56). The top finisher on the list, Rockwood, only spent $491 million. And private equity giants like Blackstone, which only spent $258 million and finished eighth, were equally conservative in their New York outlook. But there’s clearly a lot of money on the sidelines. Private equity firms raised $63 billion from 2009 to 2010, and another $160 billion in 2011. Hopefully, some of the money will be spent here in 2012. We’ll see what the year brings. Here’s to a productive and happy 2012! Enjoy the issue.

Stuart Elliott

14 January 2012 www.TheRealDeal.com

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A ‘Weill’-d winter market A burst of heat in December, but perhaps a cooler January BY LEIGH KAMPING-CARDER he news that former Citigroup chairman Sanford Weill found a buyer for his 15 Central Park West penthouse — listed only three weeks earlier

RESIDENTIAL MARKET R EPORT for $88 million — rocked the real estate community last month. The buyer, a Russian fertilizer

billionaire named Dmitry Rybolovlev, purchased the spread for his 22-year-old daughter, and an anonymous source told Forbes that she would be paying full price. If that’s true — when contacted by The Real Deal, a spokesperson for the family declined to say — the price would demolish previous records for the most expensive Manhattan residential sale. (For more on real estate records broken last year, see page 46.)

Though a lack of inventory has helped sales in the luxury market, brokers characterized the Weill deal as an outlier, rather than a sign that the market is back to any sort of boom-time climate. “A sample size of one isn’t necessarily enough” to indicate where the market is heading, cautioned Jeffrey Schleider, founder of Manhattanbased Miron Properties. In the fourth quarter of 2011, the median sale price for a Manhattan

apartment was $855,000, up 1.2 percent from the same period of

sales dropped 12.4 percent over the previous year to 2,011, according to the report, written by Jonathan Miller, CEO of appraisal ﬁrm Miller Samuel. Donna Olshan, president of luxury specialist Olshan Realty, said the Rybolovlev acquisition

The sale of Sanford Weill’s apartment at 15 Central Park West is expected to shatter previous records for the most expensive Manhattan residential sale ever. the previous year, according to a market report from Prudential Douglas Elliman. The number of

speaks to the trend of foreigners investing in U.S. assets under the belief that they are safer bets than those abroad. “There [are] people around the world who want to move money into the United States,” Olshan said. “It might be a piece of real estate and it might be a sports team, but they need to move their money out of [their home countries].” The Weill deal may be an outlier, but brokers did report an uncharacteristic burst of heat in the sales market last month. At press time, the number of signed sales contracts for Manhattan apartments in December was up 9.5 percent over the previous month, while November contract volume rose 7 percent over October levels, according to Jeffrey Jackson, chairman of appraisal firm Mitchell, Maxwell & Jackson. According to UrbanDigs, a real estate analytics and consulting firm, Manhattan buyers signed an estimated 513 to 525 contracts in the first three weeks of December. At that pace, the total number of signed contracts was set to hit between 756 and 775 for the month — up from the 712 new deals signed last December. Brokers said the increased activity could be caused by buyers finally returning to the market after being sidelined by uncertainty, or hoping to beat the competition associated with a January uptick. Other factors could play a role as well. “When you see the rentals go this high, and the interest rates are low, and the prices are good prices, you know that it sets the stage for the sales market to move,” Olshan said. Miron’s Schleider offered another explanation: “The most common theory I hear floating around is that the tame weather has allowed people to stay involved Continued on page 86

16 January 2012 www.TheRealDeal.com

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Treasurys get buried With yields dropping to record lows, real estate investment pulls ahead

BY DAN WEIL ground to inflation with Treasurys and garistorically, institutional investors nering higher yields in real estate has now looking to park their cash in real become a no-brainer, experts say. As opposed to Treasurys, where invesestate have compared brick-andmortar investments to Treasury notes be- tors are basically losing money, real estate is fore getting out their checkbooks. currently getting them a 6 percent yield and The thinking went that investors con- inflation-protected leases, Fasulo said. “All of a sudden commercial real estate cerned principally with safety would choose Treasurys, while those more interested in looks awfully rosy [to investors],” he said. “I would argue that commercial real estate high returns would go with real estate. But now, with Treasury yields near re- has been one of the main beneficiaries of the cord lows, many are fleeing that tradition- Federal Reserve’s low-interest-rate policy. ally safer investment and opting for real Without that, a lot of major [real estate] estate, where they can get relatively higher players would be in bad shape.” returns. Patton agreed: “Investing in Treasurys According to the research firm Real Capital Analytics, the spread between national cap rates, which measure the rate of return on a real estate investment, and 10year Treasury note yields hit a decade-long high in September. Treasury yield: 1.98 percent Ten-year Treasurys, which only five years ago yielded 4.56 percent, Cap rate for NYC have now dropped to below a minoffice property: 5.42 percent iscule 2 percent. RCA’s most recent data shows Source: Real Capital Analytics that in September, the 10-year Treasury yielded 1.98 percent, while the cap rate for core properties na- really isn’t investing,” he said. “It’s like insurance.” tionwide averaged 7.1 percent. For the lenders on the other side of the The cap rate for New York City office equation, real estate also represents a supeproperties, meanwhile, was 5.42 percent. The drop in Treasury yields to minis- rior investment to Treasurys, thanks to the cule levels has made real estate more ap- yield differential, Fasulo said. “Lenders need to decide where to put pealing as an investment during the last 18 months, which has, of course, been a rocky their depositors’ money,” he said. “When economic time. Treasury rates are so low, it encourages “The attractive spread of Treasurys is banks to lend for higher rates of return one of the reasons why commercial real es- [rather than buy Treasurys]. They certainly tate is a favorite asset class among investors like lending to commercial real estate, espenow, despite headwinds in the economy,” cially in the best markets, like New York.” “It’s almost as if New York City has besaid Dan Fasulo, managing director of Real Capital. come the T-bill of real estate, Manhattan in Indeed, the drop in Treasurys, which particular,” added Peter Hauspurg, CEO of have been on the decline for 10 to 15 years, real estate investment advisory firm Eastintensified in 2011 to the point that it isn’t ern Consolidated. even useful to compare them to real estate Those investors who opt for real esanymore, said Kenneth Patton, professor at tate over Treasurys do still have to decide NYU’s Schack Institute of Real Estate. in which geographical areas to put their “The time-honored relationship is gone,” money. And that choice depends on how he said. “People now use corporate debt much risk they’re willing to take. “When you go outside of primary marswaps for a benchmark. You’d get thrown out of an office for saying ‘spread over Trea- kets — New York, Washington, etc. — it’s surys.’” still pretty downtrodden. And people make That new calculus boils down to an issue money buying at the bottom,” said Jahn of investment return. Brodwin, senior managing director for FTI When inflation — which totaled 3.9 Schonbraun McCann Group. Of course, the investment risk is higher percent nationally during the 12 months through September — is factored in, Trea- in non-gateway cities. surys are actually offering negative real Washington, Boston and San Francisyields. co have cap rates 100 to 200 basis points For pension funds and insurance com- higher than those in New York, Brodwin panies, which rely on current investment said. But in return for accepting the lower income to make payments to beneficiaries yields available in New York City, investors and claimants, the choice between losing Continued on page 91

Treasury yields vs. NYC cap rates

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Occupy Wall Street and the 99 percent Compiled by Russell Steinberg

Occupy’s effort:

The Occupy Wall Street movement held a national foreclosure action day last month. Protesters argue foreclosures are the rere sult of fraudulent lending practices. In New York, about 300 people made their way to a Brooklyn home, where they tried to help a home homeless family “reoccupy” their house.

A tight squeeze:

According to a report by the Urban Institute, the average New Yorker barely enough to rent a earns two-bedroom apartment. The typical two-bedroom in NYC requires renters to earn ap approximately $55,000 a year, but the median household income is just a tad more than that, the report found.

Not just Zuccotti:

There are 516 “privately owned public spaces” (or POPS) in NYC, including Zuccotti Park, which was home base to the Occupy Wall Street movement and is owned by Brookfield Properties. The city says the POPS program has provided over 3.5 million square feet of public space since its inception in 1961.

Taxing the 1 percent:

IRS data from 2008, released in November, showed that nine of the 10 most heavily taxed zip codes in the coun country are in the NYC area. Residents in those nine zip codes, including several on the Upper East Side, paid $16.5 billion in income taxes in 2008. (Crain’s)

20 January 2012 www.TheRealDeal.com

Top-heavy:

The city’s Independent Budget Office released a study last month which found that the top 1% of earners in NYC made a minimum of $493,439 in 2009, the most recent year on record. Half of New Yorkers, meanwhile, made $28,000 or less. In all, about 10% of earners pay 71% of the city’s income-tax revenue.

Millionaire pool shrinks:

Recently released state statistics show Manhattan households with incomes of over $1 million fell by a whopping 24% in 2009, the most recent year on record. In that same year, the IRS reported a decrease of 26% nationally of those high-earning homes, compared to 2008. (Journal News)

Foreclosure disclosure:

The 99% had reason for celebration when the number of homes issued foreclosure filings dropped by 3% from October to November. Filings were also down 14% year-over-year. Homes in New York State had the eighth-lowest rate nationwide, of just one in every 1,587. (RealtyTrac)

Neighborhood in trouble

Brooklyn’s East New York has the highest foreclosure rate of any neighborhood in NYC, as 16.8 per 1,000 homes received filings in 2010, according to the NYC comptroller’s office. Nationwide, more than 4 million homes have been taken over by banks since 2006, according to RealtyTrac.

BeSeen-9-11-Print.pdf

9/15/11

12:14 PM

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PHOTOGRAPH FOR THE REAL DEAL BY MAX DWORKIN

A 2007 award from the L.A. chapter of the American Institute of Architects for the Pacific Design Center’s Red Building, designed by César Pelli, who also designed the campus’s two other structures: the so-called Blue and Green buildings, named for their vibrant exteriors.

A fan of old cars, Cohen has 20 in his collection, including a recently added 1930 Ford Model A. Cohen lives in Fairfield County, but keeps most of the cars in garages around the country at his various homes.

A broker from Mexico hoping to land office space for a retail client came bearing these brightly colored tequilas over the summer. Though the deal fizzled, the Reposado and José Cuervo stayed.

the

Desk

of:

ChArles Cohen

A flag awarded to Cohen by Congresswoman Carolyn Maloney in 2001 for Cohen’s support of the armed forces via the USO, which he raised money for.

A clock showing the time in London, New York and Los Angeles. Cohen is currently putting the finishing touches on the 400,000-square-foot Red Building in L.A., the third addition to his firm’s Pacific Design Center, a 14-acre complex in West Hollywood where decorators can browse 2,200 brands of sinks, ovens and other interior design products. It’s slated to open by next spring.

A photo of his wife, Clo Jacobs Cohen, a former fashion marketing executive, who grew up in South Africa and lived in England for years. Cohen’s so enamored with her accent that he asked her to record all of the company’s voicemail greetings.

In 2010, after the success of “Frozen River,” Cohen launched Cohen Media Group, a 12-employee company that has 10 films in production, including the just-released “The Lady,” about Myanmar opposition leader San Suu Kyi, directed by Luc Besson.

A model of a Gulfstream IV, which Cohen’s owned for years and which he uses to jet back and forth to the West Coast. He says he’s planning to upgrade soon to a Bombardier Global Express XRS.

A smaller version of the mural by artist and graphic designer Paula Scher that can be seen on the exterior of 622 Third Avenue. Because Cohen believes art is crucial to architecture, he invited Pratt students last summer to showcase dozens of digitally generated prints in the stairwell of the D&D Building. Cohen also bankrolls scholarships for Pratt interior design students.

Cohen’s Macassar ebony desk embodies the style sense of Area Architects, the firm that designs most of the interiors of Cohen’s 12 million-square-foot portfolio. Area is now leading renovations of the lobbies at 3 Park Avenue, 623 Fifth Avenue and 475 Park Avenue South. “Lobbies set the tone for the buildings,” Cohen says.

t shouldn’t come as a surprise that eye-catching marble panels line the elevators at 750 Lexington Avenue, the headquarters of Cohen Brothers Realty Corporation. After all, the development firm’s best-known buildings are five national design centers, including the Decoration & Design Building (aka the D&D Building) at 979 Third Avenue, where vendors sell fabrics, furniture and stone finishes. The firm built a handful of glitzy office towers in Midtown in the 1970s and 1980s, including the red-granite, full-block 780 Third Avenue (which has since sold). Cohen Brothers also owns 135 East 57th Street, a high-rise with a circular plaza that movie fans might recognize as the home of the Green Goblin, the villain in 2002’s “Spider-Man.” Fittingly, company CEO Charles Cohen, 59, produces movies on the side, a pastime that’s taken on new intensity since his first film, “Frozen River,” was nominated for two Oscars in 2008. But most of the drama in his 28th-floor office comes from the views, which sweep across Manhattan. B y C. J. H ugHes

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12/22/11 12:54 PM

No big bang expected to ring in start of 2012

But experts predict ofﬁce leasing in the second half of the year will be better than the ﬁrst Planning, financing, and building for the future.

BY ADAM PINCUS he Manhattan ofﬁce leasing market started 2011 with a bang of big leasing deals, driving down availability rates signiﬁcantly. It’s not expected to perform quite as well in early 2012, but real estate professionals do view the year ahead in a positive light.

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Bruce Mosler, chairman of global brokerage at Cushman & Wakefield, said he does not expect much in the way of blockbuster deals in the first part of this year. That continues a trend that started in the second half of 2011 in which relatively smaller deals — less than 100,000 square feet — took a greater share of the market. Firms with an international presence, for the time being, are holding off on leasing new office space to get a better idea of their needs amid worldwide economic tumult. “Large multinationals are looking to see what is happening globally,” Mosler said. But “look for the second half of [2012] to be better than the first half in terms of large commitments.” Uncertainty about possible layoffs at financial services firms is weighing on New York and the nation, said Brad Doremus, a research and economics analyst at the real estate data firm Reis. Yet he predicted that the local market will continue to marginally improve, in part because the restrained rent growth has kept the city relatively affordable. “Much like 2011, we should see some declines in vacancy and measured increases in rents,” Doremus said. “I’d love to be wrong on the upside and see more improvement, but I haven’t had to change our forecasts materially since early 2010. And all bets are off if the euro disintegrates.” Meanwhile, the Manhattan office leasing market ended the year on a positive note. The availability rate — which measures office space available for rent now or in the next 12 months — fell to 10.9 percent last month from 12 percent in December 2010, according to figures from commercial firm Cassidy Turley. The availability rate also declined 0.1 point last month from 11 percent in November. And the average asking rent rose by $0.20 per foot to $51.40 per foot in December. Cassidy Turley also reported that tenants signed 20.8 million square feet in new and renewal deals in the first half of 2011, compared with about 14 million in the second half of the year.

Midtown High-proﬁle law ﬁrm Wilmer Cutler Pick24 January 2012 www.TheRealDeal.com

Seiter&Miller 000731 Pub. The Real Deal Size 4.625 x 13.125 Issue 01/02/2012 Art Director: sd/mm Copywriter: ms Account Executive: wt Date 12/13/11

Manhattan ofﬁce stats Manhattan

Availability Average rate asking rent

Dec ’11 Nov ’11

10.9% $51.40 11.0% $51.20

Midtown

Dec ’11 Nov ’11

11.6% 11.9%

$58.68 $58.36

9.5% 9.4%

$41.91 $41.10

Midtown South

Dec ’11 Nov ’11 Downtown

10.5% $37.99 10.3% $37.86

Dec ’11 Nov ’11 Source: Cassidy Turley

ering Hale and Dorr (known as WilmerHale) is moving its 160 New York-based attorneys Downtown in July, and the Midtown market is already feeling the effects. Brokers listed approximately 147,000 square feet of Class A office space at 399 Park Avenue with an asking rent of $99 per foot, which WilmerHale is vacating. The firm signed a lease in April 2011 for 210,841 square feet at 7 World Trade Center, according to CoStar Group. Mosler said the turnover of office space from WilmerHale is beneficial. “I think it is healthy for the market,” he said, noting that it keeps options open for tenants. “I don’t see significant shadow space. I think quality space will be gobbled up relatively quickly.” Mosler said he anticipated some activity later this year in Midtown at the Brookfield Properties office development project dubbed Manhattan West, where construction is slated to start this month. Mosler is leading a Cushman team hired to lease the 5.4 million-square-foot project at Ninth Avenue and 31st Street. “We will look to sign an anchor tenant in the latter half of 2012,” with a letter of intent or term sheet, for about 800,000 square feet, he said. The space could also be rented to several different firms rather than one large company. Overall, the Midtown market tightened dramatically last month, falling 0.3 points to 11.6 percent, and the average asking rent rose by $0.32 per foot to $58.68 per square foot, Cassidy Turley statistics show.

Midtown South “In Midtown South, there are bidding wars, the likes of which I have not seen since 2008,” said Sean Black, a vice president at Jones Lang LaSalle. Black, in a widely reported deal, repreContinued on page 88

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In their words...

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

“We also have a strict no-asshole rule here.” Eastern Consolidated chairman and CEO Peter Hauspurg, on why his employees get along so well.

“Real estate is a very expensive place to make a mistake. I have seen misfortune in real estate end marriages, cause financial ruin and even cost people their health. Weekend hobbyists and D.I.Y. enthusiasts are better suited to ant farms, or découpage.” Blogger J. Philip Faranda. (J. Philip’s Westchester Real Estate Blog)

“Nobody bilks [Leona] Helmsley out of anything. She screwed me on my fee.” Celebrity attorney Alan Dershowitz, in response to a newly released letter accusing him of “bilking” Helmsley out of legal fees after unsuccessfully appealing her tax evasion conviction in 1992. (New York Magazine)

“Was Bloomberg the anonymous donor toward the new Cornell campus on Roosevelt Island? Hmm. Just asking.” New York Post columnist Lois Weiss. (Twitter) 26 January 2012 www.TheRealDeal.com

“I’m just a dumb American; I can barely speak English.” Sotheby’s power broker Elizabeth Sample, on why she was impressed by her multilingual partner Brenda Powers. (New York Times)

“‘Lower Eastpacking.’ The name makes us shudder, but it just seems so appropriate as the Lower East Side is besieged with interloping nightlife-goers and takes on characteristics of the Meatpacking District.” (Curbed)

“People would pretend they discovered [the High Line] when they were going to art galleries, but it was really when they were going to gay dance parties at Twilo, the Tunnel or the Roxy.” Friends of High Line cofounders Joshua David and Robert Hammond, in their new book “High Line: The Inside Story on New York City’s Park in the Sky.”

“Many developers seem to be fretting that if they set aside public space adjacent to their buildings, they could end up with an occupation of their own in the future, just like Brookfield Properties has. … The Occupation trend may have been exported to Oakland and Boston, but it’s unlikely to get exported to other sites throughout Manhattan.” Landscape architect Thomas Balsley. (Observer)

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The secrets of Huguette Clark’s famo

By Candace Taylor

or the past two decades, some 17,000 square feet of prime Fifth Avenue real estate have sat fully furnished, but empty. Once owned by eccentric heiress Huguette Clark, the three sprawling apartments at exclusive co-op 907 Fifth Avenue are now visited only by cleaning staff. Clark spent the last 20 years of her life in hospitals despite reported good health, scarcely ever setting foot inside 907 Fifth Avenue or her seaside mansion in Santa Barbara, Calif. She also reportedly never spent a single night in the 12,766-square-foot Connecticut country house she bought in 1951. (That 52-acre estate in New Canaan is currently on the market for $24 million.) Yet Clark’s properties were meticulously maintained. The Fifth Avenue spread is filled with dolls the heiress collected, and paintings by the likes of Monet and van Gogh. “It was like she had just walked out,” recalled Barbara Fox, who visited the units to do an appraisal for the estate — becoming one of the few living real estate brokers to ever set foot inside. “There were dolls everywhere.” When 907 Fifth Avenue went co-op in the 1950s, Huguette Clark and her mother, Anna La Chapelle Clark, purchased the three spaces they were renting: Both of the apartments that comprise the eighth floor — giving them an eye-popping total of 10,000 square feet on that level — plus a half-floor unit on the 12th floor, the building’s top story. At some point, they added more bedrooms to their 12th-floor space, bringing it to roughly 7,000 square feet, said Key Ventures’ Larry Kaiser, who said he’s sold some 14 apartments in the building over the years. Anna died in the 1960s, and Clark — Anna’s only surviving child — inherited all three apartments. The Clark apartments comprise one of the largest holdings on Fifth Avenue, if not the largest. The three apartments will likely be put on the market separately, each fetching “tens of millions” of dol-

Huguette Clark

Clark was the daughter of William Andrews Clark, a former senator who made his fortune when he struck copper in the Montana Territory in the 1870s. After his 1925 death, Clark and her mother moved into a massive 28-room spread on the 12th floor. With a 20-by-40-foot living room overlooking Central Park, it was considered one of the finest apartments ever constructed.

The original 12th floor

Built in 1916 as a rental, 907 Fifth Avenue was designed by noted architect J.E.R. Carpenter. The limestone Italian Renaissance structure was built around a square central courtyard to let more light into the rooms, Alpern said. The Clark apartments are “very much in original condition,” Fox said. That means potential buyers will be salivating over the original prewar details and hardwood floors. But the units will need extensive renovations to modernize the kitchen and bathrooms, and additional features like central air. “This will need everything done,” Fox said, estimating that the apartments would need another $5 million worth of work. That high renovation cost is one reason the sale of the apartments is unlikely to net the $100 million some news reports have estimated. Servants used this staff elevator for accepting deliveries and moving furniture. The elevator opens onto a “tiny vestibule” with doors to each apartment, Alpern said. The two apartments are not currently connected except through this vestibule and a larger common area in front, which the Clark women used to cross from one apartment to the other. The Clarks’ apartment on the 12th floor had 11 servants’ bedrooms; the eighth floor originally had eight maids’ rooms, plus two “servants’ halls.” These rooms were clustered at the back of the apartments, in close proximity to the kitchens and dining rooms. This entrance gallery, a popular feature when the building was built, is essentially an oversize hallway, Alpern said. With a closet and powder room at one end, it would have functioned as a place to receive visitors or host parties, he noted. This living room, with a fireplace, is at the opposite end of the building from the living room of the other eighth-floor apartment. That makes combining the two apartments very difficult. “There’s really no way to conveniently attach them,” Alpern said. “These apartments were intended to be separate.” And in any case, it’s unlikely that the co-op board would allow one person to buy both. The board is known for having a number of international owners, and is tough but not unreasonable, Kaiser said. “They demand excellent credentials, but they’re not the Gestapo.” Pierre Durand, a financier who is the head of the board, did not respond to a request for comment.

28 January 2012 www.TheRealDeal.com

sterious home

famous apartments revealed lars, said Prudential Douglas Elliman’s Tristan Harper, who is listing a 3,300-square-foot two-bedroom on the ninth floor for $7.9 million. Brokers estimated that the Clarks’ 12thfloor apartment and the north-facing apartment on the eighth floor could sell for $25 million to $30 million each, while the other apartment on the eighth floor would likely go for $15 million to $18 million. So Clark’s death last May at age 104 sent New York real estate observers into a frenzy of speculation about when her homes would hit the market. Clark, who was married and quickly divorced in the 1920s, had no children, and the will unveiled at the time of her death left nothing to her surviving family. But a second will — this one more beneficial to her relatives — surfaced late last year, plunging the estate into litigation. Just before press time, a Manhattan surrogate court suspended Clark’s longtime accountant, Irving Kamsler, and her lawyer, Wallace Bock, from their posts as executors of her estate, amid allegations that they engaged in tax fraud while handling her affairs. (Both deny any wrongdoing.) John Dadakis, a partner at Holland & Knight, the law firm administering one of Clark’s wills, said the Manhattan apartments will likely go on the market early this year. If the properties are sold before the legal disputes are ironed out, the proceeds will be held in escrow, he said. In the meantime, The Real Deal examined original floor plans to find out what lies behind these long-locked doors. “Every broker worth his salt is going to want to be able to market these apartments,” said Andrew Alpern, a Manhattan-based architectural historian who has studied Clark’s holdings.

The Le Beau Chateau in New Canaan, Conn.

William Clark

907 Fifth Avenue

The original apartment had windows in the reception room and living room looking south across 71st Street, over the top of a private house that stood no more than six stories, Alpern said. However, when 900 Fifth Avenue was built in the 1960s, those windows lost their view, he said.

Fifth Avenue

Clark’s holdings at 907 Fifth have often been mischaracterized as one massive 42-room apartment, Alpern said. In fact, Clark had three separate, unconnected apartments in the building. After 22-year-old Clark moved out to marry William MacDonald Gower in 1928, Anna likely felt she didn’t need as much space, Alpern said, so she left the 12th floor for a smaller unit, one of two apartments on the eighth floor. Anna’s apartment (shaded) was all on one level, but her neighbor’s apartment was the lower half of a duplex. This staircase originally connected the eighth and ninth floors of the duplex. But as the real estate market changed after World War II, the enormous homes at 907 Fifth Avenue — and many spacious apartments throughout the city — were chopped up to maximize rental returns. During that period, the duplex next to the Clarks was divided into two apartments, and the Clarks rented the lower portion, giving them the entire 10,000-square-foot eighth floor. It’s unknown what, if any, changes were made to the layout of the south-facing apartment once it was separated from the ninth floor. “There are big question marks that can’t be resolved until someone unlocks those doors,” Alpern said. But according to city building permits, he said, very few changes have been made to the eighth floor of the building over the years, indicating that it may be much the same as it was in 1916. Anna’s original eighth-floor apartment had five bedrooms. When her divorced daughter returned to 907 Fifth Avenue after only two years of marriage, Anna’s home was likely deemed too small for both of them, Alpern said. By that time, their original 28-room unit on the 12th floor had been subdivided into two apartments. One of them was unavailable, so the Clarks rented the other. When The Real Deal last month visited the rarely used elevator landing on the eighth floor of 907 Fifth, it was occupied only by two simple, black mid-century chairs. Each of the apartment doors is marked with a security sticker indicating that it is alarmed. By the time of her death, Clark was reportedly paying $28,500 per month in taxes and maintenance for her apartments in the building. Roughly 100 feet of the eighth floor — including “nine huge windows”— overlooks the park, Kaiser said. That makes Clark’s eighth-floor spread one of only a few in New York City “with that much space on the park,” he said. In fact, he said, the only other comparable floor-through spaces this big are at exclusive co-ops 820 Fifth Avenue and 960 Fifth Avenue. One of at least five wood-burning fireplaces originally found on the eighth floor. Another sought-after feature for buyers is the 10.5-foot-high ceilings, Kaiser said. 72nd Street

www.TheRealDeal.com January 2012 29

Construction lending shackles loosen Money starts ﬂowing in New York City, albeit slowly, and only for select projects

BY JANNA HERRON as the construction lending spigot, once jammed shut, turned to allow a slow stream of financing for New York City development projects? Industry insiders think so. Construction loans big and small are starting to add up in the city: $26 million for a condo project in Chelsea. Another $66 million for two Fashion District hotel developments. Most recently, Related secured a whopping $200 million construction loan for a 30-story apartment house on West 30th Street, and Minskoff Equities secured a loan in the $165 million to $200 million range for an office tower at 51 Astor Place. “If you look at the last three to six months, we’re getting lenders saying, ‘We want to entertain a construction loan,’” said Richard Jaroki, managing director at Grubb & Ellis’s New York office. “Last year, they would have hung up the phone.” The construction lending process started loosening up at the beginning of 2011, said Jaroki, as lenders discussed possible loans but withheld approval. But it wasn’t until the summer that lenders asked him to “bring this stuff in.” In the last three months, things have only continued to heat up. Jerry Swarz, one of the founding partners of Manhattan-based HKS Capital Partners, and Steve Kohn, president and principal of Cushman & Wakefield Sonnenblick Goldman, agree with Jaroki’s timeline, but are quick to point out that the number of loans issued lately is nowhere near the level seen during the go-go days between 2005 and 2007. So nobody is quite ready to celebrate the complete comeback of construction financing, of course. Caution still dictates the game, and only the right developer with the right project and the right finances gets the green light. “It’s still brutally difficult to get construction financing for a project,” said Gregg Winter, the president of Winter & Co., a financial firm that arranges commercial mortgages. “The only projects capable [of obtaining it] have very experienced sponsors with significant liquidity, net worth, and relevant track records for projects in good locations [that were] bought at a good price.”

not the same slam dunk as rentals when it comes to securing financing. Small, boutique condo projects that get the thumbs-up are located in well-established markets like Tribeca, Soho and the West Village, Winter said. They are typically upscale, built for around $1,700 per square foot. “That’s the only part of the market [where] we’re seeing any financing: deliverable projects in high-end markets with very dependable developers,” he said. Mixed-use projects with ground-floor retail and residential on the upper floors also are getting second looks from lenders, said Jaroki. Hotel developments are on lenders’ radars as long as a major hotel flag is on board. Case in point: Hidrock Realty nailed down two construction loans worth $66 million, for its 167-room Courtyard Marriott across from Macy’s Herald Square and a 173-room SpringHill Suites by Marriott on West 37th Street.

Developer Stephen Ross recently secured a construction loan to build a 30-story apartment house on this West 30th Street site.

Developer Ed Minskoff recently secured a construction loan for his speculative ofﬁce tower at 51 Astor Place.

Continued on page 90

The mechanics of

securing a construction loan

he road to an approved construction loan starts with a good plan.

First, said Richard Jaroki, managing director at Grubb & Ellis’s New York office, the developer must have control over the land or property — or have an option or contract to purchase it for development. “A lot of projects have been stalled just because of this,” he said. Then the developer should put together a marketing book that outlines why the property is needed in this particular market, why financing the project is a good idea, and what kind of financing is necessary to get the project off the ground. These books get pitched to potential sponsors and partners. DevelopDDG Partners CEO Joe McMillan’s firm recently secured a construction loan for its Gansevoort Square condo at 345 West 14th Street.

ers ﬁll out applications or term sheets based on the preliminary ﬁgures of the project, said Jerry Swarz, the founder and partner of HKS Capital Partners. Once a lender is found, the project

Residential is king All the industry insiders that The Real Deal talked to agreed that residential — either rental or condo — is the property of choice among most lenders. Indeed, the lion’s share of projects that have reportedly gotten construction ﬁnancing since summer have been multifamily, though a handful of loans went to hotel developments or mixed-use proj30 January 2012 www.TheRealDeal.com

goes through an appraisal and a plan ects with an element of residential. “The vacancy rate for rental multifamily is so low, you can probably rent it before putting a spade in the ground,” said Jaroki. The city’s vacancy rate (excluding Staten Island) for apartment rentals slipped to 2.6 percent in the third quarter from 2.8 percent the previous quarter, according to real estate

data tracker Reis Inc. That dip sent average effective rents in New York City (again, excluding Staten Island) up 1.2 percent, to $2,859 a month, during the same period. While condo fundamentals are stabilizing — sales jumped more than 33 percent year-over-year in the third quarter, according to Miller Samuel — condos are

approval process. If the development checks out, the loan can close. The typical time frame for the construction loan process: 45 to 90 days, depending on the complexity of the transactions, said Swarz.

PHOTOGRAPH OF MCMILLAN FOR THE REAL DEAL BY MAX DWORKIN

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one floor. In addition, the owners are dividing up another of these floors into spaces of 3,000 to 5,000 square feet for tenants to create smaller offices. Durels noted that the owners are in talks with financial services firms, nonprofits and entertainment-related businesses. He said The advertising firm will take 214,372 have leasing challenges. And the effort to fill the deals could be announced at any time. He said that if they all get finalized, there square feet of space covering floors three up the rest of the building — nearly 430,000 through eight in a condo deal reportedly square feet — will continue into 2012. That would be only about 110,000 square feet of valued at $144 million. It also signed a 20- includes leasing up the 48,000 square feet office space left to lease in 2012. year lease for 124,760 square feet of space of retail space. (Most of the office space left Tower floors (floors at the top of the buildat 3 Columbus Circle is on floors that have on floors nine, 10, 18 and 19. As part of the ing) are asking $80 a square foot. Meandeal, the firm gets the naming rights to the about 21,000 square feet of space; Young & while, floors in the middle of the building, including where Young & Rubicam leased, are asking $68. Both asking rents are higher than the $62.13-per-squarefoot average asking rent for the Midtown West submarket as of October, according to data from Cassidy Turley. SL Green will also continue to market the 48,000 square feet of retail space on the first two floors (more than 40,000 square feet of that is on the second floor, which fronts Eighth Avenue and Broadway). Jeffrey Roseman, the Newmark Knight Frank broker heading up the retail effort, said that both international and domestic brands have been checking out the space, including fashion brands. He said that two “very Steven Durels, SL Green’s leasing director, overlooking strong contenders” had emerged Columbus Circle last month late last month. “With the popularity of Uniqlo and H&M and Zara and Topshop, the city has become extremely in demand,” Roseman said. “The best thing is, Time Warner Center has really sort of paved the trail for Columbus Circle. Retailers now really understand the significance of it.” The owners are asking in the mid-$300s per square foot on the ground floor and about $150 a foot annually on the second floor. The space could also be turned into and sold as a retail condo — SL Green has partFrom left: 3 Columbus Circle, which just underwent a renovation; developer Joseph Moinian; and SL Green CEO Marc Holliday. nered with Jeff Sutton on nu“We had another tenant who we were in negotiations with, in term- merous high-profile retail deals like this in recent years. Durels sheet negotiations with. We were probably 24 hours away from draw- said that is not something the ing a lease for the tenant for about 280,000 square feet. And Young owners are pursuing, and Sutton declined to comment. & Rubicam entered the picture.” Steven Durels, SL Green Realty According to Durels, a halftower, which is located right off Columbus Rubicam’s floors were slightly bigger, at just dozen prospective tenants have already looked at it — most of them in the apparel Circle. Young & Rubicam — which was rep- under 35,000 apiece.) resented by CBRE brokers Mary Ann Tighe, But Durels said there are deals in the works business. The asking rent has not been disGregory Tosko, Christopher Mansfield and at the tower, which was rebranded from its closed, but given the Columbus Circle locaLauren Crowley — is expected to move once previous 1775 Broadway address to one capi- tion, it should reach into the mid-$100s a the lease starts Aug. 1. According to the New talizing on Columbus Circle’s cachet. foot annually. “These are the premier floors, in the upYork Post, the company is currently trying to “We’ve been selective with the type of tensell its headquarters at 285 Madison Avenue, per third of the building, with unobstructed ant we want to complement the renovation,” where one of its employees was killed in an views of Central Park,” Durels said. Durels said. “We think we should wait until elevator accident last month. He said the owners are in negotiations we have a sufficiently upscale tenant that’s Certainly, the owners at 3 Columbus still with a tenant that plans to take nearly all of appropriate for the property.” TRD

Tenants in line behind Young & Rubicam, as fortunes for troubled tower improve

BY TOM ACITELLI he announcement early last month that advertising giant Young & Rubicam had signed for nearly 340,000 square feet of office space at 3 Columbus Circle, the former Newsweek Building, was a much-needed boost for the closely watched tower. The 26-story, 768,565-square-foot tower was, of course, famously at the center of a battle in 2010 between developer Joseph Moinian and the Related Companies’ Stephen Ross. After Moinian defaulted, Ross attempted to wrest control of the building from him by buying the note and having his partner file to foreclose. However, powerhouse landlord SL Green Realty stepped in as Moinian’s savior and paid off the mortgage to squelch the foreclosure. Moinian and SL Green, which is headed by Marc Holliday, successfully finished a $175 million renovation — which included doubling the size of the lobby and cladding the exterior in glass — in the early fall. “This is the type of building, I think, that put SL Green on the map,” said Richard Bernstein, a vice chairman at Cassidy Turley who is not involved in any deals at 3 Columbus Circle. “Nobody really does this better — take a kind of B+ building and understand how to get the most out of it, and minimize the hurdles.” Yet until last month, more than 630,000 square feet of office space in the building sat empty — even amid a wide marketing push started last January by both the owners and Newmark Knight Frank brokers James Kuhn, Scott Klau and Brian Waterman, who were retained as co-brokers. As a result, many in the industry and in the real estate press have speculated about the tower’s struggles. Indeed, before Thanksgiving one broker equated 3 Columbus Circle’s renovation to “lipstick on a pig” when talking to The Real Deal. However, during much of that time, SL Green and its partners were quietly negotiating the Young & Rubicam deal. And, according to Steven Durels, SL Green’s leasing director, the building had another big tenant, also a marketing firm, interested in anchoring 3 Columbus Circle. “I don’t think this is widely understood — we had another tenant who we were in negotiations with, in term-sheet negotiations with,” Durels said in an interview early last month. “We were probably 24 hours away from drawing a lease for the tenant for about 280,000 square feet. And Young & Rubicam entered the picture.” Young & Rubicam — whose parent company, WPP, leases space in another SL Green building, 100 Park — closed in six weeks, Durels said, even though the deal involved a complicated arrangement of commercial condo trades and office leases.

32 January 2012 www.TheRealDeal.com

PHOTOGRAPHS OF DURELS AND 3 COLUMBUS FOR THE REAL DEAL BY CHRIS MARTIN; PHOTOGRAPH OF MOINIAN BY MARC SCRIVO

Behind every successful Building Owner there is a host of incredibly talented Brokers and steadfast Tenants. Jack Resnick & Sons thanks the following Firms and the Brokers who represented them, as well as our existing Tenants who renewed their commitments to New York City in 2011. LT Burger 8 WEST 40th STREET represented by: Matt Cohen of The Lansco Corporation RP Management, LLC 110 EAST 59th STREET represented by: Michael L. Goldman & Daniel Posey of Studley, Inc. RadioShack Corporation 205 WEST 57th STREET Cardio Prevention & Therapeutics of NY 133 EAST 58th STREET represented by: Stanley Piesh of Prime Manhattan Realty American Express Travel Related Services 250 HUDSON STREET represented by: Michael Liss & Bruce Surry of CB Richard Ellis, Inc. Metropolitan Obstetrics & Gynecology 133 EAST 58th STREET Europa Café 205 WEST 57th STREET PJ Carney’s 205 WEST 57th STREET

Europa Café 199 WATER STREET Ruby 21 Jewelry, Inc. 205 WEST 57th STREET Hyper Island, Inc. 250 HUDSON STREET represented by: Trisha Jerry & Randy Kornblatt of Sinvin Realty, LLC Don Allen Studios, Inc. 133 EAST 58th STREET represented by: William O. Berkis, Jr. of Winoker Realty Co. Cornell University 422 EAST 72nd STREET represented by: Paul Wexler of Corcoran Wexler Healthcare Properties Kingsland Capital Management, LLC 485 MADISON AVENUE represented by: Donald A. Direnzo, Donald A. Direnzo, Jr. & Adam Rappaport of Cushman & Wakefield, Inc. Back Into Balance, LLC 133 East 58th Street represented by: Lance Weitz of JFW Realty Corp.

Standard Security Life Insurance 485 MADISON AVENUE represented by: Daniel Horowitz & Jeffrey Peck of Studley Inc. Beech Hill Securities 880 THIRD AVENUE represented by: Lisa Kiehl of Jones Lang LaSalle Polarn O. Pyret aka. PO.P 200 CHAMBERS STREET represented by: Robin Abrams of The Lansco Corporation HHK Sushi & Tea, Inc. 170 WEST 23rd STREET represented by: Morris Sabbagh of Kassin Sabbagh Realty Eve Bari NYC 205 WEST 57th STREET Motion Picture Arts Gallery 133 EAST 58th STREET Cosmetic Prosthodontics 133 EAST 58th STREET represented by: Jeffrey Symmons of The Lawrence Group, LLC Bar Basso, Inc. 1755 BROADWAY

TED Conferences, LLC 250 Hudson Street

Jack Resnick & Sons Owners and Builders Since 1928 110 East 59th Street New York, NY 10022 212-421-1300 www.resnicknyc.com

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Brokers get grayer NYC ﬁrms see unexpected beneﬁts from older agent pool

BY LUCY COHEN BLATTER n 2008, 21-year-old Jared Seligman had sold some $40 million worth of real estate and gained fame for listing the Olsen twins’ Morton Square penthouse. And he wasn’t the only youngster flocking to residential brokerage during the mid2000s. During the real estate boom, hordes of recent college grads entered real estate, hoping to cash in on the myriad six-figure deals taking place in Manhattan. There are, of course, still some young hotshots in the field. But for the most part, the dream of getting rich quick — before age 30 — died with the Lehman Brothers collapse, as The Real Deal reported last spring. But now, new data from the National Association of Realtors confirms what real estate executives have been reporting anecdotally: NAR’s 2011 Member Profile, a national survey of the group’s members, showed that the median age of residential real estate brokers and agents across the country increased to 56 in 2011, up from 52 in 2008. Meanwhile, the average NAR member had 12 years of experience last year, compared to 10 in 2010. While New York Cityspecific numbers are hard to come by, brokers here said they’ve noticed the same thing. “The average age of [real estate agents] is absolutely increasing,” said David Schlamm, CEO and founder of Manhattan brokerage City Connections Realty. And while some predicted that a graying of the profession would have negative consequences, industry veterans say the more experienced workforce has proven to be unexpectedly beneficial. “I’ve definitely been seeing a more mature group entering the business,” said Michael Signet, executive director of sales for Bond New York. “It’s been a boon for us. Older brokers come with a work ethic that you don’t get from 20year-olds.”

Not getting any younger New York City real estate brokers tend to be younger than their colleagues in the rest of the country. The Real Estate Board of New York said it doesn’t keep track of members’ ages, but brokers estimated that the average age of their colleagues is somewhere between 35 and 45, significantly younger than NAR’s countrywide average of 56. “I would say that the average of those taking the 75-hour licensing course in my classes is 38 to 45,” said John Vitteriti, 34 January 2012 www.TheRealDeal.com

who teaches at the NYU Schack Institute of Real Estate. The preponderance of young agents in New York is due in part to the city’s large number of rental apartments, brokers said. Rentals — a fast-paced, high-energy business — tend to attract 20-somethings, who

“Fewer newcomers are coming into the industry than once were,” said Walter Molony, a spokesperson for NAR. According to the New York Department of State, the number of residential and commercial brokers’ licenses issued across the ﬁve boroughs dropped from 3,245 to 1,897

These days at Rutenberg, Braddock said, “we have a couple of people who come to work for us right out of college, but they’re very much in the minority.” Many of the firm’s new recruits do come from other fields, however. “This is a logical job for people who have been laid off,” she said. Others echoed that point. “Recently, there’s been a larger influx of mid-level career-changers than in previous years,” said Marina Tokar, marketing representative for the New York Real Estate Institute. “The young, just-starting-out people … who entered the industry during the boom are being supplanted by career-changers.” Experienced brokers also tend to have more staying power in today’s tough times, so they’re less likely to leave the field when the economy flounders. “Realtors tend to become more successful over time — with referrals and return clients — so they’re likely to stay in the business longer,” said NAR’s Molony.

Older and wiser

“Older brokers come with a work ethic that you don’t get from 20-year-olds.” Michael Signet, Bond New York often move on to sales as they gain experience. Plus, MNS CEO Andrew Barrocas noted, 20- and 30-somethings looking for rentals tend to prefer brokers in the same age range. Greg Young, founder of the Manhattan real estate training and consulting company Broker Heaven, said the average sales agent he works with is around 45, while rental agents are closer to 30. Still, the struggling economy and real estate downturn of the past few years have made brokerage less appealing for new graduates, brokers said.

between 2008 and 2009, during the worst of the recession. Between 2010 and 2011, the number fell from 1,952 to 1,519. “Less and less people are calling me after college and asking to get into the business,” said Schlamm. “I think the economy has ﬂushed out a lot of conﬁdence.” When Kathy Braddock, cofounder of Rutenberg Realty, appeared on a recent career panel at Harvard University, she asked the audience of undergraduates how many of them thought their parents would be proud if they became residential real estate brokers. Only one student raised their hand.

But this more seasoned broker population has had unintended benefits for the industry. For one, agents with previous business experience under their belts often have advantages that help them succeed in brokerage. “As an older person, you have more contacts, and this business is based on contacts,” Braddock noted. And the wealthy buyers who can afford New York City homes — often baby boomers — often “don’t want to buy a $2 million apartment from a 22-year-old kid,” said Esther Muller, who runs the Academy for Continuing Education. Overall, today’s pool of agents tends to have stronger skills and ethics than in the past, brokers said. “Becoming an agent in New York City doesn’t necessarily lead to becoming profitable right away,” Schlamm said. “This is good, because it tends to eliminate the agents who are only in this business temporarily. The ‘get rich fast’ mentality seems to [encourage] newly licensed agents to take shortcuts in the way they do business.” Of course, there are also downsides to the loss of younger brokers. “Many agents who have been in the real estate business for a long time tend to be stuck in their ways and sometimes find it difficult to change the way they operate,” Schlamm said. He added that older agents are sometimes reluctant to embrace social media and other new technology. “Seasoned agents must be constantly learning more and more,” he said, “in order to fully service their clients.” TRD ILLUSTRATION FOR THE REAL DEAL BY PETER BONO

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A market in real estate fraud

Today’s low home prices and cheap interest rates may be setting the stage for a new generation of crime BY KENNETH HARNEY ould today’s seductive conditions in the housing market — severely marked-down prices, recordlow interest rates and hundreds of thousands of foreclosures waiting to be resold — be breeding new generations of the very practices that led to the crash? In an ironic twist, there are signs that the wreckage left over from the housing bust may be reigniting dubious real estate schemes and fraud. According to researchers: Property ﬂippers are back in action in places like South Florida and Las Vegas, where condo prices crashed but are now seeing appreciation again in some areas. So-called ﬂoppers are defraud-

One investigator pretending to be a purchaser was veriﬁed as having funding available in the amount of $850,000. The loan application was to buy 935 Pennsylvania Ave. NW, in Washington, D.C., which is the headquarters building of the FBI. Investors are hoodwinking lenders into giving them low down payments and rock-bottom interest rates by lying about their intentions to occupy the property they plan to buy as a principal residence. Some investors consider such dissembling nothing more than a ﬁb, but in reality it’s bank fraud. Researchers at the Federal Reserve Bank of New York have documented that widespread falsehoods by investors about occupancy played a major but previ-

tion databases, credit bureau data and other information, and runs it all through proprietary models to establish estimates of fraud risk. For example, when an applicant claims to be purchasing a home as a principal residence, Interthinx pulls credit bureau ﬁles and public records, and may ﬁnd that the applicant already has other homes listed as principal residences. The anti-fraud systems also spot cases where buyers apply to multiple lenders for the same property. For the sixth straight quarter, the states that Interthinx ranked riskiest for mortgage fraud are the same that experienced the most explosive booms and the most crushing busts between 2004 and 2008: Nevada, Arizona, California and Florida. California alone

Borrowers increasingly are falsifying W-2s and other records in order to meet the tougher debt-to-income thresholds. ing banks by hijacking short sales at prices below what legitimate purchasers are willing to pay. In these schemes, real estate agents obtain fraudulent appraisals to convince banks to sell houses at below-market prices to investor groups. The investors then flip the houses at fair market prices to ordinary homebuyers and split the quick profits. Creative “credit enhancement” companies are “renting” investors the bank account balances they need to demonstrate to lenders that they have the financial wherewithal to qualify for a mortgage. The accounts are for real, but they don’t belong to the loan applicants who claim them. Account names are assigned to applicants — who pay for the service — but they are never allowed access to the money. When mortgage underwriters check to verify the deposits — which are in reality fraudulent sub-accounts — they are told the money is in the name of the loan applicant.

ously unrecognized role in the real estate bust. To Ann Fulmer, a former white-collar crime prosecutor who is now a vice president with mortgage fraud analytics company Interthinx, this all amounts to a “past is prologue” situation: The market conditions are ripe for a reprise of some of the worst behavior of the boom and bust. Her ﬁrm’s latest study of mortgage fraud nationwide, covering loan origination and other data from the third quarter, found that applicants’ dishonesty about their employment and income was up 9 percent from the same period the year before, and a stunning 50 percent from the third quarter of 2009. The reason: Borrowers increasingly are falsifying W-2s and other records in order to meet the tougher debt-to-income thresholds lenders adopted following the bust and recession. Interthinx works with major mortgage lenders to spot fraud and has access to vast loan applica-

accounted for half of the 10 highest-risk metropolitan areas in the most recent rankings. Miami-Ft. Lauderdale and Cape Coral-Ft. Myers, Fla., are high on the list as well. Metropolitan Washington, D.C., which had been ranked sixth in fraud risk earlier this year, dropped to 24th place in the most recent study. San Jose, Calif., saw a 16 percent jump in “identity fraud” schemes where loan applicants seek — and get — new identities and credit histories good enough to qualify them for mortgages that would otherwise be beyond reach. Déjà vu? “I wouldn’t be surprised,” said Fulmer. “There’s so much money on the sidelines” looking for high returns in the face of a volatile stock market and low yields on conventional investments. If you have larceny in your heart, mortgages and houses can be tempting targets. Ken Harney is a syndicated real estate columnist.

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Government I N B R I Ebriefs F State panel probes Apple’s deal for Grand Central Holiday shoppers weren’t the only ones eyeing Apple’s new megastore in Grand Central Terminal last month. A state assembly panel is investigating Apple’s 10-year lease with the Metropolitan Transit Authority to determine if the company got a “sweetheart” deal, the New York Post reported. Apple is expected to make some The Apple Store in Grand Central $100 million per year from its new store, the Post said, but its $60-per-square-foot rent is far less than that of its Grand Central neighbors.

City planners propose new ‘green’ zoning rules The City Planning Commission last month proposed changes to the zoning code that would help make city buildings more ecofriendly, Crain’s reported. The new “Zone Green” rule changes would allow solar panels, green roofs and other eco-friendly features to be built in areas where zoning restrictions would otherwise prevent them. “This is the most comprehensive citywide initiative dealing with energy efﬁciency and green building in the U.S.,” said Amanda Burden, chair of the City Planning Com- Amanda Burden mission. “This is about being a greener city, providing cleaner air and water, as well as saving money on utility bills.” The proposals will be reviewed by the city’s community boards and all ﬁve borough presidents, and must be approved by the City Council before they can be adopted citywide.

U.S. Supreme Court may hear challenge to New York City’s rent-stabilization laws A Manhattan landlord has petitioned the U.S. Supreme Court to review the city’s rent-stabilization laws, claiming they are unconstitutional, the New York Daily News reported. Attorney James Harmon, who owns a brownstone occupied by three rent-stabilized tenants, called New York’s rent-stabilization laws a “racket.” “The issue is whether the Constitution allows the government to force someone to take strangers into their home and to subsidize them for the rest of their lives,” Harmon told the Daily News. If the Supreme Court hears the case and agrees with Harmon, laws impacting roughly a million New York City residents living in rent-stabilized apartments would be invalidated. The high court ordered the city to submit briefs responding to Harmon’s argument by Jan. 4. The district court and state Supreme Court have already declined to hear the case. “We are conﬁdent that once the U.S. Supreme Court receives our brief, the lower courts’ decision will stand,” said city attorney Leonard Koerner.

Congressman proposes replacing Fannie, Freddie Johnny Isakson, a Republican U.S. Senator from Georgia, has introduced a bill to wind down Fannie Mae and Freddie Mac. Isakson proposed replacing Fannie and Freddie with a new government agency, which would provide guarantees on securities comprised of mortgages that meet certain standards, the Wall Street Journal reported. The new corporation, to be called the “Mortgage Finance Agency,” would be privatized within 10 years. Fannie and Freddie, meanwhile, would be placed in receivership, a form of bankruptcy restructuring, and their assets Johnny Isakson liquidated. “This legislation is a detailed road map to change the unsustainable course we’re on, in which the American taxpayers have been bailing out the mortgage industry,” said Isakson, a former real estate broker. Few expect Congress to approve the bill before the end of the term, however. Compiled by Russell Steinberg

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The argument for audits

Financial forensics on rise for real estate players, as partners seek protection before teaming up BY VANESSA WEIMAN eral partner, to the exclusion of the investor hile the ailing economy has hinpartner,” explained Koppel. dered some real estate firms in If cash flow dries up at a project, the genthe last few years, it has spelled eral partner may start diverting funds to opportunity for others. Among the benefiother areas of the business, taking out unciaries? Auditors, who say they’ve seen an authorized loans, or stopping payments on increase in demand for their services, espemortgages or real estate taxes — all without cially among real estate investors involved the investing partners’ knowledge. in joint ventures. To cover up this behavior, they can use In recent years, industry experts said, “inflated invoices, inflated contracts, nosome real estate players have turned to unshow jobs or just fictitious transactions” derhanded methods to increase their infrom landscapers, cleaners and other concome and ease financial woes, often tractors, said Philip Ramacca, senior without the knowledge of their managing director of internal audit and forensics at David Landau. partners. And tough times tend to make indiscretions more noMost of the real estate audits ticeable. DLA sees are in hospitality and re“The economy brings out bad tail ventures, areas that require more behavior in people,” said active management — and thus provide Steven Koppel, an atmore opportunity for fraud — than torney in the real commercial and industrial propestate practice at erties, Ramacca law firm Jones Day. “When said. things were goIn one recent incident DLA ining well, no one may have noticed money going vestigated, a partner [out], but now there’s nothin a retail projing to replace it.” ect “borrowed” These disputes $100,000 from mean more work the venture for auditors, espeover 14 months cially since firms are to help pay off debts now doing “proac- “I see an increased aware- at his other projtive auditing,” and ness in newer partnerships ects, Ramacca said. taking other meaAt first he paid back about reporting, and a sures to protect the money he took, their assets before bigger exercise of control.” but as his financial entering into partproblems deepened, Steven Koppel, Jones Day nerships. he was no longer able David Landau, CEO of the New Jerseyto replace the funds. based real estate and financial services adviTo uncover irregularities, auditors go sory firm David Landau Associates, said his through a venture’s books with a fine-tooth company has seen a 40 percent increase in comb. real estate audits over the past three years, “We might look at money going out to one partner at the beginning of the and has hired more forensics experts at the firm to accommodate that growth. month and the other partner receiving it The firm said it now does about 60 real at the end of the month, and [find that] estate audits annually, compared to roughly the managing partner is taking more than 40 two years ago. their fair share,” Ramacca explained. They also investigate “what our client may not Money in, money out know about who their partner is doing Since the downturn began, a number of business with.” high-profile real estate partnerships have But in many cases, the wronged partner gone awry. Maurice Mann, for example, doesn’t realize anything is amiss for months famously joined forces with Africa Israor years. el to convert the Upper West Side’s landAlan Fried, a partner at Manhattanmark Apthorp into condos, but Africa Isbased real estate law firm Braverman & Asrael later sued to remove Mann as managsociates, said some partners in joint vening partner. tures “hadn’t really been looking closely at books and records” until recently. And developer Yair Levy made headlines for striking his onetime partner, Kent Swig, with an ice bucket after a deal went south. Preemptive strike Real estate joint ventures are vulnerable Now that many ventures “are fighting over to fraud because “the control over money books and expenses,” he said, that relaxed and bank accounts and documents has hisattitude has changed, and “people are torically been primarily vested in the genContinued on page 86

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38 January 2012 www.TheRealDeal.com

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N eighborhood C lose -U p

NORTH SIDE 1

27 Essex Street

This redbrick, five-story apartment building has two storefronts. The larger of the two contains S & J Grocery, a deli, while next to it is Sammy’s Photo Lab, which will develop film in an hour. The building is owned by a limited liability corporation called Yang Zi Jiang, which bought it in 2006 for $1.49 million in cash, city records show. But in 2007, they got a new mortgage from HSBC Bank for $1.35 million, records show.

51 Hester Street

Another tenement with ground-floor retail space, this elevator building, which has five floor-through one-bedrooms, was marketed in 2010 by Massey Knakal for $2.8 million. Yet city records indicate it never sold. That suggests the owner is still Haim Kadouri, a member of the Syrian family that for decades sold dried fruit and nuts from No. 51, but which a few years ago rebranded itself as Kadouri International Foods and relocated to Bushwick. Al Kadouri, who handles real estate matters for the company, hung up on a reporter. Where apricots and cashews were once scooped is a clothing store called aNYthing, which stands for “A New York Thing” and opened in 2005. Owner Kiernen Costello said there’s symmetry to the location because his Jewish grandparents settled nearby after immigrating to America in the 1920s.

5 4

Hester Street’

53 Hester Street

Gertel’s Bakery occupied this address for 99 years, before moving to Williamsburg several years ago. A Flushing, Queens-based company called J.P. Hester paid $4.8 million for the site in 2007, city records show, and promptly tore down Gertel’s building, though nothing ever went up in its place. Today, the lot is in foreclosure, brokers said, and city records suggest that different banks have controlled the note for the last few years.

55 Hester Street

By far the most tangible evidence of the block’s new direction is this 11-story, 27-unit condo, which was completed in 2009 on the site of a former tile store. Indeed, the building, which has a paneled façade and greenish-glass terraces, is far larger and more gleaming than most nearby properties. Yet it has struggled to find buyers, selling just 60 percent, or 16, of its oneand two-bedrooms at about $1,000 a square foot, said Leon Tsoi of Kinyu Realty, which marketed it, though StreetEasy shows just 11 units sold. Its developers, 88 Hester Construction LLC, which would not speak to a reporter, have since offered the balance of the units as rentals — all of which are occupied save for one, a two-bedroom listed at $3,500 a month, Tsoi said. Linda Kyan, of real estate brokerage Bond New York, said No. 55 struggled because the layouts are ungainly and amenities are lacking. Downstairs sits Lu Magnus art gallery, a deep, double-height space that opened in late 2010. The gallery, which signed a three-year lease, joins dozens of galleries that have debuted in the area in recent years. They benefit from being open on Sundays, which is when their rival West Chelsea galleries are closed, said Amelia Abdullahsani, a gallery co-owner.

A building-by-building b an immigrant past colli

W By C. J. Hughes

hen waves of immigrants washed across the Lower East Side a century ago, Hester Street between Essex and Ludlow streets was a kinetic — and occasionally run-down — jumble of storefronts. Shoppers flocked there to buy low-cost groceries, apparel and household goods from the pushcart vendors filling the streets. But Mayor Fiorello LaGuardia relocated the pushcarts to three new brick warehouses on Essex, one of which survives as a market today. And Eastern European Jews, who sold pickles and prayer shawls, gradually gave way to Asians, who migrated east, starting in the 1960s, from Chinatown.   Now there are more changes afoot. In recent years, young white “hipsters”

61-63 Hester Street

This five-story, beige-brick apartment house has been owned by Morris Goldman Real Estate since 1994. Goldman didn’t return a call for comment. Two retail berths in this space facing Hester are owned by Brown Café, a local favorite that opened in 2001. After scaling back dinner offerings a few years ago, the main restaurant, which features lacquered logs as benches and $11.25 grilled cheeses, is now offering a Friday-night small-plates menu, perhaps in response to increased weekend revelers on the streets. Adjacent to it is the Sweet Life, a store that’s sold candy at least since the 1960s. Super-size superhero Pez dispensers line the window, and jars of jelly beans pack the shelves inside. 40 January 2012 www.TheRealDeal.com

N eighborhood C lose -U p

SOUTH SIDE 1

4 3

s yin and yang reakdown of a block where ides with a hipster future have crept in from the East Village, drawn by (comparatively) cheap rents. They frequent establishments like nearby Frank’s Chop Shop, a five-year-old barbershop offering $60 haircuts, and Café Grumpy, a Greenpoint-based coffee shop, which opened its second outpost on Essex Street in June. Still, brokers say Chinese landlords continue to rent to Chinese tenants, so gentrification is often measured in inches. “We’re not going to happen like the Meatpacking District or Soho,” said resident and developer Ron Castellano, who cofounded the two-year-old Hester Street Fair. At the nexus of the old and the new, Hester Street serves as a true microcosm of the Lower East Side’s ongoing evolution, as The Real Deal discovered through a building-by-building analysis.

The retail space in this four-story building is occupied by Spring Sign, a dusty shop where restaurant signs are made. One day last month, an employee was on the sidewalk out front fitting red covers on black metal letters that spelled “Golden China.” A noticeable trend in the area is Chinese businesses knocking out Chinese businesses with similar products, brokers said. That was the case here, as the former occupant, Shunda Sign, was forced to move to nearby 15 Essex Street in 2008 after 10 years because of a rent hike, locals said. Attempts to reach the owner, No. 1 Golden Mountain, which purchased the building in 2004 for $900,000, city records show, were unsuccessful. Also tucked inside No. 25 is XCubicle, a video-game-system repair shop.

40 Hester Street

In 1941, the Association of Metals and Minerals Corporation, which was based in this 300-square-foot storefront, was awarded a contract to rip down a portion of the elevated Second Avenue subway. Decades later, it came full circle, with many construction businesses taking root here. In fact, until last month, a small building company was based at No. 40, which is actually part of 25 Essex and is also owned by No.1 Golden Mountain. Currently, local brokerage Worldwide Real Estate is marketing the empty space, which can be leased for five years for $2,000 a month.

42 Hester Street

The oranges in a red bowl visible in a window belong to Fei Liem Tao, the Buddhist temple that occupies this two-story, redbrick structure; it was bought for $900,000 in 2004 by No. 1 Golden Mountain, which also owns 25 Essex. The famed Guss’ Pickles had a store here from 1920 to the 1970s, before moving to Essex Street and then to Orchard Street, though the business no longer exists under that name.

46 Hester Street

With a rusticated stone façade and balconies, this 1980s apartment building replaced one that housed the H&M Skull Cap Manufacturing Company. Today, its 1,100-square-foot ground floor contains the Manhattan office of the Committee Against Anti-Asian Violence, or CAAAV, an advocacy group working to protect area residents from unscrupulous landlords. Rents across the Lower East Side and Chinatown can still be found for $200 a month, for rent-controlled onebedrooms, though increasingly the norm is about $2,500, for new market-rate one-bedrooms, said Esther Wang, one of CAAAV’s directors. Another statistic that may make residents gulp: 20 percent of those who live in the 10002 zip code, which covers the area, either face eviction or have been threatened with it, according to a survey that CAAAV conducted last summer.

25 Essex Street

48 Hester Street

The nine-story, 40-unit Kwok Wah House, a market-rate condo completed in 1990, sits on a lot that used to contain a hardware store and lumberyard. Many of the condo’s mostly Asian residents use their units here as pieds-à-terre, said Peter Stratigakis, president of Urban Construction, which developed the building and keeps an office at its base. When apartments do become available, which is rare, they sell for about $1,000 a square foot, up from $200 a foot in the 1990s, Stratigakis said. The residential demographics are shifting in the area because the retail mix is changing, not the other way around, he added. “The commercial is leading it, and it’s full-blown,” he said. Next door to Urban Construction is an empty 400-square-foot retail berth that until last year contained catering offices for Brown Café, a restaurant across the street. The space is now for rent for $2,500 a month, said Tsoi, the agent with Kinyu Realty who’s marketing it. A third business, the longtime Kwok Wan Laundromat, occupies the space that wraps the corner onto Ludlow. TRD

www.TheRealDeal.com January 2012 41

T H E YE A R

AHEAD

A roundup of developers, brokers, listings, projects, REITs and more to keep an eye on in NYC real estate this year

BY LEIGH KAMPING-CARDER

ast month The Real Deal spoke with real estate professionals to learn which projects and players will be on their radar in the year ahead. After dozens of interviews, hours of research and many editorial meetings, we winnowed down a list of real estate players and projects to watch in 2012. We weren’t looking for the city’s top brokers, or the biggest ﬁrms or the most successful developments.

Instead, we were looking for the most interesting newcomers who are already making a splash, or the veterans putting their expertise to use in a different way. We looked at the developments that have the power to change a neighborhood — or demonstrate the folly of hubris. We looked at the new alliances that will be tested in the coming year, and the investors who have money to plow into property in the upcoming months. In short, we zeroed in on those who are embarking on uncharted territory this year. For one reason or another, every entry on this list will be worth a look in 2012.

Ground-up condos Extell Development Company’s One57 is capturing all kinds of attention between its record-breaking 90-story height, audaciously priced $110 million penthouse, and its promise of luxury to rival the city’s glitziest residences. The question, however, is whether Extell can deliver such opulence — and ﬁnd buyers. The answer to that — which could come to light this year as the company starts up sales in earnest — could sway the luxury market across Manhattan, sources say. At the same time, the overall lack of new luxury inventory is keeping everyone’s eyes on the relatively few new condo projects out there in 2012. Take Toll Brothers’s the Touraine at 132 East 65th Street: 18 of the 22 units have gone into contract since sales started in early October, according to David Von Spreckelsen, a senior vice president at the company. Prices are averaging about $2,700 per square foot, Von Spreckelsen said. He anticipates buyers will move in at the end of 2012. It’s a similar story at 250 West, the onetime fruit-and-vegetable warehouse in Tribeca that the El-Ad Group began converting into 106 condos in June. With more than a third of the units sold or under con-

250 West

tract, Richard Cantor (principal of Cantor Pecorella, which is handling the building’s marketing) expects it to sell out by the end of 2012 if the current pace continues. Units are on sale for about $1,500 per square foot on average, but Cantor said the team has increased prices seven times already, and anticipates future price hikes. Meanwhile, the Brodsky Organization’s planned 19-story building at 135 East 79th Street may also go some way toward meeting the demand for luxury condos, although sales won’t start until late 2012 at the earliest. Brodsky reportedly secured a $120 million construction loan in November,

2012January GRAPHIC BY DEREK ZAHEDI; PHOTOGRAPH OF TOLL BY HUGH HARTSHORNE 64 2012 www.TheRealDeal.com

Bob Toll

and groundbreaking on the 30 residences, primarily three- to five-bedrooms, is set for this month. A block further east, at 200 East 79th Street, the Wilf family’s Skyline Developers is finally making way on a condo that, city records show, will rise to 19 stories on a site the company began assembling as early as 2005. Though Skyline project manager Jonathan Wilf remained tight-lipped about details, he said the attorney general’s office recently gave the green light to Skyline to begin preliminary marketing for the project in advance of approving the offering plan.

Skyline has tapped Alexa Lambert of Stribling & Associates to handle marketing, and has lined up construction ﬁnancing, Wilf said.

Residential conversions Will the Salvation Army’s ladies dorm at 18 Gramercy Park South become Downtown’s 15 Central Park West? No doubt that’s what developer William Lie Zeckendorf and architect Robert A.M. Stern are hoping. The pair, who famously collaborated on the actual 15 Central Park West, is teaming up once again, to transform the landmarked 17-story www.TheRealDeal.com January 2012 43

TH E Y E A R A H E A D parkfront property into luxury condos. Construction is well underway and is estimated to cost $14.4 million (in addition to the $60 million they paid for the site), according to city records. No word on exactly when the units will hit the market, however, and Zeckendorf did not respond to calls seeking comment. Meanwhile, Extell is also converting the Helmsley Carlton House, a former hotel at 680 Madison Avenue, into 68 apartments. Though an Extell spokesperson said details are not ﬁnalized, the site is ready for construction, and the developer recently hired Manhattan-based commercial leasing brokerage Isaacs and Company to start shopping 32,000 square feet of retail space slotted for the lower two levels. “[Extell founder] Gary Barnett is going to be one of the bellwethers of ... super high-end luxury [in 2012],” said Andrew Gerringer, managing director of new business development at the Marketing Directors, a brokerage that specializes in new development. At 150 Charles Street in the West Village, Prudential Douglas Elliman superbrokers Leonard Steinberg, Raphael De Niro and Darren Sukenik will be joining forces to market 98 condos the Witkoff Group is constructing around the existing façade of the former Whitehall Storage building. Pricing hasn’t been released, but it is said to match the nearby Superior Ink, where condos have sold at an average of $3,128 per square foot, according to real estate listings website StreetEasy. (Steinberg said the brokers could not comment, and Witkoff did not respond to requests for comment.) The West Village is also home to the 184unit Printing House at 421 Hudson Street, which a group of investors, led by Belvedere Capital, acquired in 2011. Plans call for converting 105 existing rental units to condos. Units will likely go on sale by mid-2012, according to Kelly Kennedy Mack, president of Corcoran Sunshine Marketing Group, which is marketing the project. Also noteworthy: Harry Macklowe’s conversion of the 105-unit rental building at 737 Park Avenue to condos. Macklowe plans to spend $107 million to reposition the building, and ﬁled suit in September seeking to evict a couple who allegedly wanted to stay put after their lease expired.

Rental developments While New York by Gehry, the 76-story rental tower at 8 Spruce Street, is 65 percent leased, the remaining 200-odd units will hit the market this year — possibly as early as next month. The project’s backers expect all 903 of the units to be rented out by fall 2012. But developer Forest City Ratner is making one adjustment, combining eight units on the top ﬂoor into three penthouses ranging from 3,000 to 4,000 square feet — priced between $45,000 to $60,000 per month. “They were nice,” Forest City ex44 January 2012 www.TheRealDeal.com

Gary Barnett

The Woolworth Mansion

Sam Zell

Jacques Herzog (left) and Pierre de Meuron

ecutive Susi Yu said of the scrapped apartments, “but not up to the standards of these units that we are creating.” Further north, David Picket’s Gotham Organization broke ground on its massive Gotham West project — a $520 million, four-building complex between West 44th and West 45th streets and 10th and 11th avenues with 1,240 rental units — in October. It’s been described as the largest new construction project underway in Manhattan. On a smaller scale, Toll Brothers and Equity Residential paid $134 million for a former parking lot at 400 Park Avenue South, with plans to erect a 40-story rental-condo hybrid on the property, which comes with 400,000 square feet of development rights. Equity Residential, headed by Sam Zell, will own and operate the lower 22 floors, with 265 rental apartments, while Toll’s upper floors will house 100 condo units. Meanwhile, Jeffrey Levine’s Douglaston Development, the firm behind the Edge condos, is planning another massive Williamsburg project, this time at the site

Robert A.M. Stern

David Picket

Kelly Kennedy Mack

Ziel Feldman

56 Leonard

once set aside for the third Northside Piers tower. Unlike the Edge and Northside Piers developments —which once competed for a shrinking pool of buyers but are now mostly sold — the new tower will reportedly contain 500 apartments for rent, testing the rental market even as the North Brooklyn condo glut burns off. Douglaston will work with Toll Brothers’s former partners at the site, L+M Development Partners and RD Management, and will reportedly start construction in March.

Back-from-the-dead development The story of One Madison Park is frequently invoked as a parable of the recent boom and bust. Now, however, the 50-story skinny tower — built by the relatively untested developers Ira Shapiro and Marc Jacobs and forced into bankruptcy in mid-2010 after about a dozen sales closed — is starting a new chapter. Stephen Ross’s Related Companies and Ziel Feldman’s HFZ Capital Group are mov-

ing swiftly to take over the property, after emerging as the only bidders before an auction planned for last month. Related, HFZ and a One Madison entity still need court approval for a restructuring plan that revolves around the developers’ purchase of about $234 million in debt, but the building could change hands as early as February. That would allow Related and HFZ, as the building sponsors, to sell the remaining 57 units and finish construction on amenities including a pool and a gym. Another revived development attracting attention in 2012 will be 56 Leonard, the Herzog & de Meuron–designed tower, which was set to rise 57 stories above Tribeca in a Jenga-like construction of glass and concrete. However, work stopped in late 2008 when developer Alexico Group had trouble obtaining additional financing. Now, Houston-based developer Hines has joined Alexico on the 145-unit project, which will contain a mix of one- to five bedroom units priced from nearly $2 million to $30 million. With a sales relaunch planned

PHOTOGRAPH OF PICKET FOR THE REAL DEAL BY MAX DWORKIN; PHOTOGRAPH OF 56 LEONARD FROM HERZOG & DE MEURON

TH E Y E A R A H E A D for mid-2012, brokers and buyers are calling on a daily basis to check on progress, said Corcoran Sunshine’s Mack, who will head up marketing.

Trophy listings As the 2012 calendar year starts up, the Woolworth Mansion at 4 East 80th Street, which came on the market for $90 million in March, is New York City’s priciest townhouse listing. Paula Del Nunzio, the Brown Harris Stevens broker handling the sale, declined to discuss whether any offers had come in, or her expectations for a sale in the coming year. “The only thing I don’t have is a crystal ball,” she said. Meanwhile, Steven Feder, founder of the Psychic Readers Network (who might have a crystal ball), has been trying to sell his Time Warner Center penthouse on and off for several years; at $60 million, the listing was the second most expensive on the market during a stretch of 2011. Elizabeth Sample and Brenda Powers, of Sotheby’s International Realty, are representing Feder.

Several recent offers for the 9,000square-foot four-bedroom have come in, but the unit is currently being rented out (although the tenant could be made to leave in three months, Sample said). She expects a sale in 2012. Speaking of pricey rentals, Juergen Friedrich, a former Esprit Holdings executive who owns the Plaza’s Astor Suite, put the 5,087-square-foot three-bedroom up for rent last month. The $165,000 monthly price tag makes it the city’s most expensive rental listing, according to listing agent Melanie Lazenby of Elliman, who is hoping for a signed lease this year. Also set to hit the market in 2012 is Brooklyn’s 96 St. Marks Avenue. The units there may not be fetching the same exorbitant prices, but the building will be the ﬁrst multifamily residence in the country to seek certiﬁcation from Germany’s Passive House Institute, which has established standards for “zero energy” houses that maintain comfortable temperatures without active heating and cooling systems. The 80-year-old

four-story brownstone has three two-bedroom units and a garden duplex, according to developer Brendan Aguayo. Pricing is not yet set. Also worth watching this year? The brewing legal battle over Huguette Clark’s three sprawling Fifth Avenue apartments (see related story on page 28).

Hotels In the last ﬁve years, New York’s supply of hotel rooms has grown by 24 percent, according to Mayor Michael Bloomberg. But citywide occupancies have remained relatively unchanged, said John Fox, a senior vice president at PKF Consulting who tracks the hotel industry. “In general terms, it means that we’ve absorbed all these new rooms,” he said. Luckily for the new hotel developments set to get underway in 2012, that trend shows no signs of stopping. At 1717 Broadway, Marriott International and Granite Broadway Development are erecting what they say will be the tall-

est standalone hotel tower in the city, at 752 feet, nine inches. While the Nobutaka Ashihara–designed structure isn’t set to open until 2013, construction will be nearing completion this year. It will house 639 rooms split between a Marriott Courtyard and a Residence Inn by Marriott. New hotel brands are also set to come to New York this year. This month, the city’s first Conrad Hotel & Resort — a luxury brand from Hilton Worldwide — will debut at the former Embassy Suites in Battery Park City, with 463 rooms each at an average of 550 square feet. Goldman Sachs bought the hotel in 2006, after it was briefly closed following the September 11 terrorist attacks. Additionally, the latest iteration of Ian Schrager’s hospitality concept, the Public Hotel, will soon arrive in New York as part of Durst Fetner Residential’s 56-story rental tower at 855 Sixth Avenue. (The first Public opened in Chicago in October.) Groundbreaking on the 250 rooms is scheduled for April. The Out NYC at 510 West 42nd Street, the city’s first gay hotel, will add another 105 rooms when it opens in early 2012. Lastly, one familiar property — the Cooper Square Hotel — will be getting a makeover during the next year now that hotelier Andre Balazs has begun transforming it into the Standard East Village (a more subdued version of his Standard Hotel in the Meatpacking District), with 145 rooms.

Commercial brokers Feder’s Time Warner Center penthouse

Paula Del Nunzio

Ronald Solarz (left) and Eric Anton

Andre Balazs PHOTOGRAPH OF BALAZS BY PASCAL PERICH

Ivan Hakimian

1717 Broadway

The former Eastern Consolidated investment sales brokers Eric Anton and Ronald Solarz made the big switch to Brookfield Financial, part of Brookfield Asset Management, in September. But this year is when their deal-making action is likely to start up. “We’re brand-new; we’re babies,” Anton said. The pair will continue to work on land and multifamily sales, but they also plan to ramp up their work with office properties, focusing on Class A and B buildings from $50 million and up. Given Brookfield’s national and international operations, Anton and Solarz are angling to get involved with office transactions outside New York City. With Chris Wilson, a real estate finance specialist, the team will also branch out to handle mergers and acquisitions, Anton said. Meanwhile, last January Benjamin Fox left his post as president of Winick Realty Group to head up Massey Knakal Realty Services’ retail leasing division. As of early last month, the team had 70 sales and leasing listings. The leasing arm is a departure for Massey Knakal, and the firm’s chairman, Robert Knakal, could be found at a holiday party boasting of the division’s success. (Fox declined to discuss details.) While they’re not quite a Brookfield, two smaller firms are worth keeping an eye on. Ivan Hakimian’s HPNY, founded in Continued on page 89

www.TheRealDeal.com January 2012 45

TH E YE A R A H E A D

For the record The New York real estate records smashed in 2011

BY LEIGH KAMPING-CARDER

ven in a year marked by continued economic malaise, buyers, sellers, landlords, lenders, builders, investors and even tourists broke records in New York in 2011. Below, a list of the all-time highs — and lows — reached in the last year.

Priciest residential sale The sale of former Citigroup chairman Sandy Weill’s 15 Central Park West penthouse may be the most expensive residential deal ever. Weill put the spread on the market in November for $88 million and vowed to donate the proceeds to charity. Mere weeks later, he found a buyer. Ekaterina Rybolovleva, the 22-year-old daughter of Russian fertilizer magnate Dmitry Rybolovlev, claimed to be the purchaser, saying through a spokesperson that she plans to stay there while studying at a U.S. university. The spokesperson declined to conﬁrm how much Rybolovleva paid, and public records on the ﬁnal price won’t be available until the sale closes. But even at a generous 39 percent discount, the price would knock out J. Christopher Flowers’s 2006 purchase of the Harkness Mansion, which set the bar at $53 million.

Priciest foreclosure auction The Henry T. Sloane Mansion at 18 East 68th Street, once on the market for $64 million, could have set a record for the city’s priciest townhouse sale. Instead, it went to billionaire Alexander Rovt at the city’s costliest foreclosure auction in June. Rovt, who also made his fortune in fertilizer, successfully bid nearly $40 million — the total owed to ﬁrst mortgage lender Madison Realty Capital.

Record residential asking price The estate of ﬁtness mogul Lucille Roberts put the Woolworth Mansion on 4 East 80th Street up for sale in March. The $90 million asking price is the largest on record for a townhouse property (see story on page 43.)

REIT assets As of September, mutual funds that invest in U.S. real estate investment trusts had assets worth $96 billion, shattering the previous record of $87 billion set in February 2007, Bloomberg News reported, citing a Citi Capital Markets report. As stock values went haywire, REITs represented a relatively stable corner of the market, while paying out dividends that surpassed the yield from more conservative investments such as U.S. Treasurys.

Tallest buildings Several developers last year made headway on towers that, when built, are set to surpass the highest points in the current skyline. The most notable, of course, is One World Trade Center, which will be New York’s tallest building when it reaches its full height of 1,776 feet. The lofty One57 condo tower, which broke ground about six months ago, is slated to become the city’s tallest residential building at 1,000 feet, eclipsing the current residential giant: the 870-foot New York by Gehry at 8 Spruce Street. Marriott International’s under-construction hotel at 1717 Broadway, which was announced in August, is set to become the tallest standalone hotel structure at nearly 753 feet. Meanwhile, Bruce Ratner’s Forest City Ratner recently unveiled plans to build the largest-ever prefabricated tower, which would rise 32 stories at Brooklyn’s Atlantic Yards (see story on page 62).

Priciest ofﬁce tower One World Trade Center is not only tall — it’s expensive. Indeed, at $3.2 billion, or $1,250 per square foot, 46 January 2012 www.TheRealDeal.com

the central structure to go up as part of the World Trade Center’s reconstruction dwarfs the cost of other glitzy office buildings in the city — and the country.

Priciest retail buy Spain’s Inditex, parent company of fashion retailer Zara, in March closed on a deal to pay $331.6 million for a 39,000-square-foot slice of a 666 Fifth Avenue retail condo, city records show. At $8,300 per square foot, it was the highest price ever paid for a U.S. retail property, according to Real Capital Analytics data.

Highest retail asking rent In April, Vornado Realty Trust began quietly shopping the 1,402-square-foot retail space at 691 Fifth Avenue occupied by Elizabeth Arden’s Red Door Spa, sources said. Several brokers told The Real Deal at the time that the $3,000-per-square-foot asking rent for the ground-floor space was a record for Fifth Avenue, the city’s priciest retail district. The property is still available, according to Vornado’s website, but the broker handling the listing was not immediately available for comment.

CMBS delinquency rates Though the delinquency rate of U.S. commercial mortgage-backed securities has stabilized since the fall, the percentage of delinquent CMBS hit a record 9.88 percent in July, according to data from market research ﬁrm Trepp.

Mortgage rates In 2011, mortgage rates reached historic lows — and then dropped further. As of the middle of last month, government-backed mortgage lender Freddie Mac said that the 30-year ﬁxed rate matched an all-time record low of 3.94 percent set in October, while the 15-year ﬁxed rate had broken the October record of 3.26 percent, sliding to 3.21 percent.

Tourist volume The number of hotel rooms in New York hit a record high of 90,000 in 2011, growing 24 percent from 2006, according to Mayor Michael Bloomberg, who has been pushing to increase tourism to the city. Likewise, the 50.2 million tourists who visited New York last year represented the highest number yet, topping the 48.8 million who came in 2010. TRD GRAPHIC FOR THE REAL DEAL BY DEREK ZAHEDI

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PROFILE

Taking the Fifth

Investor Joe Sitt has ramped up his building buys on Fifth Avenue, but is he paying too much? BY ADAM PIORE oseph Sitt made his fortune thinking big — and not just in real estate. Back in the early 1990s, Sitt had trouble ﬁnding retail tenants for his urban properties. So he decided to open his own upscale apparel chain to serve the most promising urban retail sector he could ﬁnd: plus-size women. “I saw a big niche area,” he told an interviewer in 2003. “I mean, have you looked at the size of the butts of women in the inner city? They’re big.” It was a bold move at a time when most national chains were spurning the inner city. But within a decade, the conventional wisdom had changed, and Sitt appeared prescient. By the time he cashed out most of his stake, the Brooklyn-born developer and his partners had built a 380-store retail chain with a presence in 100 cities. That experience, along with the success in urban real estate investing that followed, helped burnish Sitt’s reputation and has proven a powerful lure for institutional investors, who have shelled out upward of $1 billion in recent years to buy into two Urban Development funds run by Sitt’s Thor Equities. Lately, Sitt has been making another bet that’s turning heads. In 2011, Thor snapped up seven properties in the city — all but three on Fifth Avenue at or below 49th Street, including a threeparcel development site at 43rd Street that he purchased from Aby Rosen’s RFR last month for an undisclosed price some have placed at upward of $132 million. (His biggest purchase on Fifth was his only one above 49th Street — the trophy Takashimaya Building at 54th Street, for $142 million in July 2010.) No one doubts that the stretch of Fifth Avenue below 49th Street is on the rise — many brokers consider it the “next frontier” in retail. Yet some say Sitt vastly overpaid to win his properties, while others are skeptical of the scale of his development ambitions, since his company has never built a major ground-up development. Sitt, who declined to be interviewed for this story, has said he intends to construct a 350,000-square-foot retail, hotel and residential complex on the RFR site that would cost $250 million. (He has not yet obtained the air rights he would need to build such a large complex, but does have the 300,000-squarefoot assemblage.) “It seems like an awfully big bet,” said one veteran industry player. “And I think the market perception is he’s over his head on that.” As for the already standing properties that he’s purchased: “I’m scratching my head,” said one broker. “He’s going to have to get rents that are twice as much as what others are asking ... to make some of his properties work.”

Big promises It’s a criticism that’s been heard before. At several New York sites, detractors have accused Sitt of overpaying (and overpromising) and then relying on zoning changes or city actions to bail him out. 48 January 2012 www.TheRealDeal.com

On Coney Island, Sitt famously acquired a series of development sites promising to transform them into a luxury, Las Vegas-like destination — only, critics say, to evict tenants and raze buildings while he engaged in a protracted public battle with the Bloomberg administration over the future of the site. In the end, he sold 6.9 of his 12.5 acres to the city for $95.6 million in 2009, likely ensuring the value of the land he still owns will skyrocket. A Thor spokesperson said Sitt has two buildings going up in Coney Island and is just waiting for infrastructure investments from the city before moving ahead with hotels and retail. The spokesperson also dismissed the more overarching complaints about Sitt overpromising, noting that Sitt has “successfully redeveloped dozens of properties and that some could make the case that redevelopment is actually more challenging than building a project from the ground up.” He noted that many developers specialize in buying untitled land and then getting it rezoned. “It’s the highest-risk development investing, but also the highest return, and that’s what we do there,” he said. There are plenty of areas where Thor has followed through. Sitt’s restoration of Chicago’s Palmer House, one of the oldest hotels in the country, which he purchased for $240 million and spent $170 million on renovating, is widely considered a smashing success. And in New York, Sitt’s spokesperson touted his work at 88 Greenwich Street, which he redeveloped into 450 luxury condos. He’s had other grand slams as well. In 2005, Sitt shelled out $13 million for lots near the Cyclones’ minor league baseball stadium in Coney Island, then sold them a little more than a year later to Taconic Partners for $90 million when the city announced plans to allow them to be developed. That same year, he sold a 23-story ofﬁce building at 180 Madison to the Clarett Group for $146 million, three years after buying the property for $92.7 million. And in 2007, Sitt sold 321 West 44th Street — an ofﬁce property he purchased in partnership with GVA Williams for $35 million in 2003 — to the Kushner Companies for $87.5 million. Certainly the market has judged the self-made developer a winner — his ability to raise billions from institutional investors is a testament to that. Since 2001, Thor has purchased well over $1.7 billion worth of properties in New York City alone, according to Real Capital Analytics. Some have placed his worldwide empire at $5 billion (see related story on page 56). But Sitt’s deals on Fifth Avenue are the ones that have the greatest potential to have a major impact in Manhattan in the years ahead. They also are classic Sitt — counterintuitive, risky and high-stakes.

First one in Sitt launched Thor from his New York University dorm room in 1984. At the time, the city was littered with abandoned, blighted buildings, which the Koch administration was demolishing and holding tax auctions for, to either dispose of the vacant land or unload them. The properties weren’t for the faint of heart — many were in gritty, high-crime neighborhoods. But Sitt noticed some were also located right in the middle of heavily trafﬁcked areas that desperately needed retail. Sitt raised money from friends and famJoe Sitt has purchased ily, and settled on a 12,000-square-foot propover $1.7 billion erty on East Tremont Avenue in the Bronx as worth of properties in New York since 2001. his ﬁrst buy. He then reached out to national

PROFILE chains, but was rebuffed. So he ﬁlled the property with local, immigrant retailers instead. He traded up as soon as he could, purchasing existing shopping centers, properties where “the roofs are leaking, the lighting is poor and there is typically little maintenance,” he told GlobeSt.com. “By going in and refurbishing these assets, increasing their value so we can increase income, we found that for a few pennies we made lots of dollars,” he said. Sitt’s concept was to repave and restripe the parking lot, replace the lighting, and redo the façade. He also equipped his shopping centers with state-of-the-art sound systems, playing jazz on the weekdays and gospel on Sundays in black neighborhoods, and salsa and other Latin music in Hispanic neighborhoods. After three or four years, Sitt inked his ﬁrst deals with national retailers, among them Rite Aid, Rainbow Shops and Payless. Still, most chains steered clear, but Sitt

void was in apparel for plus-size, career-oriented women. So in 1991, he started Ashley Stewart and opened the stores in his own properties — naming the company after Laura Ashley and Martha Stewart in tribute to his wife’s two favorite businesswomen. Like his earlier ventures, Sitt decorated his stores with customer tastes in mind: leopard-print carpets, ﬂatscreen TVs and “sometimes candy and food because plussize women enjoy that sort of thing.”

dors in distressed areas. She was struck by the passion with which he spoke about the plussize, inner-city women, whom he insisted were “looking for style and respect.” “He was very intent and rapid-ﬁre, and it was surprising coming from this Orthodox guy from a very male, parochial Jewish Ocean Parkway area,” she said. “He wasn’t talking about wigs for women in Borough Park. He was so sensitive and aware of the needs of the low-income communities of color.”

Working with others From operating retail stores and small urban malls, Sitt moved to take bigger gambles on real estate. On some of those projects, Sitt has done joint ventures. In 2003, he partnered with hip-hop mogul Russell Simmons, to purchase a 697,000square-foot shopping mall in Albany, Ga., for $26.8 million. In 2010, in one of his biggest, most high-proﬁle projects, Sitt teamed with Meyer Bergman in London to buy the sto-

Number of NYC purchases by Sitt YEAR

Left, Mayor Michael Bloomberg, whom Sitt clashed with over Coney Island. Right, hip-hop mogul Russell Simmons, with whom Sitt bought a shopping center in 2003.

# OF BUYS

2011

2010

2009

2008

Source: Real Capital Analytics and news reports.

Thor’s 2011 purchases ADDRESS

SALE STATUS

SIZE (SF)

PRICE

SELLER

NOTES

245 Fifth Avenue (ofﬁce)

Purchased

303,139

$161.5 million

Whitehall Investment Funds

Owns 80 percent with joint venture partner the Moinian Group, which owns 20 percent.

516-520 Fifth Avenue (development site)

Pending purchase

355,000

$132 million

RFR Realty

Package of three properties. Sitt plans to spend $250 million to redevelop.

597 Fifth Avenue (ofﬁce)

Purchased

78,000

$99 million

A&A Acquisitions

Mixed-used property; Sephora is retail tenant.

837-843 Washington Street (industrial)

Pending purchase

13,125

$55 million

Square Mile Capital/ Taconic

Sitt bought a 75 percent stake in the site; Thor will oversee leasing of the retail; Taconic and Square Mile are redeveloping it.

292 Atlantic Avenue (residential)

Purchased

n/a

$5.4 million

n/a

Sitt bought it in foreclosure auction and plans to renovate as much as 6,000 square feet of retail space.

426 West 14th Street (retail)

Pending purchase

15,486

n/a

The Benous Family

Sitt purchased a 48-year master lease at the ofﬁce building and has right of ﬁrst refusal to buy/ lease it.

445 Fifth Avenue (ofﬁce)

Pending purchase

87,000

n/a

Mixed-used property; condos on top ﬂoors not included in the sale.

Source: Real Capital Analytics and news reports.

Left, the Takashimaya Building is Sitt’s only Fifth Avenue property above 49th Street. Middle, 516 Fifth Avenue, one of three buildings Sitt bought from Aby Rosen last month. Right, a view of Coney Island, where Sitt sold 6.9 of his 12.5 acres to the city for $95.6 million.

now knew ﬁrsthand that the demand existed. So in 1989, he started his own retail chains, teaming up with Joseph Chehabar, the owner of Rainbow apparel. The pair purchased the Children’s Place and Accessory Place chains, with 202 stores, for $30 million from a distressed Toronto-based company that also owned Federated and Ann Taylor. Meanwhile, Sitt realized the biggest retail PHOTOGRAPH OF 693 FIFTH AVENUE FROM PROPERTY SHARK

As a result, noted the newsletter Real Estate Finance and Investment, the company’s ﬁrst Ashley Stewart store did monthly sales of approximately $800,000 per square foot. Kathryn Wylde, president and CEO of the Partnership for New York City, a nonproﬁt organization of the city’s business leaders, remembers meeting Sitt in the 1990s when she was trying to rebuild commercial corri-

Sitt “was the ﬁrst investor in many distressed, low-income neighborhoods,” she said. “He was the only retailer who was willing to take the risk.” By the late 1990s, national retailers were catching on to the huge potential of urban markets. Gap, Old Navy, Kmart and WalMart all followed Sitt in. Yet after growing his chain to 380 stores in 100 cities, Sitt decided to change his focus.

ried Burlington Arcade for $163.6 million. And last March, Thor partnered with the Moinian Group at 245 Fifth Avenue to buy a 93 percent-occupied ofﬁce building, valued at $161.5 million. Other partners in the city have included GVA Williams Real Estate, Premier Equities, Morris Moinian and Andrew Heiberger. (Sitt is an equity partner in Heiberger’s brokerage, Town Residential.) Much of Sitt’s current money, however, comes from institutional investors. Over the last 10 years, he’s raised about $1.1 billion for two Urban Property Funds (the ﬁrst fund raised $400 million and closed to new investments in 2004; the second raised $673 million and closed in 2008), according to the alternative-asset database Preqin. Top investors include pension funds representing public employees in California, Baltimore and Houston, as well as the University of Michigan, Washington State University, and investment vehicles that funnel money from hedge funds into large investments. Continued on page 90

www.TheRealDeal.com January 2012 49

European vacation Countries on the continent to take a 2012 holiday from investing in New York commercial real estate BY TOM ACITELLI anhattan’s commercial property will see less investment from Eurozone countries in 2012, as the continent continues to struggle with national deficits, austerity measures and a general existential crisis that last month’s summit failed to resolve, analysts say. The Manhattan activity from Eurozone countries (e.g., Spain, Germany, France and Italy) is expected to come mostly from investors, especially banks, selling off assets here to pay down debt or to conform to new European Union banking regulations. In 2011, investors from Spain and Germany accounted for nearly all of the $446 million in Manhattan investment from Eurozone countries, according to data from Real Capital Analytics. That was more than double the volume of 2010, when investors from France, Italy and Germany, the primary European investors that year, accounted for $198 million in trades. (The data covered trades of at least $2.5 million that were either closed or in contract, and deals where the Eurozone investor was the sole or majority partner.) These mid-nine-figure numbers are not huge amounts for Manhattan investment sales. As The Real Deal has reported, Canadians alone accounted for nearly $1.5 billion in Manhattan trades in 2011. Meanwhile, the United Kingdom — which is a member of the European Union but not on the euro — accounted for more than $891 million in 2011 and poured more than $1.8 billion into commercial real estate here between 2007 and last year. In addition, nearly three-quarters of the Spain-Germany total stemmed from the $324 million March purchase by Spanishbased Inditex of the 39,000-square-foot retail portion of 666 Fifth Avenue. Still, the amount of money that Eurozone countries are pouring into Manhattan commercial properties is enough for New York brokers and lenders to notice. “What we have seen, obviously, in the last six months is a pretty significant slowdown [in Eurozone investments in New York] because of all the sovereign debt and euro issues that are going on across the board, predominantly in Western Europe,” said Arthur Milston, a managing director at international brokerage and advisory firm Savills. Investor skittishness over recent government changes in Greece, Italy and Spain — and the social unrest that accompanied them — are contributing to this slowdown. This year’s French presidential election, in which President Nicolas Sarkozy is being challenged by Socialist leader François Hollande, is also contributing to the overall uncertainty.

50 January 2012 www.TheRealDeal.com

Top European countries investing in NYC commercial real estate, 2007-2011 COUNTRY

TOTAL

United Kingdom $1.8 billion Germany

$1.7 billion

Italy

$919 million

Spain

$694 million

Switzerland

$585 million

Source: Data is from Real Capital Analytics and runs through early last month. It includes closed and under-contract deals of $2.5 million and more in which the investor has a majority interest.

“I can tell you that we expect the investors from Asia to be a lot more active than Europeans.” Arthur Milston, Savills The anxiousness has helped to prompt a sell-off of assets across the U.S., and will contribute, analysts say, to the lower investment here in 2012. Two recent major examples highlight this: In late November, Société Générale SA, France’s second-largest bank, agreed to sell $600 million of commercial property loans to an Australian money manager. A ﬁrm spokesman declined to say if any of the loans were tied to New York property. But according to a top executive quoted by Bloomberg News, the bank was selling the assets because of pressure on Europe’s largest lenders to boost capital and cut the

size of their balance sheets. “[The bank] is going through some changes right now because of the European situation, and as part of that they are cutting down on some businesses,” said Naseem Haffar, the U.S. head of loan sales and trading at Société Générale. Also in November, Germany’s Deutsche Bank said it was considering reshuffling its asset-management businesses, including selling off its RREEF real estate arm, which has more than $60 billion in office, industrial, retail and multifamily assets under management worldwide. A spokeswoman declined to say which of

those might be in New York. The main reason for the divestment? New EU regulations that the bank said are making the management of the assets more difficult. A Deutsche Bank spokesperson told The Real Deal that it was too soon to speculate on the fate of the bank’s recent real estate acquisitions. But in July, RREEF acquired the 11,862square-foot retail condo at 415 West 13th Street, which houses an AllSaints clothing store, for an institutional investor for an undisclosed sum in an off-market deal. A few months before, it had acquired the 16,742-square-foot retail condo at 473-475 Broadway, housing retailer Scoop, for another investor. “European banks, compared to American banks, are undercapitalized, and many of them are in the position of having to increase their capital cushions,” said Sam Chandan, president and chief economist of real estate research firm Chandan Economics. “They generally have two choices to do that: They can find equity, or they can sell some assets. The way the regulatory environment is moving in Europe right now, there are some banks that are having to liquidate assets, including high-quality assets in major markets. “For every loan they have, they have to hold some capital,” he added. “And right now the capital requirements are going up. If you can’t raise the money to build those cushions, you need to liquidate some assets.” On the investment side, analysts say that because of its relatively stronger banking system and sounder economy, the Germans will lead any Eurozone spending for New York properties. Most of these properties, they predict, will be either higher-end retail or office buildings. Multifamily, on the other hand, is not expected to command as much attention — because, as one broker put it, “everyone’s interested in multifamily.” “Our feeling, based on conversations we’ve been having with people,” Milston of Savills said, “is that there will be interest in 2012. A lot of that interest will come from German buyers. [But] beyond the German fund buyers, it will be spotty.” One top Manhattan investment sales broker, who asked to remain anonymous, also said that Eurozone investors may take advantage of the economic crises in their home and neighboring countries. They will buy up properties there, the broker predicted, rather than invest in New York, one of the world’s pricier markets. In the end, the ongoing euro crisis may mean a geographic shift in focus in 2012 for New York brokers, investors and lenders. It could end up being a permanent one if the latest deal, forged in Brussels last month to form a more perfect fiscal European Union, doesn’t hold. “I know you’re not asking,” Milston said, “but I can tell you that we expect the investors from Asia to be a lot more active than Europeans.” TRD

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Building blocks How many buildings do you own? Nine buildings, about 150 apartments, in Bay Ridge, Park Slope and Brooklyn Heights. The largest is 8802 Ridge Boulevard in Bay Ridge, with 48 apartments. We have rents ranging from $190 per month [for a rent-stabilized unit] to $3,000 for a grand apartment in a brownstone with a huge backyard garden. Is it a family business? In 1968, my parents bought a six-family building in Bay Ridge — 6821 Owls Head Court — where we lived for 11 years after I was born. My grandmother lived across the hall. My mother and father were very handy. They did all the work themselves. My father was a carpenter, so he’d make the kitchen cabinets and everything. It wasn’t his primary occupation — he was in the shipping business — but we needed a place to live. Eventually he left shipping and got more into real estate, and bought more buildings. I grew up tagging along on a weekend to shovel snow or put out the garbage or help him do work in the apartments. By Jane C. Timm

Vital Stats:

Name: Christopher Athineos Title: Owner, Athineos Enterprises Age: 42 Hometown: Bay Ridge, Brooklyn Currently living in: Bay Ridge, Brooklyn

How did you decide to make it your career? After I went to Brooklyn College, it was just a natural progression. I don’t really think of it as a business — this is our life. Are your parents retired? These days, my father is still very much active, probably even more than me! My sister works in the office as well. My mom does decorating and troubleshooting for us. How do you rent out your units? We use local brokers and, a lot of times, just word of mouth. We’ll also advertise on our own. [But] we’re using brokers less and less now; people will try and save a little money and go directly through an online ad. Have you thought about expanding into Manhattan? We have not crossed the bridge into Manhattan because it is easier to be close to the buildings we own. If a boiler goes out in the middle of the night, we are quick to respond. … There’s one traffic light between my home and my office.

Landlord life What’s the hardest part of owning buildings in NYC? Running the buildings would be much easier if we didn’t have all these regulations. At least half of my time is dedicated to administrative things with the city and state. They’re so onerous, and they just don’t make sense.

Horrible hoarder Tenant horror story? We had a hoarder in an eight-unit building in Park Slope. We inherited the tenant. She was paying less than $200 a month. Her apartment was filled with trash, newspapers, clothes, takeout containers and cats — just junk from floor to ceiling. It started affecting other people in the building — people’s apartments were infested with roaches and the odor was unbearable. We finally got her evicted, but it took 15 years and we probably spent over $100,000 on legal fees. It’s a total waste of resources. That money could have been spent on improving the building.

The bottom line How is the market doing, from your perspective? It’s been very flat. We’re not increasing our rents; a lot of our tenants have been paying the same rent for five years, which is hard, because the costs are just going up. Here and there we’ll raise them, though, if we can. When you do raise rents, by how much? For someone in Bay Ridge paying $1,400 [per month], we might raise it $50 or $25. We try to be fair. What worries you as a landlord, in terms of politics? The best thing the city and state could do for property owners is to keep the laws steady and not have drastic changes — no one can plan for them, and it makes things very difficult.

— Athineos’s Brooklyn properties

What’s the best part? It’s a nice part of the job to look out for people. It’s not just the bricks and mortar — we go to people’s weddings and funerals. We recently had one of our tenants who had a home birth in the apartment. Which landlord organizations are you involved in? I’m active in the Small Property Owners of New York and the Greek-American Property Owners here in Bay Ridge. It’s good to network with other property owners and vent. It’s like a therapy session — 95 percent of tenants are great, but you always get the 5 percent who are awful.

54 January 2012 www.TheRealDeal.com RealDeal.com

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BIG INVESTORS

Private equity, unwrapped

These ﬁrms led the pack in NYC spending during 2011, even if much money still sits on the sidelines

BY C .J. HUGHES or years, private equity firms have been lavished with huge sums of money by investors looking to own New York buildings. But recently, there have been fewer deals that those firms are finding attractive — ones that offer quick and bountiful yields. Plus, many so-called distressed opportunities that were supposed to materialize didn’t, as banks worked out new loan terms with their struggling borrowers.

Over the same period, private equity firms have been awash in money. From 2009 to 2010, they raised $63 billion, according to data from the London-based financial research firm Prequin. That equaled almost all of what was raised during the entire pre-boom period, from 1990 to 2004. In 2011, the Prequin data shows, $160 billion was raised. That pot of money will inevitably compete with capital from earlier fund-raising rounds, and thus probably

As a result, many private equity ﬁrms’ buckets of cash have been sitting unspent. And, under typical investment rules, funds that are not deployed within

struggle to find worthy investments, analysts say. In all, “you promise your investors a 20 percent return, but it is hard to do that with New York real estate,” said David Eyzenberg, a managing director of NewOak Capital Advisors who also teaches at New York University. “You would have to take a vacant building in Nebraska for that kind of thing,” he added, “which is why a lot of funds are having a hard time putting it out the door.” Yet a handful of private equity firms are showing themselves to be up to the challenge, pulling away from the pack in the past 12 months with some large and notable transactions. This month, with the help of Real Capital Analytics data and news reports, The Real Deal looked at closed deals involving private equity firms where the company’s share in the buildings exceeded 50 percent. Below are profiles of the biggest spenders in the pack.

three years must be returned to investors, without a hotel or condo or office tower to show for them. In addition, because private equity firms are generally looking for greater returns than other types of investors such as pension funds and institutional players, their portion of the commercial real estate investing pie is shrinking. In 2009, in the depths of the recession, private equity deals accounted for 39 percent of total investment sales in Manhattan, according to research firm Real Capital Analytics. In 2010, as distressed opportunities became scarcer, that share fell to 23 percent, with the figure looking to be about the same for 2011 at the end of the year.

Rockwood Capital Partners: $491 million This San Francisco-based firm, formerly of White Plains, N.Y., finished in the top spot with six closed deals in New York, with a total value of $491 million. One of them was the complicated, multiparty, $390 million purchase of 530 Fifth Avenue, a limestone, full-block edifice once known as the Bank of New York building. Today, the high-rise office tower is also home to retailers Fossil and LensCrafters. 56 January 2012 www.TheRealDeal.com

Rockwood’s five other buys were of a much different stripe: five five-story rental buildings located mostly on the Upper East Side. The deals, in which Rockwood partnered with Stone Street Properties — an upstart firm that already owns three similar properties in the West Village — were part of a $90 million portfolio purchase from Icon Realty Management that closed in September. Rockwood, which is led by Edmond Kavounas, a former attorney who has been in-

vesting in New York real estate since 1980, likes diverse plays ranging from ofﬁce buildings to small rentals, according to Michael Phillips, a managing director of Jamestown Properties, which was the general partner on the 530 Fifth Avenue deal. (According to Phillips, Crown Acquisitions is handling leasing; Murray Hill is the asset manager; and Rockwood is the equity investor.) The ﬁrm did not return calls for comment. But Phillips said: “I think value comes in a lot of different shapes and sizes. I think [Rockwood’s principals] are sharp guys.

They’re strategic, long-term investors.”

Savanna Partners: $465 million Savanna Partners notched a close second place ﬁnish among private equity ﬁrms picking up properties in New York City. Between December 2010 and the middle of last month, it had four closed acquisitions, with a total value of $465 million. Showing an eye for emerging neighborhoods, Savanna snatched two buildings PHOTO ILLUSTRATION BY DEREK ZAHEDI

BIG INVESTORS around Madison Square Garden and the Financial District: The firm purchased 31 Penn Plaza and 100 Wall Street — each for about $130 million.. And, its dollar volume of transactions will likely be even higher when non-closed deals like the office tower 21 Penn Plaza — which it bought in partnership with the Feil Organization for $137 million, according to news reports — are included. The busy streak has been fueled by the firm’s closing last spring of a $550 million fund — its second. The first, for $313 million, closed in 2006. What helps put Savanna — headed by Chris Schlank and Nicholas Bienstock — toward the front of the pack, analysts say, is that it operates buildings itself. As a result, it doesn’t have to collect rents and oversee renovations through third parties. “Essentially they are eliminating what in the past had been an extra layer of management,” said Tom Boytinck, who teaches in the real estate program at Columbia University with Savanna’s Bienstock, and is cofounder of Allegro Advisors, a boutique investment bank. “That’s their whole shtick,” Boytinck said.

CIM Group: $382 million Increasingly active CIM, a Los Angelesbased firm that The Real Deal profiled last month, closed four deals for $382 million last year in New York City. Many had a ride-to-the-rescue quality, like CIM’s buying $85 million in senior debt at the embattled Trump Soho. There was also the purchase, for an undisclosed sum, of the note for 209 unsold units in the 330-unit, 47-story William Beaver House condo, which has struggled to find buyers since launching sales in 2006. After buying that note from an affiliate of the Blackstone Group (see related item below), CIM pushed to slash prices by 20 percent and also put a batch of the condos on the market as rentals, which are being leased by Rose Associates. Studios there now start at $3,535 a month. CIM also paid nearly $43 million for 46 East 57th Street, a townhouse that sits next to the former site of the Drake Hotel at 432 Park Avenue, which it bought in 2010 and where it plans to build a massive 1,300-foot tower. Not known for ground-up construction, CIM kept developer Harry Macklowe on the project, though without an equity stake. Macklowe controlled the site before his empire crumbled in the late 2000s. A spokesperson for CIM did not return calls for comment.

Beacon Capital Partners: $354 million This Boston-based ﬁrm — which once controlled the John Hancock Tower and which sold many of its holdings to Equity Ofﬁce Properties in the 1990s in a $4 billion deal

But the ﬁrm (which controls the A-list 1211 Sixth Avenue, home to News Corp., as well as similar trophy buildings in L.A., Washington, D.C., London and Paris) has invested every last cent, according to its website. The next batch of funds could come from the sale of 1211 Sixth, which was shopped around this fall for $1.9 billion, though there was no offer higher than $1.6 billion for the 45-story ofﬁce tower, according to news reports.

Left: Savanna’s Chris Schlank and Nicholas Bienstock. Right: The CIM Group bought $85 million in senior debt at Trump Soho.

Private equity ﬁrms with most closed NYC buys in 2011 FIRM

AMOUNT SPENT

Rockwood Capital

$491 million

Savanna Partners

$465 million

CIM Group

$382 million

Beacon Capital Partners

$354 million

RLJ Development

$332 million

Dune Capital Management

$264 million

Thor Equities

$261 million

Blackstone Group

$258 million

Morgan Stanley Private Equity

$191 million

Starwood Capital Group

$139 million

Source: Real Capital Analytics. Data includes closed purchases in Manhattan for 2011.

RLJ Development: $332 million Named for the initials of Robert L. Johnson, the founder of Black Entertainment Television, this Maryland-based firm prefers spending its cash on hotels. Last year was no exception, with the $332 million purchase of Midtown’s Doubletree Hilton Metropolitan, located at 569 Lexington Avenue, at East 51st Street. It was the firm’s only New York purchase of 2011. Formerly known as the Loews Hotel New York, the 760-room tower was designed in 1961 by noted hotel architect Morris Lapidus, who gave Miami Beach the Fontainebleau. The Doubletree — which was sold by Highgate Holdings, Whitehall Real Estate Funds and Rockwood Capital — is the third New York hotel RLJ has purchased in recent years. The others are the Hilton Garden Inn, at 63 West 35th Street, and the Fashion 26 Hotel, at 152 West 26th Street. RLJ is expected to do a renovation of the hotel — the last one was about a decade ago — which would significantly enhance its value, said John Fox, senior vice president with PKF Consulting. He noted that it’s a very large property by New York standards, saying: “It certainly wouldn’t be replicated today.” There’s a relative shortage of hotel rooms, so demand will stay strong, especially with this “prime Midtown location,” Fox said.

Dune Capital Management: $264 million Starwood’s Barry Sternlicht (left). The Mark Hotel was purchased for $145 million by Dune Capital Management.

From left: RLJ Development’s Robert L. Johnson, the founder of BET; 597 Fifth Avenue, which Thor Equities purchased for $99 million; and the Blackstone Group’s Stephen Schwarzman.

— spent $354 million on New York real estate in 2011. One of those deals, for about $150 million, was the acquisition of a land lease, at 330 Hudson Street, where the ﬁrm will build a 350,000-square-foot tower. The other was the purchase of the majority interest of 195 Broadway, the 29-story former AT&T Building near the under-construc-

tion One World Trade Center. Efforts are now underway to add three retail stores to No. 195’s lobby. At first glance, Beacon, which is headed by Alan Leventhal, would appear to be a poster child for the imbalances among private equity firms when it comes to capital raised versus capital spent. Indeed, the last fund it closed, its fifth, was for a whopping $4 billion.

A hedge fund/private equity ﬁrm, Dune is headed by Daniel Neidich, a former Goldman Sachs banker who helped raise $12 billion for Goldman’s Whitehall Real Estate Funds and leveraged it into $50 billion in properties, according to news reports. Other Dune Capital executives used to work for George Soros. Those Wall Street backgrounds might have come in handy as Dune, in a series of complex ﬁnancial pas de deux, wrested control of the Mark Hotel, at 25 East 77th Street, for $145 million. During the boom, developer Alexico Group had purchased the Mark with the hopes of turning the upper-story units of the 16-story building into co-ops. (Because the Mark sits on leased land, condos weren’t an option.) Continued on page 86

www.TheRealDeal.com January 2012 57

THIS MONTH IN

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The Real Deal looks back at some of New York’s biggest real estate stories 1988: CUOMO GOES AFTER CORRUPTION IN BUILDING INDUSTRY

overnor Mario Cuomo announced the formation of a group of more than 100 investigators, prosecutors, auditors and other professionals to battle corruption and racketeering in the building industry, 24 years ago this month. Along with city officials, Cuomo created the Construction Industry Strike Force because of the allegedly endemic nature of mob infiltration and corruption in New York City’s multibillion-dollar development business. The task force included professionals from the State Organized Crime Task Force and from the office of Manhattan District Attorney Robert Morgenthau. Cuomo said in the first year he would direct $4 million to hire 60 additional investigators and staffers to tackle the corruption. The task force is still active, and took part in the investigation that led to the DA’s raid of Lehr ConstrucMario Cuomo tion’s Manhattan offices in March 2010. In May last year, the DA brought charges against four Lehr executives for allegedly overcharging for construction work.

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1962: MORMONS BUY LAND LATER USED BY SOLOW

he Mormon Church bought four low-rise commercial properties facing the Plaza Hotel 50 years ago this month. The properties were later acquired by developer Sheldon Solow for his luxury office tower 9 West 57th Street, and were at the heart of a $3 million lawsuit the church brought against Solow. Officially known as the Church of Jesus Christ of Latter-day Saints, the Mormons paid $1.25 million for the four four- and five-story properties at 10-20 West 58th Streets, between Fifth and Sixth avenues. The church planned to build a 30- to 40-story building that Sheldon Solow would include a chapel, administrative offices and an auditorium, as well as additional office space or apartments that would be rented out. At the time, the church estimated there were 3,000 Mormons in the metro area. However, by 1968 church officials had agreed to transfer their ownership in the four properties, as well as adjacent 11 West 57th Street, to Solow in exchange for 40,000 square feet of space, including a chapel, in Solow’s future tower at 9 West 57th. But they never moved in, and in 1977, four years after the building was completed, the church sued Solow, seeking $3 million in damages, claiming he fraudulently took the land without providing the chapel. It was unclear how the dispute was resolved.

1933: THOUSANDS REJECTED AS HEIRS TO A FORTUNE

Manhattan surrogate court judge threw out the claims made by 2,302 people 79 years ago this month that they should inherit a piece of a vast New York City real estate fortune owned by the wealthy but low-proﬁle Wendel family. The judge’s action cleared the way for the bulk of the $36 million family property fortune — which included the 22-story 525 Seventh Avenue, the 23-story 1385 Broadway, and scores of other buildings around the city and East Coast — to be given to charities, following the 1931 death of the last remaining family member, Ella Virginia von Echtzel Wendel. The $31 million valuation for the 161 New York City, Westchester and Long Island properties was substantial, although less than the $60 million holdings of William Waldorf Astor when he died in 1919. The Wendel estate grew over three generations, in part because its founder, fur trader John Wendel, told his son John D. Wendel to “Buy, never sell, New York real estate.” By 1914, the bulk of the estate was held by John D. Wendel’s son, John Gottlieb Wendel. He died that year and passed the fortune on to his sisters, ﬁve of whom reportedly never wed, partly because of his efforts to keep them single in order to keep the estate whole. Ella Virginia von Echtzel Wendel The vast bulk of the estate was turned over to charities. But in June 1933, $2 million was given to nine distant relatives. That same year, one person, Thomas Patrick Morris, was sent to prison for falsely claiming to be the son of John Gottlieb Wendel. Compiled by Adam Pincus

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Buildings sprout in Garden State A roundup of 10 developments along New Jersey’s Gold Coast, and how they are faring

By Leigh Kamping-Carder or developers, New Jersey’s Gold Coast — that swath of real estate hugging the Hudson River from Englewood Cliffs to Jersey City — presents a tale of two markets. On the one hand, the rental market has rebounded, recovering to the point where brand-new rental projects are now being built and quickly leased. “The environment is conducive to new development,” said Michael Barry, president of Hoboken-based developer Ironstate Holdings. Lenders are backing “well-heeled, well-positioned, stable” projects, he said. But in an echo of Manhattan trends, new condominium developments are thin on the ground. (“Do you know any condos being built?” asked one prominent New Jersey developer. “I don’t.”) That’s because in today’s economy, financing for rentals is easier to secure. Meanwhile, the presales that make condo towers viable are not possible at every location. “If you’re in an A or an A+ location,

you can build condos,” said Benjamin Jogodnik, a senior vice president at Toll Brothers, which has several condo projects in the works. Still, New Jersey’s Gold Coast now

RiverTrace in West New York broke ground in November.

Name/Location: RiverTrace (11 Avenue at Port Imperial, West New York) Developer: Roseland Property Company Units: 316 rentals Status: Broke ground November 2011

ort Imperial, a 6,000-unit, 200-acre, $2 billion mixed-use community that straddles Weehawken and West New York, started construction in 1996. The latest addition is RiverTrace — a $120 million, 12-story waterfront rental that broke ground in November and is scheduled for occupancy in the fall of 2013. Pricing is still up in the air for the units, a mix of one-, two- and three-bedrooms. All told, Roseland plans to construct seven or eight additional residential buildings at Port Imperial, adding to the collection of buildings there now, said Carl Goldberg, Roseland’s managing partner.

60 January 2011 www.TheRealDeal.com

has a solid record of new development construction, from the 1,813-unit Port Liberte, which opened in Jersey City way back in 1994, to newer, brandname projects like the Trump Plaza

Residences, which finished construction in 2008. Below, The Real Deal looks at 10 of the coast’s most recent developments, both condos and rentals.

The W Hoboken, where the last two remaining units sold over the summer

Name/Location: W Hoboken (225 River Street, Hoboken) Developer: Ironstate Development Company Units: 225 hotel rooms, 40 condos Status: Sold out

ith its iconic red “W” blazing atop a 27-story tower, the W Hoboken hotel and condominium residences sold out in August, despite a somewhat rocky start after they went on sale in November 2006. Though all 40 condos were under contract in 2008, eight of those deals fell through. Irongate was then forced to re-list the units during the downturn, offering a modest 10 percent discount, and bringing the average price in the building to $1,075 per square foot. By mid-2009, 75 percent of the apartments had closed. In the summer of 2011, the last two remaining units, which Ironstate had rented out to friends and family, sold.

New Jersey Name/Location: 1450 Washington (1450 Washington Street, Hoboken) Developer: Toll Brothers Units: 157 condos Status: 40 percent sold

he 1450 Washington development broke ground in August 2010. When the sales office officially opened in November, 40 percent of the condos had already sold, after hitting the market roughly five months earlier. (That number had not changed at press time.) Prices range from the low $400,000s for studios to the mid-$900,000s for three-bedrooms. The 12-story building is the fourth of six residential properties at Hudson Tea, the onetime U.S. headquarters of the Lipton Tea Company. Toll Brothers converted two of the warehouses into rentals in 2000 (six years later, it converted them into 525 condos). The third building included 116 loft condos. Plans for the remaining two yet-to-be-built properties will depend on market conditions, said Toll Brothers’ Jogodnik.

A groundbreaking is planned this year for 18 Park in Jersey City.

developers finished construction early last year and began leasing in March. The building’s units — ranging from studios priced at $2,460 per month to three-bedrooms at $5,775 per month — were 86 percent leased at press time.

Name/Location: Laguna (45 Park Lane South, Jersey City) Developer: The Lefrak Organization Units: 150 rentals Status: Broke ground September 2011

he Laguna tower will be the 16th building at Newport, Lefrak’s 400-acre megaproject that currently includes 12 rental properties with 4,100 units and three condo properties with 881 units. Lefrak expects to start marketing the apartments — mostly one- and two-bedrooms — in January 2013 and to wrap up construction that spring. Rental rates are not finalized, but across the Newport development they range from $1,735 to $3,074 per month. The $10 billion project, which started back in 1986, is about 70 percent complete, said Mario Gaztambide, Lefrak’s vice president of residential asset management. “We’re bullish on the Gold Coast,” he said.

Name/Location: Beacon (4 and 20 Beacon Way, Jersey City) Developer: Metrovest Equities Units: 1,200 condos (total) Status: Phase one, where sales started October 2005, is 97 percent sold

Name/Location: 18 Park (18 Park Street, Jersey City) Developer: Ironstate Development Company and Kushner Real Estate Group Units: 422 rentals Groundbreaking: Planned for second quarter of 2012

ronstate, along with Murray Kushner’s eponymous firm (Murray is developer Charlie Kushner’s brother), is developing 18 Park “almost like a continuation of [225 Grand] right next door,” said Ironstate’s Barry, referring to the 348-unit, 15-story rental that made up the first phase of the developers’ Liberty Harbor project. The developers haven’t set asking rents for 18 Park, but Barry said they would be similar to 225 Grand, where units went for an average of $36 per square foot. (The last lease at 225 Grand was signed in April.) Eighteen Park will include studios, one-bedrooms, two-bedrooms and a “sprinkling” of three-bedrooms, Barry said. Leasing is set to begin in fall 2013.

Name/Location: Estuary (1600 Harbor Boulevard, Weehawken) Developer: Roseland Property Company and Hartz Mountain Industries Units: 589 rentals Status: Broke ground December 2011

oseland and Hartz plan to bring the first of three rental buildings to market in late 2013 or early 2014. The $200 million project, which broke ground last month, will include two six-story buildings and a third at eight stories, with snazzy amenities like a yoga room and a golf simulator. Hartz has owned the site, now occupied by parking lots, since 1981, and brought Roseland on after working with the developer on the Monaco in Jersey City. According to Roseland’s Goldberg, it “probably has the single most spectacular views of the Manhattan skyline along the entirety of the Hudson River waterfront.” Rents have not yet been set.

Name/Location: Monaco (475 Washington Boulevard, Jersey City) Developer: Roseland Property Company, Hartz Mountain Industries and Garden State Development Units: 523 rentals Status: 86 percent rented

A model unit at Crystal Point in Jersey City

Name/Location: Crystal Point (2 Second Street, Jersey City) Developer: Fisher Development Associates Units: 269 condos Status: 90 percent sold

he 42-story Crystal Point has unloaded more than 90 percent of its units since opening for sales in January 2010, although it has remained at that level for several months now, according to Fisher Development president Brian Fisher. The condos, ranging from 800 to 1,586 square feet, start in the high $500,000s, with some penthouses priced at $1.5 million. The average price per square foot has been rising, Fisher said, but he declined to reveal figures. Much to the developers’ surprise, the pricier three-bedrooms (20 percent of the residences) were the first to sell, Fisher said. “That is really unusual in this market.”

Name/Location: 70 Greene (70 Greene Street, Jersey City) Developer: Equity Residential Units: 480 rentals Groundbreaking: June 2006

illed as the tallest rental building in New Jersey, the two 50-story towers of the Monaco, which broke ground in late 2008, timed the market just right. “We were the last major construction loan to close before the financial world started to fall apart [at the end of 2008],” said Roseland’s Goldberg. The

etrovest’s $350 million restoration of the 14-acre Jersey City Medical Center campus into a 10-building luxury residential complex first got underway in 2005 with the Capital and Rialto condo towers, where all but nine of the 315 units had reportedly sold by April 2011. (Most of these were reportedly sold by late 2009.) For the latest phase, Metrovest president George Filopoulos switched gears, turning space intended for more than 100 smaller condo units into 25 sprawling half- and full-floor loft condos — apparently both a cost-saving measure and a concession to the stalled sales market. Rechristened the Mercury Lofts, the 2,994- and 6,665-square-foot residences went on sale in October 2009 and were priced at current levels of $799,000 to $2.7 million in December 2010, when Metrovest relaunched sales there. It was not immediately clear how many are still available. (Filopoulos did not return calls for comment.)

Monaco in Jersey City

he 49-story 70 Greene opened for pre-leasing in March 2009 and was first fully rented in December 2010; it’s now 96 percent leased. Studios and one-, twoand three-bedrooms are currently priced from $2,110 to $4,180, according to the development’s website. The tower is the rental twin of 77 Hudson, a condo property built by K. Hovnanian Homes that went on sale in September 2007. (Units there are priced from the $400,000s to $2.6 million, according to news reports.) Though 70 Greene is cited as an important development on the Gold Coast, it faced some troubles during construction, namely an October 2007 fire and the March 2008 death of a construction worker. TRD

www.TheRealDeal.com January 2011 61

James Gardner | Architecture Review

Forest City’s building blocks Will the prefab tower at Atlantic Yards look like real architecture, or will it be Lego-like? BY JAMES GARDNER he most remarkable thing — perhaps the only remarkable thing — about the recently released plans for a residential high-rise at Brooklyn’s much-debated Atlantic Yards site is not the design itself, but rather the manner in which the project will be built. Conceived by SHoP Architects for Forest City Ratner, the building will be made up of prefabricated units constructed off-site and then assembled on the premises. The prefab component of construction should allow for considerable savings. The project, known for now as B2 (as in “Barclays Two”), is part of Bruce Ratner’s $4.9 billion, 22-acre Atlantic Yards development. The architectural centerpiece of that project will, of course, be the Barclays Stadium, which SHoP also worked on while preserving the general (and mediocre) vision of Ellerbe Becket, the firm that originally designed the arena after Frank Gehry was very publicly sent packing. B2 is the first of what will eventually be three residential high-rises that will stand on the southern and eastern elevations of the Barclays arena, along Dean Street, Sixth Avenue and Flatbush Avenue. The building will contain 350 of the development’s 1,500 units (half of them for low- and middle-income families). At 32 stories, it promises to be the tallest prefabricated, modular structure ever built. The building’s design was in no small degree determined by the guidelines established by the Empire State Development Corporation, the state entity backing the project, which required a complicated series of setbacks. To judge from the renderings, the stiffly geometric results, with their shifting, syncopated planes, recall the same Deconstructivist aesthetic that inspired a number of buildings on West 42nd Street, among them the Condé Nast building at 4 Times Square and the Reuters building at 3 Times Square — both designed by Fox and Fowle. Perhaps feeling that the pared-down geometry of the structure needed some enhancement, the architects have emphasized the semi-autonomy of each zone by casting it in a different color. In any case, its severe geometry doesn’t look as though, when completed, it will work well with the demonstrative curves of the Barclays arena itself. Though a relatively young firm, SHoP has been quite busy around New York (and around the world) in recent years. I am especially partial to their Porter House, an entire alien structure that cantilevers over the southern side of an old factory building at Ninth Avenue and 15th Street. This

62 January 2011 www.TheRealDeal.com

building is interesting not only for its shape and position, but also for its striking use of white accents against the gunmetal gray of its façade. Also distinguished is the soon-to-open Pier 15 at the South Street Seaport, part of the East River Waterfront Esplanade, the ﬁrst part of which opened last summer. Though the esplanade itself, which SHoP designed, does not overcome the unpleasant fact that it is just beneath the FDR

dwelling in little time. By 1906, Thomas Edison had developed the single-pour concrete system, and two years later, 22 different models of housing were being sold by Sears, Roebuck and Co. Soon, Modernists like Frank Lloyd Wright, Le Corbusier, and Buckminster Fuller were designing such prefab habitations. More recently, Japanese architect Shigeru Ban (he of the Metal ShutRenderings of the so-called B2, a 32-story, prefabricated residential tower, which will contain 350 units. Inset, top: Developer Bruce Ratner. Inset, bottom: The principals of SHoP Architects, from left: Twin brothers Christopher and William Sharples; William’s wife, Coren; and Kimberly Holden with husband Gregg Pasquarelli.

Drive, this new pavilion, which gleams with a reddish ﬁre at night, manages to channel such Miesian glass-box masterpieces as the Farnsworth House and the Neue Nationalgalerie in Berlin in a somewhat deconstructed idiom. In addition, the ﬁrm has designed an audacious model for a new building for the Fashion Institute of Technology here in New York, and also an educational building in Botswana, Africa. The desire to prefabricate American housing has been a dream of developers ever since Augustine Taylor invented the balloon-frame house around 1833, which made it possible for anyone with a hammer to replicate the work formerly done by skilled craftsmen and build a decent

ter House in Chelsea) created inexpensive housing made of freight containers in order to aid earthquake and ﬂood victims. But no one has attempted anything on the order of SHoP’s B2. The construction, which is to begin early this year, is as yet untested on anything of this magnitude. Ratner claims to have spent two years studying modular construction and anticipates that it will cut building costs by as much as 25 percent. His intention is to have 60 percent of the work — including prefabricating 1,000 steel-frame modules — done in a factory. The modules will then be transported to the site and assembled. Naturally, his idea has created friction with the construction unions, which initially threatened to sue on the grounds that

the 17,000 jobs they were promised as part of the Atlantic Yards deal have never materialized. Aesthetically, the great question surrounding B2 is whether, when completed, it will look like real architecture, or like something that’s just rolled out of one of the recently unveiled 3-D printers. Will this development make it possible for good architecture to be produced at bargain-basement prices — or will it prove to be the greatest gift of technology to fans of so-called value engineering? Even more than lackluster design, value engineering is the besetting sin of architecture in the ﬁve boroughs, and it produces that sinking feeling that corners were cut, and the cheapest materials were used, to save the most money. Yet, if anything, New York probably needs its buildings to be more expensive rather than less. Some projects, like the Urban Glass House at 330 Spring Street (which the nonagenarian Phillip Johnson conceived in collaboration with Annabelle Selldorf ) have an excellent design. But their effect is thoroughly vitiated by the paltriness of the manufacturer. Perhaps the problem with value engineering is not the attempt to save money, but the attempt to create something that looks ritzy — when in reality, it’s anything but that. That problem is unlikely to beset the four youngish principals of SHoP (whose name derives from a rough acronym of their last names: The twins Christopher and William Sharples, William’s wife Coren, Kimberly Holden and her husband, Gregg Pasquarelli). Thus far, they have managed to design some attractive, well-made buildings. In this regard, their efforts differ from such recent developments as Lot-ek’s several projects that look, and are, cheap, as well as the general mass of new buildings that cost more than they should — and still look cheap. Surely the project revealed by SHoP looks, from the initial renderings, to be far duller and more conventional — in purely formal terms — than what Gehry had proposed. However, Gehry’s project was overrated, for all the usual mid-cult reasons — adulation of fame and the tendency to associate newness with importance — attendant upon the labors of starchitects. And B2, though perhaps not better, is surely not worse. TRD

www.TheRealDeal.com 200 RENDERING AND GROUP PHOTO FROM SHOP ARCHITECTS; RATNER PHOTO FOR THE REAL DEAL BYAugust MAX DWORKIN

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MANHAT TAN OFFICE MARKET

Leasing legends A ﬁrst-ever ranking of the most senior leasing brokers in New York City

BY ADAM PINCUS ommercial real estate insiders in New York City can easily tick off Manhattan’s top power brokers in the office leasing world — and rank the biggest firms here to boot. But a haze obscures the actual amount of business each of these brokers — who collectively handle millions of square feet of office leasing every year — participates in. This month The Real Deal created a firstever ranking of the city’s most senior leasing agents to shine light on an area of the business that has, for a variety of financial and internal political reasons, been kept out of sight. Creating a list of top leasing agents is not a straightforward process, in part because complex and overlapping broker collaborations make it virtually impossible to untangle who deserves credit. To ensure an even-handed system, The Real Deal adopted a highly restricted meth-

Senior brokers involved in the greatest square feet of known deals

A tally of the highest-ranking agents on Manhattan ofﬁce leasing transactions during 2011 RANK

BROKER

AGENCY SF

# OF TENANT DEALS

TENANT SF

TOTAL # OF DEALS

Mary Ann Tighe, CBRE CEO Tri-State Region

706,164

1,536,074

2,242,238

Scott Panzer, Vice Chairman

JLL

1,944,677

Tara Stacom, Vice Chairman

Cushman

1,502,433

365,082

1,867,515

John Cefaly, Exec. Vice Chairman

Cushman

214,426

1,349,310

1,563,736

Scott Gamber, Vice Chairman

CBRE

1,448,752

21,108

1,469,860

Peter Riguardi, Pres. NY Region

JLL

546,105

813,000

1,359,105

Mitchell Konsker, Vice Chairman

JLL

312,246

1,038,778

1,351,024

William Cohen, Exec. Vice President, Principal

Newmark

1,229,034

25,710

1,254,744

Mitchell Steir, Chairman, CEO

Studley

382,857

854,929

1,237,786

David Falk, Pres. Tri-State Region, Principal

Newmark

704,925

369,729

1,074,654

Brian Waterman, Vice Chairman, Principal

Newmark

752,834

264,617

1,017,451

Neil Goldmacher, Exec. Vice President, Principal

Newmark

1,003,362

Howard Fiddle, Vice Chairman

CBRE

408,794

402,412

811,206

Paul Glickman, Vice Chairman

JLL

725,574

78,885

804,459

Bruce Mosler, Chairman of Global Brokerage

Cushman

231,768

452,308

684,076

Stephen Siegel, Chairman of Global Brokerage

CBRE

377,936

248,814

626,750

Scott Gottlieb, Vice Chairman

CBRE

504,086

110,198

614,284

Michael T. Cohen, Colliers Pres. Tri-State Region

233,626

343,663

577,289

Richard Bernstein, Vice Chairman

Cassidy Turley

111,100

391,967

503,067

Andrew Peretz, Exec. Director

Cushman

456,412

Cushman & Wakeﬁeld’s Tara Stacom

Cushman & Wakeﬁeld’s John Cefaly

Jones Lang LaSalle’s Peter Riguardi

odology. For simplicity and fairness, we credited only the broker with the most senior title on the deal even when other highranking brokers participated. (In the case of brokers with the same title, both were given full credit.) In order to do this, The Real Deal combed 64 January 2012 www.TheRealDeal.com

COMPANY

# OF AGENCY DEALS

TOTAL SF

Source note: Data came from news reports and industry sources as well as ofﬁce leasing databases including CoStar Group. It includes deals of 10,000 square feet and greater for 2011, through Dec. 27. Only the most senior broker on each deal was given credit. In the case of two brokers with the same title, credit was given to both.

through roughly 700 deals totaling more than 25 million square feet. We looked at both deals that were reported in the press and those available through leasing databases, including CoStar Group, to compile a list of 20 senior brokers. The data is for 2011 through December 27.

The ranking includes both renewals and relocation deals that were 10,000 square feet or greater, for Midtown, Midtown South and Downtown. According to Cassidy Turley statistics, roughly 34.8 million square feet of deals (both new and renewals) were done in 2011 — a

total which, unlike The Real Deal’s survey, includes deals for less than 10,000 square feet. The list reveals which brokers were active in 2011 on both the agency and tenant sides. It also indicates, although not explicitly, who brings the most money to a ﬁrm. (Commis-

PHOTOGRAPH OF STACOM FOR THE REAL DEAL BY MARC SCRIVO; PHOTOGRAPH OF RIGUARDI BY MICHAEL TOOLAN

MANHAT TAN OFFICE MARKET sion information is both privately held and closely guarded by the companies.) The findings were shared with all of the firms for verification, but several firms declined to participate. One source said it was simply nobody’s business what kind of activity a broker generated. “To say you have a right to know [how much money] they make — you have zero fucking right,” the source said. Cushman & Wakefield, CBRE Group and Studley said any results The Real Deal came up with would be inaccurate and incomplete because of the limited information available, including confidential deals. “Cushman & Wakefield would never divulge an internal production ranking of its professionals because we believe it’s proprietary information, and because most of our largest transactions are collaborative efforts of many, and not individual, brokers,” a company spokesperson said. CBRE, through a spokesperson, said, “We have a fiduciary duty to our clients to closely guard deal-specific information. As such, we do not make our deal database available to third parties.” But others saw value in attempting to drill down and go beyond vague national transaction tallies or the city’s top 50 lease deals, which are published every six months. “It will be interesting simply because it is not something we typically focus on, and it gives greater clarity on where a lot of the leasing velocity comes from,” said Richard Bernstein, vice chairman at Cassidy Turley. “It is very easy in a market that churns 20 to 30 million square feet to lose some sense of clarity because so many deals are getting done. This will be the scorecard.”

Power players While the term power broker may be overused, it is still unavoidable when talking about the top 10 on the list. In descending order of square feet leased, Mary Ann Tighe, Scott Panzer, Tara Stacom, John Cefaly, Scott Gamber, Peter Riguardi, Mitchell Konsker, William Cohen, Mitchell Steir and David Falk were the most senior-ranking brokers on deals, and leased between 1 million and just over 2.2 million square feet. The combined production of those individuals — who together represent CBRE, Jones Lang LaSalle, Cushman & Wakeﬁeld, Newmark Knight Frank and Studley — was over 15 million square feet, more than 40 percent of Manhattan’s total for the year. CBRE’s Tighe and Cushman’s Stacom were propelled to the top tier by last year’s largest new deal — the 1 million-squarefoot Condé Nast lease at the under-construction One World Trade Center. In that deal, Stacom (see this month’s Closing on page 102) represented the landlord, which is the Port Authority of New York and New Jersey, while Tighe represented the publishing house.

Senior brokers involved in the greatest square feet of known agency-side deals, 2011 RANK

BROKER

COMPANY

# OF AGENCY DEALS

AGENCY SF

Tara Stacom, Vice Chairman

Cushman

1,502,433

Scott Gamber, Vice Chairman

CBRE

1,448,752

William Cohen, Exec. Vice President, Principal

Newmark

1,229,034

Brian Waterman, Vice Chairman, Principal

Newmark

752,834

Paul Glickman, Vice Chairman

JLL

725,574

Mary Ann Tighe, CEO Tri-State Region

CBRE

706,164

David Falk, Pres. Tri-State Region, Principal

Newmark

704,925

Peter Riguardi, Pres. of NY Region

JLL

546,105

Scott Gottlieb, Vice Chairman

CBRE

504,086

Andrew Peretz, Exec. Director

Cushman

456,412

From left to right: CBRE’s Howard Fiddle and Mary Ann Tighe, and Studley’s Mitchell Steir

From left to right: Newmark’s William Cohen and David Falk, and Jones Lang LaSalle’s Mitchell Konsker.

Senior brokers involved in the greatest square feet of known tenant-side deals, 2011 RANK

BROKER

COMPANY

# OF TENANT DEALS

TENANT SF

Scott Panzer, Vice Chairman

JLL

1,944,677

Mary Ann Tighe, CEO Tri-State Region

CBRE

1,536,074

John Cefaly, Exec. Vice Chairman

Cushman

1,349,310

Mitchell Konsker, Vice Chairman

JLL

1,038,778

Neil Goldmacher, Exec. Vice Pres., Principal

Newmark

1,003,362

Mitchell Steir, Chairman, CEO

Studley

854,929

Peter Riguardi, Pres. NY Region

JLL

813,000

Bruce Mosler, Chairman Global Brokerage

Cushman

452,308

Howard Fiddle, Vice Chairman

CBRE

402,412

Cassidy Turley

391,967

10 Richard Bernstein, Vice Chairman

Source note: Data came from news reports and industry sources as well as ofﬁce leasing databases including CoStar Group. It includes deals of 10,000 square feet or greater for 2011, through Dec. 27. Only the most senior broker on each deal was given credit. In the case of two brokers with the same title, credit was given to both.

Panzer, a vice chairman at JLL, earned a top spot by representing NBC Universal with a 1.4 million-square-foot lease renewal at several Rockefeller Center buildings. (On the other side of the deal, representing the landlord GE Capital, was CBRE’s Gamber.) Winning leasing agencies, in which a broker represents an entire building for a landlord, was a consistent route to the top of the pack. Most brokers tend to specialize on one side of the deal or another. Among the top 10 on the list, only a few showed a level of parity in both tenant and landlord deals. On that short list were JLL’s Riguardi, Studley’s Steir, Newmark’s Falk, and Tighe. It’s not easy to crack into the top tier of office leasing brokers. Most of the top 10 agents have a minimum of 20 years in commercial real estate experience. Some insiders pointed out that a number of the biggest rainmakers did not appear on the list, as would be expected. For example, Robert Alexander, a vice chairman at CBRE, is generally recognized as one of the city’s top producers, but he was only publicly identified on four deals larger than 100,000 square feet. Likewise, Bruce Mosler, chairman of global brokerage at Cushman, is missing a few deals that were not made public, according to sources. And, Mark Weiss, a vice chairman at Newmark, had only a small amount of deals listed publicly, but the brokerage said he was on far more than 1 million square feet of office leasing deals in Manhattan in 2011. However, some insiders said big producers may take a piece of the deal “ticket,” but may not want credit publicly, either to keep a low profile or for other reasons. Or they have stricter confidentiality clauses dictated by clients.

Pay day Commissions on leasing deals, of course, are not publicly reported anywhere and are impossible to calculate with certainty, but there are some general rules of thumb that offer a range of how much these top brokers pulled in last year. The basic commission calculation for a tenant broker is about onethird of the gross of the ﬁrst year’s rent payment. So if a 100,000-square-foot lease was signed at $50 per foot annually to start, the commission would be about $1.65 million on $5 million in rent. Of that, the tenant team members would divide up the commission based on factors like who found the business (15 percent), who secured the business (35 percent) and who executed the business (50 percent). Agency brokers get about 20 percent to 50 percent of the amount a tenant broker gets, sources said, and they give a higher percentage of their commission to those who execute the business. Once the percentages are allocated, each broker loses 30 to 50 percent of their cut to the house. To further complicate matters, Continued on page 91

www.TheRealDeal.com January 2012 65

State of the unions The expiration of a long-held agreement deals a blow to the ‘closed-shop’ model BY KATHERINE CLARKE n a key sign that the relationship between developers and organized labor has changed, the so-called New York Plan — a century-old agreement that required most contractors to use union labor — was allowed to expire Dec. 31. The New York Plan required any member of the Building Trades Employers’ Association — which represents the majority of the city’s construction managers and contractors — to use completely “closed shops,” with all-union labor. But in the middle of last year, the 1,700-member BTEA called for a halt to the agreement, saying it put their members at a competitive disadvantage when going up against non-union outfits for building contracts. Unions are undoubtedly still strong in New York City, historically a heavily prolabor town. But the demise of the New York Plan does indicate a marked shift in the landscape for unions here. “Union influence is declining rapidly,” said Allen Ross, head of construction litigation at the law firm Duane Morris, who represents several high-profile developers. “The market is beginning to open up, and some people are predicting not the death knell of the union, but certainly the death knell of the closed shop.” For many years, the use of non-union construction has been confined to small residential projects in the outer boroughs, industry experts told The Real Deal. But an increasing number of developers are now considering non-union alternatives, they said, due to the economic crisis and the unions’ perceived failure to compete on price with non-union labor. In the past, non-union labor was “mostly in the outer boroughs,” said Louis Coletti, president and CEO of the BTEA. Now, “it’s creeping into Manhattan,” he said. “Manhattan is not a safe haven.” Equity Residential, one of the city’s largest real estate investment trusts, went with non-union construction on its 111-unit rental project at 500 West 23rd Street last year. Homebuilder Toll Brothers opted to go non-union on its second tower at Northside Piers in Williamsburg in 2009. And the Chetrit Organization has hired non-union workers for its controversial renovation of the Hotel Chelsea. Paul Fernandes, chief of staff at the Building and Construction Trades Council of Greater New York, an organization that represents the interests of the unionized construction industry, also attributes the unions’ loss of market share to the financial crisis. But it’s not so much that developers are opting to go non-union, he said; rather, a huge chunk of high-end private-sector construction has simply disappeared since the recession. “A diminished pool of work and [in-

66 January 2012 www.TheRealDeal.com

creased] competition for that work has brought these problems much more to the surface,” Fernandes said. “Class A commercial ofﬁce space, high-rises, upper-income projects — that market is dramatically smaller.” Still, he said, large-scale transportation projects and public works are almost entirely union-constructed. “If you look at

vid Von Spreckelsen said his company likely would have gone union at Northside Piers if it made ﬁnancial sense. “The market had changed, and we had a sense of what we’d be able to sell the condos for,” he said. “It wasn’t a number that would work if we used union construction.” At the New York University Schack Capital Markets Conference last month, Re-

certain types of the market, we’re still very strong.”

lated Companies chairman Stephen Ross complained about the price of union construction. “We can build the same building in Chicago at 50 percent of the cost in New York,” he said. “Working with the unions, it’s hard to compete with other parts of the country. The best thing that could happen to New York is it would become an openshop town.” Most onerous for developers, one real estate honcho said, is not the wages, but the work rules: prescribed lunch hours, coffee breaks, and safety measures that many developers view as excessive and a waste of time.

A ‘closed-shop’ town In the 1970s, non-union construction constituted only about 10 percent of the work going on in New York. Little ofﬁcial data exists on the subject, but industry insiders agreed that the ﬁgure now hovers around 40 percent. “There was a time where if you were operating in a heavily unionized environment, it was almost considered to be anti-American to go non-union,” Ross said. “That’s not really the case anymore.” Toll Brothers senior vice president Da-

The expiration of the New York Plan affects future developments, not projects already under construction. But as the plan takes effect, more developers may opt to use a combination of union and non-union workers, as opposed to the “closed shop” the plan required, said Duane Morris’s Ross. Coletti noted that many developers have pledged to continue using union labor. “Most of the developers we work with would go union with or without the plan,” he said, though he declined to identify the developers in question. Another possible consequence of the plan’s expiration, however, is that it “may

drive a wedge between the unions themselves,” said Ross, the attorney. Aside from dictating the exclusive use of union contractors, the plan speciﬁcally outlines which roles certain workers can carry out. Its expiration will allow certain workers, like carpenters or electricians, to dabble in other kinds of construction, introducing an element of competition that might not otherwise have existed. Traditionally, one incentive for developers to hire union workers has been that they are viewed as more skilled than their nonunion compatriots. Plus, “larger projects, with more mass, require the skill of union Continued on page 88 ILLUSTRATION FOR THE REAL DEAL BY PETER BONO

Q&A

Mortgage market molasses While NYC residential lending is loosening in some corners, the industry is moving slowly in its recovery BY MELISSA DEHNCKE-MCGILL he debt crisis may be rocking Europe’s economy, but in a strange twist, it’s actually had something of a positive effect on New York City’s mortgage market — at least for now. In this month’s Q&A, The Real Deal talked to mortgage brokers and mortgage experts, who said that investors are pouring capital into U.S. Treasurys, which is, in turn, helping to keep mortgage rates low and attractive to buyers. Of course, the turmoil in the global economy is not all good news. It is, of course, also rattling buyers’ conﬁdence. And the mortgage industry is still depressed compared to a few years ago, as evidenced by the fact that the mortgage industry itself employs a fraction of the people it once did. Those who have opted to buy in New York have probably noticed a slight loosening of underwriting standards for condos. And there are plenty of lenders trying to get a

Guy Cecala

publisher, Inside Mortgage Finance Publications There’s obviously a lot of uncertainty tied to the global economy right now with the debt crisis in Europe. So what’s going on with lending for residential properties in NYC? Generally the global debt crisis and the problems in Europe are good for mortgage borrowers in New York. The more turmoil there is in the world, the more investors want to plow their investment dollars into U.S. Treasury securities as a safe haven. And, most mortgage rates are tied to Treasury rates. That’s why we haven’t seen mortgage rates rise in the last two years. They keep going down even though there’s no economic reason for them to be doing so. [Still], turmoil in the global market doesn’t help home-buying activity overall, which is what would be needed to push up home prices. Lending obviously tightened drastically after the meltdown in 2008 and has been pretty tight for a while now. Are you seeing any changes on the lending front? Mortgage underwriting hasn’t changed at all in the last year or two. And, it’s not

you can’t get any ﬁnancing. There’s also an ongoing loosening of underwriting in the private sector, meaning banks that are doing portfolio loans or larger balance loans. Those started out extremely tight in 2009 and have progressively gotten looser. Instead of requiring 40 percent, they went to a 30 percent down payment earlier this year, and now some banks think 20 percent is okay. What are the most positive and negative trends you’re seeing right now in the NYC mortgage industry? [On the positive side], there are a lot of lenders who want to do business in New York and it’s a fairly competitive market. [Buyers have] choices. [On the negative front], credit is still tight — even though there is competition and lenders want to make loans. That’s limiting volume and activity. If you’re going to demand a 20 percent or more down payment and a 740 or higher credit score, that’s going to automatically limit your universe. So what sort of down payment, income and other documentation are banks demanding now from borrowers in NYC? That really hasn’t changed. [Like I said], the rule of thumb is, if you want a Fannie Mae or Freddie Mac mortgage — up to $625,500 — you need a minimum 20 percent down and a credit score of 740 or

“There is no real solid future for private-label residential mortgage securitization, which is obviously a key to opening up the jumbo market.” Matt Hackett, Equity Now likely to change going forward. ... [But] there seems to be some loosening of condo underwriting requirements, which is a big factor in markets like New York. ... It’s not going to change the overall underwriting. You still need a very good credit score, equity or a down payment, but whole buildings won’t be blocked out so 68 January 2012 www.TheRealDeal.com

higher. You can qualify with less, but you will pay a higher rate and have higher payments. FHA is slightly looser; you can get a lower down payment requirement and pay mortgage insurance. But that’s going to add on to your mortgage payment. Private lenders — particularly on loans over $729,750 or outside the reach of the gov-

piece of the action in New York. But mortgages backed by Fannie Mae and Freddie Mac are still limited to buyers who can put at least 20 percent down and have credit scores of 740. Buyers can qualify with less, but they’ll pay a higher interest rate and have higher payments. Meanwhile, one source reported that jumbo lending is starting to come back. But another noted that the future for “private-label residential mortgage securitization” is bleak, adding that that is “obviously a key to opening up the jumbo market.” He also pointed out that unlike conforming loans, which are fully dictated by strict Fannie and Freddie guidelines, jumbo lending is “all over the map.” For example, one lender may require 20 percent down, while another requires 30 percent. For more on what’s going on with reﬁnancing activity, as well as how new FHA loan limits and year-end bonuses are expected to affect residential lending, we turn to our panel of experts.

ernment program — are still extremely tight: a 750 minimum credit score and generally down payments of at least 20 to 30 percent.

get a great deal from a broker now than you were two or three years ago.

There was a report recently that found that nationally the refinancing share of mortgage activity fell last month. What are you seeing with refinancings in NYC? Most homeowners have already refinanced or they can’t. Unfortunately, home-buying activity has not picked up any of the slack. Nationwide we are anticipating producing lower mortgage volume in 2012 than we did in 2011, due entirely to the fact that refinancing activity is expected to go down, while home-buying activity is not increasing.

CEO, Guardhill Financial What’s going on with lending for residential properties in NYC? Residential lending remains cautious in that most lenders will approve or reject loans based on adhering strictly to the guidelines, rather than underwriting the deals based on whether they make sense. This has been the standard for the last year. In the boom times, most lenders were approving loans based on underwriting guidelines that required much less veriﬁcation.

What’s the size of the mortgage industry like in terms of employees these days? It is way down. There are a lot of people who’ve been laid off; it’s a flexible business in terms of hiring. When you have the volume, you hire a lot of loan officers or shift business to brokers. When you don’t have business, you lay them off and cut back. We were generally in cutback mode for a lot of 2011. I hear of smaller lenders hiring, but the big boys generally aren’t, and that’s where the big numbers are. That’s not likely to change. The rules dictating how mortgage brokers are compensated were recently changed. Instead of being paid based on the interest rate of the loan, brokers are now being paid up to 3 percent of the loan value itself. How is that impacting the industry? It’s basically part of a continuing trend to blacklist or reduce activity for mortgage brokers. Mortgage brokers used to be on a level playing field — if not an elevated playing field — when it came to their ability to originate loans and sell them to larger lenders. There are fewer larger lenders that will even deal with brokers these days. As a borrower you are less likely to

Alan Rosenbaum

What kinds of residential buyers in NYC are most likely to get loans these days? Buyers with a down payment of 20 to 35 percent, depending on loan size, are able to obtain excellent ﬁnancing today. What is the most worrying trend you’re seeing in the NYC mortgage industry right now? That the larger banks are de-emphasizing mortgage lending.

Matt Hackett

underwriting manager, Equity Now What is the most worrying trend you’re seeing in the NYC mortgage industry right now? It is sort of nationwide, but the uncertainty in the mortgage market as a whole. There is no real solid future for private-label residential mortgage securitization, which is

Q&A obviously a key to opening up the jumbo market. Any loan over $625,500 needs to go on a bank balance sheet — or get securitized. [But] there is a ton of ambiguity around the laws and what’s going to happen to the private-securitization market. That [ambiguity] has basically stalled that market. ... That’s the biggest issue for jumbo loans in New York. What differences are you seeing in NYC between conforming and jumbo loans? Everything, really. One market is based on two automated underwriting systems — the conforming market. Everything is dictated to the T by the Fannie and Freddie guidelines. But everything is also standardized and easy to deal with and relatively streamlined. The jumbo product is all over the map. There isn’t a huge secondary market for it. Everyone is putting it on their balance sheet and they all have their own guidelines and views that they want you to follow. One local bank could say 80 percent for a loan amount and another could say 70 percent. You have to do a lot more homework if you’re applying for a nonconforming loan. Has refinancing activity dried up? And is home buying picking up the slack? I have not seen home-buying activity picking up the slack, but I also haven’t seen refinancing activity dropping precipitously in New York. We are a company that does mostly refinances, so I wouldn’t say that I had my finger on the pulse of the purchase markets, but we are still getting tons of refi applications. FHA loans became popular in NYC a few years ago. But there were concerns about some loan originators steering buyers to FHA loans because they’re more profitable to service. What kinds of concerns still exist about FHA here? On April 1, a law came into effect that loan originators are not supposed to be paid based on the profit of the loan. Theoretically that should have eradicated that issue. I’m sure it hasn’t, because even though the law says you can’t compensate loan officers based on profitability, from what we are seeing out there talking to loan officers, there seem to be some people that think they can get away with breaking that law. [But] at least [the law] is a step in the right direction. What’s the size of the industry like compared to the recent past? It has to be less by a big margin. Some of these employee-regulatory laws put a tremendous onus on people because we can’t just hire somebody. We have to take months and months until they get licensed. ... The industry has been pretty downtrodden. It’s not at the low point of maybe 2009, when everybody was depressed. I think now only 75 percent of people are depressed.

Brooke Jacob

chief loan officer, the Everest Equity Company What kinds of buyers in NYC are least likely to get loans these days? The most difficult purchase transactions to finance are new condo developments where one or more of today’s basic lending guidelines are lacking. Examples are insufficient number of units sold; any one investor owns more than 10 percent of the units in the project; too many units are non-owner-occupied; greater than 35 percent of total square footage is commercial use; the sponsor or seller is cutting deals for some buyers; and comparable units appear overpriced. Lenders are issuing mortgages for new construction projects, but it really helps when developers have done their research. What is the most positive trend you’re seeing right now in NYC? That with all the pent-up demand from slower sales in the past three years, many buyers are finally getting off the fence to sign purchase contracts. What is the most worrying trend? Due to the current economic climate, year-end bonuses are disappointing for many prospective buyers. This can be a downer on confidence and, as a result, would-be buyers may further delay their decision to purchase. What impact do you expect the increase in FHA loan sizes to have here in NYC? New York homebuyers have been waiting for FHA’s loan-size increase. The new limit of $729,750 offers relief for buyers in the outer boroughs, but not for Manhattan buyers, where the average sales price of an apartment is well over $1 million. It was $1.46 million in the third quarter.

Jeffrey Appel

sales manager, MetLife How is the refinancing market in NYC? The refinancing market will stay active for the foreseeable future, but as we reach the bottom of the rate cycle, the volume is likely to diminish. What impact do you expect the increase in FHA loan sizes to have here in NYC? This is a great benefit, particularly for condominiums that are FHA approved. By raising the FHA limit there will be more opportunity for those who do not have the 20 percent down, but can service

the cost of the home. New York is not a cheap place to be a home seeker, between purchase price and required closing costs. This change in the lending limit will allow more people to own a home and earn equity as the market corrects in the midterm. What’s the size of the industry like compared to the recent past? The industry is smaller and more consolidated, but the people still in it are more knowledgeable. With new licensing and continuing education requirements for mortgage professionals, I believe it’s a better environment for consumers. I think we will continue to see people exit the profession.

Melissa Cohn

president, the Manhattan Mortgage Co. What is the most positive trend you’re seeing in the NYC mortgage industry? The influx of new jumbo lenders. What’s the most worrying trend? That existing co-ops and condos are not working to become more Fannie and Freddie compliant, making it very difficult for people to buy in their buildings and for owners to refinance in their buildings. Some of the buildings simply can’t afford to do so. For example, Fannie Mae requires that you have 10 percent of the annual budget in reserve and that there is a line item in the budget to make sure that you continue to accrue the 10 percent in reserve. Some buildings don’t have the cash, or the boards are not willing to increase maintenance or common charges in order to create the reserve. It’s a real issue. What are you seeing in NYC with refinancing activity? Has it dried up? Refinancing has not dried up, and the good news is that purchase activity has definitely increased, which is why you are seeing refinancing as a smaller share of total mortgage activity. A couple of months ago, we were looking at 80 percent of our business being refinances and 20 percent purchases; I think we are at 65 percent to 35 percent now. Fannie and Freddie are obviously still financially struggling. What impact is that having in NYC? Fannie and Freddie are making it more expensive to get mortgages these days. They have new overlays in terms of the cost of financing. So, for example, it used to be when financing up to 75 to 80 percent, there would be no additional cost if you had good credit. That’s not the case anymore. So even if you have a credit

score over 740 and you want to ﬁnance 80 percent, they are imposing additional fees and have also ratcheted down the credit score tiering so it gets more expensive very quickly. They are also making fewer waivers and making fewer exceptions on buildings that don’t meet Fannie and Freddie guidelines. They’re making it harder to get ﬁnancing in general.

Rolan Shnayder

director of new development lending, H.O.M.E. Bank What’s going on with lending for residential properties in NYC? For New York, getting co-ops and condos approved has been getting more and more difficult. There are still updates coming out pretty regularly on guidelines. We have also seen the regulatory agencies — FHA, Fannie Mae — making constant updates to their guidelines. What sort of documentation are banks demanding now from NYC borrowers? Documentation hasn’t really changed except for the fact that we have more choices for doing what’s called “stated-income loans,” loans where you don’t need to prove income. “Reduced documentation” is another term for it. For borrowers that have 40 to 50 percent to put down and don’t want to verify their income, there are more loans available. ... Banks are comfortable with that because the person has so much equity in the property. If the person has a great credit history, it’s a risk they are willing to take. What changes have you seen in the jumbo-loan market in NYC? A year ago you had to put down 25 percent, 30 percent and 35 percent to get those jumbo mortgages. I’m seeing more banks allowing jumbo mortgages with 20 percent down. I would think it’s because the jumbo market has done very well and banks are confident with pricing and are starting to lend again. What’s the size of the industry in NYC compared to the recent past? The barriers to entry have definitely increased. I think there are a lot less people left in the industry, but I think the people that are left are educated and the competition is getting stronger. Rule changes mean that brokers are now being paid up to 3 percent of the loan value rather than being paid based on the interest rate. Does that mean the lower end of the market will get ignored? I would say yes. I think that is going to hurt the lower end of the market. I think they are going to be ignored. TRD www.TheRealDeal.com January 2012 69

Tri-state briefs NEW JERSEY

LG approved for new HQ Local officials voted last month to allow LG Electronics USA to build its new $300 million North American headquarters in Englewood Cliffs, the Bergen Record reported. LG had filed an application last year to replace the company’s current headquarters on Sylvan Avenue — and office space it rents in two other buildings — with a 493,167-square-foot complex. At eight stories, the facility’s central building will be the tallest in the

A rendering of LG’s new headquarters

borough and peak above the tree line of the Palisades, a fact that has drawn criticism from the Palisades Interstate Park Commis-

sion. The Englewood Cliffs Zoning Board of Adjustment voted to grant the company several variances, including one that would allow a 143-foot-tall building in an area zoned for structures no taller than 35 feet. “This is really a major milestone and gives us the conﬁdence to move forward with this major project,” said John Taylor, vice president of public affairs and communications at LG, which manufactures cell phones, televisions and other appliances. The company said it hopes to break ground in 2012, pending approv-

al from the state Department of Transportation.

CONNECTICUT

Mortgage fraudster gets 10 years in prison A Connecticut man accused of masterminding a wide-ranging mortgage scam was sentenced to 10 years in federal prison by Hartford’s U.S. District Court, the New London Day reported. Syed Babar, a 29-year-old from New London, was also ordered to pay back $4.7 million in restitution for fraud that cost lenders millions of dollars. Ba-

bar pleaded guilty last year to one count of conspiracy, eight counts of wire fraud, one count of mail fraud and four counts of making false statements to the government. Prosecutors said he coordinated the sale of some 30 Connecticut properties to “straw buyers” for inﬂated prices. The buyers then abandoned the properties, usually without making any mortgage payments, allowing members of the conspiracy — including an attorney, an appraiser and a mortgage broker — to proﬁt. ROCKLAND COUNTY

Simon says: New mall for Nanuet shoppers

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Rockland County’s holiday shoppers will have a shiny new mall by Christmas of 2013, according to the Journal News. Simon Properties made its ﬁrst presentation to the Clarkstown Town Board (which has jurisdiction over the hamlet of Nanuet), detailing plans to replace the current Nanuet Mall — Rockland’s oldest mall — with the open-air Shops at Nanuet. When completed, the new facility will cover 747,550 square feet and include a 12-screen movie theater, a ﬁtness center and an upscale grocery store, the developer said. Most of the current mall will be demolished starting Jan. 1, and construction is slated to begin in March. Simon said it will leave in place about 400,000 square feet of the facility that it does not own, which includes a Macy’s and a Sears. The Nanuet mall has lost tenants for years to the Palisades Center in West Ny-

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The existing Nanuet mall

ack, which opened in 1998, and Simon hopes a refurbished facility will bring customers back. “This has been a long time coming,” said Thomas Schneider, the executive vice president for development at Simon. “We are excited to get this project started.” Though Simon is in talks with possible tenants, he said, no details have been released about speciﬁc retailers. Compiled by Russell Steinberg

Please join us in congratulating Senior Vice President,

Caroline Bass on her inclusion in Forbes Magazine’s list of real estate’s “Top 30 Under 30” for 2011.

This honor is well deserved, and everyone at Citi Habitats is very proud of all that Caroline has achieved in her career.

All information is from sources deemed reliable but is subject to errors, omissions, or withdrawal without notice. No representation is made as to accuracy of any description. Owned and operated by NRT, LLC.

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

The Reno skyline

more than an acre of prime real estate at 150 and 151 El Camino Drive, one block from Rodeo Drive. The 116,000-squarefoot complex now houses the music division of WME, as William Morris became known after it merged with Endeavor in 2009. The price, about $412 per square foot, is consistent for trophy commercial property in the area, the Hollywood Reporter said. WME said it plans to move out of the space, though there is no timetable for vacating it. In 2008, William Morris The former William Morris headquarters

Reno In one of the largest land sales in U.S. history, a 1.28 million-acre Nevada parcel traded hands for $31 million last month, according to the CBRE Group, which represented the seller. The property stretches all the way from Reno to the border of Utah, and is approximately the size of Rhode Island. The buyer, Florida-based Fountain Investments, also purchased mineral rights for 800,000 acres of the parcel. The seller was Pico Holdings, a California-based holding company. Pico’s former chief geologist will join Fountain as an adviser to oversee mineral extraction on the land. “A land sale for more than $30 million is very signiﬁcant today,” Steve Lehr, senior managing director with CBRE’s Land Services Group, said in a statement.

Houston The world’s largest ofﬁce lease for 2011 was executed last month at Shell Plaza in downtown Houston, Property Magazine International reported. The renewal by Shell Oil Company, for 804,419 square feet at One One Shell Plaza

Shell and 471,934 square feet at Two Shell, is for 15 years. The company has been a tenant at Shell Plaza — a 2 million-square-foot, Class A office property — for 40 years. The building was developed in 1970 by the international real estate firm Hines, which has continued to own and manage it since then. Shell was represented by the Cushman & Wakefield team of Tim Relyea and Joe Peddie. Hines was represented in-house by Charles Elder and Chrissy Wilson.

Washington, D.C. The Washington, D.C., metro area saw the highest number of signed contracts for the month of November in six years, according to RBI Pending Home Sales Index data released last month. The region saw 3,781 signed contracts in November — 10.3 percent less than the 4,215 signed in October, but 23.3 percent more than the ﬁve-year November average. The report also showed modest month-to-month gains for home prices in the region. The median closed sales price was $335,000, 4.7 percent more than the previous month. There were 2,926 closed sales in November, up 3.9 percent from the previous month, marking only the second time in the past decade where closed sales increased from October to November. There were 348 foreclosed sales, down 35.7 percent from November in 2010.

Chicago The Federal Housing Finance Agency sued the city of Chicago last month over a rule that makes mortgage creditors liable for the upkeep of vacant properties, the Wall Street Journal reported. Under an ordinance signed into law by Mayor Rahm Emanuel, lenders face daily ﬁnes of up to 72 January 2012 www.TheRealDeal.com

$1,000 if they don’t mow lawns and provide basic maintenance of unoccupied buildings, even those that haven’t yet been taken back through foreclosure. After lenders threatened to sue, the city revised the law in November by dropping a provision that had deﬁned creditors as property owners. But that didn’t satisfy the FHFA, which said the regulation unfairly imposes all of the costs of ownership without any of the beneﬁts, such as the right to sell or lease the property. “We are looking into the details of the lawsuit, but this type of action demonstrates the need for swift action” by the state “to hold lenders responsible for securing vacant properties,” a spokesperson for Emanuel told the Journal. Chicago has one of the biggest foreclosure backlogs in the country, which has worsened the problem

Rahm Emanuel

of neglected vacant buildings. Nearly 1,900 vacant properties in Chicago are stuck in the foreclosure process, at a total of $36 million in upkeep costs borne by the city, according to the Journal.

Los Angeles CIM Group last month paid $47.8 million to buy the former Beverly Hills headquarters of the William Morris Agency from Brickman, a New York City-based developer, according to the Hollywood Reporter. The iconic two-building spread sits on

sold the two buildings and another at 150 South Rodeo Drive to Cape Horn Group, a Chilean investor, for $143 million, or $783 per square foot. Brickman was Cape Horn’s lender and it acquired the properties from the company prior to a formal foreclosure. Meanwhile, “King of the Hill” creator and star Mike Judge purchased a 3,700-square-foot Santa Monica home last month for $4.45 million, the Los Angeles Times reported. The four-bedroom house features three stone fireplaces, a gym and a guest house. Seller Richard Taite, chief executive of the Cliffside Malibu rehab facility, purchased the house for $3.6 million in 2009. Judge is perhaps best known as the creator of longrunning MTV Mike Judge animated sitcom “Beavis and Butthead,” and as director of the cult-favorite film “Office Space.”

Atlanta Metro Atlanta home values dropped nearly 15 percent year-over-year in October, the Atlanta Business Chronicle reported last month. Data from the real estate website Zillow put Atlanta’s average home value at $109,700 in October, down 1.4 percent from September and 14.7 percent from October 2010. Atlanta’s home values in October were also down 37.6 percent from the market’s peak. Nationally, home values dipped 0.3 percent from September and fell 5.1 percent to $147,900 year-over-year, Zillow said. “As expected, home values continue to fall in the back half of this year due to an abundance of housing supply relative to demand,” Stan Humphries, Zillow’s chief economist, said last month. “Potential buyers remain on the sidelines or doubled up in other households, despite record-high housing affordability and historically low mortgage rates. This crisis of consumer conﬁdence, along with high rates of negative equity, are the biggest factors hindering a housing recovery.” Compiled by Guelda Voien

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On the market Midtown West office building on the block A 12-story loft office building at 335 West 35th Street is on the market with an asking price of $27 million. The 87,100-square-foot prewar property, located between Eighth and Ninth avenues, is 90 percent occupied. The majority of the tenants have below-market-rate leases, which may be terminated within a year. “Current zoning allows for multiple redevelopment 335 West 35th Street strategies, including conversion to office or hotel use. Even a residential conversion could be implemented,” Eastern Consolidated’s Brian Ezratty said in a news release. Ezratty is handling the assignment with Gabriel Saffioti and Scott Ellard.

Commercial condo for sale in FiDi A multilevel commercial condo at 40 Broad Street is on the market with an asking price of $25.3 million, or $375 per square foot. The four floors, totaling 67,500 square feet, are located at the base of the Setai Wall Street, a 33story luxury condo tower, and can be purchased in their entirety or as indi40 Broad Street vidual floors. Owned by a joint venture of DMR CRE Opportunity Fund and CTNY Investors LLC, the building consists of 159 residential units on floors eight through 33 and offices on floors four through seven,

Commercial properties recently placed on the market

as well as the Setai Spa, Michelin-starred restaurant SHO Shaun Hergatt and vacant retail space. The property is on the market with Cassidy Turley’s David Lebenstein, Stephen Bellwood and Edward Kent.

UWS apartment building on the market The developer of a nine-unit building at 208 West 96th Street has abandoned plans to sell the units as condominiums and instead is offering to sell the entire property, with an asking price of $22.8 million. Brooklynbased Manor Properties Group constructed the 10-story building, and was granted a certificate of occupancy in April. But attempts by Halstead Property Development Marketing to sell the units as condominiums failed. 208 West 96th Street Then Manor Properties tried renting the apartments, which are all full-floor, three-bedroom units. Now, Eastern Consolidated has been tapped to sell the building, which has a retail unit on the ground floor.

Murray Hill school building for sale A vacant building at 237-241 East 34th Street that was previously used as a lecture hall facility is for sale with an asking price of $16.5 million. Yeshiva University is selling the 17,875-square-foot property, located on the north side of East 34th Street between Second and Third avenues. The building consists of a 359-seat lecture hall on the ground ﬂoor, ofﬁces and storage in the basement, storage

and utility rooms on the second floor, and offices on the third and fourth floors. The property, which will be delivered vacant, offers about 49,380 buildable square feet. Massey Knakal’s John Ciraulo, Michael Azarian and Kobi Leifer are handling the sale.

237-241 East 34th Street

Brooklyn development site asking $15M A block-through development site at 110 Beard Street in Red Hook, Brooklyn, is on the market. The sale, which is being handled by Massey Knakal, has an asking price of $14.95 million. The current owner is Beard Street Acquisition LLC, which purchased the property for $11.6 million in 2008, according to city records. The 193,800 square feet of buildable space is zoned for hotel, retail, commercial or industrial development, according to the listing.

Bronx apartment buildings on the block Two apartment buildings at 2828 and 2885 Valentine Avenue in the University Heights section of the Bronx are on the market with an asking price of $7.3 million. Located within a block of each other, between East 197th and East 199th streets, the prewar buildings have a combined 84 residential units, with an occupancy rate of 96 percent. The properties together have 79,275 square feet of space. Moses Sioni of Sioni & Partners is handling the assignment on behalf of the owner. Compiled by Linden Lim

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Deal Sheet summary

The Deal Sheet, on pages 76 to 84, covers transactions from 11/11/11 through 12/10/11. Please submit future deals to deals@therealdeal.com.

Sales

Overview

By type

Property sales Deals Dollars

41 $1,153,230,000

Financing

By dollar volume (in millions)

Development

Hotel

Industrial

Mixed-Use

Mixed-Use Multi-family

0 3.4

Multi-family

149.1

95.65 170.61

Transactions

Office

577.4

Buildings

Retail

157.07

Aggregate value

$1,042,300,000

Leases Office

Retail

Total

127

Leases square feet Office Retail Total

1,001,254 210,755 1,212,009

Office leases Office leases by industry Industry

Office leases sf by industry Leases

Advertising & Marketing

Industry

Top tenant reps for office leasing by sf

Square feet leased

Tenant representative

Square feet leased

Advertising & Marketing

138,175

The CBRE Group

284,699

Architecture & Design

13,200

Newmark Knight Frank

151,116

Construction

17,500

Jones Lang LaSalle

83,886

Education

60,630

Cresa Partners

65,500

Fashion*

185,408

Cassidy Turley

64,433

Film Production

22,373

Studley

57,691

Financial

47,231

Cushman & Wakefield

31,500

Health & Beauty

11,100

Rice & Associates

31,064

Jewelry

57,691

Prudential Douglas Elliman

20,383

Legal

12,958

Adams & Co.

20,333

Medical

26,477

CBC Hunter Realty

19,670

NGO

128,718

Spiegel Real Estate

16,000

NGO Other / n/a

Other / n/a

41,369

Okada & Co.

14,600

Real Estate

127,274

New Street Realty Advisors

12,484

Science & Technology

103,350

Benchmark Properties

11,250

Telecommunications

JFW Realty Corp.

11,000

7,800

Retail leases Top tenant reps for leasing by sf

Retail leases by industry

Broker

Drugstore

34,490

Fashion

36,650

Square feet leased

Retail leases sf by industry

Winick Realty

45,190

Fashion

Thor High Street Advisors

17,000

Food & Beverage

62,245

Katz & Associates

15,000

Health & Beauty

37,062

Newmark Knight Frank

14,100

Medical

13,987

PBS Real Estate

12,000

Other

26,321

NAI Friedland Realty

11,957

NYCRS

10,150

Prudential Douglas Elliman

10,000

Siderow Organization

10,000

The CBRE Group

9,000

New Street Realty Advisors

7,256

Cassidy Turley

7,241

City Connections Realty

5,230

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

3 12

www.www.TheRealDeal.com January 2012 75

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 11/11/11 to 12 /10/11. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

3 Columbus Circle

124,760

Young & Rubicam Group / M. Tighe, G. Tosko, CBRE

SL Green; The Moinian Group / J. Kuhn, S. Klau, B. Waterman, E. Harris, L. Korman, Newmark Knight Frank

The advertising firm signed a 20-year lease for floors nine, 10, 18 and 19. In addition, the company purchased an additional 214,372 square feet at the building, also known as 1775 Broadway, as a commercial condominium, Crain’s reported.

1740 Broadway

100,000

Limited Brands Inc. / M. Tighe, E. Deutsch, K. Meyerson, CBRE

Vornado / Represented in-house

The apparel company signed an expansion lease for floors 14 through 17, the New York Observer reported. The tenant will now occupy 500,000 square feet total in the building. The company owns retail brands such as Victoria’s Secret and Bath and Body Works.

175 Varick St

75,000

WeWork / Sean Black, Jones Lang LaSalle

Extell Development / M. Myers, E. Meyer, R. Plehn, S. Hecht, Colliers International

The provider of office space and community work space signed a new 15-year lease on the ground floor, the third floor through the fifth floor and the eighth floor. The company has three other Manhattan locations: at 154 Grand Street, at 349 Fifth Avenue and at 1 Little West 12th Street.

350 Fifth Ave (Empire State Building)

70,000

Human Rights Watch / B. Waterman, L. Bank, K. Kronstadt, R. Kramer, Newmark Knight Frank

W&H Properties / W. Cohen, R. Kass, Newmark Knight Frank

The nonprofit signed a lease renewal and expansion for part of the 33rd floor and the entire 34th and 35th floors.

120 Park Ave

60,000

Oracle Corp. / M. Rayner, J. Roundell, J. Halpern, Cresa Partners

120 Park Avenue Associates / P. Glickman, D. Biasotti, Jones Lang LaSalle

The computer technology firm signed an 11-year lease for part of the 24th floor and the entire 25th and 26th floors.

200 Fifth Ave

57,691

Tiffany & Co. / M. Steir, M. Barlow, Studley

L&L Holding / Represented in-house

The jewelry company signed an expansion lease for an extra floor, bringing its total occupancy in the building to 345,000 square feet, the New York Post reported.

112 West 34th St

52,274

Regus / M. Ravesloot, W. Iacovelli, CBRE

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

The office workspace provider signed a lease on the 17th and 18th floors.

200 Madison Ave

50,000

Garan Incorporated / J. Saunders, N. Flagg, Newmark Knight Frank

n/a / n/a

The Warren-Buffett-owned clothing company signed a 10-year expansion lease on the entire fourth floor, the New York Observer reported.

236 West 27th St

45,130

Fashion Institute of Technology / Grant Greenspan, Kaufman Organization

Jonathan Rosen / Perry Mesmer, Colliers International

The school signed a lease, the New York Post reported.

641 Sixth Ave

31,500

Infor / B. Mosler, A. Rappaport, C&W

Atlas Capital Group / P. Turchin, G. Rothkin, CBRE

The business application software company signed a lease for part of the third floor and the entire fourth floor.

245 Park Ave

20,700

Skandinaviska Enskilda Banken / A. Schreier, J. Schindler, Cassidy Turley

Brookfield Office Properties / Represented in-house

The Nordic financial company signed a long-term lease.

505 Eighth Ave

18,060

Common Ground / M. Furst, D. Lebenstein, Cassidy Turley

Newmark Holdings / E. Gural, A. Gurevich, Newmark Knight Frank

The nonprofit signed a 10-year lease on the fifth and 12th floors.

28 West 44th St

17,773

Crew Cuts Inc. / Rob Silver, Newmark Knight Frank

APF Properties / D. Rosenbloom, J. Goldman, J. Fales, M. Blanchard, C&W

The commercial and film post-production company signed a lease renewal on the 21st and 22nd floor.

519 Eighth Ave

16,000

Skanska Railworks Joint Venture / Ted Spiegel, Spiegel Real Estate

n/a / S. Kaufman, B. Raskob, Kaufman Organization

The construction development company signed a five-year lease. The reported asking rent was in the mid-$30s per square foot.

160 Fifth Ave

15,173

The Simons Foundation / P. Hennessy, W. Miller, Cassidy Turley

RFR / A. Chudnoff, M. Konsker, J. Tootell, M. Ginberg, Jones Lang LaSalle; O. Katcher, RFR

The nonprofit signed an expansion lease for the entire second floor.

1465 Fifth Ave

12,484

Harlem Children’s Zone / M. Gorman, J. Gettler, New Street Realty Advisors

Site 8 Developers Equities LLC / n/a

The nonprofit signed a long-term lease for three floors.

350 Seventh Ave

11,850

Augme Technologies / M. Sevillano, C. Okada, Okada & Co.

n/a / Bernstein Real Estate

The technology firm signed a lease.

34 West 33rd St

11,250

Accessory Innovations LLC / Michael Beyda, Benchmark Properties

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

The children’s apparel and accessory maker signed a 13-year lease. The reported asking rent was $39 per square foot.

5 Columbus Circle

11,000

Riverside Associates / JFW Realty Corp.

n/a / Jeffrey Rosenblatt, Newmark Knight Frank

The psychologists signed a lease for the entire 10th floor.

151 West 26th St

10,500

T. Schreiber Studio & Theater / M. Furst, D. Lebenstein, Cassidy Turley

Abner Properties / Louis Prisco, Colliers International

The acting school signed a 10-year lease renewal and expansion.

10 Hudson Square

9,715

Jen Kao / Michael Schoen, Savitt Partners

Trinity Real Estate / n/a

The fashion designer signed a 10-year lease, the New York Post reported.

253 West 35th St

9,001

Amida Care Inc. / Allen Gurevich, Newmark Knight Frank

Shulsky Properties / A. Bonett, N. Zagar, Adams & Co.

The nonprofit signed a five-year lease. The reported asking rent was $28 per square foot.

660 Madison Ave

8,886

Falcon Edge Court / A. Chudnoff, D. Turkewitz, Jones Lang LaSalle

n/a / P. Amrich, S. Zarba, N. King, CBRE

The tenant signed a lease for 10 years and 11 months on the 19th floor.

40 Fulton St

8,583

Laws.com / Anita Grossberg, Prudential Douglas Elliman

Vornado / n/a

The legal website company signed a 10-year lease for its corporate offices.

1140 Broadway

8,500

ICrave / Elie Reiss, Rice & Associates

1140 Associates / Michael Joseph, Colliers International

The design studio signed a lease.

424 West 33rd St

7,800

Stanacard LLC / Anita Grossberg, Prudential Douglas Elliman

424 West 33rd Street LLC / n/a

The telecommunications company signed a seven-year lease. The tenant is relocating from 1350 Sixth Avenue.

350 Fifth Ave (Empire State Building)

7,665

Acronym Media / Daniel Bodner, CBRE

W&H Properties / W. Cohen, R. Kass, Newmark Knight Frank

The search engine marketing firm signed an expansion lease.

159 West 25th St

7,500

Iconology / Michael Okun, CBC Hunter Realty

Thomas Campenni Co. / Represented in-house

The digital platform for comic books signed a lease.

420 Lexington Ave

7,457

Phoenix Investment Advisor / Loren Biller, Kaufman Organization

SL Green / Represented in-house

The securities investment advisor signed a 10-year lease on the 20th floor. The tenant is relocating from a smaller space in the building.

524 Broadway

6,600

Health Guru / Elizabeth Juviler, Rice & Associates

Viad / Robert Gallucci, Newmark Knight Frank

The health and wellness company signed a lease.

76 January 2012 www.TheRealDeal.com

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Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

5 Columbus Circle

5,500

1Life Healthcare / Edward Wartels, Cresa Partners

n/a / Jeffrey Rosenblatt, Newmark Knight Frank

The healthcare company signed a lease on the 17th floor.

620 Foster Ave (Brooklyn)

5,333

Premium Health / Nick Zweig, Locations Commercial Real Estate

n/a / Nick Zweig, Locations Commercial Real Estate

The medical office signed a lease.

500 Eighth Ave

5,000

Resource Training Center / H. Schuster, J. Gladstone, Walter & Samuels

Walter & Samuels / H. Schuster, J. Gladstone, Walter & Samuels

The school signed a lease.

333 Park Ave South

4,600

Red Square Productions / Elissa Groh, Rice & Associates

Bloch Graulich Associates / J. Robinson, J. Charles, Bond NY

The film and television production company signed a 10-year lease.

188 Montague St (Brooklyn)

4,512

Fidelity National Title Insurance Company / Ingram & Hebron Realty; Colliers International

The Treeline Companies / Represented in-house

The real estate insurance company signed a lease.

8 West 38th St

4,375

Okun, Oddo & Babat / Michael Okun, CBC Hunter Realty

Fraglow Realty / n/a

The law firm signed a lease.

56 West 45th St

4,000

Turkish Cultural Center / F. Consolo, J. Aquino, Prudential Douglas Elliman

n/a / Cassidy Turley

The nonprofit signed a lease on the fourth floor.

292 Madison Ave

3,600

Burford Group / Signature Partners

Herald Square Properties / CBRE

The investment advisor signed a new lease on the 23rd floor.

112 West 34th St

3,425

Taylor Consulting & Contracting LLC / Ira Rovitz, Grubb & Ellis

112 West 34th Street Company LLC / n/a

The energy consulting firm signed a five-year lease.

213 West 35th St

3,250

Nikki Apparel Ltd. / A. Bonett, D. Theodore, Adams & Co.

n/a / Samuel Stein, Justin Management

The apparel company signed a five-year lease. The reported asking rent was $27 per square foot.

1330 Sixth Ave

3,179

Karya Capital Management / Michael Okun, CBC Hunter Realty

n/a / William Elder, RXR Realty

The investment firm signed a lease.

19 West 21st St

3,130

Taboola / Thomas Jacobs, Rice & Associates

Fifth Ave. Partners / A. Defortuna, V. Hehra, Professional Consortium

The video discovery and distribution platform signed a lease.

244 Fifth Ave

3,000

Masterson Group / Alan Markowitz, Sandmark Realty

Pro-Media / Elizabeth Juviler, Rice & Associates

The advertising firm signed a sublease.

247 West 35th St

3,000

CSH Martial Arts / Brett Maslin, Adams & Co.

n/a / Adams & Miller

The martial arts studio signed a five-year lease. The reported asking rent was $32 per square foot.

317 East 34th St

2,894

Michael Margiotta, M.D. / Brentler Inc.

317 East 34th Street / David Levy, Adams & Co.

The medical office signed a seven-year lease renewal. The reported asking rent was $58 per square foot.

34 West 33rd St

2,890

United States Accessories Inc. / David Levy, Adams & Co.

Arcade Building Associates / David Levy, Adams & Co.

The accessories company signed a one-year lease. The reported asking rent was $36 per square foot.

39 Broadway

2,820

Doyle & Roth / Neil Murray, CBC Hunter Realty

Lawrence Group LLC / n/a

The supplier of heat-transfer equipment signed a lease.

7 West 45th St

2,750

Pekoe Group / Jay Meran, Okada & Co.

n/a / Phil Amarante, Colliers International

The marketing firm signed a sublease.

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

78 January 2012 www.TheRealDeal.com

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

684 Broadway

2,744

SMCP Inc. / D. Baker, J. Louzon, Isaacs & Co.

Olmstead Properties / Represented in-house

The fashion company signed a lease for showroom and office space. The reported asking rent was $48 per square foot.

11 West 25th St

2,500

La Boutique / Elie Reiss, Rice & Associates

Kew Management / Represented inhouse

The graphic design company signed a lease.

5 Hanover Square

2,340

Braemar Steege Inc. / M. McKenna, T. Wilson, Newmark Knight Frank

n/a / n/a

The energy-adjusting company signed a lease.

541 West 25th St

2,300

Asia Art Piers / Earl Bateman, Rice & Associates

25th Street Art Partners / Jamison Weiner, The Manhattes Group

The art gallery signed a lease in the office building.

19 West 34th St

2,250

New Life Accessories / Joseph Friedman, Adams & Co.

n/a / Scott Domansky, PRD Realty

The accessories company signed a four-year lease. The reported asking rent was $38 per square foot.

148 West 24th St

2,200

Anthony Barrata LLC / D. Baker, J. Louzon, Isaacs & Co.

Signature Partners / n/a

The interior design firm signed a lease.

55 Broad St

2,055

LeaDOG / T. Hatzimichael, Red Rock NYC; E. Aronis, The Bouklis Group

55 Broad Street LP / Gene Baumstein, Rudin Management

The financial services firm signed a five-year lease.

28 West 44th St

2,002

Rule Financial / Ricky Kramer, Newmark Knight Frank

APF Properties / D. Rosenbloom, J. Goldman, J. Fales, M. Blanchard, C&W

The financial firm signed a lease renewal on the eighth floor.

885 Third Ave

1,930

Galileo Investment Management / Michael Mandel, Grubb & Ellis

Metropolitan 885 Third Avenue Leasehold LLC / Scott Klau, Newmark Knight Frank

The financial services firm signed a five-year lease.

162 West 21st St

1,900

Kramer & Kramer / Elissa Groh, Rice & Associates

Northside Realty Corp. / Stan Putko, Orenda Estates LLC

The photographers signed a lease.

65 Broadway

1,796

Atlas Financial / Michael Okun, CBC Hunter Realty

AM Property / n/a

The financial company signed a lease.

231 West 39th St

1,779

Summit One LLC / James Buslik, Jeffrey Buslik, Adams & Co.

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

The company signed a five-year lease renewal. The reported asking rent was $35 per square foot.

218 East 29th St

1,750

Arimed / Ryan Gessin, Halstead Property

n/a / Ryan Gessin, Halstead Property

The medical clinic signed a five-year lease for its third location. The reported asking rent was in the high $30s per square foot.

231 West 39th St

1,682

Anama LLC / James Buslik, Adams & Co.

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

The fashion company signed a two-year lease renewal. The reported asking rent was $35 per square foot.

1071 Sixth Ave

1,651

Reliable Office Systems & Supplies Inc. / D. Levy, J. Schwartz, Adams & Co.

Ten Seventy One Associates / D. Levy, J. Schwartz, Adams & Co.

The office supplies company signed a four-year lease renewal. The reported asking rent was $48 per square foot.

10 West 33rd St

1,627

Linda DeRosa / David Levy, Adams & Co.

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

The fashion accessories company signed a five-year lease renewal. The reported asking rent was $39 per square foot.

547 West 27th St

1,534

Littlejohn Contemporary / Earl Bateman, Rice & Associates

Pinetree Group / n/a

The art gallery signed a lease in the office building.

545 Eighth Ave

1,500

El York / Paul LeBlanc, Synergy Realty

n/a / K. Lerner, C. Okada, Okada & Co.

The construction firm signed a sublease.

60 Broadway

1,500

Michael Silverstein / Jason Mezydlo, NYCRS

n/a / n/a

The tenant signed a lease.

40 East 23rd St

1,500

Physicalmind Studio / Allan Gallaway, DJK Commercial

CeeCee Associates / M. Gorman, J. Gettler, New Street Realty Advisors

The fitness studio signed a lease on the third floor.

463 Seventh Ave

1,247

Popstar LLC / David Levy, Adams & Co.

The Arsenal Company LLC / David Levy, Adams & Co.

The tenant signed a 10-year lease. The reported asking rent was $95 per square foot.

110 West 40th St

957

Stern Metals Inc. / David Levy, Adams & Co.

One Ten West Fortieth Associates / David Levy, Adams & Co.

The producer of metal alloys signed a three-year lease renewal. The reported asking rent was $36 per square foot.

241 West 37th St

400

MPPG Group / Jared Jasinski, NYCRS

Private investor / Jared Jasinski, NYCRS

The tenant signed a lease.

Retail leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

100 Broadway

22,605

Duane Reade / Ann La Centra, Winick Realty

MM 100 Broadway LLC / Jill Grabel, Madison Capital

The drugstore signed a lease for another location.

55 West 25th St

17,000

American Apparel / Chris DeCrostas, Thor High Street Advisors

Rose Associates / B. Spiegel, B. Bergman, Rose Associates

The apparel retailer signed a short-term lease for a pop-up store at the Chelsea Landmark residential building.

32-32 49th St (Queens)

15,000

Retro Fitness / Scott Sher, Katz & Associates

Broadway Stages / J. Ibrahim, Right Time Realty; H. Galosher, N. Hurwit, Sholom & Zuckerbrot

The gym signed a 20-year lease.

595 Fifth Ave

12,000

Ted Baker / L. Pomerantz, B. Ende, PBS Real Estate

595 Fifth Avenue Inc. / J. Scibilia, A. Kahn, C&W

The British clothing company signed a lease. The retailer has two other Manhattan locations, at 32-34 Little West 12th Street and 107 Grand Street.

345 Adams St (Brooklyn)

11,483

Sugar & Plumm, Purveyors of Yumm; American BBQ & Beer Co. / K. Ota, H. Dweck, K. Cohen, Newmark Knight Frank

Muss Development / Robert Greenstone, Greenstone Realty

Sugar & Plumm signed a 21-year lease; it will sublease half the space to American BBQ and Beer Company.

153 Seventh Ave

10,685

Duane Reade / Ann La Centra, Winick Realty

20th & Seventh Associates / n/a

The drugstore signed a lease renewal.

1250 Broadway

10,000

Gaonuri / Brad Siderow, Siderow Organization

Murray Hill Properties; Jamestown / n/a

Korean restaurateur Andy Sung signed a lease for a restaurant on the top floor of the building, the New York Post reported.

382 West Broadway

10,000

Erno Laszlo Institute / F. Consolo, J. Aquino, Prudential Douglas Elliman

Kamran Hakim; Henry Hay / F. Consolo, J. Aquino, Prudential Douglas Elliman

The beauty products brand signed a 10-year net lease to open a spa. The tenant will occupy the entire building.

3250 Westchester Ave (The Bronx)

9,257

Surgicare Ambulatory Center Inc. / R. Herko, S. Lorenzo, D. Scotto, NAI Friedland Realty

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

The ambulatory center signed a lease.

1211 Sixth Ave

9,000

News Corp. / M. Ann Tighe, K. Rapp, T. Dempsey, CBRE

Beacon Capital / J. Kuriloff, G. Spiegelman, D. Tricarico, M. Arkin, C&W

The media company signed a lease for the plaza-level space, which will likely be used for studios, the New York Post reported.

www www.TheRealDeal.com January 2012 79

Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

250 Park Ave

7,241

People’s United Bank / R. Bernstein, E. Thomas, R. Giordano, Cassidy Turley

n/a / D. Hoffman, R. Billingsley, W. Miller, Cassidy Turley

The bank signed a 15-year lease, the New York Post reported.

79 Henry St (Brooklyn)

6,350

All in One Deli / Diana Boutross, Winick Realty

Whitman Owner Corp. / Diana Boutross, Winick Realty

The deli signed a lease.

10 Union Square East

4,556

Panera Bread Company / Andrew Mandell, Ripco Real Estate

W&H Properties / Represented inhouse

The bakery chain signed a lease for its second Manhattan location.

453 Broome St

4,200

Suit Supply / Maverik Group LLC

n/a / Maverik Group LLC

The suit maker signed a four-year lease.

391 Sixth Ave

3,360

Onegin / Tatiana Jung, Winick Realty

Walter & Samuels / Jud Ebersman, Walter & Samuels

The Russian restaurant signed a lease.

206 East 58th St

3,000

Land of Plenty / David Hantman, NYCRS

Private investor / n/a

The Chinese restaurant signed a lease.

213 West 40th St

2,800

Hale & Hearty / M. Gorman, J. Gettler, New Street Realty Advisors

Future 40th Street Realty LLC / M. Tergesen, D. Valentino, ABS Partners

The soup chain signed a lease for another location.

191 Chrystie St

2,750

Experimental Cocktail New York Inc. / n/a

Steven Kamali Hospitality / D. Baker, J. Louzon, Isaacs & Co.

The tenant signed a lease for a new bar concept.

411 West 39th St

2,730

Mark Fisher Fitness / C. Halliburton, B. Himmel, DHS Development Corp.; City Connections

BKR Realty Corp. / Barbara Stone, Corcoran

The fitness studio signed a lease for multilevel space. The reported asking rent was about $24 per square foot.

3250 Westchester Ave (The Bronx)

2,700

Suma Medical Associates / R. Herko, S. Lorenzo, D. Scotto, NAI Friedland Realty

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

The medical office signed a retail lease.

555 West 42nd St

2,645

7-Eleven / G. Covey, A. Schuster, RKF

Massachusetts Life Insurance Company / M. Gorman, J. Gettler, New Street Realty Advisors

The convenience store signed a lease for another location.

1400 Fifth Ave

2,617

Physical Therapy of Harlem LLP / Jonathan Krivine, Newmark Knight Frank

1400 Fifth Commercial LLC / M. Gorman, J. Gettler, New Street Realty Advisors

The physical therapy office signed a lease for ground-floor space.

4261 Broadway

2,500

Envy Corp. / Barry Fields, City Connections

BLDG / Barry Fields, City Connections

The nail salon chain signed a lease for another location.

350 Hudson St

2,400

Hale & Hearty / J. Gettler, M. Gorman, New Street Realty Advisors

Trinity Real Estate / Represented inhouse

The soup chain signed a lease for another location.

244 East 51st St

2,400

Karizma Lounge / H. Demetrious, I. Donath, NYCRS

Leo Fox / Shelly Snyder, Coldwell Banker Real Estate

The hookah bar and restaurant signed a lease.

2284-2286 Broadway

2,056

Hale & Hearty / J. Gettler, M. Gorman, New Street Realty Advisors

Time Equities / Represented in-house

The soup chain signed a lease for another location.

150 Fourth Ave (Brooklyn)

2,030

n/a / n/a

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

The pediatric dental office signed a long-term retail lease. The reported asking rent was $50 per square foot.

772 Madison Ave

2,000

Oscar de la Renta / Jud Ebersman, Walter & Samuels

Walter & Samuels / Jud Ebersman, Walter & Samuels

The fashion designer signed an expansion lease for retail space.

157 East 33rd St

1,900

S’Mac / n/a

n/a / Eric Roth, ECR Realty

The mac-and-cheese eatery signed a 12-year lease for its second Manhattan location, the New York Post reported.

27 Prince St

1,500

n/a / James Famularo, NYCRS

Private investor / James Famularo, NYCRS

The pizza restaurant signed a lease.

27 Prince St

1,200

Mt. Sapola / J. Famularo, B. De Soultrait, NYCRS

Private investor / James Famularo, NYCRS

The health and beauty retailer signed a 12-year lease.

1357 Second Ave

1,200

Kolb Art / J. Ebersman, J. AntrimCashin, Walter & Samuels

Walter & Samuels / J. Ebersman, J. Antrim-Cashin, Walter & Samuels

The art gallery and furniture store signed a 10-year lease.

1988 Amsterdam Ave

1,200

Health Rite Pharmacy / M. Esposito, R. Bergman, NY Retail Group

Amsterdam LLC / NY Retail Group

The pharmacy signed a 10-year lease.

427 Seventh Ave

1,200

NYC Gifts / Solomon Fallas, SolCo

DK China LLC / Solomon Fallas, SolCo

The gift shop signed a lease for its eighth NYC location. The reported asking rent was $500 per square foot.

555 West 42nd St

1,200

Subway / n/a

Massachusetts Life Insurance Company / J. Gettler, M. Gorman, New Street Realty Advisors

The sandwich chain signed a lease for another location.

1381 Sixth Ave

1,100

City Souvenirs / Solomon Fallas, SolCo

ACHS Management / Solomon Fallas, SolCo

The gift shop signed a 10-year lease for its first NYC location. The reported asking rent was $220 per square foot.

229 First Ave

1,000

Baobeque / K. Brandman, J. Famularo, NYCRS

Private investor / K. Brandman, J. Famularo, NYCRS

The Vietnamese barbecue restaurant signed a lease.

1357 Second Ave

1,000

Sharkey’s Cuts for Kids / Jud Ebersman, Walter & Samuels

Walter & Samuels / Jud Ebersman, Walter & Samuels

The barber shop for kids signed a 10-year lease.

30 East 13th St

1,000

Pocket Foods / Kelly Gedinsky, Winick Realty

Double M K Realty / J. Isa, J. Siegelman, Winick Realty

The restaurant signed a lease for a second location.

8 Prince St

950

Maje / D. Baker, J. Louzon, Isaacs & Co.

Mel Lev / n/a

The fashion retailer signed a lease.

741 Broadway

950

LiSi Cosmetics / Harold Sherr, HSRE

Algin Management / A. La Centra, J. Siegelman, Winick Realty

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

219 East 23rd St

900

n/a / G. Thomas, A. Gallaway, DJK Commercial

Private investor / Ken Brandman, NYCRS

The fried chicken restaurant signed a lease.

461 Amsterdam Ave

900

Organic Avenue / n/a

n/a / n/a

The natural foods shop signed a lease for another location.

694 Madison Ave

850

Fabergé / B. Rosen, Z. Beloff, RKF

Ardalan Lahijani / Represented inhouse

The jeweler signed a lease for its first ever U.S. boutique.

102 East 7th St

800

n/a / Croman Real Estate

Private investor / Ken Brandman, NYCRS

The restaurant signed a lease.

2236 Adam Clayton Powell Blvd

760

Innovative Therapy Solutions LLC / n/a

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

The pediatric speech therapy firm signed a five-year lease for retail space.

1065 Park Ave

700

Biscuits + Bath Hudson Street LLC / Robert Kunikoff, Grubb & Ellis

The Mark Hupert Irrevocable Trust / Robert Kunikoff, Grubb & Ellis

The dog daycare center signed a retail lease.

75 Baxter St

700

Viet Tran / Abe Bichoupan, NYCRS

106-108 Bayard St. Corp. / Abe Bichoupan, NYCRS

The Vietnamese fast-food restaurant signed a 10-year lease.

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

80 January 2012 www.TheRealDeal.com

Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

1300 Second Ave

690

Gotham Coffee / Hal Shapiro, Winick Realty

315 East 68th Street / Hal Shapiro, Winick Realty

The coffee shop signed a lease.

2484 Adam Clayton Powell Blvd

675

Fofana Tax Services / n/a

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

The tax services firm signed a five-year retail lease.

1450 Broadway

665

Sabon LLC / n/a

The Zar Group / Michael Gleicher, Winick Realty

The bath and body retailer signed a 10-year lease.

437 West 53rd St

600

M&N Box LLC / M. Esposito, R. Bergman, NY Retail Group

437 NYC LLC / Time Equities

The retailer signed a two-year lease.

1114 Madison Ave

500

Sean / Sinvin Realty

Walter & Samuels / Jud Ebersman, Walter & Samuels

The fashion retailer signed a lease for its seventh U.S. location.

48 Greenwich Ave

500

Culinary Concepts / Josh Siegelman, Winick Realty

50 Greenwich Avenue / Josh Siegelman, Winick Realty

The restaurant ownership and management company signed a lease.

166 Elizabeth St

400

Marie World / Jeanett Catskeas, Bapple RE

Private investor / Ken Brandman, NYCRS

The salon signed a lease.

722 10th Ave

350

Diva Cleaners / David Hantman, NYCRS

Private investor / K. Brandman, M. Borell, D. Hantman, NYCRS

The dry cleaners signed a 10-year lease.

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

140 East 45th St

43-story, 667,000 sf office bldg

Rockwood Capital affiliate / n/a

Boston Properties / n/a

The property sold for $401 million, Real Estate Weekly reported. The purchase of the building, also known as Two Grand Central Tower, includes the assumption of a $176.6 million mortgage.

3 Columbus Circle

214,372 sf comm. condo

Young & Rubicam Group / M. Tighe, G. Tosko, CBRE

SL Green; The Moinian Group / J. Kuhn, S. Klau, B. Waterman, E. Harris, L. Korman, Newmark Knight Frank

Floors three through eight of the building sold for about $144 million, or $671 per square foot, the New York Post reported. The buyer also signed a 20-year lease for floors nine, 10, 18 and 19.

400 Park Ave South

400,000 buildable sf development site

Toll Brothers; Equity Residential / n/a

A&R Kalimian / W. Heller, W. Silverman, Studley

The development site sold for $134 million. The joint venture plans to build a 40-story condominium and rental apartment tower. Equity Residential will own and operate the lower 22 floors with 265 rental apartments and retail, and Toll Brothers will build and sell about 100 condo units on the upper floors, the Wall Street Journal reported.

103 Prince St

30,000 sf retail bldg

Crown Acquisitions; Centurion Realty / n/a

Apple / n/a

The building sold for about $75 million, the New York Post reported. The property is the site of the cityâ&#x20AC;&#x2122;s first Apple store.

Bronx portfolio

11 apt. bldgs, 486 units total

Chestnut Holdings / n/a

Prana / n/a

The package of multifamily buildings sold for $46.8 million. The properties are mostly located along Sheridan Avenue and the Grand Concourse, between 167th and 170th streets.

Manhattan portfolio

3 bldgs, 98,000 sf total

The Lam Group / Christopher Okada, Okada & Co.

Regal Real Estate Investment / Independent Properties

The package of three buildings sold for $41 million. The eight-story building at 21 Maiden Lane has 30 residential units and two stores; the two-story building at 3 East 17th Street is a mix of retail and offices; and the five-story building at 105 Chambers Street is a mix of retail, residential and office space.

42 East 57th St

5-story, 8,580 sf comm. bldg

CIM Group / n/a

Turnbull & Asser / n/a

The townhouse sold for $32.4 million. The building contains four commercial condo units.

Avenue B and 5th St

6-story nursing home

MM 62-74 Avenue B Owner / n/a

64 B Venture / n/a

The property sold for $25.5 million, the Lo-Down reported.

4310-24 and 4506 13th Ave (Brooklyn)

40,000 sf retail space

The Jackson Group / Represented in-house

Sam Goldstein / n/a

The three blocks of retail space sold for $22.67 million, the New York Post reported. Some of the tenants currently occupying the spaces include Duane Reade, Fabco Shoes and HSBC.

One Jackson Square

8,636 sf retail condo

American Realty Capital / n/a

Hines; RFR / Jones Lang LaSalle

The retail condo sold for $22.5 million.

3101 and 3115 Avenue I (Brooklyn)

Two 6-story apt. bldgs, 154 units total

The Parkoff Organization / Josh Orlander, GFI Realty

Elias Mallouk Realty / Yanni Simantov, GFI Realty

The buildings sold for $22.1 million. The price represents a gross rent multiple of 12.8.

111 Fulton St

4 retail condos, 21,820 sf total

The Klein Group / n/a

n/a / n/a

The retail condos at the District residential building sold for $20 million. The retail spaces are occupied by such tenants as Crisp, a vegetarian restaurant, and frozen yogurt chain Red Mango.

RECENTLY SOLD FOR

$36 MILLION

54-58 Canal Street, New York, NY

82 January 2012 www.TheRealDeal.com The

James Kinsey

Matthew Sparks

CEO & Partner 646.253.0923 jkinsey@ergpa.com

Partner 646.253.0904 msparks@ergpa.com

Buys continued Address

Size

Buyer/ Representative

Seller / Representative

Notes

118 North 11th St (Brooklyn)

5 mixed-use bldgs, 135,000 sf total

n/a / n/a

n/a / Neil Dolgin, Kalmon Dolgin Affiliates

The five-building complex sold for $16.4 million, Crainâ&#x20AC;&#x2122;s reported. Two of the buildings are residential, and the remaining properties are occupied by tenants Inner Gaze Furniture Design and Mary Kuzma Design. The buyer plans to convert the complex into residential use in the long term.

65 Bank St

6-story, 25,614 sf apt. bldg, 35 units total

Benchmark Real Estate Group / George Niblock, Friedman-Roth Realty

n/a / Friedman-Roth Realty affiliate

The walk-up building sold for $15.78 million.

72 Wall St

6,100 sf retail space

Best Work Holdings / n/a

Young Woo & Associates / n/a

The retail space at the building sold for $14.5 million, the International Business Times reported. Young Woo purchased the property and 70 Pine Street for $150 million in 2009 from American International Realty Corp.

Homeport (Staten Island)

7 acre development site

Ironstate Development / n/a

New York City Economic Development Corporation / n/a

The site of a former U.S. Naval Base in Staten Islandâ&#x20AC;&#x2122;s Stapelton neighborhood sold for $11 million. The buyer plans to build a $150 million mixed-use complex, with 900 residential rental units, 30,000 square feet of retail, 600 parking spaces and a public plaza.

734 and 736 Broadway

29,485 sf comm. bldg and 6,226 sf apt. bldg

Extell Development / n/a

The Muschel brothers / n/a

The two loft buildings sold for $11 million. The 11-story property at 736 Broadway has 2,300 square feet of retail space and 11 commercial units, while 734 Broadway has 128 square feet of retail and five residential units.

1424-1428 Lexington Ave

5-story, 14,200 sf apt. bldg

Lazar Equities LLC / Shaun Moamem, Plaza Real Estate Group

1595 Associates LLC / Janet Sedaghatpour, Plaza Real Estate Group

The prewar property sold for $9.5 million.

3940 Bronx Blvd (The Bronx)

7-story, 84,340 sf apt. bldg, 92 units total

3940 Bronx Blvd. Realty LLC / Aaron Jungreis, Rosewood Realty

3940 Bronx Blvd. Owner LLC / Aaron Jungreis, Rosewood Realty

The elevator building sold for $8.75 million. The price represents a gross rent multiple of 7.25.

529 West 48th St and 534 West 50th St

Two 5-story apt. bldgs, 40 units total

n/a / n/a

n/a / Orly Hazan, Besen & Associates

The two multifamily buildings sold for $8.7 million.

Brooklyn portfolio

4 apt. bldgs, 72 units total

n/a / Samuel Kooris, Rosewood Realty

n/a / Aaron Jungreis, Rosewood Realty

The four-building package sold for $7.9 million. The price represents a gross rent multiple of 9. The properties are located at 1400 Dean Street, 299 and 303 Putnam Avenue and 267 Clifton Place.

1280 East 18th St

6-story, 42,180 sf apt. bldg, 47 units total

n/a / Josh Orlander, GFI Realty

The property sold for $7.35 million. The price represents a gross rent multiple of 12.8.

2304 Sedgwick Ave (The Bronx)

7-story, 68,800 sf apt. bldg, 58 units total

n/a / Aaron Jungreis, Rosewood Realty

2304 Sedgwick LLC / Aaron Jungreis, Rosewood Realty

The elevator building sold for $6.75 million. The price represents a gross rent multiple of 7.3.

60 Third Ave

6,022 sf apt. bldg, 3 units total

Ze Ray Properties LLC / Leon Ye, Oxford Property Group

KumJung Enterprises Inc. / B. Ryu, J. De La Crus, EXIT Realty Landmark

The property sold for $5.6 million.

1065 Jerome Ave (The Bronx)

7-story, 59,952 sf apt. bldg, 58 units total

n/a / Aaron Jungreis, Rosewood Realty

1065 Jerome LLC / Aaron Jungreis, Rosewood Realty

The elevator building sold for $4.65 million. The price represents a gross rent multiple of 7.75.

704-02 Eighth Ave (Brooklyn)

4-story apt. bldg, 13 units total

Red Sky Capital / n/a

702 Properties LLC / J. Winter; Guardian Property Management of Brooklyn; M. DiBella, TerraCRG

The prewar building sold for $4.34 million. The property consists of two rentcontrolled units, four rent stabilized units and seven free-market units, as well as two medical office spaces.

362 Fourth Ave (Brooklyn)

14,420 sf development site

Storage Deluxe / Marissa Harrison, CPEX Real Estate

Local investor / R. Condren, E. Altschul, D. McCabe, CPEX Real Estate

The property sold for $4.1 million.

116 Third Pl

9,106 sf apt. bldg, 5 units total

Local investor / B. Leary, I. Krivit, CPEX Real Estate

TD Bank / B. Leary, I. Krivit, CPEX Real Estate

The property sold for $3.65 million, or $401 per square foot. The building contains three two-bedrooms and two three-bedrooms.

99 East 7th St

5-story apt. bldg, 17 units total

n/a / n/a

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

The property sold for $3.6 million.

133 East 36th St

5-story, 5,100 sf apt. bldg

n/a / n/a

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

The property sold for $3 million.

1167-1173 Flatbush Ave (Brooklyn)

4-story, 32,970 sf apt. bldg, 24 units total

n/a / George Niblock, FriedmanRoth Realty

n/a / Giuseppe Ingelese, Friedman-Roth Realty

The property sold for $2.45 million.

2110 Frederick Douglass Blvd

5,231 sf retail condo

1031 exchange buyer / n/a

BRP Development Corp.; Goldman Sachs / M. Tortorici, V. Sozio, S. Shkury, Ariel Property Advisors

The retail condo at the base of the Douglass Condominium sold for $2.4 million.

280 Manhattan Ave

12,610 sf apt. bldg, 10 units total

Private investor / V. Sozio, M. Tortorici, J. Deutch, Ariel Property Advisors

The property sold for $2.28 million, or $180 per square foot.

26-60 Borough Pl (Queens)

15,989 sf industrial bldg

n/a / n/a

n/a / S. Preuss, S. Weiner, Massey Knakal

The warehouse sold for $2.25 million, or about $141 per square foot.

1804 Third Ave

5-story, 8,500 sf apt. bldg

n/a / n/a

n/a / M. Tortorici, V. Sozio, Ariel Property Advisors

The walk-up building sold for $1.85 million, or $218 per square foot.

939 Sterling Pl (Brooklyn)

17-unit apt. bldg

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

The property sold for $1.83 million.

138 Union St (Brooklyn)

4-story, 5,780 sf mixed-use bldg

n/a / n/a

n/a / S. Palmese, W. Clifford, Massey Knakal

The property sold for $1.75 million. The building consists of six residential units, a vacant retail space and an office.

591 Franklin Ave (Brooklyn)

4-story, 11,760 sf apt. bldg, 10 units total

n/a / n/a

n/a / S. Antebi, J. Landau, GFI Realty

The property sold for $1.4 million. The price represents a gross rent multiple of 7.

567 Vanderbilt Ave (Brooklyn)

7-unit apt. bldg

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

The property sold for $1.3 million.

740 Barry St (The Bronx)

10,000 sf industrial bldg

Wild Edibles / n/a

ST 1 Realty LLC / Tony Lembeck, NAI Friedland Realty

The warehouse sold for $1.15 million.

690 Prospect Pl (Brooklyn)

6-unit apt. bldg

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

The property sold for $1.03 million.

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

www.TheRealDeal.com January 2012 83

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

62nd St and Junction Blvd (Queens)

610,000 sf shopping center

Alexander’s Inc. / n/a

n/a / n/a

A $275 million refinancing was completed for the Rego Park II shopping complex, GlobeSt.com reported. The new, seven-year loan will repay the existing mortgage on the property.

4545 Center Blvd (Queens)

Development site

TF Cornerstone / n/a

Wells Fargo; M&T Bank; Bank of America; Capital One Financial Corp. / n/a

A $265 million construction loan was provided for a 40-story, 820-unit luxury residential building, Crain’s reported.

West 30th St and 10th Ave

Development site

The Related Companies; Abington Properties / n/a

n/a / n/a

A $200 million loan was secured for the construction of a 30-story residential building, Crain’s reported. The property will have 400 units and will be built under the state’s 80/20 Program, meaning that 20 percent of the homes will be reserved for low-income families.

980 Madison Ave

6-story, 130,478 sf mixed-use bldg

RFR Holding Corp. / M. Tepedino, M. Gigliotti, HFF

RBC Capital Markets / n/a

A $115 million loan was provided to refinance the property. The adjustablerate mortgage is refinancing a maturing loan and providing funds for a strategic leasing and business plan.

77 Water St

26-story, 600,000 sf office bldg

William Kaufman Organization; Travelers Insurance / A. Singer, K. McSharry, Singer & Bassuk Organization

AXA-Equitable / n/a

A $45 million loan was provided to refinance the building. Goldman Sachs net-leases the entire property, but does not occupy it. Tenants in the nearly full office tower include the William J. Clinton Foundation, the Regus Group and AT&T.

960 Sixth Ave

Hotel bldg

Hidrock Realty / n/a

BBVA Compass / n/a

A $36 million construction loan was provided to convert the building into a hotel. The planned Courtyard Marriott will include 167 rooms, a rooftop bar and retail, and should be completed by October 2012.

25 West 37th St

Development site

Hidrock Realty; Robert Finvarb Partners / n/a

Bank of Nova Scotia / n/a

A $30 million construction loan was provided to develop a hotel. The Springhill Suite hotel will have 173 rooms and is slated for completion in October 2013.

First Avenue and 72nd St

Development site

Bluerock Real Estate LLC / n/a

Canyon Capital Realty Advisors LLC / n/a

A $25.6 million senior loan was provided to refinance existing debt and to resume pre-development activities at the site. The project, the Charles, will be a 32-story residential condominium building.

444 Central Park West

132-unit apt. bldg

444 Central Park Owners Inc. / n/a

NCB / n/a

An $11.2 million first mortgage and a $1 million line of credit were arranged for the building.

76-61 113th St (Queens)

352-unit apt. bldg

Seminole Owners Corp. / n/a

NCB / n/a

A $5.8 million first mortgage and a $500,000 line of credit were arranged for the building.

2166 Broadway

112-unit apt. bldg

The Opera Owners Inc. / n/a

NCB / n/a

A $5.2 million first mortgage and a $500,00 line of credit were arranged for the building.

55 Liberty St

71-unit apt. bldg

55 Liberty Street Owners Corp. / n/a

NCB / n/a

A $4 million second mortgage and a $1 million line of credit were arranged for the building.

37-21 80th St (Queens)

101-unit apt. bldg

Evergreen Owners Inc. / n/a

NCB / n/a

A $4.2 million first mortgage was arranged for the building.

134-138 Duane St

14-unit apt. bldg

Main Duane Owners Corp. / n/a

NCB / n/a

A $3 million first mortgage and a $500,000 line of credit were arranged for the building.

144-40/50 38th Ave (Queens)

168-unit apt. bldg

Lincoln Garden Owners Inc. / n/a

NCB / n/a

A $3.5 million first mortgage was arranged for the building.

35-21, 35-27 81st St (Queens)

63-unit apt. bldg

Maple Court Apartments / n/a

NCB / n/a

A $2.3 million first mortgage and a $300,000 line of credit were arranged for the building.

2 Fifth Ave

335-unit apt. bldg

Square Arch Realty Corp. / n/a

NCB / n/a

A $2.5 million line of credit was arranged for the building.

12-14 East 64th St

14-unit apt. bldg

12-14 East 64th Owners Corp. / n/a

NCB / n/a

A $1.4 million first mortgage and a $500,000 line of credit were arranged for the building.

210 East 21st St

29-unit apt. bldg

210 East 21st Street Tenants Corp. / n/a

NCB / n/a

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

242 West 104th St

24-unit apt. bldg

242 West 104 Owners Inc. / n/a

NCB / n/a

A $900,000 first mortgage and a $150,000 line of credit were arranged for the building.

144-63 35th Ave (Queens)

72-unit apt. bldg

The Pavilion Owners Corp. / n/a

NCB / n/a

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

Other Deals Vornado considers renovating Hotel Pennsylvania instead of erecting massive skyscraper Vornado Realty Trust has put off constructing a massive skyscraper at 15 Penn Plaza that would challenge the Empire State Building’s height, sources told the New York Post last month, and might even pour millions into renovating the hotel that currently occupies the site. With market rents still hovering below the rates necessary to make office development profitable and the financial firms that would make sensible anchors cutting operations instead of expanding, Vornado has decided to hold off on the project. Further clouding the project’s future is the competition rising just west of 15 Penn Plaza, where both the Related Companies and Brookfield Office Properties are preparing to begin construction on Hudson Yards and Manhattan West, respectively.

Archstone pays $131M for Kips Bay building While a bidding war has emerged for its portfolio, Archstone acquired a 209-unit Kips Bay apartment building for $131 million, the apartment investment firm announced last month, and will rename it Archstone Kips Bay. The building, at 377 East 33rd Street near First Avenue, had been owned by Madison International Realty and RFR Holding, which bought it for an undisclosed price in 2007, 84 January 2012 www.TheRealDeal.com

according to public records. The partnership took out a $100 million loan on the building from Anglo Irish Bank. Madison and RFR were represented by a Cushman & Wakefield Sonnenblick Goldman team consisting of Dave Karson, Helen Hwang and Nat Rockett.

Kushner refinances 666 Fifth Avenue Jared Kushner’s Kushner Companies completed a refinancing of its mammoth tower at 666 Fifth Avenue with Vornado Realty Trust, Bloomberg News reported last month. Vornado is injecting $80 million of equity into the project in return for a 49.5 percent stake in the tower, while Kushner will also contribute $30 million to the refinancing. Under the agreement, the tower’s senior debt will be reduced to $1.1 billion from almost $1.22 billion, a source with knowledge of the deal told Bloomberg. The equity contributions will cover the costs of leasing the 30 percent of the building that’s currently vacant, the source said. (The deal was announced after the deadline for the Deal Sheet.)

house ad

Law firm reverses course, shies away from World Financial Center deal After much speculation that they would move to Brookfield Properties’ largely vacant World Financial Center in Lower

Manhattan, law firm Milbank Tweed, Hadley & McCloy LLP may stay at 1 Chase Manhattan Plaza, the New York Observer reported last month. The firm occupies 375,000 square feet on several floors at the property owned by JP Morgan Chase. Brokers told the Observer that lease negotiations with Brookfield were so advanced that Brookfield was representing an approximately 300,000-square-foot space as “spoken for” in their negotiations with other companies. But sources said that the law firm is now in negotiations to renew their existing lease at 1 Chase Manhattan, on the corner of Liberty and William streets in Lower Manhattan.

Gluck’s Stellar to add retail frontage to Meatpacking District Larry Gluck’s Stellar Management finalized a plan last month to partner with tenant Erez Shternlicht and replace a loading dock in Gluck’s Meatpacking District office building at 450 West 15th Street with a prime retail storefront. The retail addition, which will sit just west of luxury clothing retailer Jeffrey New York on West 14th Street between Ninth and 10th avenues, is part of a larger approximately $60 million sale and lease transaction Milk Studio’s Shternlicht executed in two separate deals, including the sale of the neighboring Mobil gas station. TRD

Residential market

from page 16

in the market.” However, with experts predicting a lackluster bonus season on Wall Street, the usual January sales spike may not provide the same boost as in past years. Diminished Wall Street compensation “may result in a slower ﬁrst quarter than in years when there have been big bonuses on the horizon,” said Anne Young, a senior vice president at Brown Harris Stevens. As a result, some brokers said they are turning their focus away from buyers in the ﬁnance sector to focus on new market segments, including creative workers and foreign buyers.

John Gomes, an executive vice president at Prudential Douglas Elliman who specializes in new developments, said he plans to consider shifts in the local workforce — away from finance and toward technology start-ups — when allocating marketing budgets this spring. “As we see the decline in jobs in the finance sector,” Gomes said, “I firmly believe this group of innovators will be the future millionaires that we’ll be selling real estate to in this city.” Mickey Conlon, a senior vice president at Core, said he is hoping to capture more business from foreign buyers to make up for less-active Wall Streeters.

But smaller bonuses could be good news for the rental market. Even if bonuses are not large enough to convince ﬁnanciers to buy new homes, Bond New York executive director of leasing Douglas Wagner hopes the payouts will at least spur them to upgrade rental accommodations. “Our industry relies on a certain amount of discretionary movers throughout the city,” Wagner said. “Hopefully, bonuses will be large enough to give renters the conﬁdence to improve their living conditions and move up, even if they might be prevented from buying this year.” TRD

the general partner, as has usually been the case — in charge of ﬁling tax returns. “I see an increased awareness in newer partnerships about reporting, and a bigger exercise of control,” Koppel said, while investors who previously had little role in the day-to-day functioning of a project now have “beefed-up asset management.” In one of his recent cases, for example, a builder who

was selling homes in a joint venture kept the proceeds of a sale instead of distributing them to the partnership. His partner found out because they had put a monitoring system in place for sales. When controls are agreed to in advance and a problem arises, Koppel said, then a partner can require that the terms of the agreement be lived up to, “and they’re not accusing anyone of anything.” TRD

make, said Ben Thypin, director of market analysis for Real Capital Analytics. “They’re always looking for the Goldilocks of risk,” Thypin said. “Risky enough, but not too risky.” And Thor’s total deal volume is even higher when all of its pending sales are factored in. For example, last month, Sitt agreed to buy three connected buildings at 516-520 Fifth Avenue from Aby Rosen’s RFR for an undisclosed sum that some have put at $132 million. The deal, and several others, had not closed by press time.

Real Estate Funds appears to be regularly divesting itself of assets, Morgan Stanley went in the other direction in 2011, with the eyebrow-raising, $191 million purchase of 1107 Broadway, an ofﬁce it hopes to turn into luxury condos. Yes, new condos, which in the last few years have been a tough sell in New York, in part because lenders have been reluctant to help homebuyers ﬁnance them. But Morgan Stanley is perhaps taking solace in its partner, the Witkoff Group, a seasoned hand whose portfolio contains the Woolworth Building, as well as the former Daily News building on East 42nd Street. In all, its plan for 1107 Broadway — a 16-story, 305,000square-foot tower facing Madison Square Park that is also known as the Toy Building North — calls for spending $100 million to put 145 condo units in the building, according to news reports. Morgan and Witkoff won the building, previously owned by Lehman Brothers, in an auction sale over the summer by beating out the CIM Group, among others.

Audits from page 38 learning to be more careful.” An increasing number of ﬁrms are now doing “proactive auditing,” or taking certain precautions before teaming up with others, Ramacca said. Often, that means putting more protections into their partnership agreements, such as requiring both partners’ signatures on checks above a certain amount. And some joint ventures now put the investor partner — rather than

Private equity from page 57 But during a massive $100 million renovation, the market began to turn, and the units proved tough to sell. Even though Alexico scaled back its conversion plans from 42 to 10 co-ops, selling them proved tricky, and some buyers demanded their money back. With its cash flow squeezed by paying land rent, Alexico was in a jam. Then, after much back-and-forth with the bank, Dune finally bought the five troubled mortgage notes for the Mark from Anglo Irish Bank, which later was nationalized. Next, Dune threatened to foreclose and ended up with the 150room, 10-co-op hotel this past summer. The firm seems to like distress. In November, it picked up 35 buildings, most of them Upper West Side rentals, for $119 million, by buying the soured note on the properties, which were owned by controversial developers the Pinnacle Group and the Praedium Group. Dune did not return calls for comment.

Thor Equities: $261 million When most real estate observers think of Thor, they likely think Coney Island — and the firm’s long-running standoff with Mayor Bloomberg over a seven-acre parcel there. But the firm, helmed by Joe Sitt, also has a war chest of private equity capital to play with, through its Urban Property Funds, which is financed through pension funds, college endowments and private foundations. The funds have raised over $1 billion in the last 10 years and have helped fuel Sitt’s property spending spree. (See profile of Sitt on page 48.) Locally, those reserves enabled Sitt to close on two Manhattan buildings in 2011, for $261 million. Added to the firm’s 40 properties in locations from Chicago to Mexico City is a historic prize: 597 Fifth Avenue. The former home of Charles Scribner’s bookstore, the 12-story building, which Sitt bought from A&A Acquisitions, cost $99 million. Sitt also teamed up with developer Joseph Moinian to buy out Goldman Sachs at 245 Fifth Avenue for $162 million. With the 597 Fifth deal, some brokers say Sitt overpaid for a building whose street-level interior space is landmarked, meaning it will be difficult to stick just any old tenant in there. However, Thor may be gambling that the building can fetch higher rents, which is a bet many private equity players 86 January 2012 www.TheRealDeal.com

Blackstone Group: $258 million The real estate track record of this private equity powerhouse is commanding: 300 investments globally over the past two decades, for $28 billion, according to its website. And those purchases weren’t merely of, say, 20-unit condos, but often of multi-building portfolios, or even larger acquisitions. “Their idea of a good time is to buy a real estate company,” said Boytinck of Allegro Advisors, alluding to Blackstone’s 2006 purchase of Sam Zell’s Equity Office Properties Trust. But if the firm has had a fallow period locally, it might have been in 2011, when it bought just two New York properties, for a total of $258 million — despite sitting on $12 billion in dry powder. Then again, it cast a wide net globally in 2011, spending $111 billion for 3,650 properties, RCA said. One purchase here was the $160 million deal for the top 12 floors of the former New York Times building, at 229 West 43rd Street. (In November, it installed a basketball court to attract tenants.) Yet the overall slow pace of acquisitions suggests Blackstone might be one of those private equity firms struggling to find the perfect deal, analysts say. The firm, headed by Stephen Schwarzman, was mostly in a selling mood in New York City in 2011, unloading the Radisson Lexington, at 511 Lexington Avenue, for $335 million. Meanwhile, its stock price was about $14 a share early last month, down from a yearly high of $19.63.

Morgan Stanley Private Equity: $191 million Many of the city’s blue-chip investment banks have real estate investment arms. But while Goldman Sachs’ Whitehall

Starwood Capital Group: $139 million A hotel-centric firm that gravitates toward distress, Starwood, which closed its ninth fund, for $1.83 billion, in March 2010, nosed into 10th place last year with two sizeable purchases. The first was a case-in-point illustration of its approach: the $72 million purchase of 1414 Sixth Avenue, at West 58th Street, which was a hotel through the 1970s, but more recently contained offices. The 18-story brick high-rise had been owned by private equity firm Murray Hill Properties, which picked it up for $121 million in 2007. That means it was acquired by Starwood at a hefty 41 percent discount over just a four-year period. (Murray Hill purchased it from APF Properties, which bought it from SL Green in 2004 for $61 million.) In addition, Starwood — which was founded in 1991 by Barry Sternlicht and is headquartered in Greenwich — also acquired 20 West 53rd Street, otherwise known as the Donnell Library, from the New York Public Library for $67 million. The deal, which closed in July, included Tribeca Associates. A 120-room hotel-and-condo combo is planned there. TRD

Commercial market report

from page 24

sented Internet social media site Foursquare, which signed a lease last month for 56,000 square feet at 568 Broadway in Soho. While Foursquare is expanding, he said many tech firms are shoehorning their employees into small spaces — often below the average amount of office space per person of about 200 square feet. “Some tech companies are under 100 [square feet] per person. But the question is: How long can that last? As a company begins to grow, we will ultimately see that persquare-foot rate per employee go to a more traditional level,” Black said. He attributed the density to tech firms “racking and stacking” employees’ work spaces, then giving them room to breathe with break rooms or game rooms. Also in Midtown South, digital animation firm Titmouse signed a 15,000-square-foot sublease for less than two years on the seventh and eighth floors at 129 West 27th Street, with an estimated rent of $25 per square foot, CoStar shows. Joshua Winslow, president of brokerage Winslow & Company, represented the tenant, while Tadd Wisinski,

David Starr and Andrew Lindsey, of UGL Services, represented Kaos Studios, the firm that’s giving up the space. Overall, asking rents in Midtown South rose sharply, by $0.81 per foot, to $41.91 per square foot in December, while the availability rate edged up by 0.1 points to 9.5 percent, according to Cassidy Turley. The increases in asking rent and availability were driven in part by the 425,708 square feet of Class A space at the office tower 101 Sixth Avenue that were put on the market. Winslow said despite the tight leasing environment, there are still deals to be had. “There are the last vestiges of value” in Midtown South and Midtown West from about 27th to 39th streets, between Fifth and Eighth avenues, because prices are much higher near Madison Square Park. “Twenty-third [Street] is on fire,” he said. That’s largely due to restaurant and food market Eataly and advertising firm Grey Group moving into 200 Fifth Avenue, he said.

Downtown was the darling of 2011, with Condé Nast sign-

ing a 1 million-square-foot lease, and construction at both 1 World Trade Center and the Santiago Calatrava–designed transportation hub plowing ahead. But what about in 2012? Several million square feet of Bank of America space at World Financial Center is expected to officially hit the market this year. That will undoubtedly impact availability rates. “Downtown, the vacancy will spike, and that will have a very interesting impact on the market,” JLL’s Black said. He noted, however, that the Downtown market is far stronger than it was only a few years ago. There were a number of spaces put on the market last month, including two at the 3.6 million-square-foot tower 55 Water Street, between Broad Street and Old Slip. There, CBRE Group brokers listed the entire 68,141-square-foot 48th floor and the 62,251-square-foot third floor, with no published asking rent. The availability rate nudged up slightly Downtown, by 0.2 points to 10.5 percent in December, while the average asking rent rose slightly, by $0.13 per foot to $37.99 per square foot, Cassidy Turley figures show. TRD

nancially competitive. At TF Cornerstone’s Queens West Long Island City project, Fernandes said, his organization made a special deal with the developer to cut the union’s payroll costs by 20 percent. TF Cornerstone did not respond to a request for comment. Union labor has a few more cards up its sleeve, however. The unions are sure to maintain their grip on the New York market for at least a few more years, sources said, because developers are increasingly turning to labor pension funds for project ﬁnancing in the continuing credit crunch. The Housing Investment Trust arm of AFL-CIO, a voluntary federation of 57 national and international labor

unions, has invested over $700 million in the New York metro area through its initiatives since 2002, an AFLCIO spokesperson told The Real Deal. The most recent investment was $134 million for the rehabilitation of the historic Penn South Cooperative in Manhattan. And union ﬁnancing almost always comes with the condition that the developer must use union labor. Sometimes the agreement is constituted by “a wink or a nod,” sources said; other times it’s in writing. The fact that unions are acting as lenders provides an additional incentive for developers to use union labor. “If they desire to organize themselves in a manner that can create a lending arm, then that can be a healthy model for them,” Missry said. TRD

Downtown

Unions from page 66 labor and a volume of workers that only the union can supply,” said attorney Morris Missry, chair of the real estate department at law firm Wachtel & Maysr. But the gap between the skill sets of union and nonunion workers may be closing. Duane Morris’s Ross said the recession and ensuing layoffs at unionized companies has allowed nonunion contractors to hire skilled workers they wouldn’t normally have access to. Fernandes said that isn’t a significant factor. Since the recession, “There are 25,000 fewer construction jobs in New York City,” he said. “[Laid-off workers] are not going to work for nonunion employers. They’re unfortunately not going to work anywhere.” He added that unions are working to become more fi-

Court trashes challenge to waste transfer station Ruling clears way for city to rebuild garbage facility on Upper East Side BY LEIGH KAMPING-CARDER n Albany state appeals court signed off last month on New York City’s plan to rebuild a controversial marine waste transfer station at East 91st Street and the East River, throwing out a challenge from a local community group. That group, the Gracie Point Community Council, opposed the city’s plan to locate the facility — which would process at least 1,860 tons of garbage per day or, according to the group, enough trash to fill eight trucks per hour — in the densely populated residential area. The site is adjacent to Asphalt Green, an indoor and outdoor sports complex used by children and adults. The group sued the New York State Department of Environmental Conservation in August 2009, claiming the agency failed to heed its own regulations when granting permits to the city to build and operate the project. The suit was dismissed in June 2010, but the group appealed. In a unanimous decision, however, the appeals court sided with the city and the DEC, finding that any potential adverse impacts from the facility — including high noise levels and increased diesel emissions — would be offset by its public benefits. “In our view,” the judges wrote, “DEC’s interpretation of its regulations was rational and, thus, entitled to deference.”

88 January 2012 www.TheRealDeal.com

The marine waste transfer station

The East 91st Street facility is one of four marine waste transfer sites (one is in Queens and two in Brooklyn) slated for reactivation under Mayor Michael Bloomberg’s 20-year solid waste management plan, which was approved by the City Council in 2006. The plan calls for using barges and trains, rather than trucks, to export much of the city’s waste in an effort to reduce the health and environmental impacts of land-based waste transfer stations. The facility would also allow Manhattan to process some of its own residential and commercial waste, rather than sending it to the outer boroughs or New Jersey, according to the city. The project has come under ﬁre in at least two other lawsuits, one ﬁled by former Assembly member Adam Clayton Powell IV, claiming the plan violates a 1913 law protecting public parklands from being used for non-park uses. Another lawsuit from the Gracie Point group and another group, the

Association of Community Organizations for Reform Now, challenged the city’s selection of the East 91st Street site. The city has prevailed in both cases, with separate courts concluding that the relevant agencies performed adequate environmental reviews and did not need approval from the state legislature. The state issued permits for the East 91st Street facility in October 2009. Jane Gordon, a senior counsel with the New York City Law Department who handled the appeal, praised the decision in a statement. “It again affirms the well-considered and environmentally sound approach the city took in developing plans for the East 91st Street marine transfer station,” she said. Representatives for Gracie Point could not immediately be reached for comment, but a statement on the group’s website indicated they would appeal the ruling. A marine waste transfer station operated on the East 91st Street site from 1940 to 1999, but shut down when the Fresh Kills landfill on Staten Island closed in 2001. According to Gracie Point, the previous facility was a hotbed of odors, vermin and pollutants. After Fresh Kills closed, most of the waste managed by the city’s sanitation department was delivered to private transfer stations in Brooklyn, the Bronx and Queens before being shipped by truck to landfills in other states, the opinion said. TRD

What to watch

from page 45

10 Hanover Square

Fredrik Eklund

John Gomes

Kyle Blackmon

March when the broker left Itzhaki Properties, is currently shopping two off-market hotel development sites in the Financial District. Last month, the firm found buyers for a “big” retail building in the Meatpacking District and two properties in the East 20s, one residential and one office, Hakimian said. “I want to push him down the stairs,” joked David Schechtman, a principal at Eastern Consolidated, describing his competitor as a “tremendous” off-market broker. Also in the category of burgeoning firms, Tarter Stats O’Toole, a 25-year-old Manhattan-based commercial sales and leasing brokerage, grew from five agents to almost a dozen in 2011, and shows no signs of stopping. That’s thanks in part to vice president Catherine O’Toole, who helped increase the firm’s agency representation by 1 million square feet up to 3 million square feet in the last year. The firm plans to recruit several more agents in the coming months. Clients include New Jersey’s Hartz Mountain Industries, Renaissance Properties, Lincoln Property Company and the Eretz Group, O’Toole said. But she prefers to stay out of the spotlight. “I function well behind the curtain,” she said.

Residential brokers Elliman’s Fredrik Eklund is literally a broker to watch in 2012, not only because he

95 Wall

and partner John Gomes will help design and market half a dozen new developments Downtown this year, but also because he’ll beam onto your TV screen as a cast member of “Million Dollar Listing,” Bravo’s Manhattan spinoff of its Los Angeles–based reality show. Eklund said the chance to court international buyers on the show, which is set to debut sometime this year, motivated the Swedish broker to join the cast. “How many realty agents are known from New York in, let’s say, China or in the U.K. or in Sweden?” he said. Connecting Scandinavian buyers with properties overseas is also the motivation behind Eklund Stockholm New York, which in 2012 will launch its first London storefront and a second Stockholm office. When Kyle Blackmon was 28, he helped former Citigroup chairman Sandy Weill buy a 6,744-square-foot penthouse at 15 Central Park West for $43.7 million. Now in his early 30s, the Brown Harris Stevens broker, who The Real Deal included in its “Moguls in the Making” story in April, recently helped Weill find a buyer for the apartment, which was listed for a whopping $88 million. Depending on the final sale price, it could set a high (and early) bar for the most expensive residential sale ever in the city,

PHOTOGRAPH OF BLACKMON FOR THE REAL DEAL BY DEREK ZAHEDI

and will almost definitely eclipse last year’s priciest deal, the $48 million sale of a condo at the Plaza. As far as newbies go, Morgan Turkewitz, a rental agent at Citi Habitats, is not doing too badly either. Turkewitz, 24, was named Citi Habitats’ Rookie of the Year in 2010, her first full year at the firm, partly because she closes between six and 10 deals a month and partly because she starts answering e-mails at 5:45 a.m., she said. “Some of my clients think I’m crazy,” she noted. As a college student at the University of Delaware, Turkewitz spent a summer selling office supplies door-to-door in Tennessee. She said she wound up ranking as the company’s second-best salesperson nationwide. When Citi Habitats senior vice president Brian Morgan, now Turkewitz’s boss and an acquaintance of her brother, heard about her performance, he said, “Imagine what she could do with real estate in New York,” according to Turkewitz. On the firm level, while Elliman has always handled rental listings, the city’s largest residential brokerage is focusing anew on the rental sector. The man behind the expansion is Mark Menendez, the firm’s director of rentals, and head of its flagship rental office in Tribeca. This year, Menendez will continue to recruit rental agents, as well as run a planned Wall Street office, which will cater to tenants in the Financial District. “We feel like it’s a very strong part of the market,” Menendez said, “and in Manhattan, the rental market is always going to be important.”

Collaborations While 2010 may have been the year of the new venture — between the founding of Keller Williams NYC, Town Residential and a host of start-ups such as Broker Heaven and RentJuice — the last year gave birth to two noteworthy alliances that could flourish or flounder in the upcoming year. In October, the financially struggling commercial firm Grubb & Ellis revealed that mogul Andrew Farkas, founder of Island Capital Group, would invest a significant stake in the commercial brokerage. Indeed, an Island affiliate is investing $10 million and, separately, joining Colony Capital, a California-based real estate investment firm, to hold Grubb’s senior secured debt. Sources have told The Real Deal that Colony and Island are looking to fashion a deal that could give them total control of Grubb. (Grubb would not comment.) Also in October, Howard Lutnick’s global financial brokerage BGC Partners closed on its acquisition of the U.S. commercial real estate brokerage Newmark Knight Frank, creating a 1,600-broker powerhouse. Things started changing immediately, beginning with the commission structure: A November news report said the 425 exNewmark brokers would be forced to give up part of their commissions in exchange for BGC stock. But it remains to be seen

whether further policy changes will affect the ranks. (Representatives from the ﬁrms declined to comment.)

Real estate investment trusts After making its first New York City acquisition in March, the Denver-based UDR went on a Manhattan tear, spending nearly $1.2 billion to nab 10 Hanover Square and 95 Wall in the Financial District, Rivergate in Murray Hill and 21 Chelsea on West 21st Street. All told, that’s more than 1,900 rental apartments. But UDR isn’t quite finished, according to CEO Tom Toomey. The goal is to invest up to $800 million more in Manhattan rental buildings, particularly in older, under-rented neighborhoods, Toomey explained. And he hasn’t ruled out ground-up development down the road. In the nearer term, UDR plans to spend $60 million in 2012 renovating the 706 residences and common areas at Rivergate, with the goal of raising the rent from about $3,200 to $4,000 per month, Toomey said. No doubt shareholders and analysts will be anxiously waiting to see how this expansion affects UDR’s stock price in 2012. For its part, Equity Residential has already taken the plunge into the field of new construction, first building 70 Greene in Jersey City, New Jersey. (see related story on page 60). Its first ground-up development in Manhattan, the 111-unit Ten23 in Chelsea, went on the market in October; it’s now 15 percent leased and slated for occupancy this month. But keep watching. Along with its stake in 400 Park Avenue South, Equity also signed a 99-year lease worth a reported $76.5 million for the site at 170 Amsterdam Avenue, where the REIT plans to erect a 224-unit rental building. Groundbreaking is scheduled for the second quarter. Brookfield Asset Management may have grabbed headlines in 2011 as the owner of Zuccotti Park, the site of the Occupy Wall Street protests, but in 2012 the REIT will be in the spotlight for its other projects. First, there’s a joint bid with the Stuyvesant Town–Peter Cooper Village Tenants Association to buy and transform the complex’s 11,232 rental apartments into co-ops or condos, depending on the outcome of discussions with tenants. The Torontobased trust is also seeking fashion retail tenants for 200,000 square feet of space at the World Financial Center. Stephen Plourde of the McDevitt Company, which is handling the leasing for Brookfield, said the firm would likely have a deal to announce in the first quarter. Lastly, a Brookfield affiliate recently paid $110 million to buy Prudential Real Estate and Relocation Services, making the company the world’s second-largest employee relocation services provider behind Connecticut-based Cartus Broker Network. TRD www.TheRealDeal.com January 2012 89

Construction lending

from page 30

There is still almost no financing for speculative development, and any office, industrial and retail projects must show substantial pre-leasing to have a chance, both Jaroki and Swarz said. The notable exception is Minskoff Equities’ mixed-use office tower, which secured a mega-construction loan in November valued at up to $200 million — even with no tenants in place. Details of the loan, such as equity commitment and guarantees, weren’t disclosed. Joe McMillan, CEO of DDG Partners, which secured a $26 million construction loan from M&T Bank in August for a condo called Gansevoort Square at 345 West 14th Street, said his firm had been shopping around for a lender since the beginning of the year and narrowed down the options this summer. “If you have a strong team and a strong project, construction financing is possible,” he said, noting that the company’s recent success selling out its 41 Bond Street condo, as well as the supply-constrained Chelsea market, all played into getting the financing. Construction on the condo began in September, with an expected top-off date in the first quarter of next year.

Wanted: ‘Strong swimmers’ The project type isn’t the only consideration for lenders. Just as important is who is asking for the loan. Lenders are looking for well-established developers,

“names we know,” who have a track record of completing developments, said Jaroki. Experience should be relevant not only to the New York market, but also to the property type. If not, industry sources say, developers should be prepared to pair up with a partner with the expertise they lack. And lenders are asking developers to bring more to the table. They need to reach deep into their pockets and provide 30 to 35 percent in equity toward the project to show they can back up the development, said Jaroki. Kohn puts the number even higher, at 40 to 50 percent for the senior construction lender. In some cases, developers must cough up a guarantee of completion or a repayment guarantee, while others must be willing to accept a recourse loan, in which the lender can come after the developer’s assets if he defaults. And condo projects must provide lenders with a rental backup strategy in case units don’t sell, Swarz says. On the bright side, lenders are working with developers on payback terms that “aren’t [very] onerous,” said Jaroki. Typical timetables for construction loans could be anywhere from 24 to 48 months. And interest rates are attractive: Construction loans are coming in at between 4.5 and 6 percent, said Winter. Still, the pool of developers who can clear the hurdles remains small, he said.

“Only the strong swimmers can qualify for construction ﬁnancing now,” Winter said.

But it’s Fifth Avenue that may turn out to be his most significant investment, since he now owns more properties there than any other landlord in the city. Fifth has traditionally been bifurcated at 49th Street. North of the divide, Bergdorf Goodman and Saks anchor a high-end retail corridor that commands some of the highest rents in the world, while south of the divide has, until recently, been wholly populated by low-end discount camera shops, cell phone stores and the like. All but one of Sitt’s properties are below the dividing line, which means luxury retailers will have to migrate south and drive up rents dramatically in order for Sitt to hit a home run. But many retail brokers note that has begun to happen. In 2007, H&M moved to Fifth near 42nd Street, followed by Zara two years later. The arrivals have continued in recent months: Tommy Bahama, Diesel, Urban Outfitters and others have inked deals. “There’s been a significant uptick in retailers of worth that have committed to the market south of Rock Center,” said David LaPierre, an executive vice president with the CBRE Group’s Global Retail Services Team. “And it has clearly changed a lot of people’s perspective on believing you might actually connect south of Rockefeller Center to the north.” Bradley Mendelson, executive vice president of Cushman & Wakefield, said that 18 months ago, “almost half the street was vacant.” But now most of it is full. Meanwhile, retail rents on the upper half of Fifth soared to $2,318 a square foot in 2011’s third quarter, according to CBRE data, with little availability. That, in turn, has helped steadily drive up rents below 49th. In recent months, rents have jumped from the $300-to$350-a-square-foot range to $583 a square foot, and now, “everybody is looking for four-figure rents,” Mendelson said. Despite the upward trend, at Sitt’s 44th Street development site, one broker estimated he would need $1,200 a square foot for retail space to make money. But the rents below 46th still generally fetch less than $600. “I don’t know if it is in the cards,” the broker said. “I wouldn’t have invested in that building.” A few blocks north, Sitt paid $99 million last July for

the Sephora building at 597 Fifth Avenue between 48th and 49th. The broker noted that Sitt wants $10 million to $12 million a year in rent, which is close to the total volume Sephora does in business in its entirety.

Behind the curtain While a few new lenders have debuted in the Big Apple — such as the investment arm of the London-based nonproﬁt called the Children’s Investment Fund Foundation, which provided a $250 million investment to Harry Macklowe for his condo conversion project at 737 Park Avenue — most of the faces are familiar, industry experts say. There are the major U.S. banks, like Bank of America and Wells Fargo, along with regional banks like PNC and Capital One. German and Canadian banks, such as the Bank of Nova Scotia and TD Bank, have also been spotted looking at deals here, though most European banks have pulled back of late because of the debt crisis there (see related story on page 50). The Industrial Bank of China has also sent in inquiries, said Jaroki. HKS’s Swarz is seeing Wall Street investment banks take on the biggest construction loans, usually north of $150 million. The smaller loans, between $5 million and $30 million, are being picked up by commercial banks and thrifts. The key is having a prior relationship with the lender, said Kohn. “It would be difﬁcult for a developer who hasn’t borrowed from the lender before,” he said, “unless he’s a substantial player.” TRD

Sitt from page 49 Those investors are betting that Sitt will achieve his high historical returns. On his home turf, Sitt’s biggest initial buy was the $24 million lease on the aging, glass-enclosed Albee Square Mall in Downtown Brooklyn in 2001 — on city-owned land. The purchase was followed by an announcement of ambitious plans to transform it into an upscale shopping center. As the New York Times noted in 2007, he “promised to remake it in the image of a palatial Italian villa with granite floors, national retailers like the Gap, and tuxedoed greeters.” But Sitt never delivered on his grand plans. “He got as far as spiffing up the first floor and putting a new awning on the outside,” the Times noted. “The basement level is a mostly vacant bunker. In place of a greeter in a tuxedo stands a man wearing a sandwich sign over his parka, advertising a sale at a leather coat store inside.” Nevertheless, thanks to Brooklyn’s economic boom, a major rezoning of the area and tax breaks approved by the city for new buyers, in 2007 Sitt flipped the property to another group of developers for almost $125 million — five times what he initially paid for it. The developers, a joint venture led by Acadia Realty Trust, recently began construction on the mixed-use City Point development. The profit Sitt made was stunning. Yet it helped fuel the criticism that Thor acquires valuable pieces of land and then “holds them hostage.” The “rap on him is that he overpays, can’t carry through the development, and then gets bailed out,” noted an industry source who has worked with him in the past. A spokesperson for Sitt said at Albee Square, Thor spent $15 million and “gut-renovated it into a beautiful asset with tremendous annual return on investment. Only later did we do the rezoning and eventually sell it.”

Buying on Fifth Sitt is currently sitting on parcels of land, including three properties on Broadway between Grand and Prince — at 512 Broadway, 440 Broadway and 530-536 Broadway — which he purchased in 2007 and 2008. He’s also made a series of recent buys in the Meatpacking District, one of the hottest areas of the city. 90 January 2012 www.TheRealDeal.com

Fundamental retail shift But Sitt appears to be banking on more than just the southward retail drift. In an interview with Bloomberg Television last month, he argued that there is a fundamental shift in retail underway. Tourism and the growing “emerging market consumer, whether it’s Brazilians, Indians, Colombians, Chinese,” will drive up rents, he said. “You look at London, which normally leads New York City. In London now, the Chinese represent 27 percent of the purchases on Bond Street, as an example, which is a mind-boggling shift for a consumer that didn’t exist 10 years ago. And that wave is making its way to New York City and to Fifth Avenue.” Sitt has also argued that the rise of Internet sales will force many stores to downsize, and rely on marquee ﬂagships with luxury addresses in big cities to showcase their products. Fifth Avenue, he believes, will beneﬁt from that trend. Though that argument might not yet be conventional wisdom, it’s one that a growing number of real estate experts are buying into, said Dan Fasulo, managing director of Real Capital Analytics. He points to the Apple Store — where consumers wander in, browse, then wander out and later buy on the Internet — as the prototype of the future urban retailers. “Many investors out there believe that urban retail is fundamentally underpriced and will go through a huge structural change over the next couple of decades, with retailers using storefront space more as marketing and advertising tools, versus just pure sales conduit,” Fasulo said. “If that thought process is correct, in the future, retailers are going to be willing to pay much more to rent fewer spaces but in better locations.” Sitt’s spokesman noted that the developer has a “belief in the high streets of the world. “Joe believes [they] defy traditional value,” he said. “People who bet against Joe do so at their own peril. He has a history of spotting real value.” TRD

Treasurys

from page 18

expose themselves to less risk. “People view New York City as very safe,” Brodwin said. That’s a point that came into clear view in the aftermath of the ﬁnancial crisis. “Even at the depth of the downturn there was a market in Manhattan. That can’t be said for many markets around the country, which basically froze up,” Fasulo said. Hauspurg said the paltry yields available from Treasurys have made his clients happy to accept cap rates under 4, 5 and 6 percent. Cap rates for New York City ofﬁce properties have dropped from 9.36 percent in January 2001, according to RCA data. They

Top ofﬁce leasing

fell throughout the boom, dropping to a low of 4.34 percent in February 2008. And they actually dipped below 10-year Treasury yields in June and July of 2007. Today, of course, that’s no longer the case. “A buyer of one deal we worked on said, ‘Why should I have a 1.5 percent Treasury bond?’ ” instead of real estate, Hauspurg said. “People have said that to us in many ways.” Given the Fed’s commitment to keep short-term interest rates low until mid2013, investors will likely continue to accept lower cap rates on New York City properties as an alternative to Treasurys, experts say. “Cap rates could keep going [down]. I

wouldn’t be surprised to see sub-3 percent,” Hauspurg said. Indeed, he’s currently working on a sale of a luxury apartment complex in Manhattan that could end up with a cap rate below that level. Even if investors have to accept a low cap rate now, they can look forward to higher yields on their properties in the future, as economic recovery drives rents higher, said David Eyzenberg, head of commercial real estate at NewOak Capital, a Manhattanbased investment advisory ﬁrm. “Looking at real estate fundamentals, we haven’t had a bounce back because we haven’t had job growth,” he said.

However, Eyzenberg added, that should change. Fasulo said the rally in Manhattan commercial real estate should last at least a few more quarters. “You don’t get much visibility beyond that because there is so much uncertainty around the country and world,” he said. Indeed, what will likely put an end to the slide in cap rates is when Europe’s debt crisis spreads here, pushing interest rates, including Treasury yields, higher, Hauspurg said. “It’s only a matter of time until we run into our own problems. Interest rates will rise at some point, and then all bets are off,” he said. TRD

from page 65

some brokers have sharing arrangements whereby they split their commissions with other partners who were not even in on the deal.

One notch below Below the top 10 Manhattan leasing brokers sits a cushion of 10 other successful dealmakers who were the most senior brokers in transactions totaling between about 450,000 and 1 million square feet in 2011. Some of these brokers are household names in the real estate community, while others might prompt only blank stares. In

the former group are Stephen Siegel, CBRE’s chairman of global brokerage, and Cushman’s Mosler. Lower-proﬁle yet active brokers include Andrew Peretz, an executive director at Cushman, and Scott Gottlieb, a vice chairman at CBRE. TRD

C O R R E C T I O N S A N D C L A R I F I C AT I O N S In the December issue story “Who Is Town hiring,” The Real Deal incorrectly stated that Town brokers Lauren Arpel and Sean Hughes were “new to NYC real estate.” In fact, Arpel worked at Corcoran and Hughes worked at Brown Harris Stevens. The Real Deal also stated that 114 of Town’s hires, including Arpel and Hughes, were also new to real estate. In fact, the remaining 112 hires are either new to real estate or came from “unknown” backgrounds.

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The New York Chapter of the American Institute of Architects presents a seminar, “Up to Speed on LEED,” which will outline the proposed changes to LEED rating systems and help architects know what to expect in 2012. 6 to 8 p.m. Center for Architecture, 536 LaGuardia Place. Fee: $10 for members, $15 for nonmembers. Information and registration: www.aiany.org.

The Real Estate Board of New York hosts a Sales Agent Boot Camp, focusing on how taxes and abatements affect residential brokers. The speaker will be Anne Young of Brown Harris Stevens. 9:30 to 11:30 a.m., REBNY Mendik Education Center, 570 Lexington Avenue. Free. REBNY members only. Registration required. Information and registration: www.rebny.com.

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Inman News hosts its annual Real Estate Connect New York City conference. The theme this year is “Leading the Way: Innovation in Action.” Keynote speakers include Danny Meyer, CEO of Union Square Hospitality Group; Thomas Arnold, global recruiting partner at Facebook; and Brian Brett, managing director of customer research at the New York Times. Marriott Marquis Times Square, 1535 Broadway. Fee: $899 for associate package, $949 for professional package, $1,099 for premium package. Information and registration: www.realestateconnect.com.

The Real Estate Board of New York presents its 116th Annual Banquet. This year’s honorees are Douglas Durst, chairman of the Durst Organization; Howard Rubenstein, president of Rubenstein Associates; Simon Ziff of the Ackman-Ziff Real Estate Group; RFR Realty executive vice president Gerard Schumm; Pamela Liebman, president and CEO of the Corcoran Group; and David Green, executive director of Cushman & Wakefield. 7 p.m. New York Hilton Hotel, Grand Ballroom, 1335 Sixth Avenue. Fee: $1,000. Formal attire. Information and registration: www.rebny.com.

The Certified Commercial Investment Member Institute presents the annual CCIM Real Estate Forecast, featuring interactive analysis of the regional and global real estate market over the next four quarters. Speakers include Giacomo Barbieri, senior director of global real estate at TIAACREF, and Jeffrey Barclay, managing director of real estate asset management at Goldman Sachs. 8 a.m. to 12:30 p.m., New York City Bar Association, 42 West 44th Street. Fee: $49 for members, $69 for nonmembers. Information and registration: www.ccimforecast2012.com.

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The Council of New York Cooperatives & Condominiums presents the first installment of a three-part seminar entitled “SelfManagement 101.” The series aims to help boards run small buildings efficiently, and effectively use professionals and vendors. 7 to 9 p.m. Location to be announced. Fee: $100 for the series for members, $90 per session for nonmembers. Information and registration: www.cnyc.org.

The Association of Real Estate Women, the Mortgage Bankers Association of New York and the Metropolitan New York Chapter of the Appraisal Institute jointly host a Mid-Winter Networking Cocktail Reception. 5:30 to 8:30 p.m. Celsius restaurant, Bryant Park, 1065 Avenue of the Americas. Fee: $110 for members of any of the three organizations, $125 for nonmembers. Information and registration: www.mbany.org, www.arew.org or www.aimetrony.com.

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92 January 2012 www.TheRealDeal.com

Sponsored by Lucky Strikers Social Media Club, Real Estate BarCamp 2012 welcomes realtors, lenders, escrow professionals, appraisers, inspectors, home stagers and anyone else in real estate looking to improve their business through social media. 9 a.m. to 5 p.m. Simple Studios, 134 West 29th Street. Fee: $30 to attend, $500 to become a sponsor. Information and registration: www.rebar campnewyork.com.

21 The New York Building Congress hosts its annual membership meeting and industry luncheon forum. 11:30 a.m. Mandarin Oriental New York, 80 Columbus Circle. Fee: $195 for members, $250 for nonmembers. Information and registration: www.building congress.com.

The Brooklyn Real Estate Roundtable presents its first-ever cocktail party, with historic cocktails, beer and wine. 6:30 to 8:30 p.m. Brooklyn Historical Society, 128 Pierrepont Street, Brooklyn. Fee: $50, or free with purchase of 2012 Roundtable series ticket. Information and registration: www.brooklynhistory.org.

The New York State Bar Association holds its Real Property Law Section 2012 Annual Meeting, followed by a cocktail reception and luncheon. The featured speaker is Darcy Stacom, a vice chairman at the CBRE Group. 8:30 a.m. Hilton New York, 1335 Avenue of the Americas. Fee: $85 for meeting, $99 for luncheon. Information and registration: www.nysba.org.

The Manhattan Realtor Chapter of the Bronx-Manhattan North Association of Realtors presents a breakfast seminar featuring speaker Richard Dansereau, managing director of the Investment Management Division at Stonehenge Partners. 7:30 to 9:30 am. Club 101, 101 Park Avenue. Fee: $20 for BMAR members, $40 for nonmembers in advance, $50 at the door. For registration information, call (212) 2424343 or (718) 892-3000, or g.rivera@bmar.org.

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