The Real Deal October 2012 by The Real Deal

What do the Trumps tweet?

Developers tap brokers for cash

Hipsters in the Hudson Valley

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Core broker vs. Bachmann

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One57 views for a lucky few

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Vol. 10 No. 10 October 2012 $3.00

Related’s reins

FACT

Will Jeff Blau be able to keep the mega-developer on top?

On average, maintenance in co-ops shot up 4 to 7 percent in the last two years, while condo costs increased about 3 percent. See page 77.

BY ADAM PIORE Jeff Blau’s promotion to CEO of the Related Companies last month was years in the making. Indeed, company founder Stephen Ross has been SPECIAL REPORT grooming him for the job since the 1990s. But now that Blau is taking over for Ross as the top dog, can he keep the juggernaut going?

AT A GLANCE New legs for NYC’s residential market Manhattan saw residential sales volume grow 11.5 percent in the third quarter as inventory dropped. Brokers say that’s a strong indication of the “legs of the market.” Listings that have been lingering for months are even seeing renewed interest. See page 16.

See story on page 68

NYers property shop in Europe

Major cities are in, vacation locales are out BY TOM ACITELLI The euro may be muddling its way through a global crisis, but more New Yorkers are seizing the opportunity to buy homes on the continent. TRD breaks down where they’re buying and how those markets are faring. See story on page74

Tracking real estate’s growing IPO craze Listings website Trulia, which went public last month, is just the latest real estate company to issue an IPO. TRD examines the industry’s recent IPO boom. See page 20.

Secret servicers

Pulling back the curtain on mysterious special servicers BY ADAM PINCUS Despite NYC’s $5.3 billion in distressed CMBS debt, brokers are shying away from looking for deals in the sector for clients. The reason? The servicers who control the loans are notoriously opaque. This month, TRD pulls back the curtain on how servicers execute deals. See story on page 56

Platt Hotel falls ﬂat

A real estate guide for the races, issues and players to watch this election season BY LEIGH KAMPING-CARDER

that race and a slew of other key contests could have

Shapiro steps into spotlight As Nest Seekers grows, a look at the ﬁrm’s enigmatic CEO

Jeffrey Gural on taking calls from Obama See page 130.

on the business of buying and selling property. We also

The contest between Barack Obama and Mitt Romney reveal which real estate players — from Leonard Lithas, unsurprisingly, inspired wall-to-wall media cover- win to Dan Tishman — dug deepest into their pockets to donate to candidates. We even map age. And the furor will only intensify EATURE TORY out where some of the most inﬂuential in the weeks leading up to the Nov. 6 vote. But what does it all mean for New York’s real es- New York politicians live and how their addresses imtate industry? This month, TRD looks at what impact pact their agendas.

BY LEIGH KAMPING-CARDER Nest Seekers CEO Eddie Shapiro has always tried to stay under the radar. But with the ﬁrm at a turning point — it has doubled in size over the past two years and gained a national proﬁle on “Million Dollar Listing” — that’s becoming impossible, whether Shapiro likes it or not. See story on page 58

Budget hotelier John Lam’s latest project, the Platt Hotel, which is under construction in Lower Manhattan, is a hodgepodge of discordant parts, argues critic James Gardner. The only silver lining, he says, is that it’s an improvement over the parking lot that used to be there. See page 64.

See story on page 37

Big-ticket buildings NYC’s $100 million-plus investment sales market heats up BY ADAM PINCUS After a slow start to the year, the selling season for Manhattan’s most expensive buildings and development sites — those with price tags of $100 million and up — has kicked into NYC’s priciest on-the-market high gear with a rush of properties hitcommercial properties ting the market. Those listings, which 11 Madison Ave. $1.5B total more than $5 billion, bode well for 825 Eighth Ave. $1.2B the higher-end investment sales market. 550 Madison Ave. $700M Brokers offered several reasons for sell75 Rockefeller Plaza $360M ers’ sudden enthusiasm, including the 525 Lexington Ave. $350M fact that developers are salivating over record prices for über-luxury condos and that many buyers are looking to See story on page 62 park their money in trophy ofﬁce towers.

Rendering of the Platt Hotel

The blogger brigade Many NYC neighborhood blogs have garnered big broker followings. Find out which ones are popular with real estate pros and why. See page 50.

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SPACE LIFT

Highlights O C T O B E R

2 0 1 2

More competitive than cautious

Up in the air

Real estate’s IPO craze

Brokers say the tight inventory in the residential market is favoring sellers.

Who will the proposed Midtown East rezoning beneﬁt and who will it hurt? In the wake of Trulia’s IPO last month, a look at how going public pencils out.

Real estate companies are bullish on the stock market.

Eric Benaim

Eric Benaim’s gallery mentality The young Modern Spaces CEO has an office filled with graffiti-style street art — a look that seems to work with the brokerage’s new Williamsburg office.

Since its construction in 1982, the Jacob K. Javits Center has been one of the world’s leading examples of spaceframe design. But the I.M. Pei & Partners-designed exhibit space needed updating to put its best face forward for the 3.5 million visitors it receives each year. So owners engaged Epstein Global and FXFowle Architects, who developed the recladding program that is dramatically increasing the building’s transparency and energy efficiency. Targeting LEED Silver with a glazing system that will enable the building to exceed energy code requirements by 25 percent, the new face of Javits proves that being old doesn’t have to mean retiring.

In their words...

Walking on ‘Sunshine’

This month’s funniest and most insightful real estate–related comments.

Kelly Kennedy Mack on steering her company through the ﬁnancial crisis and coming out on top.

Corcoran Sunshine president Kelly Kennedy Mack

Transforming design into reality

Trumps on Twitter The Donald and his offspring have over 3 million Twitter followers combined. So what exactly are they tweeting?

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Housing: AWOL in campaign Both Democrats and Republicans are mum on the foreclosure crisis, columnist Kenneth Harney says.

Finalizing the High Line Construction on the $90 million third — and ﬁnal — section of the elevated park began last month.

37 The election and NYC real estate TRD’s guide to the key races, the big money and the political players during this heated political season. Architect: Epstein Global, FXFowle Architects Photographer: Enclos

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58 58 get serious 62 Sellers A look at the $100 million-plus buildings on the market in NYC. Colleges today are rethinking not only the structure of their curriculum, but also that of their classrooms. With John Jay College of Criminal Justice outgrowing its widely scattered facilities, school officials asked Skidmore, Owings & Merrill to design a new vertical campus consolidating all social and academic functions, including a 65,000-square-foot roof terrace, within a single city block. Using steel girders to span a network of Amtrak tunnels running beneath the prominent Midtown site made the design possible. Now, John Jay students are better able to collaborate across disciplines and enhance their legal research—proving it’s easy to build a case for choosing structural steel.

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The ‘development’ of a CEO Jeff Blau, the new CEO of Related, has been preparing to take over for decades. So what’s he going to do now that he has? Jeff Blau, the new CEO of the Related Companies

10 October 2012 www.TheRealDeal.com

Shapiro steps into spotlight As Nest Seekers grows, its founder moves out of the shadows.

Residential Market Report

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

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

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

Brokers Kevin Brown and Nikki Field at One57

128

A view for a few

Developer Gary Barnett opens One57, but only for selected brokers.

to know Gural 130 Getting The Newmark chair talks about Architect: Skidmore, Owings & Merrill Structural Engineer: Leslie E. Robertson Associates Photograph: SOM | © Eduard Hueber

A TRD analysis shows a steady stream of distressed loans coming due, which investors are likely to seize upon.

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

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Buoyed by NYC transplants, the Hudson Valley sees an increase in sales activity.

backing Obama, horse racing and life since BGC took over his ﬁrm.

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

120

Calendar of Events Check out this month’s activities.

126

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

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We Heard A lighter look at industry buzz.

THE REAL DEAL N E W YO R K R E A L E S T A T E N E W S PUBLISHER Amir Korangy EDITOR-IN-CHIEF Stuart W. Elliott MANAGING EDITOR Jill Noonan DEPUTY MANAGING EDITOR Candace Taylor EXECUTIVE DIGITAL EDITOR Gabrielle Birkner ART DIRECTORS Ronald Gross, Derek Zahedi SENIOR REPORTER Adam Pincus REPORTERS Leigh Kamping-Carder, Katherine Clarke, Guelda Voien WRITERS C.J. Hughes, David Jones, Adam Piore PRODUCTION MANAGER & RESEARCHER Linden Lim WEB PRODUCER Adam Fusfeld EDITORIAL ASSISTANT Zachary Kussin INTERN Christopher Cameron PHOTOGRAPHERS Chris Martin, Marc Scrivo DIRECTOR OF MARKETING OPERATIONS Yoav Barilan ASSOCIATE SALES DIRECTOR Ross Fox ADVERTISING SALES Eran Evron, Abi Laoshe, Nick Mascaro, Robert Stearns WEBMASTER Nima Negahban FINANCE DIRECTOR Kenneth Cyrus ADMINISTRATOR Junaid Zahid CIRCULATION Paul Destanko DISTRIBUTION Mitchell Newman, Michael Presto VIDEOGRAPHER Toni Comas ATTORNEY Barry J. Friedberg Trachtenberg Rodes & Friedberg ACCOUNTANTS William T. McCallum, CPA, P.C., Christine Wang The Real Deal is a registered trademark of Korangy Publishing Inc. Copyright © 2012. Call 212-2601332 or e-mail news@therealdeal.com. Warning: It is illegal to photocopy or reproduce any part of The Real Deal without express written consent. For reprints and duplication rights, call 212-260-1332. Principal ofﬁce: 158 West 29th St., New York, NY 10001. The Real Deal is published monthly. Annual subscriptions cost $95. Send check or money order to 158 West 29th St., New York, NY 10001.

12 October 2012 www.TheRealDeal.com

EDITOR’S NOTE

Power beyond money

oney is power. Businesspeople, including those in New York real estate, are typically motivated by money. And while money does impact the outcome of political races, generally speaking, politicians seek a different sort of power. They seek the adoration of the crowd and the ability to make the decisions that affect all of us. While many of them, like Mitt Romney or Michael Bloomberg, are outrageously wealthy when they enter politics and others end up becoming wealthy as a result of their high political proﬁles, they are typically less motivated by amassing personal wealth. The proof? Their own real estate. In a story beginning on page 42, we look at the homes of some of the most inﬂuential New York City politicians. Both state attorney general Eric Schneiderman and City Council speaker Christine Quinn (who may be our next mayor) live in apartments that appear to barely exceed the average Manhattan apartment price: Schneiderman in an Upper West Side co-op building, where a comparable unit is on the market for $1.6 million, and Quinn in a Chelsea condo worth around $1.3 million (a recent upgrade after reportedly living in a rent-stabilized apartment for years). The most powerful man in Albany (besides the governor), state Assembly speaker Sheldon Silver lives in Co-op Village. The affordable housing project — which is on the far Lower East Side and was privatized in the 1990s — is popular with young homebuyers with a limited budget who want to stay (barely) in Manhattan. And so on. The story is part of a package this month that looks at the intersection of real estate and politics as the election nears. We examine several important races — from the Presidential face-off to local elections — that will have an impact on New York real estate. Of course, contributions from New York’s real estate industry are helping to

While some politicians like Mitt Romney or Michael Bloomberg are outrageously wealthy when they enter politics, politicians are typically less motivated by amassing personal wealth than those in business — and a look at where they live shows it.

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shape these races. We tally campaign-giving in the race for President — Obama has ALN52-015-12_B2B_The_Real_Deal_117,475x161,925_4c_2.indd 1 27.09.12 surprisingly raised more than Romney here this year — and look at the biggest individual donors on the state level to find out what they are trying to buy with their money. At the top of the donor chart is the elusive nonagenarian CEO of Glenwood Management, Leonard Litwin, who’s given $1.6 million to candidates in various state races since the start of 2011. (That’s enough to buy Quinn a new condo.) While candidates’ net worth or real estate holdings might not shape their political agendas, it certainly sheds light on their views. Indeed, Obama’s estimated $11 million net worth (much of which comes from book royalties) pales in comparison to Romney’s estimated $200 million. It would take the leader of the free world nine times his current wealth to buy the most expensive apartment in Manhattan. (While they have been painted, respectively, as the archetypal anti-capitalist and big-business booster, Obama and Romney are hardly the richest or poorest candidates to run for office. An analysis by the website 247wallst.com reported EisnerAmper’s Real Estate Services Group provides a wide array that George Washington would be worth $525 million in today’s dollars, making him of audit, tax and advisory services to the real estate community, one of the wealthiest presidents. On the other end of the spectrum, several presidents including REITs and real estate opportunity funds. went bankrupt before or after their terms, and one quarter of the 44 Presidents would be worth less than $1 million today, including Abraham Lincoln.) Our goal is to help our clients structure sound transactions and Of course, even the wealthiest President couldn’t afford some of the priciest examine each aspect of operations to help maximize potential commercial real estate on the market today in New York. We look at those properties returns and build future success. — one of which is asking $1.5 billion — in a story starting on page 62. Elsewhere in the issue, check out our profile of the Related Companies’ new CEO, And as a leading service provider for financial service Jeff Blau, who has been groomed to head the development juggernaut for years and companies as well as family offices, EisnerAmper is uniquely has finally taken the reins (page 68), as well as stories on Corcoran Sunshine president positioned to create synergies that help our real estate clients Kelly Kennedy Mack (page 30) and Nest Seekers founder Eddie Shapiro (page 58) — all grow their businesses. relatively young guns moving to the top of the food chain in their respective areas. Finally, I’d also like to congratulate Leigh Kamping-Carder, who was promoted from TM Let’s get down to business. reporter to deputy web editor, a new position at the magazine, this past month. And I . J.D., LLM Kenneth Weissenberg, CPA, Partner want to wish farewell to web producer Adam Fusfeld, who is heading to Newsday. 212.891.4070 I’m also thrilled to announce another personnel change this month — to my own kenneth.weissenberg@eisneramper.com family — with the birth of my son, Jonah Emerson Elliott. If you see a baby around town Aaron Kaiser, CPA EisnerAmper LLP Partner wearing a TRD onesie, it’s probably him. Enjoy the issue!

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Stuart Elliott www.TheRealDeal.com October 2012 13

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RE S I D E N T I A L MA R K E T BY LEIGH KAMPING-CARDER f a year ago the watchword for buyers was cautious, this October a better term might be competitive. In the third quarter of this year, sales of Manhattan condominiums and co-ops rose 11.5 percent, to 2,952 transactions from 2,647, compared to the previous quarter, according to a market report prepared by appraisal ﬁrm Miller Samuel for Prudential Douglas Elliman. The median sale price increased 7.4 percent, to $890,000

More competitive than cautious Brokers say the post–Labor Day bump in listings didn’t materialize and that the tight market is trending in favor of sellers

from $829,000, in the same span — thanks largely to a whopping 45.4 percent increase in the median price of new development units, to $1.49 million, the data show. However, year-over-year indicators fell: Transactions were down 5 percent and the median sale price dropped 2.3 percent, the report says. “What I think is particularly interesting, and a strong indicator of the legs of the market, is that sales volume continues to grow as inventory declines,” said Justin

D’Adamo, a managing director at the Corcoran Sunshine Marketing Group. “This is a good indicator for the market going forward.” In other words, the increase in sales is not simply the result of additional units ﬂooding the market. In fact, it continues to be quite the opposite. “The post–Labor Day bump in new listings that we all expected was largely disappointing, as it hasn’t resulted in a signiﬁcant rebalancing of supply and demand — that has been skewed in favor of sellers for the preceding two

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quarters,” said Kate Akerly, an agent at Rutenberg Realty. In desirable neighborhoods such as the West Village and Park Slope, “multiple offers are close to becoming the norm,” said Bruno Navarro, an agent at Bond New York. Recently, Akerly said she wit-

nessed a “handful” of deals fall through after sellers retracted accepted offers, following “one more open house” that generated additional bids. Meanwhile, listings that have been on the market for ﬁve or six months are seeing renewed interest, she said, even though sellers have made only mi-

As fall got underway, buyers directed their attention to studios and one-bedrooms, brokers said. nor changes, such as removing exterior scaffolding. As fall got underway, buyers — particularly parents investing for adult children who are young professionals or college students — directed their attention to studios and one-bedrooms, making the entrylevel apartment the hottest segment of the market, brokers said. One-bedroom sales surged — to 37.8 percent of the Manhattan market, compared to 32.8 percent of the market a year ago; meanwhile, twobedroom sales made up only 31 percent of the market in the third quarter, down from 38.7 percent in the same period last year, the Elliman report says. “After the slowdown of the summer, we are ... seeing many ﬁrsttime homebuyers come to market and start actively hunting,” said Daniel Hedaya, president of Platinum Properties, noting that the high-end market also continues to be strong. On the Upper West Side, D’Adamo observed a “strong uptick” in parents buying for collegebound children starting at nearby Columbia University and Fordham University. “They save on paying rent for their kids — which gets them zero return on investment — and they get to invest in New York real estate at historically low costs,” Navarro said. “It’s a win-win for them. New York’s supply of studios and one-bedroom apartments makes it such a good idea that parents are really starting to notice.” Mark Ski, vice president of sales at Bond, is noticing what is sometimes called “the property ladder effect,” where owners are able to upgrade into pricier housing. For example, mid-range one-bedroom Continued on page 114

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Up in the air BY JAKE MOONEY eal estate players with interests in Midtown aren’t quite sure how to react to the city’s sweeping Midtown East rezoning proposal, which would allow for the construction of taller buildings in the area. The proposal is “a doubleedged sword,” said Paul Selver, an attorney for Argent Ventures, which, through a subsidiary, owns more than 1 million square feet of

Grand Central Terminal’s unused air rights. The rezoning could either help or harm the value of the company’s investment, he said. Potential buyers of the air rights that Argent and others own are also anxiously awaiting some of the plan’s key details. The Bloomberg administration proposed the rezoning in July as a way to encourage developers to replace the aging ofﬁce buildings in Midtown East with more modern ofﬁce towers — thus mak-

Bloomberg’s proposed Midtown East rezoning has real estate players watching and waiting

ing New York City more globally competitive. The proposal is now on a tight schedule to get a green light before Mayor Bloomberg’s term expires at the end of 2013 and must pass through the city’s Universal LandUse Review Procedure, which includes approval from the City Council. Under the plan, developers in the entire 74-block Midtown East area would be allowed to construct taller buildings if they make a pay-

ment, called a District Improvement Bonus, into a new city fund. In addition, the existing “transfer zone” for the so-called Grand Central Subdistrict — a subsection of the broader Midtown East area — would be expanded, so that air rights there can be sold more freely. Expanding the transfer zone in the Grand Central Subdistrict is a signiﬁcant move because, typically, air rights in the city are transferrable only to adjacent lots — or,

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in the case of landmark properties, across the street. (The city established the subdistrict, which includes the area between East 41st and 49th streets and Fifth and Third avenues, in 1992 in an effort to encourage the use of air rights. But in an illustration of why it’s now expanding the zone, only one such transfer has occurred since — to 383 Madison Avenue, a 47-story building completed in 2001.) In 2006, Andrew Penson’s Argent Ventures made a bet on the Grand Central area. The company bought the land under the train station and, by extension, its air rights from the American Financial Group, which, years earlier, had taken over the remnants of the Penn Central railway. Argent now holds about 1.3 million square feet of the unused remaining air rights. According to PropertyShark, other air rights owners in the area include St. Patrick’s Cathedral (1.2 million square feet), St. Bartholomew’s Church (646,299 square feet), 390 Park Avenue Associates (358,994 square feet), 250 Park Avenue (304,628 square feet), Landgray Associates (185,625 square feet) and Central Synagogue (165,049 square feet). Some of those owners, however, are in the broader Midtown East area and not the Grand Central Subdistrict, so will only be able to sell to adjacent building owners or those across the street. But the Daily News reported last month that the Archdiocese of New York is lobbying the city for the right to transfer its development rights anywhere in the zone, despite the fact that Grand Central is the only landmarked building that would be able to do so under the current proposal. Selver, Argent’s lawyer and the cochairman of the land-use department at the law firm Kramer Levin, said in an interview with The Real Deal that the future value of his client’s air rights will be determined, in large part, by the specifics of the rezoning. That is because under the Bloomberg proposal, in order to use the air rights that they purchase, developers would first have to buy separate development rights from the city, with the proceeds from those sales going into the fund to pay for pedestrian and Continued on page 108

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By the Numbers

Real estate’s IPO craze Compiled by Russell Steinberg

The cost of an IPO

Late last year, PriceWaterhouseCoopers released a “roadmap” for real estate companies considering going public. While it noted that raising capital for expansion and increasing market value were selling points, it also found that a “typical REIT rollup” could cost nearly $5 million.

Tracking real estate IPOs

Over the last two decades, the National Association of Real Estate Investment Trusts has tracked 249 real estate IPOs nationwide. Over that time, shares have averaged ABOUT $17 EACH, according to the organization’s website.

Ticker symbol TRLA

In its IPO debut last month, San Franciscobased real estate listings website Trulia .com saw its opening share price jump 40 PERCENT in the first day of trading to roughly $24 a share from $17. The company raised about $100 million through the IPO. According to published reports, Trulia initially estimated that its shares would sell for between $14 and $16.

Malkin’s mission Realogy gears up for public debut

Realogy — the world’s largest residential brokerage franchisor — plans to raise up to $1 billion through its IPO. The move, SAID the company in government filings, would reduce its debt by some $3 billion. Still, some told TRD in August that the Wall Street pressure could also mean more cost-cutting.

The Carlyle giant

The Carlyle Group went public back in May, looking to sell 30.5 million shares, or 10 percent of its company, according to the Washington Post. The Washington, D.C.-based buyout firm and mega real estate investor opened at $22 and raised $671 million. By last month, shares were hovering David Rubenstein of the Carlyle Group around $27 eACH.

Empire State Building owner Peter Malkin is trying to take the iconic skyscraper public. But, according to Bloomberg.com, the building’s complex ownership structure could hold things up. Indeed, Malkin needs an 80 percent approval from the owners of the 3,300 units held by “legacy investors” — many of whom are not on board with the plan.

Recent trends

As of early September, 18 real estate companies had issued IPOs since the beginning of 2010 with an additional 13 pending. According to Real Capital Analytics, REITs have bought more than $27 billion in commercial properties nationally since January 2010.

Starwood’s success

Starwood Property Trust, a division of Barry Sternlicht’s Starwood Capital Group, went public back in 2009 with a massive IPO of $800 million, the biggest of the year, according to the Wall Street Journal. Last month, its roughly 115 million shares were selling for $24.35 apiece. Barry Sternlicht of Starwood Capital Group

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PHOTOGRAPH FOR THE REAL DEAL BY CHRIS MARTIN

This photo with former Vice President Al Gore was taken at a Sundance Film Festival party in 2006. Benaim approached Gore and his wife, Tipper, and they “all had a Heineken.”

Benaim bought this piece, by “an old-school graffiti artist” named Cost, from a gallery last December.

The British graffiti artist known as Banksy made these fake British pounds with plans to distribute them as a prank, but reneged when they looked too real. Benaim bought them at an auction for around $600.

This photo shows the foundation for the Powerhouse Condominium, which was built in a space formerly occupied by a Long Island Railroad power plant. The project was Modern Spaces’ first exclusive marketing assignment, in 2009, Benaim said.

Before going into real estate, Benaim owned a company that threw electronic music parties, like the ones advertised in these posters. Benaim had left the party industry and started a catering company before 9/11, but when business dried up, he went into real estate.

the

Desk

These cans were from a limited-release by retailer Target to celebrate the 50th anniversary of Andy Warhol’s iconic painting. They were only 70 cents each. Benaim bought about 450. “I like them because I can’t afford a real Andy Warhol,” Benaim said.

of:eric

Benaim bought an apartment at Arris Lofts in Long Island City after personally selling about 25 apartments in the building, even though Modern Spaces wasn’t marketing it. The apartment has “14-foot ceilings and an 800-square-foot terrace,” said Benaim, who lives alone but has a girlfriend.

This picture shows Benaim with Brooklyn Borough President, Marty Markowitz, at the grand opening of Modern Spaces’ Williamsburg storefront. “Him, they should name a bridge after,” Benaim said of Markowitz. “He basically is Brooklyn.”

This is a limited-edition print of a work by artist Tom Friedman. The kaleidoscopic dollar bill is meant to question the relationship between art and commodity, Benaim said. When an art-dealer friend showed it to Benaim, he “just fell in love with it.”

ueens native Eric Benaim left Nest Seekers International in 2008 to launch his own residential brokerage, Long Island City–based Modern Spaces. The firm, which now has about 50 agents, is marketing six projects in the area, including TF Cornerstone’s the View and the Stahl Organization’s L Haus. Modern Spaces has two locations in Long Island City and one in Astoria, but Benaim recently moved his office to the firm’s new storefront at 135 Kent Avenue in Williamsburg, which he expects to be the epicenter of new business. Thirty-four-year-old Benaim — who briefly attended NYU but dropped out because it “didn’t interest” him — chose the décor for the new office, seeking to give it a Williamsburg flair with graffiti-style “street art” and a fleet of bikes that agents can use to meet up with clients and tour properties. B y G uelda V oien

BenAim

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COMMERCIAL MA R K E T

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Turning Midtown hip?

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The once-stodgy area is seeing spillover interest from tech tenants squeezed out of Midtown South

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BY ADAM PINCUS t’s well-documented that Midtown South has become New York’s hub of new technology and media. But with available office space in the area growing scarce, tech activity is moving north, causing some to predict that the traditionally stodgy Midtown market could become (at least a little) hip. Midtown South has outperformed other Manhattan markets over the past two years, with the sharpest rise in asking rents and the steepest decline in availability. That’s driving some tech tenants to consider lower-priced, postwar office buildings in Midtown. Colliers International vice chairman Brian Given said last month during the firm’s third-quarter briefing that he’s working with a tech firm looking for space near Grand Central. The company, he said, is interested in postwar office buildings. Other companies will soon follow suit, he predicted. “In another 10 years, these old Emory Roth buildings that don’t have columns and that have nice, clean floor plates will be in vogue again,” Given said. Not all brokers agree. “Saying Midtown could ever be cool is like saying a state trooper writing out a speeding ticket is cool,” said James Wacht, president of commercial firm Lee & Associates NYC, during a panel discussion sponsored by business publisher Bisnow last month. The Manhattan market, meanwhile, remained relatively static. Available space remained flat at 10.3 percent between August and September, preliminary figures from Cassidy Turley showed. At the same time, asking rents ticked up slightly, rising $0.62 per foot to $56.52 per square foot.

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Midtown may still be no cooler than a speeding ticket, but overall market activity there was strong last month. According to Cassidy Turley, average asking rents rose by $0.88 per foot to $64.46 per square foot, and the availability rate dropped by 0.1 points to 11.1 percent. Yet brokers described a nagging feeling that the market is treading water, in part because of large blocks of space that hit the market last month. That includes 180,689 square feet of the 1301 Sixth Avenue space formerly occupied by the nowdefunct law ﬁrm Dewey & LeBoeuf. Dewey once had 474,000 square feet in the building, but landlord the Paramount Group leased 200,000 square feet of it earlier this year. And across from the New York Public Library, virtually the entire ofﬁce portion

Manhattan ofﬁce stats AVAILABILITY RATE

AVG. ASKING RENT

Sept ’12 Aug ’12

Manhattan 10.3% 10.3%

$56.52 $55.90

Sept ’12 Aug ’12

Midtown 11.1% 11.2%

$64.46 $63.58

Sept ’12 Aug ’12

Midtown South 8.0% $47.74 8.1% $47.69 Downtown 10.3% 10.2%

$39.38 $38.80

Source: Cassidy Turley

of pension fund TIAA-CREF’s 275,000square-foot ofﬁce building 475 Fifth Avenue hit the market, according to a new listing on CoStar Group. A Jones Lang LaSalle team including Frank Doyle, Cynthia Wasserberger, Douglas Neye and Shawna Menifee is marketing the space. Developer Joseph Moinian and partner Westbrook Partners bought the building in 2007 and emptied it of tenants to rehab it, but lost the property to lender Barclays. The bank sold the building to TIAA-CREF last year for $144 million. Joseph Harbert, president of the Eastern Region at Colliers, said that stronger activity in 2011 brought with it higher hopes for this year. But those predictions haven’t quite come to pass. “It’s not as good as it was, and it’s not as good as the expectations,” Harbert said during the Colliers media brieﬁng.

Midtown South As Google takes more space in the office building at 111 Eighth Avenue, it has pushed out other tech companies, who are now looking for space nearby. One landlord, Erbo Properties, responded by putting 541 West 21st Street up for lease. The eight-story loft building is a block south of 556 West 22nd Street, where Hewlett-Packard signed a lease last year. Tech firms displaced from the Google building — among other types of companies — could be a good fit for the space, said Erbo’s broker, Itzhaki Properties CEO Isaac Glasman. “It could be food production, but at the same time it could be high-tech,” he said. Continued on page 116

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In their words...

The month’s funniest and most insightful comments from real estate pros “Everything he said was a lie, but how smart was that — making it personal, attacking me like that, making me into the villain? Smart, really smart. Forest City Ratner CEO Bruce Ratner, on Daniel Goldstein, the Brooklyn resident who refused to move out of his condo to make way for the Barclays Center. (New York Magazine)

“They use words like dude and totally. They pound you, they don’t shake your hand. Right now, those are the ones making the space decisions. … So for you brokers canvassing tenants, learn to pound.” Jason Pizer, president of Trinity Real Estate, speaking at a Bisnow panel on how tech and new media firms differ from Midtown’s more corporate tenants.

“When I first moved here, I lived in the American Felt Building, on 13th, and everybody told me, ‘Don’t go east of Third Avenue.’ I remember running to the deli on the cor corner and sort of looking around to see if there was anybody with a knife.”

“[When I was in high school] you would not walk into Fort Greene Park unless you went with the football team. It was a tough neighborhood.” John Catsimatidis, who went to high school on Brooklyn’s Dekalb Avenue in the 1960s.

28 October 2012 www.TheRealDeal.com

Actress Molly Ringwald. (New York Magazine)

“Tompkins Square Park, no matter how many oakleaf hydrangeas they plant, is still a stinky clusterfuck of drug addicts, scoundrels, broke sunbathers and the pierced and tattooed walking fucked-up little dogs. I love it there.” Jonathan Van Meter, a writer and Vogue contributing editor, in an interview with the Awl about the aftermath of his essay, “I Hate Brooklyn.”

“I have to sell a lifestyle every day, and I thought it would be fun to get an inside look into the industry. Plus, I got a free suit out of it.” Oren Alexander, a broker at Prudential Douglas Elliman, on walking the runway during Nolcha Fashion Week.

“Billy thinks he can get 10 bucks a foot more than we were getting. That’s great. In many ways, fantasy is better than reality.” Christopher Schlank, managing partner at Savanna, on his upcoming Midtown South sale of 386 Park Avenue South to William Macklowe Company.

“We’re chill. We’re like one big neighborhood.” David Maundrell, a native of Williamsburg and president of aptsandlofts .com, on how Nets players may react to Brooklyn. (The New York Times)

“You needed popcorn and a glass of scotch.” Michael Boxer, managing partner at RCG Longview, on negotiating a deal with the famously contrarian Edward Minskoff, president of Edward J. Minskoff Equities, on the new development 51 Astor Place. www.TheRealDeal.com August 2006 00

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PR O F I L E

Walking on‘Sunshine’ Kelly Kennedy Mack, on steering her company through the ﬁnancial crisis and coming out on top

Corcoran Sunshine President Kelly Kennedy Mack, photographed at the Aldyn

BY KATHERINE CLARKE he day Lehman Brothers ﬁled for bankruptcy in 2008, Corcoran Sunshine president Kelly Kennedy Mack was in Tribeca, where her company had just launched sales at the new Herzog & de Meuron–designed condo 56 Leonard Street. “I remember being in Tribeca on the phone with one of the senior members of my team, talking about what the ramiﬁcations were going to be,” recalled Mack, who was 34 at the time. “It took some time to set in.” Things were about to change drastically for Mack, who had taken the company’s reins just two years before, at a time when the real estate market in New York was reaching new highs. In the months after the Lehman collapse, however, “sales just virtually stopped,” Mack remembered. “There were months where it felt like there was just not one sale.” It was a crucial turning point for Mack, a real estate wunderkind who had risen to one of the industry’s top positions during the mid-2000s. From the moment she entered the business as a protégé of legendary 30 October 2012 www.TheRealDeal.com

“I don’t know if I was surprised as much as terrified [when asked to take over as president of Corcoran Sunshine]. My first response was, ‘No.’ My second response was, ‘No.’ My third response was, ‘Yes, absolutely.’” KELLY KENNEDY MACK, CORCORAN SUNSHINE new development marketer Louise Sunshine, Mack’s career seemed charmed. But the financial crisis signaled the beginning of a far more challenging period, which would force her to prove herself in a new way. “I knew we needed to take some serious steps pretty quickly,” Mack said. Fifty-six Leonard (along with a slew of other projects) stalled soon after the crisis, and with Corcoran Sunshine’s books suddenly looking lighter, Mack was forced to make difficult decisions along with Corcoran Group CEO Pam Liebman. Corcoran Sunshine’s workforce dropped to 150 from 250 over two years, the company scaled back its office space and Mack and Liebman began looking for new sources of revenue, opting to begin consulting for banks and hedge funds.

Four years later, the market has largely recovered, and Corcoran Sunshine has kept its position as the new development marketing ﬁrm with more projects than any other city brokerage. The company expects to complete $1.5 billion in sales by the end of the year, Mack told The Real Deal during an interview last month. Corcoran Sunshine is currently representing 15 active projects and has $7.5 billion worth of projects slated to hit the market over the next three to four years. That includes high-proﬁle projects such as Silverstein Properties’ Four Seasons Private Residences New York at 30 Park Place, and Starwood Capital Partners’ Baccarat Hotel and Residences New York. And while some boom-time real estate stars have dropped off the industry radar

since the downturn, Mack’s handling of the crisis helped establish her even more firmly as a force to be reckoned with. Mack “was really mature beyond her years” when dealing with the ramifications of the downturn, Liebman said. Larry Silverstein, president and CEO of Silverstein, said Mack helped his company strategize its way through the financial crisis. “I find Kelly an indispensible person to have right by my side when we’re in the throes of major considerations,” Silverstein said.

A turning tide One afternoon last month, Mack surveyed the view from one of the remaining penthouses at the Aldyn, an Extell DevelopPHOTOGRAPH FOR THE REALJanuary DEAL BY CHRIS wwDeal.com 2011MARTIN 25

PR O F I L E ment project where Corcoran Sunshine has headed sales since January 2011. (Corcoran Sunshine’s involvement in a new condo project can last up to seven years and often starts before a developer even purchases a site, with Mack giving advice on the appropriate unit mix, design and buyer proﬁle.) These days, luxury new development

far, though it has been reported that the 78story, Jean Nouvel–designed building will include 480,000 square feet of apartments atop a 92,000-square-foot hotel. Corcoran Sunshine is also working on a 605-foot Skidmore, Owings & Merrill– designed condominium at 20 West 53rd Street. The project, a partnership between

A rendering of 56 Leonard

A rendering of the Baccarat Hotel and Residences New York

pated project at the former site of St. Vincent’s Hospital in the West Village. Rudin is bringing to market six buildings — both newly built and conversions — connected by a private central garden. All are being marketed by Corcoran Sunshine. Many of Corcoran Sunshine’s clients say Mack is a large part of the reason they’ve hired the firm. She’s “refreshingly direct,” said Hines’ Tommy Craig, who has worked with Corcoran Sunshine on several New York projects. Silverstein said he often consults Mack before deciding whether or not to buy a property. “Anytime we find ourselves beginning to consider a particular piece of property for the creation of luxury condominiums, the first call is to Kelly to talk about how she perceives the location in terms of desirability, what she can do with it in terms of sales,” he said. After suspending construction during the downturn, Silverstein is now actively working to complete a financing agreement for 30 Park Place — the Robert A.M. Stern-designed residential and hotel tower planned for 99 Church Street. It will feature 80 stories of luxury condos, a restaurant and a Four Seasons hotel.

All in the family

Louise Sunshine

The Time Warner Center

William Mack

“Corcoran Sunshine does not lose projects that we don’t want to lose. When we’re off a project, it’s usually because we want to be off it.” PAMELA LIEBMAN, THE CORCORAN GROUP condos are staging a comeback. Corcoran Sunshine is serving as the exclusive sales and marketing agency for a stalled plan to build a 1,050-foot tower next to the Museum of Modern Art in Midtown. Few details have emerged about the Hines project so

Starwood Capital Partners and Tribeca Associates, is slated for completion in 2014, but the 61 residential units will likely hit the market next year. Mack’s ﬁrm has also been tapped to lead sales at the Rudin family’s much-antici-

RENDERING OF2012 56 LEONARD FROM HERZOG & DE MEURON; RENDERING OF BACCARAT FROM ARCHPARTNERS 28 March www.TheRealDeal.com

Compared with some of her peers, Mack is actually fairly new to the world of real estate. A native New Yorker, she grew up in Downtown Manhattan. Her mother did casting for television commercials and now has a broker’s license with Corcoran in the Hamptons. Her father was in the travel industry, ﬁrst working on the marketing side for now defunct Trans World Airlines and then for Hertz, the rental car company. The young Kelly Kennedy attended the prestigious Dalton School on the Upper East Side, where she was captain of the basketball and volleyball teams. That’s where she met now-husband Stephen Mack, scion of a prominent New York real estate family. The high-school sweethearts married in 2001 after a long courtship that began with dinner at burger joint Jackson Hole when Kelly was just 16. “I had a crush on him for the entire year before he ﬁnally asked me out,” Mack recalled. The pair lives at the Park Imperial on 56th Street, where rapper Diddy also owns an apartment. (“I think I keep slightly different hours than Puff Daddy,” Mack quipped.) Mack never envisioned getting into real estate. After graduating from Georgetown University, she took a job at Turner broadcasting, doing advertising sales and marketing for the Cartoon Network. Later, she got her MBA at New York University “with the intention of going back to media and entertainment,” Mack said. “I thought when I graduated I wanted

to go into something like corporate strategy for Viacom, or one of those companies.” But her plans changed after the dotcom bubble burst and advertising revenues “took a nosedive,” Mack recalled. “People weren’t really hiring.” In conversations with her father-in-law — William Mack, the founder of global real estate investment and asset management firm AREA Property Partners — she mentioned that she’d always been interested in architecture and design. “I was at the age where a lot of my friends were buying their first apartments,” she said. “Somehow or another, I always found myself as the person who was with them looking at apartments and helping them find something.” Her father-in-law suggested she meet Louise Sunshine, head of the eponymous new development marketing company. Sunshine launched her firm in 1986, and is consistently hailed as a pioneer in predevelopment planning and marketing for new condos. The two women sat down together in 2002 at Sunshine’s Madison Avenue office, and hit it off right away. “I thought she was outstanding in every way,” Sunshine said of meeting Mack. “She was extremely intelligent, extremely credible and had a very good understanding of real estate principles, even though she had very little experience in the field. I guess she absorbed it by osmosis.” Sunshine offered the young woman a job on the spot, but Mack wasn’t quite ready to commit. So she made a deal with Sunshine to work for a few months for free, in return for “living and breathing” Sunshine’s world. The pair went to every meeting together for several months. “There was a long-running joke in the office that I was the most overqualified intern the company had ever had,” Mack recalled. “After 30 or 45 days, [Sunshine] turned to me in a meeting and said ‘this is just ridiculous. You have to just start full-time.’” Mack officially joined the Sunshine Group in 2002 as a vice president of business development, and was later promoted to executive vice president. During that time, Sunshine recalled, Mack acted like her “alter-ego.” “There was no one who understood the business like she did, or understood me,” Sunshine said. For her part, Mack credits Sunshine with setting her on the path to success. “I owe a lot to her,” Mack said. “She taught me that it’s okay to speak your mind, to be confident in your opinions and your recommendations, to question everything and anything.”

Navigating the downturn In 2002, Sunshine sold her company to NRT Inc., the parent company of the Corcoran Group. The two companies ofﬁcially merged in 2005, and with Sunshine Continued on page 110

www.TheRealDeal.com October 2012 31

The Trumps onTwitter E

The Donald and his offspring have over 3 million Twitter followers combined. What exactly are they tweeting about?

BY CANDACE TAYLOR ver since real estate mogul-turned -TV star Donald Trump discovered Twitter, he’s been an outspoken and prolific participant, holding forth on everything from Barack Obama to the death penalty. Trump (@realDonaldTrump) is a vocal supporter of — and fund-raiser for — Mitt Romney, and now that the presidential race is heating up, the Donald’s tweets are more impassioned than ever. These frequent missives have earned him some 1,455,981 followers and no small amount of controversy: He was widely criticized for calling the Huffington Post’s Arianna Huffington “unattractive” through the platform in late August.

The Donald’s children, too, are embracing social media. After using Twitter to help quell a scandal over pictures of him hunting in Africa, Donald Trump, Jr. (@DonaldJTrumpJr) in June was named “Real estate’s top Tweeter” by the New York Daily News. Ivanka Trump, (@IvankaTrump), meanwhile, frequently tweets about life with real estate developer-husband, Jared Kushner, and their daughter, Arabella, as well as promotional events connected to her jewelry and fashion brands. When it comes to social media, the most conservative member of the family is Eric Trump (@EricTrump), who tweets mostly about his business and charitable pursuits. Read on for some of the family’s notable recent tweets, typos and abbreviations, courtesy of each tweeter.

Donald, Sr.

@IvankaTrump

on a holiday weekend, there’s nothing

At the @erictrumpfdn annual golf outing at

I’d rather do I can’t wait to go” - NOBODY

Running really late be-

Trump National beneﬁting @stjudes.

EVER!!!

sign--the logo is terrible.

cause my 13 month old

@ Trump National Golf Course

Lightweight Al Neuharth

daughter hijacked my cell

must’ve had something to

phone and then discarded

(1,455,981 followers)

@realDonaldTrump I hate @USAToday’s rede-

Ivanka Trump (1,401,407 followers) @IvankaTrump

do with this. No wonder paper is failing.

it in her toy bin. #adventuresinparenting

@realDonaldTrump

@IvankaTrump

@ariannahuff is unattractive both inside and out. I fully understand why her former husband left her for a man- he made a good decision.

@realDonaldTrump

@DonaldJTrumpJr Crushed my workout today. Murph: 1 mile run, 100 pull ups, 200 pushups, 300 air squats, 1 mile run. For Time: 36:57. Not bad w/ jet lag

Arabella’s been running around our kitchen in her diaper all morning banging pots

@DonaldJTrumpJr

and pans. #parade

@IvankaTrump Central Park Picnic with Jared. #datenight

Well in 2008 we voted for change & we got Photo of Ivanka, left, at her brother Eric’s charitable golf outing

@IvankaTrump

During @BarackObama’s presidency,

Thank you Carolina Herrera for having me

median family income has fallen 4.8%

at your incredible show yesterday! #nyfw

it. Higher unemployment +2%, highest debt & most new debt ever, higher gas prices. Keep it up!!!

@DonaldJTrumpJr To dude next to me on ﬂight. No its not

@realDonaldTrump

@IvankaTrump

ok for u to rest your elbow on my hip. Arm

Drew Peterson, a real sleaze, just con-

Getting ready for my @todayshow appear-

rest ok 6 inches over not so much.

victed of killing wife. Change the law so he

ance. I will discuss interior design inspira-

gets death penalty.

tion and my @ElleDecor cover. Tune in at 9

@realDonaldTrump Scary thought--is the sexual pervert Anthony Weiner now in Charlotte? Did he bring his phone with him?

A photo of a picnic of Ivanka’s date night with husband Jared Kushner

@IvankaTrump

Eric Trump (114,928 followers) @EricTrump

am! #TodayShow

Dear @conedison - please

Donald Trump, Jr. (159,856 followers)

89th ﬂoor of Trump Chicago. Arguably the great[est] apartment in the world.

show some respect and

@DonaldJTrumpJr

stop spray painting our

Those who keep saying

streets -- it looks awful.

that when Clinton left

@realDonaldTrump

ofﬁce there was no debt

@EricTrump

Joe Paterno’s family should sue the idiots

r morons. Balancing 1

So who would you guys want to see

@PennState that made that ridiculous

budget does not equate to 0 debt people!

back in the boardroom for a possible

deal--and commissioned the one sided

5.6tril Collapse

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TRD

report.

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32 October 2012 www.TheRealDeal.com

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Housing policy AWOL on the trail Both Democrats and Republicans mum on foreclosure crisis BY KENNETH HARNEY all it the political elephant in the room: 1.2 million families across the country are now at some stage of foreclosure, 3.8 million homeowners have been foreclosed upon since September 2008, 11.4 million are underwater on their mortgages, $6.5 trillion in home equity has been lost by owners since 2005 and home building and sales are intimately linked with job creation, yet the subject of housing policy was virtually a no-show in either the Democratic or Republican conventions or in the party platforms. Given the huge impact that the housing and mortgage crashes have had on millions of voters and workers, you would think housing would have been high on both parties’ priority lists. They’d say: Okay, here’s how we’re going to turn this crucially important situation around — getting builders building again to pre-boom historical levels, helping out the good folks who paid their loans on time

even when underwater, plus making sure banks make loans available to credit-worthy buyers who want a mortgage rather than penalizing them for the banks’ past mistakes. But Mitt Romney didn’t mention housing policy at all in his speech to the Tampa convention. Other than addressing the mortgage-interest tax deduction (see Government Briefs at right), President Obama touched on the subject only brieﬂy, saying, “I’ve shared the pain of families who’ve lost their homes.” The Republican platform panned the Obama administration’s response to the housing crisis as having “done little to improve and much to worsen the situation.” The GOP solution: Privatize pretty much the whole mortgage ﬁnance system, kill Fannie Mae and Freddie Mac — which currently fund about two-thirds of all new home lending — and cut the role of the Federal Housing Administration, which is the primary source

of mortgage financing for firsttime and minority purchasers who have moderate incomes but less than 20 percent down-payment cash. The Democratic platform claimed credit for assisting 5 million struggling homeowners “restructure their loans to help them stay in their homes” — a total far beyond most analysts’ estimates for the Home Affordable Modification Program (HAMP) and related federal efforts. The leftleaning Firedoglake blog called the 5 million claim “dishonest nonsense on housing,” and added that the platform’s numbers failed to account for “the [mortgage] modifications that went into redefault or the trial modifications that were canceled and squeezed the borrower by demanding the difference between the original payment and the trial modification immediately.” Last month, an independent research study by federal and academic econoContinued on page 106

�� Final section of the High Line begins construction City officials and celebrities, including Mayor Michael Bloomberg, City Council speaker Christine Quinn and fashion designer Diane von Furstenberg, attended last month’s groundbreaking ceremony for the third and final section of the popular High Line park, Crain’s reported. The $90 million addition, funded by a mix of public and private funds, will be completed in phases, with the first scheduled to be finished in 2014. The third section will extend the park north, between West 30th and West 34th streets, and from The High Line 10th to 12th avenues. CSX Transportation, the Florida company that owns and once operated the railroad tracks at the High Line, donated the last section to the city this summer.

Obama vows to keep mortgage tax break If reelected, President Barack Obama would not touch the mortgageinterest tax deduction for middle-class families, he said last month during a speech accepting his party’s nomination for president at the Democratic National Convention in Charlotte, N.C. Instead, any tax increases or deﬁcit reduction measures would be aimed at households earning more than $250,000 per year, the President said. “We believe that when a family can no longer be tricked into signing a mortgage they can’t afford, that family is protected, but so is the value of other people’s homes, and so is the entire economy,” he said. The Republicans, meanwhile, have pledged to eliminate the mortgage-interest deduction as part of their party platform. Although critics have said abolishing the tax break President Barack Obama would make it more difﬁcult for middle-class individuals to purchase homes, the Republicans say it would help pave the way for income and corporate tax cuts.

LIC-based Krinos Foods to move to the Bronx Greek food manufacturer Krinos Food announced last month that it will develop a $20 million facility on what is now city-owned land in the Tremont section of the Bronx, according to the Wall Street Journal. The Long Island City-based company — which imports and makes olive oils, cheeses, coffee, pastas and yogurts — is purchasing the site from the city for $3.5 million, and will build a 100,000square-foot facility there. Krinos will seek subsidies typically available to industrial companies, but didn’t receive any additional government incentives to stay in New York state. Krinos was founded in 1958 and has called Queens home since 1981. At a time when many manufacturers have left the city due to high costs, staying in New York was “not the obvious choice for us,” Krinos Foods president Eric Moscahlaidis told the Journal. But, he added, “I’m a born and bred New Yorker. I wanted to be in New York.”

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REAL ESTATE

AND

POLITICS

Mapping out the

key races, big money and political players impacting the industry this election season

he contest between Barack Obama and Mitt Romney has already inspired wall-to-wall media coverage and unprecedented levels of spending, and the furor will only intensify in the weeks leading up to the Nov. 6 vote. But what does it all mean for New York City’s real estate industry, and how are real estate professionals engaging with their would-be elected officials? This month, The Real Deal mapped out the intersection of real estate and politics, in what will be the first presidential election since the U.S. Supreme Court rewrote the rules on campaign financing and the U.S. Census redrew the boundaries of voting districts. In recent months, the Obama vs. Romney matchup has, understandably, taken center stage. But the two are not spending much time talking about housing policy on the campaign trail (see related story on page 34) and there are a slew of other candidates running for office in New York City seeking election to the U.S. House of Representatives, the New York State Assembly and the state Senate. (See story on page 38.) (New Yorkers will have to wait until 2013 to vote in the City Council and mayoral elections and until 2014 to vote on statewide candidates like the attorney general or governor.) The new crop of elected officials will chart the course on capital gains taxes, rent-stabilization laws and a host of other issues that could affect the industry in the coming years. But the candidates will be running in slightly different geographic districts than in the past, due to the controversial redistricting that took place after the 2010 Census revealed new national population trends. First, New York State lost two Congressional districts — dropping to 27 from 29 — because its population grew more slowly than the nation’s as a whole. Second, the state Senate grew by one seat, to 63 from 62, which will no doubt be helpful in the event of a tie. Lastly, the borders of state and federal districts have been rejiggered, meaning that some elected officials will be losing former constituents to other districts, or

representing certain neighborhoods for the first time. For example, Nydia Velázquez represents New York’s 12th Congressional District, which, until recently, covered parts of the Lower East Side, Greenpoint, Bushwick and Park Slope. Now, however, redistricting has eliminated Greenpoint from the area, and her home turf has been rechristened the 7th Congressional District. The 15th Congressional district, which Charles Rangel has represented since 1971, has also changed. Now known as the 13th Congressional District, the area previously covered a sliver of real estate on the West Side of Manhattan extending south to West 72nd Street, but now it goes no further south than 96th Street. Luckily for Rangel and Velázquez, they were not redistricted out of their own homes. But, as TRD reports, the place where a politician chooses to live can have an impact on their policies and positions. (See story on page 42.) This is also the first presidential race since the high court’s 2010 decision in Citizens United v. FEC, which effectively removed limits on campaign spending by outside groups, provided they do not coordinate with official campaigns. As a result, this election season has been awash in money. On the state level, the real estate industry has long been a main source of funding for legislators, who often have more control than their federal counterparts over the laws that affect the city’s landlords, developers and brokers. (See story on page 44.) On the federal level, Obama and Romney’s campaigns have collectively raised more than half a billion dollars, including donations from some prominent real estate executives (see story on page 46). At press time, it was still unclear who would make it to the White House or which party would take control of the U.S. House and U.S. Senate. With just a few weeks left until voters head to the polls, it’s still anyone’s game. What will the results mean for the industry? That will play out in the next four years. By Leigh Kamping-Carder

38 TRD’s ballot guide

44 Show me the money

42 Politicos’ palaces

46 Obama bests Romney for NYC real estate cash

ILLUSTRATION FOR THE REAL DEAL BY ROBERT PIZZO 42 October 2012 www.TheRealDeal.com

www.TheRealDeal.com October 2012 37

REAL ESTATE

AND

POLITICS

TRD’s ballot guide

A real estate handbook for the races and issues to watch this election

BY LEIGH KAMPING-CARDER he 2012 presidential race has garnered so much attention that it’s easy to forget about the other state and federal candidates on the ballot this November. In addition to the face-off between Barack Obama and Mitt Romney, New Yorkers will have a chance to vote on about two dozen candidates for the U.S. House of Representatives, one U.S. Senator (Democratic incumbent Kirsten Gillibrand) and 213 members of the New York State legislature.

State executives, such as the governor and attorney general, are not up for reelection until 2014, and municipal races will take place in 2013. This month, The Real Deal presents a ballot guide to the local races of particular importance to New York City real estate professionals. These are candidates who have courted big real estate money, could shift the balance of power in Albany or could affect the housing market on the national stage.

President Barack Obama vs. Mitt Romney

or many real estate professionals, the contest between President Barack Obama and Republican challenger Mitt Romney is the main focus this election season, even though neither man will have a direct hand in New York City real estate policy. However, the winner’s positions on unemployment, taxes and the role of government will no doubt affect the housing market and business growth nationally — and closer to home, experts said. “If there are no jobs, there’s nobody to rent housing,” said Peter Kalikow, president of commercial developer and landlord H.J. Kalikow & Co. “If there’s nobody to rent housing, there’s nobody to work in the office buildings we have. The spiral is unbelievable.” But neither candidate has offered a detailed plan to kick-start the still-slumping U.S. housing market, according to industry watchers who spoke with TRD (see related story on page 34.) President Barack Obama “I feel like the housing part of the conversation has been absent from the political discourse during the election this year,” said Jonathan Miller, president of appraisal firm Miller Samuel. The Obama administraGOP Presidential contender tion’s previous attempts to Mitt Romney spur mortgage lending — rounds of quantitative easing, where the Federal Reserve buys up securities, injecting money into the economy and effectively lowering interest rates — has been ineffective, Miller said. (The latest round, known as QE3, was announced last month.) To Miller, the problem is not low interest rates but tight credit. “We all know that if you do two things that don’t work, you should do the thing a third time,” Miller said, sarcastically. “I think that’s the definition of insanity.” Likewise, Obama’s approach to the foreclosure crisis — to encourage banks to modify home loans — is actually hurting the housing market by keeping people in homes they can’t afford, real estate attorney Adam Leitman Bailey argued. In New York, if those properties were on the market, the extra supply could bring down prices, he said.

38 October 2012 www.TheRealDeal.com

On the other hand, Romney has not proposed concrete alternatives, experts said. His official campaign literature calls for selling off 200,000 government-owned foreclosed homes, reforming Fannie Mae and Freddie Mac to make them less reliant on taxpayer funds and implementing “creative alternatives to foreclosure” and “smarter regulations” to increase lending. Romney has also touted the budget proposal of his running mate, Paul Ryan, but Miller said that would likely only damage the housing market. For some in the real estate industry — who tend to favor Republicans in contrast to city residents, who largely support Democrats — the choice comes down to what they see as Obama’s anti-business approach. “It’s hard not to believe that a change from Obama will be beneficial to business and that will, in turn, benefit our New York real estate market,” said Arthur Mirante II, the tri-state president of commercial brokerage Avison Young. Mirante acknowledged that he’s not political, but said his view was popular among his peers. Although Obama’s campaign has outraised Romney’s by a significant margin — not accounting for funds from political action committees — the Republican candidate has gotten more financial support from real estate professionals nationally, according to figures from election watchdog OpenSecrets. Of the $348.4 million raised by the Obama campaign, about 3.5 percent, or almost $12.2 million, has come from individuals who work in the real estate industry, OpenSecrets figures show. Romney, meanwhile, has raised almost $28.6 million

from real estate sources, making up about 14.8 percent of his campaign’s $193.4 million war chest, according to OpenSecrets. Plus, the Republican nominee is outraising Obama when it comes to outside sources: Groups have spent more than $128 million to oppose the President’s campaign. On the ﬂip side, Obamafriendly groups have spent only $46 million opposing Romney. However, so far this year, Obama is outraising Romney among New York City real estate pros (see related story on page 46.) Jeffrey Gural, chairman of Newmark Grubb Knight Frank explained his support for Obama this way: “Typically, most wealthy people support the Republicans, if for no other reason than they’ve pledged not to raise their taxes — which I think is just not fair.” Kalikow, who gave $2,500 to Romney’s campaign, is not particularly optimistic about the presidential election’s effect on the economy. “If Obama gets reelected, it won’t be good, but it won’t be terrible, and if Romney wins, it’ll be good, but it won’t be great,” Kalikow said.

U.S. Senator, New York State Kirsten Gillibrand vs. Wendy Long

en. Kirsten Gillibrand is the only U.S. Senator from New York running in the 2012 election. (Her colleague, Sen. Charles Schumer, will be on the ballot in 2016.) Since taking over Hillary Clinton’s seat in 2009, Gillibrand has established herself as a notable female voice in the Democratic Party Incumbent U.S. Senator and a powerful fund-raiser. Kirsten Gillibrand This election, she has raised $13.8 million so far, including $1.26 million from real estate professionals, making the sector her third-largest source of funds. Indeed, Gillibrand is the second-largest recipient of Republican U.S. Senate real estate funds of any U.S. candidate Wendy Long Senator or Senate candidate

www.TheRealDeal.com January 2011 25

REAL ESTATE this election cycle, according to OpenSecrets. Among her top real estate donors are employees of Rudin Management, who contributed $74,600 to her campaign. Gillibrand has touted her support for the Emergency Homeowners Loan Program foreclosure prevention measure, noting that $111 million of the program’s funds went to New York State. She also supports increasing federal investment in public housing. Her Republican opponent is Wendy Long, a Manhattan attorney who espouses many traditional GOP views, including the belief that overregulation will hurt New York’s economy. In an August op-ed in the Wall Street Journal, Long warned that the Dodd-Frank rules aimed at reforming Wall Street could lead to “the Empire State’s downfall as the world’s ﬁnancial capital.” A New Hampshire native, Long worked as a litigator at Kirkland & Ellis and clerked for U.S. Supreme Court Justice Clarence Thomas. More recently, she helped create the Judicial Crisis Network, a nonproﬁt that advocates for judicial candidates who practice judicial restraint. Long, who has an uphill battle running against the incumbent, has raised $336,976, including a $2,500 donation from an employee at the Houston-based developer Hines.

U.S. House of Representatives 13th District Mark Murphy vs. Michael Grimm

28 March 2012 www.TheRealDeal.com

POLITICS

Mark Murphy, a former aide to New York City Public Advocate Bill de Blasio. Murphy’s surname is likely familiar to Staten Islanders: His father, Jack, was also a U.S. Representative, who spent 20 months in prison on political corruption charges. He recently received the endorsement of former Mayor Ed Koch as well as $5,000 in contributions from Extell employees. But the race has gotten somewhat, well, grim, for Grimm. In his ﬁrst campaign, for the 2010 midterm elections,

Robert Knakal, chairman of Massey Knakal Realty Services, noting that several of his clients have decided to sell this year because they anticipate the rate will go up in the new year. Currently, the top capital gains rate is 15 percent, but that ceiling is set to rise to 20 percent in 2013 if Congress fails to pass an alternative budget, a measure that Obama supports. Separately, the capital gains rate for top-earners is set to go up by an additional 3.8 percent as a funding mechanism for health-care reform. Romney has pledged to preserve the 15 percent rate

“If Obama gets reelected, it won’t be good, but it won’t be terrible, and if Romney wins, it’ll be good, but it won’t be great.” PETER KALIKOW, H.J. KALIKOW & CO . Grimm reportedly raised hundreds of thousands of dollars from supporters of Rabbi Yoshiyahu Yosef Pinto, the Israeli religious leader who counts many of the city’s real estate heavyweights among his followers. The FBI is now investigating claims from some of Pinto’s followers that their contributions to Grimm’s campaign were illegal, the Associated Press reported. Murphy has called on his opponent to refund the donations, which Grimm has declined to do. “My campaign and I followed the fund-raising rules, and took reasonable measures to vet the contributions received by my campaign,” Grimm said in a statement to the AP early last month.

ichael Grimm, a former FBI agent and ﬁrst-term Congressman, is the only federal GOP incumbent on the ballot in New York City and, therefore, of note for real estate industry executives keen on maintaining the House’s Republican GOP Rep. Michael Grimm of Staten Island slant. “As New York loses [Republican] congressmen, everyone that we can keep becomes very valuable,” Kalikow said. “I’m very, very much concerned that if President Obama wins another term Democratic congressional that we need checks and balcandidate Mark Murphy ances in Washington,” said John Catsimatidis, chairman and CEO of the Red Apple Group and Gristedes Foods, referring to Republicans gaining control of both houses of Congress. Plus, as a member of the U.S. House Committee on Financial Services — which oversees economic, housing and banking policy — Grimm has a say on regulations affecting the ﬁnancial industry, a key driver of New York City’s economy and its commercial and residential real estate markets. Not surprisingly, Grimm’s main source of funding is the securities industry, with the single largest source of contributions coming from employees of Elliott Management, the hedge fund started by Paul Singer. Overall, Grimm has raised $1.78 million, including about $85,000 from real estate professionals. Grimm’s opponent in the district — which covers much of Staten Island and Bay Ridge, Brooklyn — is

AND

U.S. House of Representatives 14th District Joseph Crowley vs. William Gibbons, Jr.

ncumbent Democrat Joseph Crowley has received more donations from real estate professionals than any other U.S. House Representative in the country, securing about $145,000 of the $2.1 million raised by his campaign from the sector. His donors include employees of the National Association of Real Estate Investment Trusts, which gave $11,000; Brookﬁeld Properties, donating $10,000; and Rudin Management, which also gave $10,000. Why is Crowley, who has represented the Queens district since 1998, such a fund-raising powerhouse? It’s likely because he sits on the House Ways and Means Committee, which oversees tax policy in the lower chamber of Congress. Tax rates are not only a main source of difference between the Democratic and Republican Party platforms; they are a prime driver of New York City’s residential and commercial sale markets, mainly when it comes to taxes on capital gains. Democratic Rep. Joseph “The capital gains tax Crowley of Queens has become a huge issue for owners in New York City and may push people to sell at very different numbers prior to January,” said Frances Katzen, a managing director at Prudential Douglas Elliman. The capital gains environment may have an even bigger impact on the commercial real estate sector, said

for households making more than $200,000 annually. If the rates go up, “you’d see a tremendous drop in the number of sale transactions occurring next year,” Knakal argued. However, proponents of Obama’s plan argue that it would make the tax code fairer, since the tax break for investors tends to beneﬁt high-income individuals, while providing a much-needed revenue boost for the federal government. In the past, Crowley has voted against extending the Bush tax cuts, which set the rate at 15 percent. Crowley is running against Republican William Gibbons, Jr., who has yet to set up a campaign website. Gibbons could not be reached.

New York State Assembly 65th District Sheldon Silver vs. Wave Chan

heldon Silver is a powerhouse of New York State politics: the Speaker of the Assembly, a top fundraiser, and a fixture in the Lower Manhattan district he represents. But Silver is under fire, and his position as Speaker is on increasingly shaky ground. The state Joint Commission on Public Ethics is inAssembly candidate Wave Chan vestigating his role in authorizing a $103,000 taxpayerfunded payout to settle claims that Assembly member Vito Lopez sexually harassed two female staffers. Silver reportedly never referred the matter to the Assembly Ethics Committee. In late September, Queens State Sen. Tony Avella became the first Democrat to call for Silver’s ouster as Speaker, the New York Daily News reported. Nevertheless, Silver is expected to cruise to victory on Nov. 6 against his largely unknown opponent, Tea Party supporter Wave Chan. Indeed, the Assembly is less of a battleground than the state Senate, largely because the lower chamber is so heavily dominated by Democrats — they control 99 of the 150 seats — and many of the candidates are entrenched incumbents. Nominees in numerous prime Manhattan neighborhoods are running unopposed, including Deborah Glick (whose district covers the West Village and Soho), Linda

www.TheRealDeal.com October 2012 39

REAL ESTATE

Rosenthal (parts of the Upper West Side and Clinton) and Richard Gottfried (Midtown West and Chelsea). For this reason, the primaries held on Sept. 13 became de facto general elections. As far as real estate concerns go, the Assembly is reliably tenant-friendly, experts said. But every year varies when it comes to what degree members push rent laws to the forefront of the agenda, said Mario Mazzoni, executive director of the Metropolitan Council on Housing, a tenants’ rights group based in New York City. If Silver is replaced as Speaker, the power shift could beneﬁt New York business interests — not typically a constituency Silver has worked to court — said Mirante. “I would think that anyone new might take a fresher view than he has taken toward business in general in New York State,” Mirante said.

New York State Assembly 53rd District Vito Lopez vs. Richy Garcia

ito Lopez once enjoyed an exalted position among New York City Democrats as head of Brooklyn’s Democratic Party, chair of the Assembly’s housing committee and a top fundraiser. In the last election, Lopez raised $460,680 — the fourth-highest among Assembly members, accordEmbattled Democratic ing to figures from the Assembly member Vito Lopez New York Public Interest Research Group, a nonpartisan research organization. He received more than twice as much from the real estate industry as any other Assembly Democrat, NYPIRG’s research coordinator, Bill Mahoney, said. As housing committee chair, Lopez was also at the forefront of most major housing-related legislation, including acting as the main sponsor of the Assembly’s update to rent regulations last year. But since the summer, when a raft of sexual harassment claims from former staffers surfaced, Lopez relinquished both leadership positions and earned the unfortunate moniker “Vito Gropez.” Now stripped of his powerful party role, Lopez’s fund-raising is set to “dry up quite significantly,” Mahoney said. “I don’t think people will see the return on the investment as worthwhile with him as it has been in the past years,” he added.

40 October 2012 www.TheRealDeal.com

AND

POLITICS

Lopez, first elected to the Assembly in 1984, is still widely expected to win reelection in his district, which covers much of Williamsburg and Bushwick. His opponent is Republican Richy Garcia, whom the New Yorker reported is a 26-year-old Board of Elections warehouse worker. (When the magazine contacted Garcia about his platform, the candidate replied via text message: “I can’t do DAT I very busy rite now.”) TRD was unable to reach him for comment. A more pressing concern for real estate is who will fill the role of housing committee chair, setting the tone for how much of a priority the Assembly puts on housing issues. Though former Assemblyman and Judge Frank Seddio replaced Lopez as party boss late last month, at press time the party had not appointed a successor for the committee chairmanship.

New York State Senate 15th District Joseph Addabbo, Jr. vs. Eric Ulrich

he race for the 15th District in Queens is a crucial one to decide the balance of power in the state Senate. In fact, if incumbent Sen. Joseph Addabbo, Jr. fails to maintain his seat, there is almost no chance of the Democrats taking control of the chamber, NYPIRG’s Mahoney said. To Mahoney and others, the question of which party controls the state Senate will play a bigger role than any individual race, given that Republicans are seen as more friendly to the real estate industry, while Democrats have taken the sides of tenants. “It’s all about controlling and increasing the Republican majority in the senate,” said Frank Ricci, the director of government affairs at the Rent Stabilization Association, a Manhattan-based property owner trade group.

tives from Albany to have people take money out of their pockets and create more housing and more development,” he said. He added, “Banks have to look at it [like] it’s a no-lose proposition, and that you’re willing to put up your money; [then] they’ll put up theirs.” A former City Council Member, Addabbo was elected in 2008 to represent the district, which covers areas of Maspeth and Woodhaven. His challenger is the 27-year-old Eric Ulrich, who became the youngest City Council member after winning a special election in 2009. He sits on the Council’s Housing & Buildings committee.

New York State Senate 37th District George Latimer vs. Bob Cohen

ne of the closest — and most closely watched — races in the state is the face-off between Republican Bob Cohen and Democrat George Latimer, who are vying to occupy the Westchester seat left vacant by the retiring DemoDemocratic State Senate candidate George Latimer crat Suzi Oppenheimer. Not only is the race important for deciding which party controls the state Senate, but the candidates are also on opposing sides of the landlord-tenant divide. An Assembly member Republican State Senate since 2004, Latimer has candidate Bob Cohen received the endorsement of Tenants PAC, a group that works to elect pro-ten-

Incumbent Democrat Joseph Crowley has received more donations from real estate professionals than any other U.S. House Representative in the country. Ricci recalled the brief period of Democratic control of the Senate in 2008 when members introduced measures “every week” that would “hurt the residential real estate industry,” such as raising the threshold for luxury decontrol, or the rent that effectively removes an apartment from rent-stabilization rules. Incumbent Democratic State For real estate developSenator Joseph Addabbo, Jr. ers, it is particularly important for Republicans to keep the majority in order to induce businesses to start new projects, said Catsimatidis. He added that he has several Brooklyn developments underway that are stalled because of a lack of GOP State Senate tax credits. candidate Eric Ulrich, a member of the City Council Developers “need incen-

ant candidates in New York State. Latimer is a “strong supporter of tenants’ rights and stronger rent and eviction protections,” the group said, noting that it only supports candidates that “we know we can trust and who will actively support our legislative goals.” Meanwhile, Cohen runs a small Manhattan real estate development company, and the main plank in his election platform is the reduction of property taxes for Westchester residents. In the last election, Cohen ran a close race against Oppenheimer, winning the endorsement of the New York Times — not exactly a conservative bastion — in part because Oppenheimer had “too little to show for her years in Albany,” an editorial in the newspaper commented. Cohen has repeatedly attacked Latimer for refusing to join him in calling for Silver to step down as Assembly Speaker. “Anyone who hesitates to join this call is sending a message to women everywhere that this behavior is acceptable,” Cohen said in a statement. TRD

www.TheRealDeal.com October 2012 43

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Politicos’palaces

A look at where some of the most inﬂuential and real estate–minded politicians live in NYC

BY LEIGH KAMPING-CARDER nthony Weiner’s Twitter-enabled fall from grace may have had one unforeseen bonus: an upgrade in real estate. As a Congressman, Weiner lived in a two-bedroom co-op within the boundaries of his district in Forest Hills, Queens, an apartment that he sold last year for $430,000, public records show. As an ex-Congressman, Weiner has landed in a four-bedroom condominium on Park Avenue South, recently on the market for almost $3.3 million, the New York Post reported in August. But Weiner is not the only New York City politician whose day job affects his address — and vice versa. The neighborhoods that elected ofﬁcials occupy are circumscribed by their districts, and, in turn, the issues and projects they support and oppose are inﬂuenced by where they live.

Eric Schneiderman New York State Attorney General

s attorney general, Eric Schneiderman has the final say on whether the city’s numerous condominium projects can go forward, determining when developers can start selling units and — if they fail to follow through on offering plan commitments — suing them on behalf of residents. Perhaps in the spirit of avoiding a conflict of interest, the longtime litigator lives in a prewar co-op: an eighth-floor unit at a luxury building at 645 West End Avenue, according to public records and news reports. The 72-unit property features a landscaped garden and exercise room on its rooftop. Although it was not immediately clear how much Schneiderman paid for his apartment, which he once shared with his now ex-wife Jennifer Cunningham (who advised him on his campaign for AG in 2010), a two-bedroom in the building is currently on the market for $1.65 million. The couple has one daughter together. A representative for Schneiderman did not respond to a request for comment.

Christine Quinn New York City Council Speaker

s City Council speaker, Christine Quinn is a major player in New York City real estate — and one of the more closely watched (potential) contenders to replace Bloomberg as mayor. Quinn lives in West Chelsea with her wife, Kim Catullo, whose name is on the deed of their two-bedroom condo on Ninth Avenue between 25th and 26th streets. Catullo paid almost $1.29 million for the apartment, according to city records. The sale closed in early 2011; the unit is in the district Quinn has represented since 1999. (According to published reports, before moving, Quinn lived in a rent-stabilized apartment in Chelsea for 18 years.)

42 October 2012 www.TheRealDeal.com

The only exception may be the mayor, who has the run of Gracie Mansion while in office. (Of course, Mayor Michael Bloomberg famously turned down the home in favor of staying in his current properties: a townhouse at 17 East 79th Street, four of the five units at the co-op next door, a Southampton mansion and a collection of other homes across the world.) This month, The Real Deal maps out where some of the most influential and real estate–minded politicians live in New York City. The list does not include powerful politicos who reside elsewhere in the state, such as Governor Andrew Cuomo, who splits his time between the governor’s mansion in Albany and his home in Mount Kisco, where he lives with his girlfriend, celebrity chef Sandra Lee; New York State Senate majority leader Dean Skelos (who lives in Rockville Centre); or U.S. Senator Kirsten Gillibrand (who is based in Brunswick).

ly approved developer Jamestown Properties’ plans to add an ofﬁce tower atop the converted cookie factory — although with some size and height reductions and without a planned hotel — but Quinn has yet to take a stand on the project. As Chelsea’s representative and the leader of the 51-member body, her vote could decide the fate of the development. Some have speculated that she has remained quiet for fear of alienating either her constituents or the real estate bigwigs who could help her mayoral campaign, the New York Times reported. Quinn, who was elected Speaker in 2006, was not available for comment.

Charles Schumer U.S. Senator

hen he’s not in Washington, D.C., Charles Schumer, a Brooklyn native and New York’s senior U.S. Senator Charles Schumer and 9 Prospect Park West in Brooklyn Senator, lives not For the most part, Quinn has walked a too far from where he grew up in a preﬁne line between championing proposals war Park Slope co-op that he once called opposed by real estate developers, such as his “only major asset.” Schumer has lived at 9 Prospect Park the “living wage” bill, while allowing developments to proceed, albeit sometimes West with his wife, Iris Weinshall, a vice with concessions, as in the case of Rudin Management’s St. Vincent’s conversion. However, she has remained silent on one of the most controversial projects proposed in the neighborhood: the expansion of the Chelsea Market. The City Planning Commission recent-

chancellor at the City University of New York and a former city transportation commissioner, since 1982. The couple have two daughters together. Schumer paid $157,000 for the home, he told the New Yorker in 2010. These days, two four-bedrooms in the building are on the market there for $2.85 million, and almost $2.99 million, respectively, according to StreetEasy. While Schumer is well-known on the national stage, his advocacy in the neighborhood appears to be more limited. Perhaps he is best recognized for getting caught cycling down the Prospect Park West bike lane — an initiative his wife famously opposed. In an effort to spur the U.S. housing market, Schumer introduced a bill last October with Sen. Mike Lee (R-Utah) to create a three-year residential visa for foreign nationals who invest at least $500,000 in residential real estate. The legislation has been referred to the Senate Committee on the Judiciary.

Hakeem Jeffries New York State Assembly Member

ew York State Assemblyman Hakeem Jeffries has lived in Prospect Heights since 1999. He is now hoping to represent the area on the national stage by running for Congress — speciﬁcally the Eighth U.S. Congressional district, which covers a swath of Brooklyn and Queens. He is running against Republican businessman Alan Bellone to replace Rep. Edolphus Towns, who’s retiring (though the district boundaries have been altered). Almost six years ago, the Brooklyn

Schumer has said he paid $157,000 for his home. These days, two four-bedrooms in the building are on the market there for $2.85 million and almost $2.99 million. www.TheRealDeal.com January 2011 25

REAL ESTATE

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also win tax credits for earmarking units for middle-income residents. A similar New York City Housing Development Corp. scheme exists that provides low-interest loans to developers who build 50/30/20 buildings, with 20 percent low-income units, 30 percent middle-income units and 50 percent market-rate units.

Sheldon Silver New York State Assembly Speaker

A Attorney General Eric Schneiderman and his West End Avenue building

lifelong resident of the Lower East Side, Assembly Speaker Sheldon Silver has a hand in shaping state-wide policy, including working closely with Governor Andrew Cuomo and other lawmakers on the state budget. However, the 18-year veteran of the legislature is also known for his activity in his home district, which covers the Financial District, Chinatown and the Lower East Side. Silver lives at Hillman House, an 800unit, three-building structure that is part of Co-op Village, the sprawling cluster of 12 buildings on the far east corner of Grand Street. He and his wife, Rosa, have four children.

to make their home in a low-rise condo building in their district in Carroll Gardens on Henry Street. The couple paid $950,000 for a three-bedroom unit described in a recent listing as “an ideal apartment for people who crave space and privacy” that comes with a private roof deck and basement storage. As the local state senator, Squadron has veto power over developments at Brooklyn Bridge Park and has previously opposed the construction of new housing there, which is seen as an alternative to government funding for the park. He has also tangled with the controversial landlord and developer Ben Shaoul over sites in the East Village, opposing plans to convert the Cabrini nursing home into condos and speaking out against Shaoul’s attempt to secure a variance for two ﬂoors built atop an apartment building on East Sixth Street.

Liz Krueger

New York State Senator

ew York State Senator Liz Krueger lives in what is likely one of the most distinctive homes on the Upper East Side. “It’s a little unusual to describe,” Krueger told TRD. “It’s a hidden house.”

New York City Council Speaker Christine Quinn and her new apartment

The neighborhoods that elected officials occupy are circumscribed by their districts, and in turn the issues and projects they support and oppose are influenced by where they live. Democrat bought a three-bedroom condo in a new 39-unit development popular with young families like his — although, he jokes, “I’m getting older by the day.” The Jeffries family — he has two children — sold their previous home, a twobedroom co-op, in order to afford the new apartment, which cost about $560,000, he said. The experience reinforced his commitment to encouraging the construction of middle-income housing in Brooklyn and Queens. He is also a member of the Assembly’s committee on housing. “It’s a booming community,” Jeffries said of Prospect Heights, “but like many neighborhoods in central Brooklyn, working families and senior citizens and even middle-class residents are finding it increasingly difficult to remain because of the high cost of housing.” While federal programs exist to spur low-income housing, they largely ignore the middle-class buyers who cannot afford market-rate apartments, but also don’t qualify for affordable housing benefits, Jeffries said. A prime example is the so-called 80/20 program, which rewards developers with federal tax breaks for setting aside 20 percent of units for low-income residents. If elected, Jeffries said he would aim to reform the program so that developers can

28 March 2012 www.TheRealDeal.com

Assembly Speaker Sheldon Silver and his building, the Hillman House, on Grand Street

The union-built complex was erected in the 1940s under a federal affordable housing program, and privatized in the late 1990s. In July 2011, the New York Post reported that Silver, a prominent proponent of rent stabilization, had led the campaign to take the complex market rate, although he denied that he had played a role. These days, Silver is facing a state ethics probe in connection with a $135,000 taxpayer-funded settlement to resolve sexual harassment allegations against Assemblyman Vito Lopez, which was not publicly disclosed. Silver did not respond to a request for comment.

Daniel Squadron

State Senator Liz Krueger and her home

New York State Senator

aniel Squadron, the 32-year-old state senator elected in 2008, could have his pick of prime neighborhoods: His district spans Tribeca, Battery Park City, the Financial District, the East Village, Dumbo and Williamsburg, among others. But Squadron and his wife, Liz, chose

The home, on East 78th Street between First and Second avenues, is an 1860s farmhouse that is only accessible by walking through the door of a co-op building that fronts the street, down a hallway and over a bridge. The curious setup dates back to the turn of the 20th century, when the owners of the farmhouse, a separate structure, sold off their front yard, Krueger said. Krueger paid about $700,000 for the residence in 1989, when she and her husband moved in together. It is currently laid out as a two-bedroom, with separate ofﬁces for Krueger and her husband, but could easily be a three-bedroom, she said. Krueger represents a band of Manhattan’s East Side that stretches from 19th to 110th streets, making her intimately familiar with the hassles of the Second Avenue subway construction. One of her staffers spends nearly all his time ﬁelding complaints from constituents, she said. “Let’s be honest — we will all be greatly appreciative of the Second Avenue subway when it is open,” Krueger said. “But Continued on page 104

www.TheRealDeal.com October 2012 43

REAL ESTATE

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Show me the money

What do real estate players get for their generous donations to state political candidates? The capitol building in Albany, the hub of political activity in the state

BY LEIGH KAMPING-CARDER or more than a decade, Leonard Litwin, the nonagenarian CEO of Glenwood Management, has maintained a rarefied spot as New York State’s most prolific political donor. In 2011 alone, Litwin and affiliates of his residential development and management company contributed almost $700,000 to state politicians, outspending the runner-up — the political action arm of New York State United Teachers — by about $70,000, according to an analysis from the New York Public Interest Research Group, a nonpartisan research organization. As the Nov. 6 election gets closer, Litwin appears to have accelerated his giving, donating about $900,000 to state politicians and state political parties in the first six months of this year, NYPIRG found. But Litwin is only the most deep-pocketed donor from an industry long seen as a reliable source of funds for New York State’s elected officials. For real estate professionals, state-level donations are seen as a way to gain the ear of lawmakers and advance a pro-business agenda. Though this election season has been dominated by talk of eye-popping donations at the federal level, it is Albany’s political winners — not Washington’s — that will have the biggest effect on the day-today operations of New York City real estate professionals. And of course, while New York City government also plays a major role, municipal elections don’t take place until 2013. The governor, attorney general and other statewide officials won’t be on the ballot until 2014. In the 2010 elections, state candidates and party committees raised $246 million overall, with $13.9 million, or 5.7 percent, coming from real estate and construction interests, making the industry the most generous contributor of any business sector, according to an NYPIRG report from January 2011. This election, caps on campaign contributions — already among the highest in the country — have gone up. Donors can give up to $4,100 to New York State Assembly candidates and $10,300 to state Senate candidates. On an annual basis, individuals can give a maximum of $150,000, and corporations can give $5,000. Compared to U.S. Congressional races, where donations are limited to $2,500,

44 October 2012 www.TheRealDeal.com

Glenwood’s Leonard Litwin has donated $1.6 million Vornado’s Steven Roth donated $227,000 to state political candidates in 2011. to state politicians since the beginning of 2011.

H.J. Kalikow & Co.’s Peter Kalikow had $222,000 in political donations statewide last year.

In the 2010 elections, state candidates and party committees raised $13.9 million from real estate and construction interests, making the industry the most generous contributor of any business sector. “New York’s sky-high contribution limits [and] the state’s campaign finance system offers even greater opportunities to cultivate influence through the use of campaign contributions,” NYPIRG said in its report. Plus, real estate companies are often structured to capitalize on a little-known feature of the state’s campaign finance law. Since the mid-1990s, limited liability corporations in New York State have been treated in the same manner as individuals for purposes of campaign fund-raising, meaning they are not subject to the stricter limits on corporate giving. For developers

and landlords, who routinely set up each building they own as a separate LLC, this is a particular beneﬁt, NYPIRG’s research coordinator, Bill Mahoney said. In 2011, many of the biggest donors in the state were businesses that took advantage of this loophole, including those backed by several prominent real estate ﬁgures, according to NYPIRG. Litwin, for example, used numerous LLCs to contribute $135,000 to the New York State Democratic Assembly Campaign Committee, $174,000 to Gov. Andrew Cuomo’s 2014 reelection campaign and $40,000 to Eric Ulrich, the Republi-

can City Council member trying to unseat Sen. Joseph Addabbo in Queens, according to ﬁgures NYPIRG provided to The Real Deal. This year, Litwin also contributed $2,500 to Mitt Romney’s presidential bid, as TRD reported. Steven Roth, chairman of Vornado Realty Trust, donated $227,000, making him the state’s 17th-largest donor. He was followed closely by commercial developer and landlord H.J. Kalikow & Co., which donated $222,000 to state candidates and parties. The ﬁrm’s president, Peter Kalikow, Continued on page 112

www.TheRealDeal.com January 2011 25

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In surprise move, Obama bests Romney for NYC real estate cash

While strong last year, GOP Presidential support flags this year among industry heavyweights BY ADAM PINCUS he highest echelons of the New York real estate industry are typically viewed as a bastion of fiscal conservatism whose members are staunch Republicans. But as the country heads into the final stretch of the Presidential campaign, a TRD analysis of campaign finance data from the U.S. Federal Elections Commission showed that, surprisingly, New York real estate pros are giving more Cushman & Wakefield’s CEO cash to President Barack Obama this year than to his rival, Glenn Rufrano gave $2,500 to Romney. former Massachusetts Governor Mitt Romney. The latest figures — which were released last month and cover August — show that Obama received 311 contributions totaling $97,444 from real estate pros in New York. Romney, meanwhile, had only 55 donations totaling $57,372. (TRD included donors who lived in New York State, either in New York City or close to the city, and identified themselves as having worked in real estate or could Real estate heiress Amy Goldman gave $1 million to be identified as working in the industry.) a PAC supporting Obama. To date this year, Obama has bested Romney in both direct campaign donations from real estate pros and contributions to two of the biggest political actions committees that are spending millions on behalf of the candidates. During the first eight months of the year, Obama’s campaign collected 921 donations worth $300,064 from New Yorkers working in real estate. During that same period, Romney’s campaign took in 270 contributions worth $239,776. Extell Development’s Gary Barnett said he gave Obama $5,000 this year because

some parts of the economy had improved dramatically during his term. “The stock market has doubled in the past three years. That is good for business,” said Barnett.

The money game The figures are more dramatic in the soft-money contest, in which donations are made to PACs. Tishman Construction’s There, Obama was helped by a $1 million contribution Dan Tishman gave $5,000 to in March from Amy Goldman — one of late real estate Obama. magnate Sol Goldman’s daughters — to the pro-Obama PAC Priorities USA. Goldman is best known as an author of gardening books and doesn’t appear to work in the family business (and wasn’t counted as a top real estate donor in the related story on page 44), but she listed Solil Management, the Goldman company, as her employer in her contribution. In contrast, the only New York real estate industry– Extell’s Gary Barnett donated $5,000 to Obama. connected donation larger than $50,000 to a pro-Romney super PAC in 2012 was a $100,000 gift from John Cushman, the cochairman of Cushman & Wakefield. Last year, the Related Companies’ Stephen Ross and Vornado’s Steven Roth each kicked in $100,000. Indeed, the 2012 figures represent a reversal of fortune for Romney. At the end of 2011, he had more donations from New York real estate players. Last year, for example, Obama’s campaign took in $206,487 from the real estate sector in New York. That put Continued on page 114

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Call Michael Paul at 914-907-7579 or visit us at www.TheRoseHillEstate.com 48 October 2012 www.TheRealDeal.com

INVESTOR

S OL G OLDMAN

DIES

egendary New York City real estate investor Sol Goldman — who amassed a property fortune estimated to be worth $1 billion — died 25 years ago this month at age 70. The Brooklyn-born Goldman started assembling his real estate fortune in the 1930s during the Great Depression, when he was only 17. Along with his frequent business partner Alex DiLorenzo, Jr., Goldman at one time owned New York trophy properties such as the Chrysler Building and the Stanhope Hotel. But not all was smooth sailing for the duo. During the highinﬂation period of the 1970s, the partnership stumbled. Indeed, in 1975, the year DiLorenzo died, they lost the Chrysler Building and dozens of other properties. But Goldman recovered and began buying again, amassing — by some estimates — as Sol Goldman many as 600 buildings. Goldman’s death fanned an already brewing battle over his estate between his estranged wife, Lilian, on one side and their four children on the other. Four years after he died, a judge in Surrogate’s Court in Manhattan backed Lilian’s claim for ownership of one-third of the estate. The children had wanted her to get only the income from the one-third of the estate, but not ownership of the properties. Lilian died at the age of 80 in 2002.

1963: P ENN S TATION

DEMOLITION BEGINS

he demolition of the monumental Beaux Arts-style Pennsylvania Station began 49 years ago this month. The enormous structure, designed by architecture ﬁrm McKim, Mead & White, was erected in 1910 between 31st and 33rd Penn Station demolition streets and Seventh and Eighth avenues. With the slowdown in train travel, the building’s owner, the Pennsylvania Railroad, was in dire ﬁnancial straits and wanted to sell the air rights over the tracks to raise money. Simultaneously, Madison Square Garden was looking to relocate from its home on Eighth Avenue between 49th and 50th streets, so the Garden, through its president Irving Felt, purchased the air rights in 1961. Those air rights gave MSG the right to demolish the original Penn Station and rebuild the Madison Square Garden complex in its place. The demolition prompted a public outcry. In fact, it is often viewed as one of the key events that built momentum for the preservation movement, which fought to ensure that important city architecture could not be destroyed. In response to the station’s demolition and others, Mayor Robert Wagner signed the Landmarks Law in April 1965. The station demolition took three years and was not completed until July 1966. The new Madison Square Garden opened in January 1968.

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1987: L EGENDARY NYC

1883: M ET O PERA ’ S

FIRST HOME OPENS

he Metropolitan Opera House Company debuted in its ﬁrst home 129 years ago this month, with a performance of “Faust.” The opera company — formed three years earlier as a challenge to the older Academy of Music — erected the seven-story building Metropolitan Opera building at 1411 Broadway, which took up the entire block between 39th and 40th streets and Broadway and Seventh Avenue. At the time, the location was far north of the existing theater district, but closer to the new homes of the city’s wealthy elite. The building remained the home for the city’s leading opera company until its last performance in April 1966. That September, the Met Opera reopened in Lincoln Center. The building was demolished in 1967 and replaced with the 1.1 million-square-foot ofﬁce tower 1411 Broadway, completed in 1970. Compiled by Adam Pincus

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NYC’s neighborhood blogs

A look at the websites real estate pros rely on for hyperlocal news

W BY JANE C. TIMM

ith many newspapers focusing on city and national news these days, an army of bloggers have taken to hyperlocal reporting, covering everything from new restaurants to community board meetings. Over the past few years, neighborhood blogs have become increasingly crucial sources of local news, not just for residents, but for real estate professionals, too. “Any broker who is not reading their local blogs is doing themselves and their clients a huge disservice,” said Jacob Goldman, founder of the Lower East Side–based brokerage LoHo Realty. In particular, blogs have “become very important in covering harder news that

comes up at community meetings,” said Jonathan Butler, the publisher of Brownstoner, a hugely popular blog that focuses on Northwest Brooklyn. “Decisions about any number of quality-of-life issues that come up at these meetings can have a great impact on locals, and much of it would go unreported without the neighborhood blogs.” Few of these bloggers are professional writers or reporters, and even fewer are paid. Instead, they are activists, professionals and residents who are passionate about chronicling the goings-on in their communities. This month, The Real Deal looked at some of the city’s most popular and inﬂuential neighborhood blogs to ﬁnd out how they got started and what kind of real estate news they’re covering.

Brownstoner (www.brownstoner.com)

Neighborhood: North Brooklyn Founded: 2005

t’s a long-proven fact that there’s no money to be made in neighborhood blogging,” Butler said, “so the blogger has to be doing it for the love of the game.” Brownstoner — far and away the most influential of the city’s neighborhood blogs and one of the most successful when it comes to advertising — is profitable enough to employ three people: Butler, full-time editor Emily Nonko and freelance managing editor Cate Corcoran. Founded by Butler in 2005 while he was working on Wall Street, Brownstoner covers all of Brooklyn, but tends to focus on Northern and “Brownstone Brooklyn.” The site specializes in real estate news: developments, open houses, listings and neighborhood trends. Butler said the site gets more than 300,000 unique visitors per month. “It’s the focus on real estate that makes it a viable business,” Butler explained in an e-mail to TRD. The real estate emphasis has made it a must-read for industry people working in Brooklyn, who therefore view it as a smart advertising decision. “Everyone tries advertising in different sources, but Brownstoner really gets the most juice out of it,” said Jeffrey Schleider, managing director of the brokerage Miron Properties, which has offices in Manhattan, Brooklyn and New Jersey. Brokers say Brownstoner’s “Listing of the Day” feature can make a huge difference in the price and speed of sale. Prudential Douglas Elliman broker Dena Driver said one of her clients had bid on a house in Clinton Hill and was in the process of negotiating the price when Brownstoner featured the property. “The owner stopped negotiations and said, ‘We’re going to show it for another week and get a highest and final offer,’” she recalled. Driver’s client eventually got the house, but had to submit a higher offer to compete with the other bids prompted by the Brownstoner post. 50 October 2012 www.TheRealDeal.com

From left: Dave Gustav and Elie Perler, cofounders of the Lower East Side blog Bowery Boogie at the new Coleman Skatepark on Pike Street.

Bond New York broker Shana Allen said she is a “religious” Brownstoner reader, noting that the site helps her “predict which neighborhoods are going to be hot next.” And while the site itself may not be hugely profitable, Butler has demonstrated that there is money to be made through the connections and fame that can come from blogging. In addition to Brownstoner, he also runs the enormously popular Brooklyn Flea in Fort Greene and the Smorgasburg food market in Williamsburg. “The flea market business is a much better business than blogging,” Butler said. Additionally, Butler has tried his hand at real estate development, converting 1000 Dean Street into an artist workspace with a beer hall and artisanal food court. “Certainly, it’s helpful being at the nexus of a lot of information flow with Brownstoner, to be aware of potential

investment and development opportunities,” he said. “And having the site to write about them periodically certainly doesn’t hurt either.”

EV Grieve

(www.evgrieve.com)

Neighborhood: East Village Founded: 2007

enned by an anonymous East Village resident, EV Grieve is one of the city’s most-read neighborhood blogs. The site snagged the Village Voice’s 2010 award for the Best Neighborhood Blog, and covers everything from lost pets to retail; EV Grieve was the ﬁrst to report that neighborhood institution the Mars Bar would close, for example. Averaging 10 posts a day, the blog does not sell advertising, according to the site’s founder, who identiﬁes himself only as “Grieve.” While the site lists a few contributors, most posts are written by the

founder himself, though he said he gets lots of help from a small army of tipsters. Grieve told TRD in a phone interview that the site gets around 300,000 unique visitors per month, and that he tries to document the area’s constant development and change with a balanced view. “When Kate’s Joint opened 17 years ago, people were saying, ‘There goes the neighborhood!’” he said, referring to the vegetarian restaurant on Avenue B. “When it closed, they said, ‘I can’t believe Kate’s Joint is closing!’” Brokers working in the East Village said they look to the site’s retail coverage for tips. “Grieve will write, ‘Hey, it’s a Tuesday, this restaurant isn’t open and hasn’t been for three days, maybe it’s closing,” said Schleider. “They have that news before anyone else, and we represent restaurant owners, so we try and get our customers in those spaces quickly.” PHOTOGRAPH FOR THE REAL DEAL BY CHRIS MARTIN www.TheRealDeal.com March 2012 00

F’d in Park Slope (www.fuckedinparkslope.com)

Neighborhood: Park Slope Founded: 2008

he snarky blog F’d in Park Slope — or FIPS, as its founder Erica Reitman affectionately calls it — was started anonymously. “I was so afraid about what the reaction would be,” Reitman recalled. “Nobody had been making fun of this crazy, unique neighborhood in such a public way.” She was surprised to find that the reaction was overwhelmingly positive. FIPS now attracts half a million page views per month, Reitman said. Its humorous posts touch on topics such as rich-families’ nannies filling in for shifts at the Park Slope Food Co-op. Much of Reitman’s material comes from real estate. She has written about dissatisfied residents at the Arias on Fourth Avenue, and the blog has a regular column called ‘Show Me Yours,’ where residents post photos of their homes and state how much they pay in rent. Recently, FIPS had a hand in bringing a new restaurant — the chain Just Salad — to the neighborhood. “For years, I’ve been saying I wanted a salad place,” Reitman said. “Whenever I mentioned it, the commenters would go crazy. I tweeted a post at Just Salad, and I just got an e-mail from them: ‘Read your post, hope you’re right and we’ll see you soon in the neighborhood.’” Indeed, Just Salad will open up a restaurant this winter at 252 Seventh Avenue in Park Slope, said company spokesperson Jennifer Konde. The company had already been scouting for locations in the neighborhood, Konde wrote in an e-mail to TRD, but “F’d in Park Slope’s blog post a few months ago absolutely reaffirmed our decision to open up a shop there.” Some 20 unpaid contributors now write for FIPS in addition to Reitman, and she has a managing editor on staff. But the blog’s success has not allowed Reitman to quit her day job as a marketing director at the apparel company Ruby Ribbon. The site does earn some profits from advertising, but much of its revenue goes back into covering expenses, Reitman said.

Bowery Boogie (www.boweryboogie.com)

Neighborhood: Lower East Side Founded: 2008

n 2009, a late-night fire destroyed several buildings on East Broadway and Pike Street. Bowery Boogie cofounder Elie Perler was the first to the scene, posting photos and videos of the fire. “Bowery Boogie pretty much exploded after that,” Perler recalled. “A lot of people were linking to us and tweeting us, and it really put us on the map.” The site now gets around 80,000 unique visitors per month, said Perler, who started the 64 August 2012 www.TheRealDeal.com

blog ﬁve years ago, shortly after moving to the neighborhood. “I was reading all the other city blogs religiously, but their coverage of the Lower East Side just wasn’t there,” he said. A few months later, his childhood pal Dave Gustav brought his “technical know-how” to the site, Perler said. While both have full-time jobs elsewhere — Perler in the music business and Gustav in television — the site pays for itself through Google Ads. The site’s nine contributors are all volunteers, however. Hot real estate topics on Bowery Boogie include the new Marriott Hotel on East

crew comes and ﬁxes a hole in the street,” Gustav said. “It’s really rewarding.”

DumboNYC (www.dumbonyc.com)

Neighborhood: Dumbo Founded: 2006

ide Harashima founded DumboNYC in 2006 after moving to the neighborhood from the Upper East Side and discovering that there was little online news about Dumbo. Six years later, the blog gets 40,000 to 50,000 unique visitors per month, and has become “a second full-time job, but it’s a labor of love,” said Harashima, who

John Loscalzo (left), founder of the Brooklyn Heights Blog, received a Community Service award in 2010.

Erica Reitman, founder of the blog F’d in Park Slope

Hide Harashima, the blogger behind DumboNYC

include 325 new rental apartments. For one post, Harashima asked parking garage employees at the development site how long they were expecting to keep their jobs in an effort to predict when construction would start.

Brooklyn Heights Blog (www.brooklynheightsblog.com)

Neighborhood: Brooklyn Heights Founded: 2006

he Brooklyn Heights Blog, along with sister sites the Cobble Hill Blog and the Brooklyn Bugle, received a Community Service award in 2010 from the Brooklyn Heights Association. The three blogs are run by John Loscalzo, an executive at CBS who moonlights as a Brooklyn Heights tour guide. The Brooklyn Heights Blog has covered everything from helicopter noise to a feud that erupted over proper dog poop disposal. The site also regularly covers local developments, like the planned hotel-condominium being built by Toll Brothers and Starwood Capital adjacent to Pier 1 in Brooklyn Bridge Park. Loscalzo said the site gets 40,000 to 60,000 unique visitors per month, and its most popular posts are the ones about stroller etiquette and other “existential stuff.” “If it poops, it leads,” he said. “God, my wife is going to kill me for saying that.” Loscalzo said he was surprised by the responsibility he now feels to his readership. “When people start reading and interacting, there’s a responsibility to tell all the information,” he said. “It’s much different than writing a blog [for] your friends.” For now, the site doesn’t make much money — “not quit-your-day-job money, or even quit your moonlighting job money,” he said. But Loscalzo hopes that at some point he’ll work full-time on the site. For now, it’s one of the few blogs to pay a handful of its contributors — $10 to $15 for each post.

Pardon Me For Asking Katia Kelly, creator of the blog Pardon Me For Asking

Jonathan Butler, the publisher of Brownstoner

Broadway, which rose in the aftermath of the devastating ﬁre; the demolition of buildings on Bowery for the new citizenM Bowery hotel; and the newly opened Coleman Skatepark on Pike Street. Goldman said he ﬁnds Bowery Boogie useful in terms of “what’s going on in the neighborhood,” especially when it comes to new restaurant and bar openings. And Perler and Gustav said they’ve actually seen some changes in the neighborhood as a result of their coverage. “We write something and a day later, a

works in web marketing. Local companies advertise on the site, but Harashima said he donates all profits back to the community through local nonprofits. DumboNYC is well-known among local residents and real estate professionals. Harashima said brokers have told him that the site’s historic photos of buildings help them find out details about properties they’re listing. DumboNYC has been particularly active in covering Two Trees’ controversial Dock Street development, which will

(www.pardonmeforasking. blogspot.com)

Neighborhood: Carroll Gardens/Gowanus Founded: 2006

ommunity activist Katia Kelly founded Pardon Me For Asking as a personal blog, but it has since blossomed into a “full-time passion,” said Kelly, a 27year Carroll Gardens resident. “I wanted to document the very accelerated changes that were happening to Carroll Gardens,” she said. Kelly attends and reports on land-use hearings and community board meetContinued on page 102

www.TheRealDeal.com October 2012 51

Skin in the game

Developers increasingly turn to brokers to invest in new construction projects, help ﬁll funding void

BY KATHERINE CLARKE hile the construction lending spigot has loosened in recent months, some developers are still ﬁnding themselves with the right property in hand, but with too little cash to get a project off the ground. To cope with that problem, residential developers are increasingly turning to an unlikely source: the brokers they’ve hired to market their projects. In commercial brokerage, it’s long been common for developers to offer their real estate agents a chance to invest in projects. But industry experts say the phenomenon is now growing on the residential side of the business as well, with brokers getting a piece of the pie in lieu of, or in addition to, a commission. And some developers view a broker’s willingness to invest as an expression of conﬁdence in the product. David Maundrell, president and founder of Brooklyn-based brokerage aptsandlofts .com, said he’s recently been invited to invest in a wide variety of developments across the city, including a 60-unit condo building and a 100-unit rental property. “Recently, I’ve had a lot of my clients ask me if I want to go in [on deals],” he said. “It’s kind of a test to see if I believe in what I’m saying to them. Put my money where my mouth is, so to speak.”

slightly higher rates from a real estate investment fund or high-net-worth investor. But finding the remaining 30 percent can be difficult. “Five years ago, you could get 90 percent financing,” he said. “Now, 70 percent seems to be the cap.” Inviting brokers to invest is also a way to make sure they put their full effort into marketing the property.

sion-based income in investment pools put together by the company. Others

“It serves to incentivize the broker, much more than 3 or 4 percent commission,” said Terrence Oved, a real estate attorney with the law ﬁrm Oved & Oved. Developers “want the broker to have as much incentive to be aligned with them as possible.” These investment opportunities are often tempting for brokers, said Andrew Barrocas, CEO of Manhattan-based residential brokerage MNS, noting that he personally has skin in the game on a few MNS projects, though he declined to specify which ones. Real estate “is what I know,” Barrocas said. “When you talk about investing in the stock market, I’m not as comfortable as I am [with] what I know best.” Plus, he said, many brokers these days are seeking to diversify their income streams, so as to avoid a repeat of the hard times they experienced during the recent downturn when sales — and, in turn, commissions — dropped off. “People are looking to create annuities,” he said. One brokerage head, who requested anonymity, said he’s considering introducing a ﬁrm-wide initiative that would allow brokers to invest around 20 percent of their commis-

said some brokers or ﬁrms choose to invest in a project in hopes of securing a marketing assignment there, particularly when new development exclusives are hard to come by. “There is intense competition to get these assignments,” Heiberger said. “If a $1 million investment gets you through the door and keeps everyone working for a couple more years, for some of these ﬁrms it makes sense.” He said he has declined to make investments in projects Town is marketing, however.

“You have to be careful because you don’t want to start looking like a competitor” to prospective new development clients, he said. “It’s a ﬁne line, and you have to make sure you’re not breaking the barrier.” Perhaps for that reason some brokers who invest in projects they’re marketing are often nervous about revealing that fact. One broker, who told TRD of three separate projects he’d invested in, later cut a phone call short after being advised by his attorney not to talk about his investments. Before the recession, Maundrell said he personally invested in the Sanctuary, an HK Organization–developed condo involving the restoration of a Fort Greene church. But he prefers to keep his ﬁrm out of such dealings, he said: aptsandlofts .com did not market the Sanctuary, but

A new twist It’s not new for residential brokers to pony up some of their own cash to bring a project to life. Brokers have always purchased units in the buildings they represented. Some brokers even tried their hand at development during the boom, only to get burned during the financial crisis. Before the downturn, it was largely up to brokers to seek out these opportunities, but now they are increasingly being invited by developers to invest. Citi Habitats founder Andrew Heiberger — who developed projects like 88 Greenwich and 1 Rector Park during the boom — is now taking a hiatus from investing and developing in order to focus on growing his new brokerage, Town Residential. He said, however, that he’s recently been invited to invest in several projects, including those that Town is marketing. The reason for the uptick in these invitations, Heiberger theorized, is developers’ increasing need to fill a funding gap. These days, developers can finance only about half the cost of a project from a conventional bank with standard interest rates. From there, they can get another 20 percent at 52 October 2012 www.TheRealDeal.com

A fine line There is nothing illegal, or even unethical, about investing in and marketing the same project, according to real estate attorney Neil Garfinkel, who serves as counsel to the Real Estate Board of New York. The brokers must disclose their interest in the project in the building’s offering memorandum, however. But when a broker becomes an equity investor in a project, there’s a danger that the firm’s identity or image could be impacted, noted Barrocas.

marketed the project next door. “If you’re representing the building, I don’t know if I would recommend being on the equity side,” Maundrell said, because tensions can arise in certain situations — if, for example, a broker invests in a condo that the developer later decides to turn into a rental. And if a project loses money, Heiberger said, the commission a broker stands to make could be higher than the value of their equity return. That could incentivize them, during the sales process, to push for a quick sale rather than holding out for the highest possible price. There are other, less controversial ways for brokers to invest in property. The Marketing Directors’ Andrew Gerringer said he puts his spare cash into a real estate pool with other investors arranged by the ﬁnancial services ﬁrm Morgan Stanley. Still, for some brokers, investing directly in a project they’re working on is addictive. “If you get a taste of it, you want more, naturally,” Barrocas said. “There’s nothing like having your own money in something.” TRD ILLUSTRATION FOR THE REAL DEAL BY PETER www.TheRealDeal.com March 2012BONO 00

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The outer, outer borough

The Hudson Valley

Buoyed by New York transplants, the Hudson Valley sees an increase in sales activity

BY GUELDA VOIEN or all the ink spilled over the everhigher prices commanded by the residential real estate market in New York City, less attention has been paid to another segment of the population: those who have left in search of lower rent and more living space. Enter the Hudson Valley, the area north of Westchester along the Hudson River. As The Real Deal and others have reported, the once-depressed Hudson Valley — which includes Dutchess, Orange, Ulster, Greene and Columbia counties — has become an increasingly popular choice for young professionals opting out of the pricey real estate markets in Manhattan and Brooklyn. “I was born in New York and I love it, but it’s not the city I knew — it’s hard to do things there unless you are rich,” said Robin Horowitz, an agent with Halstead Property’s Hudson Valley ofﬁce, who herself moved up to Ghent from the city nine years ago. “And how can you say no to three acres of land on a little stream for $500,000, instead of a studio apartment?” New York City expats have sought refuge in the Hudson Valley for the past ﬁve or six years, earning the area the nickname “Williamsburg on the Hudson.” But the last two years have seen increasing interest, brokers said, perhaps due to the arrival new local arts events like the Basilica and O+ festivals. Young families are also heading to the area in search of good school districts, according 54 October 2012 www.TheRealDeal.com

to Gary DiMauro, head of his eponymous brokerage with offices in Hudson, Catskill and Tivoli. This influx of young people and families has helped transform these quaint towns, which have struggled since businesses like IBM fled in the 1990s, into oases of modern bohemian living, complete with artisanal food and hip, local businesses. So what does that mean for the real estate market? Sales activity in the Hudson Valley is up slightly from last year, brokers said: Closed sales year-to-date are up 4.3 percent in Dutchess County from the same period of 2011, according to Adele George, principal broker at Rhinebeck-based Northern Dutchess Realty. “There is a general upswing in the market, and the young people are responsible for it,” said Joan Lonergan, owner of Coldwell Banker Village Green Realty, which has five Hudson Valley offices. DiMauro said a number of buyers from the city have been working with local architects to build ultramodern houses throughout the region, often spending upwards of $1 million. Still, the area lacks new housing stock, as well as local jobs. “We don’t have the incredible job depth you find elsewhere,” said Lonergan, adding that the notable exception is New Paltz, site of one location of the State University of New York. Despite the uptick in activity, market

A townhouse at 132 Warren Street in Hudson, on the market for $495,000

8 Willard Place in Hudson, which is on the market for $695,000

211 Mitchell Street in Hillsdale, listed for $2.9 million

indicators in the Hudson Valley are mixed, with prices rising in some towns but not in others. George noted that average sales prices in Dutchess County are down 13 percent year over year. She attributed that to the fact

that the lower end of the market — homes priced under $350,000 — is where activity has picked up, as the Hudson Valley attracts more young, ﬁrst-time home buyers than in the past. “There is not a whole lot moving over $2 www.TheRealDeal.com 2012 00 HUDSON VALLEY PHOTO March BY SANDY TAMBONE

million,” DiMauro said. Halstead said last year its sales volume for homes priced over $200,000 in the Hudson Valley plummeted from where it was ﬁve years ago. But in the sub-$200,000 range, sales are up from 2007. This month, The Real Deal talked to local brokers about the real estate markets and the local ﬂavor of the Hudson Valley’s most rapidly changing communities.

Hudson

ometimes people joke that walking through Hudson, you could easily think you are walking down the street in Park Slope,” said Halstead broker Chris Pomeroy, who is currently listing a threebedroom Dutch colonial revival home outside Hudson for $395,000. Hudson has an Amtrak station in town and has seen an increasing number of people making the two-hour daily train commute to New York City, said Angela Lanuto, an agent with Coldwell Banker who moved to nearby Catskill from Jersey City. Others have started businesses in Hudson, Horowitz said, citing friends who sold a Soho loft in order to launch an interior design ﬁrm in the town. As a result, Hudson’s small-but-vibrant downtown has seen a revival in recent years, brokers said, with new restaurants like Crimson Sparrow, opened in a restored colonial building by two chefs from the avantgarde Manhattan eatery WD-50. “You had tons of vacancies on Main Street two years ago,” said Horowitz, “and now there are none.” The cultural amenities in Hudson have multiplied in recent years as well. Performance artist Marina Abramovic announced in May that she would bring her Institute for the Preservation of Performance Art to the town, housed in a new building designed by internationally acclaimed architect Rem Koolhaas. August also brought the second-annual Basilica Music Festival, which is sponsored by the popular music blog Pitchfork.com, to Hudson. The housing stock in and around Hudson is mostly single-family homes, often built in the colonial style, but there are also brick townhouses for sale. DiMauro is asking $695,000 for 8 Willard Place, a sevenbedroom colonial revival just blocks from the train station, while Horowitz is listing a three-story brick townhouse for $439,000 at 256 Warren Street. In the last year, 46 homes have sold for an average of about $200,000, according to data from the Columbia County & Dutchess County Multiple Listing Service.

Beacon

ince the 2003 opening of Dia:Beacon — at 240,000 square feet, one of the nation’s largest art galleries — artsy types have ﬂocked to this town of about 16,000 people. “It was looking pretty bad there before Dia went in,” said George, “though there is some gentriﬁcation going on now.” The Roundhouse at Beacon Falls, a 64 August 2012 www.TheRealDeal.com

boutique hotel with restaurants offering “quasi-street food” from all over the world, opened this July. And because Metro-North trains stop right in Beacon, the town attracts young people who commute to Manhattan daily. Sales volume is up and approaching prerecession levels, according to Trulia. And the city had an average sales price of about $243,000 last year, up from the previous year’s average of about $204,000, ﬁgures from the Mid-Hudson Multiple Listing Service show. The housing stock in Beacon is quite varied, with Victorian homes and brick town homes as well as more modern single-fam-

Dia:Beacon, one of the world’s largest art galleries, which opened in 2003

stock, from farmhouses and colonial homes to new ultramodern homes, “at every price point from $150,000 to $1 million,” Lanuto said. Transit in Woodstock is limited — Greyhound is the only direct way to the city — so the area is populated less by commuters than by freelancers and people starting local businesses, brokers said. Lanuto said many buyers are also purchasing second homes in Woodstock.

Saugerties

augerties feels similar to nearby hippie haven and tourist mainstay Woodstock. But due to its relative affordability, the demographics of Saugerties are “even

The village of Chatham

Downtown Hudson, which has seen a revival in recent years

“How can you say no to three acres of land on a little stream for $500,000, instead of a studio apartment?” ROBIN HOROWITZ, HALSTEAD PROPERTY ily homes and condos. The relatively urban downtown in Beacon appeals to young people, brokers said.

Woodstock

ade famous by the music festival of the same name, Woodstock still has a 1960s vibe and a large creative community, brokers said. Ironically, those factors, combined with Woodstock’s natural beauty, have made the town consistently the highest-priced market in the Hudson Valley, brokers said. The average sales price of properties sold in Woodstock within the last 12 months was $387,542, according to the Ulster County Multiple Listing Service, up from $355,197 in the same period of the prior year. Sales activity rose, with 97 properties selling in the last year, up from 85 the year previous. Woodstock has a variety of housing

younger” than those of its neighbors, Horowitz said. Saugerties has some recently opened boutique restaurants, like Diamond Mills Tavern, run by Italian chef Giuseppe Napoli, who made his name in Manhattan before moving upstate. The restaurant is attached to Saugerties’ ﬁrst luxury hotel, which opened this January. In March, the Saugerties Performing Arts Factory, which is in a repurposed 1914 factory, had an opening gala that featured dancing, drama and opera. Saugerties remains “very affordable,” according to Lonergan, but that may be changing: The average sales price in Saugerties is up to roughly $242,000, according to the Ulster County Multiple Listing Service, a steep increase from last year’s average of $191,000. The town is also close to Catskills ski ar-

eas, such as Hunter and Windham mountains, brokers noted. “It’s a hidden jewel that is really ﬁnally getting its day,” Lonergan said.

Kingston

ingston was once a center of cement production, but in recent years has suffered from its lack of train service to surrounding large cities. It’s generally considered too difficult to commute daily from Kingston to New York City, brokers said. Recently, however, it’s begun attracting artists, due in part to its affordability. The local government is also amenable to artists’ housing needs, Lonergan said, recently implementing zoning variances to let landlords rent empty retail spaces as residential. In 2007, Kingston was voted one of Business Week’s “Best 10 Places for Artists.” Kingston’s Stockade District features a number of historic stone buildings, and much of the rest of the town retains a 19thcentury Victorian feel, although many of the homes were modified in the 1970s. “It’s a good place for small-city living,” Lonergan said. Still, she described the town as somewhat “gritty,” noting that the town’s new residents are “not the artists who have ‘made it.’” The feel of the town is exemplified in the O+ Festival — a local art show that will have its third-annual run this month — during which artists can trade their work for health insurance. The average sales price for the 98 properties sold in Kingston over the last year was about $148,000, according to figures from the Ulster County Multiple Listing Service. That’s down from the prior 12 months, when 121 properties sold at an average of roughly $171,000.

Chatham

bout 13 miles northeast of Hudson, the village of Chatham reportedly only has one trafﬁc light, but much more to offer in terms of quaintness and cultural amenities. Live off-Broadway productions at nearby Ghent Playhouse and the Mac-Haydn Theatre run during the summer, and the local restaurant scene has expanded in recent years. Our Daily Bread, a beloved local bakery, has begun serving gluten-free baked goods, and an annual “farm-to-table pairing,” as local blog Rural Intelligence calls it, brings together the many small farmers and regional chefs to test the local wares. Modern and colonial-style homes, many set far back from the road, are for sale in Chatham, which have a median sales price of $155,000, according to listings website Trulia. The town is not readily accessible by public transit; Hudson is the nearest Amtrak station. As a result, Chatham is less trendy and more likely to attract families, offering a more rural experience than some other towns in the Hudson Valley. TRD www.TheRealDeal.com October 2012 55

An insider’s game

Despite improved Manhattan market, special servicers still manage billions worth of loans

BY ADAM PINCUS ew York’s real estate professionals are generally an optimistic crowd, but when you ask them about buying loans or properties controlled by special servicers, they turn cool. In fact, a handful of Manhattan investment sales brokers and company principals say they have given up hunting for opportunities involving special servicers for their clients. Some say their impression is that special servicers rarely sell and, therefore, are not worth approaching. Others gripe that buying loans from these servicers is so difficult that it’s not worth the trouble. To rewind a bit, “special servicers” are those companies that stepped in to manage loans that were pooled together and sold off as commercial mortgage-backed securities during the boom, but where the borrowers faltered. To shed light on the special servicing industry in Manhattan, The Real Deal analyzed data from research firm Real Capital Analytics to provide rarely seen figures revealing how often deals are restructured or sold. What we found is that behind the scenes there is a lot of activity. And real estate pros say a significant chunk of the existing $5.3 billion in 75 distressed loans in Manhattan currently being serviced will change hands in the coming years. (While that figure includes the $3 billion first mortgage at Stuyvesant Town and Peter Cooper Village, there is still $2.3 billion in play for investors looking to get a piece of the action.) “If I had to guess, I would say more than half [of specially serviced loans] will require a recapitalization or a transfer,” said Eric Zipkowitz, a partner focusing on distressed real estate at the law firm Tarter Krinsky & Drogin. “Either a vulture or a white knight, someone is going to come in. They’ve got you over a barrel because you are so frustrated from years with a special servicer.” For example, last month, LNR — the Miami Beach–based special servicer that’s partially owned by landlord Vornado Realty Trust — took control of 246 Fifth Avenue, an office building with a defaulted $14.5 million mortgage. At some point, the special servicer will likely want to sell. Also last month, LNR transferred the $375 million loan at Extell Development’s 215-unit Upper West Side apartment building the Belnord to another, unidentified special servicer. Nevertheless, annual debt payments are about $9 million more than the building’s net operating income, suggesting that the new servicer will have to modify the loan terms for Extell, or it could end up on the market. 56 October 2012 www.TheRealDeal.com

And those two buildings are far from the only examples of troubled loans in New York. In July, special servicer CWCapital Asset Management ﬁled to foreclose on the $219 million loan on BCN Development’s 315 Park Avenue South. And in April, the $140 million loan on Joe Sitt and Joseph Moinian’s 245 Fifth Avenue was sent to Torchlight Loan Services for special servicing after the

bined value of $290 million, have special servicers foreclosed on and then taken ownership of, the property from the borrowers. Of those ﬁve REOs (properties that are taken back by lenders are referred to as REOs, or “real estate–owned,” meaning that the special servicer kicks out the borrower and becomes the new owner of the property), none have been sold yet. The largest example is the Riverton

The second big trend is that servicers are much more likely to liquidate a troubled loan than restructure it.” Thypin said that if these trends continue, “The most likely outcome for the 75 assets still in trouble are likely to be a short sale, note sale or sale and loan assumption.”

Dominant players Three ﬁrms — CWCapital, LNR and C-III

Manhattan CMBS loans still in distress Property type

Assets under special servicing

Assets moved out of special servicing

% in special servicing

Apartment

$4.1 billion

$991 million

81%

Ofﬁce

$1 billion

$5.1 billion

17%

Hotel

$162 million

$1 billion

13%

Retail

$24 million

$68 million

26%

Total

$5.3 billion

$7.2 billion

43%

Source: Real Capital Analytics. Figures are for CMBS loans alone. Stats were only available for ﬁrst mortgages and mezzanine debt, but in the case of the apartment complex Stuyvesant Town, TRD only included the $3 billion ﬁrst mortgage. Percent of assets is based on all distressed loans that have fallen into special servicing since the downturn.

From left: CWCapital CEO Michael Berman; Andrew Farkas, whose company, Island Capital Group, owns special servicer C-III Asset Management; and LNR co-CEO Tobin Cobb.

owners defaulted because they couldn’t reﬁnance the loan. Insiders expect billions more to hit special servicing, especially because of maturity defaults, in the coming years. When it comes to working out a distressed situation, sources say special servicers generally want borrowers to make hefty cash infusions — either alone or through a new partner — as a condition for reworking a loan. Yet often, the servicer will move forward with a foreclosure proceeding, which can force the owner out even as the owner is negotiating new loan terms. Of the $12.5 billion of Manhattan loans that went into special servicing over the past several years, $5.3 billion remains on their books. In only ﬁve instances, with a com-

Square Apartments in Harlem, which was taken back in a foreclosure auction more than two years ago, and is still controlled by CWCapital. (Stuy Town is not technically an REO because CWCapital has not formally taken title to the property, city records show.) While brokers may not ﬁnd comfort in those few sales, owners should. That’s because owners can rest assured that servicers are much more likely to restructure a loan or sell it than ﬁnish the protracted foreclosure process. “What is clear to me is that there are two huge trends among the servicers,” said Ben Thypin, director of market analysis at RCA. “First, they are extremely averse to foreclosure and taking possession of collateral.

— lead the distressed loan servicing market in Manhattan today. Of the $5.3 billion that remain in servicing, they control $5 billion, a TRD analysis of commercial servicing data shows. CWCapital has the most, managing $3.9 billion in distressed loans, including the mega Stuy Town loan. Behind them is LNR, which is handling $658 million in loans, and then C-III with $392 million. LNR has sold or restructured most of its loans, including the debt on Kushner Companies’ 666 Fifth Avenue. That property is the largest example in the country of LNR’s strategy to cut loans into two parts: a larger A loan and a smaller B loan, used Continued on page 114

www.TheRealDeal.com March 2012 00 PHOTOGRAPH OF FARKAS FOR THE REAL DEAL BY MARC SCRIVO

W E G I VE T H E TOOL S

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PR O F I L E

Shapiro steps into spotlight As Nest Seekers grows, firm founder moves out of the shadows QUICK FACTS COMPANY: Nest Seekers International TITLE: Founder and CEO AGE: 37 NUMBER OF AGENTS: Almost 400 NUMBER OF OFFICES: 11 (NYC and Hamptons)

BY LEIGH KAMPING-CARDER ddie Shapiro prefers to remain an enigma. On a recent summer afternoon, the founder of residential brokerage Nest Seekers International is clad in his own version of business casual: a slim-fitting white suit and black loafers, his longish brown hair slicked back, his goatee clipped, his burgundy tie dotted with tiny skulls. “To an extent, I like to keep a lot of things in our [firm’s] business a mystery,” Shapiro said. Then he quoted a line from the 1997 film “The Devil’s Advocate”: “No matter how good you are, don’t ever let them see you coming.” Despite his eye-catching style and his position as CEO of one of Manhattan’s fastest-growing residential brokerages, Shapiro is not well-known among his peers. “The name of his firm really hasn’t crossed my desk,” said one industry executive. Another said she primarily associates Nest Seekers with its relentless e-mail blasts promoting properties. And unlike Town Residential’s Andrew Heiberger or Keller Williams NYC’s Ilan Bracha — two industry notables who remain closely linked with the rapidly expanding firms they founded — the face that most people associate with Nest Seekers is that of top broker Ryan Serhant, who appears on Bravo TV’s “Million Dollar Listing New York.” But if Shapiro, 37, has remained under the industry’s radar, he has left an imprint on those who’ve done business with him, inspiring an intense level of loyalty from agents whose careers he launched and an equally virulent dislike from some former colleagues. To his proponents, he has done the difficult work of building a brokerage

Nest Seekers founder Eddie Shapiro in his ofﬁce last month

that now competes for listings and agents with New York City’s most established firms. To his critics, however, Shapiro has failed to deliver on promises and exaggerated his firm’s productivity. Either way, the company Shapiro founded in 2002 is at a turning point. In the last two years, Nest Seekers has more than doubled its number of agents to nearly 400; opened offices in Tribeca, Williamsburg and Lincoln Square; acquired two Hamptons firms; and gained a national profile with its positioning on the Bravo show. And Shapiro is increasingly — and reluctantly — advancing into the spotlight.

Humble beginnings Over the last few years, The Real Deal has charted Nest Seekers’ growth in Manhattan as it’s increased from 127 agents in 2009 to 308 agents in May of this year, making it the eighth-largest brokerage in the borough. (See “Manhattan’s Top Firms” in the June 2012 issue.) Nest Seekers’ roughly 50 agents spread across four offices in the Hamptons also make it the seventh-biggest firm on the East End. That’s largely thanks to its 2011 acquisitions of Water Mill’s Perspective Properties and the local franchise of the German brokerage Engel & Völkers. Nest Seekers had $252 million in Manhattan residential listings this past May, a 90 percent increase over the previous year. The company is also winning new development contracts from developers such as TF Cornerstone, headed by Thomas and Frederick Elghanayan, and Mann Realty Associates, putting the firm into what one brokerage executive called the “league of legitimate sales companies.” “Eddie Shapiro’s great,” said Maurice

“We take two steps forward and then we look around — left, right — and make sure no one’s out there with a big knife trying to take us down.” EDDIE SHAPIRO, NEST SEEKERS

58 October 2012 www.TheRealDeal.com

www.TheRealDeal.com January 2011 25 PHOTOGRAPH FOR THE REAL DEAL BY CHRIS MARTIN

PR O F I L E

Nest Seekers grows agent count 2009: 127 2010: 168 2011: 209 2012: 308 Source: TRD’s annual top ﬁrms rankings.

Nest Seekers’ Manhattan listing volume

36 Gramercy Park East, where Nest Seekers handled sales

2009: $88 million 2010: $113 million 2011: $132 million 2012: $252 million Source: TRD’s annual top ﬁrms rankings.

TF Cornerstone’s 99 John Deco Lofts, where Nest Seekers handled sales

TF Cornerstone’s Thomas Elghanayan

Nest Seekers broker Ryan Serhant, who stars in Bravo TV’s “Million Dollar Listing New York”

“We respect REBNY, we love REBNY, but we ﬁnd it sometimes odd that the people that are there to regulate you and judge you are your direct competitors.” EDDIE SHAPIRO, NEST SEEKERS

Developer Maurice Mann

The 505 condo in Hell’s Kitchen, in which Shapiro’s development company was involved

Mann, founder of Mann Realty, who hired Nest Seekers to market 36 Gramercy Park East, its 51-unit condo conversion on Gramercy Park. “We love him.” Though Mann had never heard of the firm before signing it on for the project, Nest Seekers was flexible and gave him a better deal than its competitors, he said. “They make sales — that’s all we know,” added Mann, who is probably best known for being one of the original developers of the famed Apthorp on the Upper West Side. Sofia Estevez, an executive vice president at TF Cornerstone, praised Shapiro for his work marketing 99 John Deco Lofts, a 442-unit Financial District condo that’s now 75 percent sold. He arranged the project’s appearance on “Million Dollar Listing” — a first for the “conservative” development firm — and tweaked the sales team members until they meshed with the developer’s staff, she said. “When you’re selling condos, particularly in the current economy, you need someone that [knows] it’s not about ego, it’s about making the deal,” she said. Nest Seekers is also beginning to make a bigger mark on the industry on other fronts: Ravi Gulivindala, a managing director, joined the Real Estate Board of New York’s residential membership committee about two years ago, and Nest Seekers alumni have gone on to found two firms, Modern Spaces and Blu Realty. Shapiro even appeared on two episodes of the Bravo show himself — as the hardnosed boss to Serhant’s playboy dealmaker — and in February the two of them rung the NASDAQ opening bell. Like many residential firms, Nest Seekers had a humble beginning: a tiny office and only a handful of brokers, who used computers Shapiro bought on eBay for $200 each. Wendy Jackson, who joined the firm in 2002 and is now senior vice president of international sales, remembers Shapiro “working with his first baby in one hand, and the phone in the other.” Sources say Shapiro had a silent partner in Yudel Kahan, the vice president of Hawthorne, N.J.-based Churchill Furniture, one of the largest furniture rental suppliers in the tri-state area. Although the exact financial ties between the companies are not public, Churchill Furniture is affiliated with Churchill Corporate Services, a corporate relocation firm where Shapiro worked in the early 2000s, which is now affiliated with Nest Seekers. Kahan is also a cofounder of Shapiro’s development company, LEV Group, which has been involved in projects such as the 505 in Hell’s Kitchen and the Sage House in Queens. Shapiro declined to discuss the financial structure of the company or to confirm that Churchill or Kahan had invested in Nest Seekers. Kahan did not immediately respond to e-mailed questions.

PHOTOGRAPH ELGHANAYAN FOR THE REAL DEAL BY BEN BAKER; PHOTOGRAPHS OF 36 GRAMERCY PARK AND THE 505 BY DEREK ZAHEDI 28 MarchOF 2012 www.TheRealDeal.com

The big expansion From the start, the relatively uncharted world of online networking was integral to Nest Seekers. Shapiro said his first recruit — and “secret weapon” — was a programmer, Chris Sattinger, who now works for Nest Seekers out of Berlin. Along with others looking to cash in on the dot-com boom, Shapiro bought up dozens of real estate–related domain names, including Nestseekers.com. Although he says the name lacked the “WASPy, Upper East Side feel” of brokerages named for their founders, Shapiro adopted it as the firm’s brand. And as the mid-2000s real estate boom took hold, the company began to grow. “We found as we got better brokers and a better grasp of the marketplace, that even some of the Park Avenue [and] Fifth Avenue sellers said, ‘I’ve heard of this company, I’ll consider that,’” Shapiro said. In its first six years, Nest Seekers grew organically. Shapiro plowed every spare dollar into driving traffic to the Nest Seekers website, forgoing retail storefronts and splashy print advertising, since he couldn’t compete with the big-time budgets of firms like the Corcoran Group and Prudential Douglas Elliman. “For every dollar I was going to spend, Corcoran was going to spend $10,” Shapiro said. But when the market collapsed in 2008 — and rivals cut commission splits, shuttered offices or simply closed shop — Shapiro made his move. “When Corcoran just stopped spending — now if I spend $2, it’s going to mean something,” he said. Shapiro insists he did not rely on debt or outside investors to fund the expansion, instead using capital from a “very healthy business” that had, until then, pursued a conservative growth strategy. In late 2009, he moved the firm’s headquarters into 415 Madison Avenue after negotiating an “incredible deal” on a 10-year lease. (He declined to disclose the rent.) He invested in featured property booklets and paid about $850,000 to purchase a commercial condo for a Nest Seekers office in the Avery at 100 Riverside Boulevard, according to city records. “All Eddie talked about every single day was expansion, expansion, expansion,” Serhant said. A former actor, Serhant joined the firm in 2008, and is one of the many brokers who started their careers at Nest Seekers and credit Shapiro with a great deal of their success. “I would not be where I am today if it weren’t for him, 1,000 percent,” said Serhant, who was one of a handful of agents Shapiro put forward to audition for “Million Dollar Listing” after the show’s production company contacted the firm. Jackson added: “For me, working with Continued on page 104

www.TheRealDeal.com October 2012 59

DEVELOPMENT

New York gets

schooled How building classrooms can help new condos get off the ground BY CODY LYON n densely populated New York City, crowded neighborhood schools and a shortage of development sites are two sides of the same coin. So it’s not surprising that an increasing number of private developers are incorporating schools into their projects. And in many cases, they receive direct financial benefits to do so — from tax breaks to permission to construct larger buildings. There are also intangible benefits for developers and for the city, like winning support for projects from community opponents. In recent years, the city has been looking for funding to build more classrooms, especially in fast-growing residential neighborhoods like the Far West Side and Lower Manhattan, where schools are squeezed for space, explained CBRE Group powerbroker Darcy Stacom. And for developers, agreeing to build schools often means an opportunity to develop projects on city-owned sites that would otherwise be unavailable. And using city-owned land, rather than buying the site themselves, makes the process of securing construction loans easier. “In a day where financing is far more scarce than it used to be, it’s a very attractive vehicle,” said Stacom, who is working on deals for the Educational Construction Fund, a financing and development vehicle for the New York City Department of Education. Read on for a behind-the-scenes look at projects where developers are incorporating schools into their designs.

250 East 57th Street

wo new public schools in Midtown — the High School of Art and Design and Beekman Hill International elementary school — began accepting students this fall. The new schools are the product of a trade-off between developer World-Wide Holdings and the ECF. In return for building the two new schools, World-Wide is constructing a 59story residential tower on a city-owned site at 250 East 57th Street. In exchange, “the developer is allowed to build out the balance of the development rights on the site for non-school uses,” explained ECF execu60 October 2012 www.TheRealDeal.com

The Spruce Street School and Bruce Ratner of Forest City Ratner

From top: The High School of Art and Design; Victor Elmaleh, chairman of the World-Wide Group; Beekman Hill International elementary school

tive director Jamie Smarr. The city will use the rent it receives from World-Wide to pay back the loans it took out to build the new schools, Smarr explained. David Lowenfeld, a partner at WorldWide, said the deal worked out well for both sides. “Projects like this one let organizations extract the value of the unused development rights to work toward their main mission,” he said. “In our case, by leasing us the

75 Morton Street and Bill Rudin

development rights, they are able to pay for the debt service on two new schools.” Smarr said ECF plans to issue an RFP in the coming months with three additional development site opportunities.

New York by Gehry

he Spruce Street School, otherwise known as PS 397, opened in 2009 in the first five floors of the Frank Gehry–designed rental tower at 8 Spruce Street. To build the tower, developer Forest City Rat-

ner partnered with the city’s School Construction Authority, the construction arm of the Department of Education. Talks to build the elementary school were initiated by State Assembly speaker Sheldon Silver in response to a need for more classroom space in Lower Manhattan. Under the terms of the deal, Forest City Ratner agreed to construct the shell of the school, while the build-out was paid for by $65 million from the SCA, according Continued on page 106

March 2012 00 PHOTOGRAPH OF RATNER FOR THE REAL DEAL BYwww.TheRealDeal.com MAX DWORKIN; BUILDING PHOTOS BY DEREK ZAHEDI

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COMMERCIAL

Sellers get serious

After lackluster ﬁrst half of year, the $100 million–plus investment sales market heats up

Manhattan’s priciest on-the-market properties ADDRESS

EST. SALE PRICE

SELLER

DESCRIPTION

LISTING BROKERAGE

11 Madison Ave.

$1.5 billion

CIM Group, Sapir Organization

CBRE Group

2.3 million-square-foot ofﬁce building

825 Eighth Ave. (Worldwide Plaza)

$1.2 billion

George Comfort & Sons and RCG Longview

Eastdil Secured

750,000-square-foot ofﬁce building

550 Madison Ave.

$700 million

Sony Corporation of America

Brokers pending

825,000-square-foot ofﬁce building

75 Rockefeller Plaza

$360 million

Mohamed Al Fayed

Cushman & Wakeﬁeld

600,000-square-foot ofﬁce building

525 Lexington Ave. (Marriott East Side) $350 million

Morgan Stanley’s Prime Property Fund

Eastdil Secured

406,261-square-foot hotel (646 rooms)

120 West 45th St.

$270 million

SL Green Realty

CBRE Group

575,000-square-foot ofﬁce building

1 West End Ave.

$200 million

Carlyle Group, Extell Development Company

Holliday Fenoglio Fowler

850,000-square-foot development site

550 Washington St.

$200 million

Eugene Grant

N/A

1 million-square-foot industrial building

438 11th Ave.

$200 million

Edward Imperatore

CBRE Group

800,000 to 1 million-square-foot dev. site

346 Broadway, 49–51 Chambers St., 22 Reade St.

$187 million

City of New York

N/A

750,000-square-foot ofﬁce portfolio

344 West 72nd St.

$150 million

Grandchildren of Lenore Dean

Eastern Consolidated

199,502-square-foot apartment building

Source: News reports and CoStar Group data. Includes both individual buildings and portfolios in Manhattan, which are currently being marketed for sale.

BY ADAM PINCUS fter a lackluster start to the year, the fall selling season for the priciest Manhattan buildings and development sites — those with price tags of $100 million and up — has kicked into high gear with a rush of properties recently hitting the market. Those listings, which total more than $5 billion, include two buildings — 11 Madison Avenue and 825 Eighth Avenue, also known as Worldwide Plaza — that are expected to fetch more than $1 billion each. If either sells before Dec. 31, it would easily break the record for the most expensive sale of the year. The aggregate value of Manhattan’s $100 million-plus, on-the-market properties bodes well for the higher-end investment sales market here, brokers said. “People have been testing the waters and watching what is happening and realizing it is a strong market. There are a lot of aggressive buyers out there looking to shop in the market, so it becomes a good time to sell,” said David Ash, principal with Manhattanbased Prince Realty Advisors, who brokered several high-proﬁle deals this year. This, of course, is in contrast to the ﬁrst eight months of 2012, which saw just $5.4 billion in sales for deals valued at $100 million or more, compared with $9.7 billion during the same period in 2011, data from Real Capital Analytics shows. Brokers offered several reasons why sellers were returning to the market now, but all of them pointed to the record pricing, especially among asset types like retail condo-

62 October 2012 www.TheRealDeal.com

11 Madison Avenue

miniums and condo prices for projects like Extell Development’s One57 at 157 West 57th Street. Christopher Schlank, managing partner at investment ﬁrm Savanna, also noted that huge buyer demand is spurring sellers to bring product to the market. “Interest rates [are low] and there is a lot of money coming from Europe, a lot of scared money,” he said. “So it’s a currency hedge, an economic hedge and a place to put their money.” Others pointed to the capital gains tax rate — which could jump from 15 percent

The Chatsworth at 344 West 72nd Street

to as high as 23.8 percent next year — as another reason to sell before the end of 2012. “All of a sudden we had a burst of activity that started in August. People waking up — a little bit late in some cases — that we might have a nearly nine-point increase in capital gains,” said Peter Hauspurg, CEO of commercial ﬁrm Eastern Consolidated. Others say they do not make decisions about when to buy and sell based on the current or anticipated tax rate. Richard Litton — president of Norfolk, Va.-based investment ﬁrm Harbor Group International — said because any given sale has different tax

implications for different investors, depending on the participant’s corporate structure and other factors, his ﬁrm focuses on asset values rather than tax implications when deciding to sell. (In May, Harbor sold 4 New York Plaza for $270 million just about two years after buying it for $107 million.) Meanwhile, in contrast to the fourth quarter of last year — when the majority of the most expensive transactions were partial interest sales or restructurings to resolve troubled situations — this year owners are shopping around full ownership sales. For example, 11 Madison Avenue in Midtown

www.TheRealDeal.com January 2011 25

COMMERCIAL South (which CIM Group and Sapir Organization are marketing for $1.5 billion), and Worldwide Plaza in Midtown (which George Comfort & Sons is offering for $1.2 billion) are both entire property sales. But investment sales professionals say ofﬁce properties are just one of the asset classes expecting high volume in the $100 million-plus Manhattan market. “Right now the activity is spread around,” Hauspurg said. “The hotel market has been pretty quiet, but multi-family, retail and development sites [have been active].” “Pricing is at an all-time high, eclipsing 2007 in many cases,” he added. Read on for a look at some of the buyers

around $940 million. If CBRE Group’s Darcy Stacom and William Shanahan — who are marketing the property — hit their target of $1.5 billion, CIM would achieve a 60 percent gross proﬁt in less than two years. Meanwhile, George Comfort & Sons also bought their building — Worldwide Plaza — on the cheap (at least relatively speaking) in 2009 for $590 million. If Eastdil Secured brokers Doug Harmon and Adam Spies sell it for its $1.2 billion ask, the owners will make a stunning 100 percent return on their investment in just three years. Entertainment giant Sony is also exploring the sale of its U.S. headquarters at 550 Madison Avenue, which it leased from

not identify any particular assets the private equity firm is looking to sell. “As is the nature of our business, we must sell assets in order to realize returns for our investors; however, we are under no specific time frame, or under any pressure to sell,” said Heather Lucania, a Blackstone spokesperson. Blackstone owns an interest in 10 properties in Manhattan, including 1095 Sixth Avenue and 1114 Sixth Avenue, which face Bryant Park, data from CoStar Group shows. Lehman, meanwhile, owns the office building 237 Park Avenue, and the On the Avenue Hotel at 2178 Broadway, which it needs to sell to pay off creditors as it liquidates as-

“There are a lot of aggressive buyers out there looking to shop in the market, so it becomes a good time to sell.” DAVID ASH, PRINCE REALTY ADVISORS

From left to right: Harbor Group International’s Richard Litton, Blackstone Group CEO Stephen Schwarzman, CIM Group cofounder Richard Ressler and George Comfort & Sons CEO Peter Duncan.

Entertainment giant Sony is also exploring the sale of its U.S. headquarters at 550 Madison Avenue.

Lehman Brothers needs to sell properties, including the On the Avenue Hotel at 2178 Broadway, to pay off creditors.

and sellers in the market and why they’re making their move now.

AT&T in 1992, and later purchased for a reported $236 million in 2002. According to the New York Post, Sony is looking to hire brokers to market the property, which could sell for between $700 million and $1 billion. Harbor Group’s Litton said his firm’s investment plan at 4 New York Plaza was to sell at a profit in five years or more. “It happened a lot sooner than that,” he said. Institutional owners such as Blackstone and Lehman Brothers are also in the market to sell, according to news reports. A spokesperson for Blackstone would

Realizing returns This fall, many of the big sellers are investors who bought during the market’s low point and are now looking to cash out. Harbor, CIM, Sapir and George Comfort & Sons fall into the category. Sapir bought the 2.2 million-square-foot 11 Madison in 2003 for $675 million, and then in December 2010, CIM stepped in to buy a 49 percent interest valued at $470 million in the building, rendering the value at

PHOTOGRAPH DUNCAN FOR THE REAL DEAL BY CHRIS MARTIN 28 MarchOF 2012 www.TheRealDeal.com

825 Eighth Avenue, also known as Worldwide Plaza.

sets following its 2008 bankruptcy. But it is not just the large institutions that are selling. Family owners are cashing in after decades as they see prices soar. The grandchildren of Lenore Dean — who purchased the 139-unit Upper West Side rental building the Chatsworth, at 344 West 72nd Street, 67 years ago — are currently seeking $150 million for the property. Eastern Consolidated investment broker David Schechtman, who, along with broker Lipa Lieberman and Hauspurg, is marketing the residential building, said the

family was selling after seeing a steady increase in unsolicited offers from buyers. And on the West Side, the Imperatore family is looking to sell a site with between 800,000 and 1 million square feet of development potential that it’s owned for decades, through CBRE. According to the most recent report from Massey Knakal Realty Services, Manhattan development land is selling for an average price of $310 per buildable foot, a price which has remained relatively stable for several years. The Imperatore site — located in an area undergoing a new surge of development, with residential towers planned from builders such as TF Cornerstone and Silverstein Properties — has no official asking price. But sources say it could be worth more than $200 million. Yet, not all properties on the market will sell for a profit. Despite the surge in prices, there are still buildings where values remain below peak levels. For example, SL Green Realty listed 120 West 45th Street last month, through CBRE. The real estate investment trust bought the 400,000-square-foot Midtown office building — known as Tower 45 — in 2007 for $285 million. But it’s weighed down with a 6.1 percent mortgage interest rate — far above today’s rates — which can’t be paid down early. SL Green is expecting to fetch about $270 million for the property, according to published reports. While the big players like SL Green generally publicize properties they bring to market, there are also always a number of buildings being marketed quietly, which don’t make it into the public eye until a contract is signed. TRD looked at the nine closed fullproperty sales valued at more than $100 million in 2011’s fourth quarter, and found that five of the listings were announced publicly and four were kept under wraps. Brokers say there are likely even more $100 million-plus properties being marketed today given that the market is so active. For example, Aaron Jungreis, president of the multi-family focused brokerage Rosewood Realty Group, said he was working on two $100 million-plus deals that would likely close this year that were not reported when they came on the market. He would not identify the properties. Still, the market remains divided into properties in high demand and the rest. “It is somewhat of a two-tiered market,” said Jon Epstein, executive vice president at commercial firm Avison Young. “The quality product is selling at a high price, but the mediocre [assets] are not being sold at the prices [sellers] want.” In other instances, sellers were overly optimistic about pricing and pulled buildings from the market. For example, Aby Rosen was marketing a stake in the famed Seagram Building at 375 Park Avenue for $2,000 per square foot last year, but no one bought it, and the property appears to be off the market now. Continued on page 110

www.TheRealDeal.com October 2012 63

ARCHITECTURE REVIEW

Platt falls ﬂat

hatever else might be said of the new hotel that is planned for 6 Platt Street, there is something uplifting in the spectacle of what had once been a parking lot now on its way to becoming a high-rise. In all cities, but especially in New York, parking lots serve as a symbol of urban failure; of dissipated interest, if not of downright decay. As a result, few things attest more eloquently to the turn in our city’s fortunes than the gradual disappearance of these asphaltic pits once omnipresent in Midtown, Chelsea and Lower Manhattan. The development of these negative spaces signals not only enhanced revenues from property taxes, but also a revival of civic engagement. That, alas, is pretty much the best that can be said for the hotel planned at 6 Platt Street — if the renderings are at all accurate. For now, the construction crews have only laid the foundations of what is provisionally known as the Platt Hotel, and the project is not supposed to be completed for another year, according to the architect’s website. Designed by Nobutaka Ashihara Architect, this hotel, a 261room Four Points by Sheraton, is yet another misbegotten example of a project in a watered-down Deconstructivist style in which the bottom quarter sorts ill with the rest of the building. Developed by the Lam Group — a company belonging to prolific budget-hotel developer John Lam — the design of this new hotel consists of about six elements, all discordant. At the base is a dark two-story curtain wall divided into bays with sharp metal surrounds. Above these, rising to about the ninth floor, is an odd variety of window work: On the north side of the structure, the windows are regularly spaced and separated by a rather heavy sequence of mural bays, clad in a kind of white stone. To the west, however, and for no discernible reasons, the plains of the façade are slightly pinched and erratic, and the windows are inconsistent. The change occurs in such a way as to generate no sense of creative disorder beyond a feeling of carelessness. To the east there is a third façade treatment. Indeed, the windows are surrounded in brick, according to the rendering. Above this, in what amounts to the shaft of the building, the windows, in their alternation with masonry bays, are arrayed in the rhythms of the Deconstructivist style, in such a way as to suggest, I believe, the interior of an integrated circuit. Along the sides, this pattern continues up to the top. Yet on the west-side exterior, the pinched side, it is replaced by an expanse of uninflected masonry that is set back from the front of the building that rises to the top, somewhere around the 45th floor. The result is a building that is rather ugly if you think about it, but — and here is the key point — most pedestrians probably won’t think about it. It is not glaringly, clamorously ugly; rather, its varied parts are so ill-conceived and so poorly coordinated that the effect is yet a further cheapening of the skyline.

JA M E S G A R D N E R

The Lam Group’s latest Financial District hotel consists of multiple elements that don’t come together This watered-down Deconstructivsim is like current reenactments of the punk style, a weary default mode that seems ignorant of the style’s once-radical roots. But now it has come to this, to the Four Points by Sheraton at 6 Platt Street, where it can be implemented by the architect without the slightest commitment or effort and without eliciting the slightest aesthetic response on the part of the public. The Lam Group — along with McSam Hotel Group, headed by Sam Chang — has built a slew of budget hotels in the city over the past 10 years. Among Lam’s other projects are the Fairfield Inn & Suites New York Manhattan, a somewhat more successful building, as well as the Four Points by Sheraton in Soho and the Fairfield by Marriott in Long Island City. From the renderings, the new hotel on Platt Street, through its essential mediocrity, does not fall substantially below or rise above the other projects Lam has done. The developer appears to favor a Deconstructivist idiom in the Aloft Hotel in Brooklyn and the two Four Points by Sheraton hotels in Chelsea and Soho, even though there are traces of historicism and vernacular in his Four Points by Sheraton in Times Square as well as Solita Soho Hotel on Grand Street. In addition to the 261 rooms, the new 120,000-square-foot hotel will include a lounge and a rooftop bar, and a 2,200-squarefoot restaurant. Located in the Financial District, it shares in the paradox of that part of the city; perhaps nowhere else are skyscrapers as densely clustered. For that reason, in no other part of the city are they as difficult to see and appreciate above the fourth or fifth floor. In this respect, one would think this new Four Points by Sheraton was designed not to be seen at all. If such was the ambition of the developer, his choice of architect made sense. Over the past two decades, Nobutaka Ashihara Architect has played an important role in the development of the sort of quasi-anonymous budget hotels of which 6 Platt Street promises to be a representative example. Back in 1990, this firm — according to its website — worked on the Postmodern design of the Marriott Financial Center Hotel, and a similar style informs the Residence Inn New York/Bryant Park, which was completed only in 2006. Since then, however, the firm has opted for an idiom that invokes Neo-Modernism: at the Hotel Indigo at 112 West 28th Street and the rather more successful Hyatt 48 on Lexington Avenue and 48th Street, as well as the Courtyard and Residence Inn Manhattan/Central Park at 1717 Broadway and 54th Street, which I wrote about in The Real Deal last year. At other times the firm favors the Deconstructivist idiom evident at 6 Platt as well as in a new hotel that is set to rise, very near it, at 215 Pearl Street. It would have been nice to see a better building rising on Platt Street. But in New York City, where even low architectural expectations are consistently thwarted, there is some consolation in the thought that at least this new hotel is better than the parking lot it replaced. TRD

A rendering of the Platt Hotel, which is scheduled to be complete next year. Insets, from top: Developer John Lam; architect Nobutaka Ashihara.

It would have been nice to see a better building rising on Platt Street. But there is some consolation in the thought the hotel is better than the parking lot it replaced.

64 October 2012 www.TheRealDeal.com

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PROFILE

The ‘development’of a CEO

Jeff Blau, the newly minted CEO of the Related Companies, has been preparing to take over for decades. So what’s he going to do now that he has?

BY ADAM PIORE or many students, college is about streaking the quad and doing keg stands. For Jeff Blau, it was about doing deals. When the Long Island native was a sophomore at the University of Michigan, the school shut down its printing office to save money. So Blau set up a business producing course packs himself. Then he convinced his professors to let him hire their teaching assistants to take notes in their classes — and sold those notes to his classmates at a profit. As an undergrad, he was also involved in real estate, teaming up with a local contractor to buy single-family homes in Ann Arbor and subdivide them into student apartments. Blau’s entrepreneurial flair didn’t fade when he arrived at the Related Companies in the early 1990s. “Jeff was notorious for creating new businesses and having very innovative ideas,” recalled Marty Burger, who worked at Related for 15 years and is now co-CEO of Silverstein Properties. “Early on, he got [Related owner] Steve Ross to back him and bid on a casino license in California. He almost pulled it off.” Blau will have plenty of opportunity to implement more big ideas in the years ahead as CEO of the mammoth real estate development company behind the Time Warner Center and Hudson Yards. Last month, Ross officially stepped down from the CEO spot and elevated Blau, his 44year-old deputy, to the position. Ross also appointed executive vice president Bruce Beal, Jr. to succeed Blau as president. Ross, who is still chairman and majority owner, will remain involved in projects of his choosing, including Hudson Yards. But Blau will oversee much of the generation and financing of new deals, while Beal will focus on implementing the deals in the pipeline. The timing of the succession announcement took some by surprise: Ross, also a Michigan alum, broke the news spontaneously during a speech at the University of Michigan’s Ross School of Business, (which was named after him in 2004). But the succession plan itself has been in the works for years. Ever since Blau took over as Related’s president back in 2000, Ross has been gradually handing over more duties to his successors so that he could focus on whatever interested him, associates said. Until recently, “Jeff was doing the work and didn’t have the title,” said Steven Spi-

68 October 2012 www.TheRealDeal.com

QUICK FACTS nola, chairman of the Real Estate Board of New York, the industry’s biggest trade organization. “Now he’s got the title.” Ross is still “intimately involved in the business,” said Alan Wiener, vice president of the institutional owners division at Wells Fargo and a longtime Related lender. But “he has delegated an enormous amount of responsibility to both [Blau and Beal]. That is how you do succession.”

NAME: Jeff Blau TITLE: CEO AGE: 44 EDUCATION: University of Michigan HOMETOWN: Woodbury, Long Island CURRENTLY LIVES IN: 1040 Fifth Avenue

Jeff Blau is the Related Companies’ ﬁrst CEO to succeed company founder Stephen Ross.

“It’s like owning a baseball team or a football team. You see your stars and you grow them. I knew this guy was good, and I grew him.” STEPHEN ROSS, RELATED COMPANIES Indeed, Ross, a former tax attorney who founded the business in 1972, is nothing if not deliberate. “We didn’t build this up to be the largest development company in the country without thinking through all the details,” Ross told The Real Deal last month. “You always have to have contingency plans. Things happen, people leave, bad events happen to people sometimes. “It’s like owning a baseball team or a football team,” said Ross, who owns the Miami Dolphins. “You see your stars and you grow them. I knew this guy was good, and I grew him.”

Emerging rock star A product of Bayside, Queens, and Woodbury, Long Island, Blau started in business early. As a kid, he said, he had “every single business you could think of: a lemonade stand, bagel delivery, a paper route.” His father was a builder and a contractor, and Blau spent his summers working on job sites and accompanying him to meetings. When he was a junior at Michigan, Blau signed up for a graduate-level real estate development class. He was one of perhaps three undergraduates out of a class of 50, recalled Peter Allen, the devel-

oper who taught the class and headed the real estate department at the time. The rest of the students were MBAs, law students and those seeking master’s degrees in urban planning, architecture, construction and engineering. Even so, Blau earned an A-plus, and Allen was so impressed by his final project — a proposal for a mixed-use development — that he offered Blau a job at his real estate firm in Ann Arbor. Blau turned him down. “He was one of the rock stars of the class,” Allen said. “He just naturally understood the field. He was so good — not

PHOTOGRAPH FOR THE REAL DEAL BY CHRIS MARTIN www.TheRealDeal.com January 2011 25

PROFILE just at the financials, but the big picture. He could quantify all these issues of mix and density and quality and architecture. That is a hard thing to do.” That year, the university held a real estate forum and invited Ross to deliver a keynote address. When Ross asked Allen who his best student was, Allen didn’t hesitate. “He told me, ‘We have one of the brightest kids I’ve ever seen come here,’” Ross recalled. “‘He wants to come to New York. You’ve got to hire him.’” Ross offered Blau an internship, and then, when Blau graduated the following year, a job. By the time Blau graduated in 1990, however, the market had crashed. The previous year, Blau had applied and been accepted to both Harvard Business School and Wharton. But he deferred for two years. Now frustrated, Blau called Wharton and asked if he could start immediately. Ross, however, was not ready to let him go. Blau came up with a compromise. He kept his apartment in New York, and rented a second one in Philadelphia. For the next two years, he commuted, taking classes on Mondays and Wednesdays and working at Related the other three weekdays and Saturday. Within months, Ross had moved Blau from the far corner to a desk right outside his office. From then on, recalled Blau, “I was always working side-by-side on whatever Stephen was focused on.” Since Related’s projects were complex, there was plenty that Blau needed to learn. Ross prided himself on tackling projects that scared away competitors. He spent his early years developing subsidized housing, which he financed through government loans and funds raised from syndicates of investors. Then he moved on to so-called 80/20 buildings: rentals backed by tax-exempt government bonds, with 80 percent market-rate units and 20 percent low-income units. Both kinds of developments and many that followed required mastery of complicated approval processes as well as city, state and federal tax incentives. Ross taught his protégé that when it comes to deals, “the more complicated, the better,” Blau said. “Because you’ve got a lot of people in this business, and you’ve got to figure out what your competitive advantage is.” It would be a long apprenticeship. “You can’t learn this business in school,” Blau said. “You just have to do it. You do it deal by deal; it’s on-the-ground experience.” Ross dispatched Blau to run financial models, and brought him along for meetings with architects. But the most pressing order of business initially was simply ensuring the firm’s survival during the downturn of 1990, when Related was far more exposed than after the 2008 financial crisis. Some of the deals were recourse loans signed by Ross, which would have allowed lenders to go after the rest of the company

Company founder Stephen Ross will stay on as Related’s chairman.

Related bought the 52-story Tribeca Tower in 1994, with a young Blau taking the lead on the deal.

Bruce Beal is replacing Blau as Related’s president.

Former Time Warner CEO Richard Parsons, whose decision Getting selected by the city to build to sign on as the anchor tenant helped Related win the job the $2 billion Time Warner Center, which to develop the Time Warner Center. broke ground in 2000, was a major coup.

Related will convert the Hudson Yards site into 13 million square feet of commercial and residential space.

When it comes to deals, “the more complicated, the better. Because you’ve got a lot of people in this business, and you’ve got to ﬁgure out what your competitive advantage is.”

PHOTOGRAPH THE TIME WARNER CENTER FOR THE REAL DEAL BY CHRIS MARTIN 64 March OF 2012 www.TheRealDeal.com

JEFF BLAU, RELATED COMPANIES

if Related defaulted. Blau was by Ross’s side as he and others in the firm restructured $100 million in unsecured debt and, in late 1992, when Ross raised $40 million by selling a 30 percent stake in the company to friends and family. (Ross eventually bought the stake back.) Blau helped Ross and his other deputies put a new “corporate infrastructure” in place, to transform Related into a company with investors and different divisions, so “it wasn’t just about Stephen signing, it wasn’t all on him; it was about the company,” Blau explained. The new investment not only allowed Related to survive, but it freed the company up to pursue opportunities — and do bigger deals than it ever had before — while many of its rivals were still mired in workouts. In the fall of 1994, Related partnered with Apollo Real Estate Investment Fund (now known as AREA) to purchase Tribeca Tower, a 52-story, 440-unit condo in default. Related turned the property into a rental, converting it to an 80/20 building and bringing in bond financing. The building was far bigger than any development Related had worked on before, and it was also a seminal deal for Blau. While Ross remained deeply involved, he allowed Blau to take the lead and serve as project manager. Around this time, Blau was cutting his teeth on another watershed development. On the plane to the International Council of Shopping Centers spring convention in Las Vegas, Blau and Ross sat next to a real estate broker whose brother-in-law owned a huge chunk of land on the south side of Manhattan’s Union Square. Within months of that chance meeting, Related had acquired the site and became a major player in the expected revitalization of the area. Hoping to expand Related’s Union Square portfolio even more, Blau visited the Park Avenue home of an elderly woman, who owned an abandoned building on the north side of the square. Over tea, he tried to convince her to sell Related the site. Eventually, she granted the company a longterm lease, and Blau convinced the chairman of Barnes & Noble to move the mega-bookstore into the space. Despite his young age, Blau was able to make a mark because Related was “the kind of place where titles didn’t matter,” said Silverstein’s Burger. “Whatever you could tackle, you just took on. You weren’t restricted from doing things because you weren’t at that level,” he said. In the years following the downturn, Burger said, Blau approached banks and equity partners to back the firm’s future business. Blau struck up a relationship with the German financial institution Hypo Bank. He also cold-called the new real estate specialist at the Ohio State Teachers’ Pension Fund, and started a relationship that produced tens of millions of dollars in financing.

www.TheRealDeal.com October 2012 69

PROFILE After the downturn brought much of the business to a virtual standstill, Blau “basically restarted Related’s 80/20 business through relationships with lenders and equity partners,” Burger said.

The big leap In 1998, Related made its ﬁrst move into high-end condos, shelling out between $40 and $45 million to purchase and renovate 23 condo residences at 279 Central Park West, at 88th Street. The 24-story building, designed by architect Costas Kondylis, had been handed back to a group of Japanese lenders after the project’s original sponsor went bankrupt. Related also began work on a new-

construction, 32-story, 100-unit tower at 65th Street and Third Avenue, designed by Robert A.M. Stern, called the Chatham. Blau moved into the penthouse, which he designed himself. Soon after, the company took two huge leaps that placed it into a new league altogether. First, Related beat out Mort Zuckerman’s Boston Properties, Larry Silverstein, Douglas Durst and others to win the right to develop 650,000 leasable square feet of ofﬁce space for publishing giant Random House’s world headquarters at West 56th Street and Broadway. On top, they built the Park Imperial condominium. Second, the ﬁrm won the most coveted deal of all — the right to develop the

long-stalled Coliseum site at Columbus Circle. Many were predicting that the 2.8 million-square-foot, mixed-use complex would become the “Rockefeller Center of the next century.” Ross and Blau won the job by convincing Time Warner CEO Richard Parsons to sign on as an anchor tenant, making that the centerpiece of their proposal to the city, along with showcasing Jazz at Lincoln Center prominently and promising to elevate the neighborhood with upscale tenants. (One of the competing proposals, recalled Blau, envisioned a Sears on the ground ﬂoor. Related lured tenants like the Mandarin Oriental, Coach, Armani Exchange and Hugo Boss.)

Next in line

Why grooming the future CEOs is so crucial for NYC development companies

“Our biggest deal to that point had probably been a $150 million deal,” Blau said. “The Bertelsmann Building [for Random House] was a $400 million deal. It was a big step up for us.” And the Time Warner, he said, “was about $2 billion.” In January of 2000, soon after winning the Time Warner deal, Ross promoted Blau to president of Related. He was 31. By then, he had been involved in 25 deals exceeding $2 billion, with another almost $3 billion worth of property under construction. In his new role as president, Blau was responsible for overseeing Related’s dayto-day operations. But his job description Continued on page 112

“They do everything a developer does, from conception to building,” Trump said. “There’s nothing like having your children in the business when it works out well,” he added. “They are all certainly ca-

eff Blau’s ascension to CEO at Related is by no means

pable of taking over at the right time. So far I’m feeling good,

the only generational transition underway in New York City

so we’ll see what happens.”

real estate.

Larry Silverstein is taking a different approach to his suc-

Last December, Larry Silverstein, 81, elevated Marty Burg-

cession. His son, Roger, manages all of the company’s com-

er, 46, to serve alongside him as CEO of Silverstein Proper-

mercial leasing, while his daughter, Lisa, manages residential

ties. At Tishman Speyer, Rob Speyer, 42, has been sharing

development. To ﬁnd a successor, however, the family hired a

the CEO duties with his father Jerry, 72, since 2008. Donald

headhunter, which helped recruit Marty Burger in 2010. Burger

Trump, 66, has three of his children working for him. And at

had extensive industry experience, running his own develop-

Two Trees Management, Jed Walentas is now in charge of daily

ment company, Artisan Real Estate Ventures, serving as an ex-

operations for the company he runs with his father, founder

ecutive vice president of Related and working at the Blackstone

David Walentas.

Group and Goldman Sachs’ Whitehall Real Estate Funds.

It’s anyone’s guess when any in this new generation will

“Larry had a lot of conversations with Roger and Lisa about

fully take over leadership. Often, the challenge for New York

whether they wanted the business to be here long-term, or sell

moguls is less about ﬁnding someone capable of taking over and more about how to create the right role for them without

From left: Larry Silverstein and co-CEO Marty Burger

giving their own job, said REBNY chairman Steve Spinola.

everything and stop,” Burger said. “They wanted the business to continue. So they decided to have someone run the business for the long-term.”

“I don’t think people in real estate ever plan on retiring,”

Industry insiders say it makes sense that Silverstein is

said Spinola. “It’s what they do — it’s what they love doing.”

staying on as co-CEO, given how recently Burger joined the

“Real estate developers never retire,” agreed Donald

company. It allows him to hand off long-term relationships

Trump. “Real estate is our form of plastic surgery — we don’t

with equity partners, collaborators and bankers. Silverstein’s

get a face-lift, we ﬁx another building.”

name “opens a lot of doors,” said Burger. At the same time,

In that sense, the co-CEO approach chosen by Silverstein

most lenders, noted Blau, “require that people have teams

and Speyer, along with Stephen Ross’s continued role as chair-

that back them up.

man at Related, provide a compromise of sorts.

“I’m sure Silverstein has been asked by them, ‘What if?’”

In any case, most agree that deciding when to ofﬁcially

Blau said.

hand the reins over is far less important than the grooming of those likely to take them.

Silverstein promised Burger when he hired him that he Richard LeFrak (center), and sons James (left) and Harrison

“You don’t go to school to be a developer; you’ve got to

would elevate him to the top slot within two years if it was a good ﬁt.

learn it through a mentorship,” said Richard LeFrak, 67, who

“I started as executive vice president and took Larry at his

began working for his father during summer vacations when he

word that if it worked for them, and worked for us, I would become

was 13. His sons, Harrison, 40, and James, 39, began working

CEO,” Burger said. As the end of the two years approached, the

for the family company, which owns 400 mostly self-developed

duo decided that “it was working, but Larry said, ‘I’m not ready

buildings, when they were in high school.

to retire,’ and I said, ‘Good, I don’t want you to retire.’”

LeFrak’s sons are both partners in the business, and “have

Steve Kenny, head of commercial real estate banking for

the experience of actually having their money at risk and suck-

New York and New Jersey at Bank of America, said both rela-

ing it up,” LeFrak noted. He expects both to eventually take

tionships and a deep bench are essential when he and his

over and run the company as co-CEOs. “Each one has different skills and strengths,” LeFrak said.

From left: David Walentas, founder of Two Trees, and his son Jed

team are considering whether to issue loans to developers and investors.

“One is an engineer, so he has a little more interest in con-

when they got out of college. Among them: the 72-story Trump

“We tend to evaluate clients and client relationships as

struction. One has more of a ﬁnancial background and a law

World Tower across from the United Nations, completed in

opposed to just transactions,” he said. “We’re always very

degree, so he does more of the corporate stuff. They share

2001, and the 2004 conversion of the Hotel Delmonico into

focused on relationship building, and who we are going to do

responsibilities, decide what they are interested in and pur-

the Trump Park Avenue.

business with.”

sue those interests. But everything is participatory; nothing is in a silo.” As a result, “each one now has the skills of a CEO. Each one has more skills than I do at this point.” Trump has also been actively making sure his children get on-the-job training. All started working together on projects

70 October 2012 www.TheRealDeal.com

After they got a little experience, “we split them up, which

But, Kenny added, “one of the other key elements that we

is good because you can do more,” said Trump. Currently,

look at is the management team, or management depth, not

Ivanka and Eric are deeply involved with the $200 million de-

just the most senior person. Is there depth in organization such

velopment in the Doral Golf Resort and Spa in Miami, while

that they can carry out all of the aggregate business plan?

Donald Jr. has taken an active role in Trump’s $150 million golf resort in Scotland.

“Depth and continuity are things we always evaluate.” By Adam Piore

www.TheRealDeal.com January 2011 25

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Vital Stats: Name: Bruce Simon

By Katherine ClarKe

Building blocks

Age: 61 Title and Company: President, the Olnick Organization Hometown: Los Angeles Currently living in: Manhattan

How many buildings does Olnick own? Around 30. We have interests in maybe 5,000 units. In New York City, we have Lenox Terrace in Harlem, Le Triomphe at 245 East 58th Street and another rental building at 200 East 87th Street. Lenox Terrace is approximately 1,800 apartments, Le Triomphe is 160 apartments and 200 East 87th Street is 130 apartments. We used to own properties in 13 states; now we’ve contracted to New York and New Jersey. It’s very hard to keep track of your assets when they’re thousands of miles away.

You’re a lawyer — how did you get into real estate? [After law school] in the mid-1970s, I came to New York for a post-doctorate legal degree at New York University. Though I had intentions to return to California, I thought I might as well take the New York bar and see what the job market was like. I met [Olnick Organization founder] Bob Olnick — he had a boutique law firm, which did primarily real estate work. I was essentially the first associate at his law firm.

How did you end up moving over to the development side of the business? Bob died about 25 years ago, and our law firm merged with Stroock & Stroock & Lavan. After about six months with Stroock and some discussions with the Olnick family, I decided to come in-house [at Olnick], and took a position overseeing our nonresidential portfolio, acquisitions, sales, financings and construction. Picking up the operational side of the residential side of the residential portfolio was not that much of a reach.

ed past the family, and entered the bedroom to lie on the bed. The family actually found it funny.

Rep. Charles Rangel was fined $23,000 by the Federal Election Commission this year for using a rent-stabilized apartment at Lenox Terrace as a campaign office. Were you aware that he’d been improperly using the unit? Though I knew he lived there, I didn’t know where he lived [within the complex] or what he was doing there. It came as a surprise to me.

The bottom line: How has the recession impacted your busi business? Dramatically, in terms of rental rates [falling]. Then it leveled off and slowly started inching up. Rents have been going up steadily for the past three years. It depends on the product and occupancy levels.

You’ve been trying to raise tenant support for a plan to expand Lenox Terrace. What exactly are you hoping to do there? We built Lenox Terrace 55 years ago. We feel that after 55 years, [the complex is missing] accommodations and ame amenities and services consistent with first-class residential buildings today, including community facilities, childcare facilities and a park. … We’ve developed a plan that provides for six somewhat taller, slimmer buildings, as well as developing retail primarily along Lenox Avenue.

What has been the response to that plan?

Landlord life What are the challenges of being a New York City landlord? Your relationship with your tenants involves a property that in many cases is very near and dear to that tenant. It’s not a business enterprise — it’s their home.

No one likes construction next door, [but] we’ve gotten a lot of tenants and other community members to support us. Some people would like to keep things the way they are. I see that as a somewhat selfish motive, when the benefits not only go to current residents, but to future residents and the community at large in Harlem.

What else is in the pipeline for you?

Manhattan

Have you ever lived in a building that Olnick owned? Yes, for a number of years. I tried to keep a low profile, but it’s a way of hearing unfiltered comments from tenants, both positive and negative. I always tried to keep a mental note of it and bring it back to the office.

We’re trying to be in an acquisition mode. … We’re looking at existing improved properties, both residential and commercial. We’re making offers on a regular basis. We prefer to stay in prime areas within New York and New Jersey, and most of the properties that are coming on the market are at very dear prices, and there’s a lot of competition. TRD Lenox Terrace at 25 West 132nd Street

Tenant horror story? A family at the Triomphe was having dinner when the tenant from the apartment directly below walked in, clearly intoxicated, proceed-

Bruce Simon’s New York properties —

72 October 2012 www.TheRealDeal.com

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INTERNATIONAL

NewYorkers go Old World Brokers say the recent election of Socialist Party President François Hollande has not impacted the real estate market in Paris.

NYC residents are increasingly buying property in Europe — so how are the markets they’re targeting holding up?

New Yorkers are buying (or looking to buy) property in old urban stalwarts like London, Rome and Paris, and in less discovered places like Dubrovnik, Croatia. In London, a triplex sold last year for $220.9 million and a mansion is currently listed for $487.3 million.

74 October 2012 www.TheRealDeal.com

BY TOM ACITELLI he euro may be muddling its way through an existential crisis, but there’s still real estate to be had across the continent — and buyers, including New Yorkers, looking to plunk down all cash for it. This month, The Real Deal talked to brokers and analysts to ﬁnd out where New Yorkers are buying in Europe, given the euro crisis’s effects on global trade and investment as well as the recent political tumult, and to see how the various submarkets are holding up. The focus is not on the villa- and chateau-dotted regions of Italy’s Tuscany and France’s Riviera, where wealthy New Yorkers bought during the Cold War era. Those regions, brokers say, are dominated now by buyers from newly emboldened economies, especially Russia and China. Instead, New Yorkers are buying (or looking to buy) property in old urban stalwarts like London, Rome and Paris, and in less discovered places like Dubrovnik, Croatia, and perhaps even the tiny country of Montenegro on the Adriatic Sea. Americans overall make up slim percentages of the buyers in these markets. In central London, for instance, 3.7 percent of buyers July 2011 through July 2012 were American, while in Italy, 6 percent of buyers in 2011 were American, according to London-based brokerage Knight Frank. Many of these American buyers, though, hail from New York. What’s more, brokers and ana-

lysts say interest has increased from Gotham addresses. In fact, the one ﬁnancial constant on a continent in economic ﬂux may be the sophistication of the New York homebuyer. “Unlike the buyers coming into New York, who ask questions because they’re not familiar with the market, any [New York] buyer we’re seeing who’s buying in places like this actually knows the market fairly well,” said Neal Sroka, a Prudential Douglas Elliman broker and president of DE Worldwide, a global real estate sales consultancy based on Madison Avenue. “Somebody who decides to buy an apartment in Paris, I would venture to say, has been visiting Paris for 30 years or has business there,” he added. Below is a rundown of some of the European destinations in New Yorkers’ crosshairs — and how they’re holding up.

Paris

ew Yorkers will always have Paris: Market observers say they continue to buy homes in the French capital, even as the country’s new president toys with signiﬁcant tax increases. “Everybody wants a piece of Paris,” said Alon Kasha, who eight years ago relocated to the French capital from New York with his wife and launched A+B Kasha, a ﬁrm specializing in selling and renovating pieds-à-terre for foreigners. The economic uncertainty following the May

LONDON PHOTOGRAPH BY TRISTRAM COMPTON, EMPORIS www.TheRealDeal.com January 2011 25

INTERNATIONAL In Milan, New Yorkers are looking outside the center of the city in newly fashionable areas.

Dubrovnik in Croatia has seen intense interest from Americans recently, including New Yorkers.

While New Yorkers don’t seem to be buying more in Athens yet, the current real estate conditions are ripe for picking up apartments.

New Yorkers house-hunting in Rome are looking on the higher end of the market.

28 March 2012 www.TheRealDeal.com

election of Socialist Party President François Hollande has not impacted the real estate market in Paris, Kasha argued. Nor has the euro crisis dissuaded New Yorkers from apartment-hunting there, other sources say. In fact, after dropping during the recession, prices for prime apartments in central Paris’s most desirable neighborhoods climbed steadily. In 2011, they were up nearly 15 percent annually, to roughly $1,070 a square foot, according to the Global Property Guide, a U.K.-based website that tracks real estate worldwide. (All reported dollar amounts were converted from euros based on last month’s rate of $1 to €1.22.) Such increases are similar to those seen in Paris during the last decade’s real estate boom, inviting fears of a housing bubble in France. However, Knight Frank has said the city’s prime areas will “continue to stabilize” and has reported that prices have essentially been flat in 2012. Further muddying matters, Hollande has famously proposed a top individual income tax rate of 75 percent, which some say could trigger an exodus of French les riches, upping the city’s luxury inventory as wealthy property owners vacate to beat the taxman. Sellers in Paris do face high transfer taxes. But according to brokers, that is not likely to stop New Yorkers from buying there. “As far as Americans buying apartments in Paris,” Kasha said, “they are not doing it as an investment decision. What they are buying is the lifestyle.” Elizabeth Stribling, the veteran New York broker who also does business in Paris, echoed this assessment of the typical higher-end New York buyer. “Those New Yorkers who contact me about Parisian property are generally in a pied-à-terrebuying mindset,” she said. “They know they are going to spend along the lines of a New York piedà-terre.” Stribling rattled off parts of central Paris where she said most of the buyers have been foreigners, including Americans: the two islands in the Seine, Saint-Louis and Cité; the 7th Arrondissement; and the 4th Arrondissement, where she herself has a flat. And whereas New Yorkers would have paid around $650,000 for a one-bedroom during the boom, according to Kasha, they will now pay into seven figures for two- to four-bedroom apartments.

Rome

ate this summer, Diletta Spinola, a broker with Sotheby’s Realty in Rome, sold a $7.75 million, 2,690-square-foot penthouse apartment off the Piazza Navona to a New Yorker. (The apartment also has a 1,076-square-foot terrace.) Such deals, Spinola said, are indicative of a Rome where the higher end continues to perform better than the rest of the market. She said she has seen an increasing number of New Yorkers house-hunting in Rome at the higher end. They prefer the larger apartments in the city’s more fashionable center — terraces, in particular, are always in demand. “Most of the requests we’re getting from the U.S., and especially from New Yorkers,” she said, “are for penthouses, and there aren’t so many for sale.”

Higher-end downtown apartments in Rome start at around the equivalent of $1,900 a square foot — “and that goes up,” Spinola said. Still, for New Yorkers buying on the high end, Rome can offer deals. Indeed, by comparison, the average price per square foot in Manhattan is $2,113 for the luxury market (which is the top 10 percent of the co-op and condo market), according to appraiser Jonathan Miller’s second-quarter market report. Statistics on the Rome market are general and unwieldy. But they show that the middle and lower end of the market remains tepid, if not depressed. Prices and sales volume overall dropped in 2011, the most recent year for which data is available, by single-digit percentages, according to Knight Frank. Overall prices have been dropping since the recession started in 2008, prompting the New York Times to label Rome a “buyer’s market” in June. With both economic and political uncertainty, Rome prices are not expected to rebound during the last quarter of 2012, according to a forecast by Knight Frank. Still, the city’s higher-end market has had a stronger 2012 than other European cities, including Geneva and Madrid, the report said. Prices at the higher end have risen perhaps as much as 5 percent during the year. “It’s true the medium market has been affected,” Spinola said of prices, “but not the top end.”

Milan

taly’s ﬁnancial and fashion capital has mimicked the country’s political capital, Rome, in housing — with a twist: New Yorkers are looking outside the center of the city. Though, as in Rome, Milan statistics can be unwieldy, a Knight Frank analyst said that home prices in the city might be down as much as 15 percent in the last two to three years, a slide similar to elsewhere in Italy. Meanwhile, little price growth is expected in 2013, according to the Global Property Guide. Apartments in Milan of around 1,200 square feet average about $962,600, according to the guide. Sources say some New Yorkers are looking to buy at the higher end beyond the city center in areas of the Milan region that have become more fashionable. Sroka said the situation is “similar to what’s happened in New York, where people have gone to Brooklyn and Long Island City.” Sroka is involved in a large mixed-use project northeast of Milan led by Bizzi & Partners (the developer behind the Setai Fifth Avenue in New York) and a Korean investment house. The project — which will include around 10.8 million square feet of commercial and residential space, including apartments — will rise on the site of an old steel factory and will be designed in part by acclaimed architect Renzo Piano. Sroka said he expects the project, which is due for completion around 2015, to draw interest from American buyers, including New Yorkers.

London

June report from commercial brokerage Savills concluded that London’s real estate markets, including its housing market, “bottomed out” in early 2009. Continued on page 108

www.TheRealDeal.com October 2012 75

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Q&A

The gatekeepers

NYC managing agents say residential buildings are in better financial shape than they were a few years ago, but are still watching their pennies BY MELISSA DENCKE-MCGILL hey are the gatekeepers of New York City’s residential buildings. And as such, they have a front-row seat for the financial ups and downs — of which there are plenty in this post-recessionary climate — that the city’s residential buildings are experiencing. This month, The Real Deal talked to the managing agents that make sure New York City’s co-op, condo and cond-op buildings run smoothly. What we discovered is that while the majority of buildings are in far better financial shape than they were during the downturn, most are still watching their pennies. Indeed, many of the capital improvement projects that residential buildings are investing in are either required by the city — such as upgrades in the type of oil they’re burning — or are other energy upgrades to deal with soaring water and sewage bills that the buildings will make back over time in cost savings.

David Kuperberg

CEO, Cooper Square Realty As managing agents, you are the gatekeepers of NYC’s rental, condo and co-op buildings. So how is the ﬁscal health of those buildings now compared to the recent past? While our buildings didn’t struggle during the bust, many individuals did, and that may have affected the decision-making by some boards. The few buildings that didn’t increase maintenance or carry costs during those years have now seen double-digit increases. If they had kept increases on pace with costs, this wouldn’t be happening now. These days, are NYC building owners spending more or less to maintain their buildings? Over the last few years a handful of new construction buildings have cut back on some of the developer-initiated amenities in order to reduce their carrying costs. Over time that may not prove to be the best course of action. New buyers will likely perceive value in those amenities as the original purchasers did, and resale

ing money on today? Energy efficiency projects — they provide the best financial return on investment. ... Energy costs account for as much as 30 percent of the building’s operating expenses, and many energy projects have three-, fourand five-year paybacks, which are a 20 to 30 percent return, so it’s one of the best investments a building can make. Are management firms expanding into new arenas to stay competitive? If so, what are they offering now? Absolutely. For instance, we issue energy report cards for every building comparing energy use and cost to other buildings in our database. We are purchasing energy in bulk which is significantly reducing costs. We are doing and financing energy retrofit projects. We have also created reserve fund investment programs for co-ops and condos, which increase their returns. How do maintenance and common charge fees compare today to a year ago, two years ago and during the boom? The primary cost-drivers in buildings such as payroll, utilities and co-op real estate taxes continue to increase every year. Those costs did not go down during the bust. On average, maintenance in co-ops has typically gone up 4 to 7 percent over the last two

“I have been doing this for 35 years and I have never seen boards go through packages the way they are now.” IRA MEISTER, MATTHEW ADAM PROPERTIES INC. value may suffer. Some are cutting back on the concierge service because they feel no one uses it. But they are being shortsighted in my opinion, because they are cutting back on a service, even if it is only a perception of service, which does indeed increase property value. What kinds of new capital improvements are NYC co-op and condo boards spend74 May 2012 www.TheRealDeal.com

years and 2 to 4 percent for condos — the difference being that co-ops pay real estate taxes, and for condos the real estate tax is paid by the individual owners. What is the most worrisome trend when it comes to managing buildings in NYC today? By far the most worrisome trend is the continued imbalance in real estate taxes

In addition, one source noted that a handful of new construction buildings have cut back on amenities like concierge services that were dreamt up by developers. But whether it’s a good idea to make those cuts is up for debate. “They are being shortsighted in my opinion because they are cutting back on a service, even if it is only a perception of service, which does indeed increase property value,” said David Kuperberg, the CEO of Cooper Square Realty. Management companies say maintenance fees and common charges have gone up steadily — even through the downturn. But they say that tenants understand that those increases are needed to offset the increase in fixed expenses. For more on how these companies are faring, for the new types of litigation co-op and condo boards are pursuing against some residents and for a look at how buyers’ board packages are being analyzed these days, we turn to our panel of experts. for co-ops and condos. The tax rates are drastically different for single-family homes versus multiple dwellings and the net result is that a co-op or condo owner pays real estate taxes at nearly six times that of a single-family homeowner. Coops and condos are taxed as for-profit, multi-family, landlord-owned buildings. They are not taxed based on their value as a homeowner or the purchase price; they are taxed based on an artificial stream of income that is generated as if the apartments were rented out. There have been citizen groups and professional organizations fighting for years about this. It is state law and it is proving nearly impossible to change. Are there any new (and financially burdensome) laws that residential buildings in NYC have to deal with these days? The Landmarks Preservation Commission’s proliferation across the city was intended to preserve the historic architecture of neighborhoods. Instead, it’s actually lowering values, stifling development and diminishing affordability. To comply with Landmarks Preservation Commission rules, everything has to go through longer and more difficult approval processes. It costs more money in terms of materials and construction methods, and oftentimes rendering improvements is either not possible, or certainly not economically possible, and therefore discourages property upgrades. I think the city would be significantly better served with an architectural review board for new construction than with the Landmark Preservation Committee for all buildings within large neighborhoods. What sort of new issues are unit owners and boards suing over these days? Noise and odor complaints and subsequent litigation remain at the top of the list. We are also seeing an increase in litigation resulting from renovation projects undertaken in individual apartments, as

a result of faulty workmanship with subsequent damage like leaks to other apartments. During the boom, a lot of people renovated and upgraded their apartments and sometimes their workmanship was faulty.

Ira Meister

president, Matthew Adam Properties Inc. How is the ﬁscal health of NYC residential buildings now, compared to a year ago, two years ago and during the boom? I would say buildings today are in better shape. People were shocked [during the downturn], and they had to tighten their belts and make some changes. So I think ﬁnancially, many of the buildings are in better shape today. How much have NYC building owners been spending to maintain their buildings today in comparison to previous years? Every building is watching their pennies. They have been doing their maintenance and many of the buildings that were burning No. 6 oil are going through conversions right now to gas or No. 4 oil or a combination of oil and gas. They are in the process of working on it right now, but they are spending very wisely. What other kinds of new capital improvement projects are boards spending money on today? Green projects, which are payback projects — better light for people in the building, upgrading electrical systems. We are reducing the use of toxic cleaning chemicals, we are doing different projects for improvement-focused infrastructure and we are looking at a lot of new technology right www.TheRealDeal.com October 2012 77

Q&A now. Water bills are insane, so we are looking at the new technology on how to reduce water and sewer charges. The upgrades do play a role in the value of apartments. Is there generally more or less competition to land residential building management jobs — or to keep jobs — than there was in the recent past? There is less competition in the business due to the mega-companies that have bought up other companies. Are management firms expanding into new areas in order to stay competitive? A lot of firms are trying to make money by selling oil, gas and electricity, and they do make money, but there is no way that you can go out there and get competitive bids when you have self interest. I don’t think it’s the right thing to do. We go out and actually shop the market — we pick our energy companies, gas, oil and electric. They are the people paying the bills, so you have to be loyal to your master. What sorts of new demands are being placed on managing agents at NYC residential buildings these days that didn’t exist a few years ago? A lot of our buildings have us doing internal audits and labor audits just to see if there are ways to reduce staff or services. How do maintenance and common charge fees compare today to a year ago, two years ago and during the boom? Maintenance fees have gone up and there are major contributing factors — property taxes, power, sewer and water. We are already doing our budgets for 2013 and we are seeing an average increase — primarily based on real estate taxes — of as much as 3 percent just to cover fixed costs, so that’s a lot. I just worked on a very large building that I manage myself, and they are a very conservative building. They are going to have to go up 4.5 percent because of fixed costs. The tenants understand. Everybody reads the papers and uses the Internet, so they hear the news and they know about the real estate taxes. When they go to a gas station to fill up, it’s almost $4 a gallon now. What are you seeing in terms of foreclosures and financial distress of tenants/ unit owners now, compared to a year ago, two years ago and during the boom? I think it has pretty much quieted down. Our boards have really been very aggressive in collecting money. They normally don’t let things go beyond 60 days. We have had very few foreclosures, and the banks have been very cooperative with us. People pay on time now, and many buildings have instituted late fees. What kinds of new trends are you seeing with boards when it comes to approving new buyers? I have been doing this for 35 years and I 78 October 2012 www.TheRealDeal.com

have never seen boards go through packages the way they are now. I was just reading a blog from Fred Peters of Warburg Realty. When we do a deal with them they submit impeccable packages. He called 2012 the year of the turndown. They have seen their board turndown rate up 40 percent over last year. So boards are really on top of the packages and they are not relying on bonuses anymore. What are fees like today for third-party managing agents, and how does that compare to fees in the past? We have had basic increases in many of our buildings. They know that our costs go up and that we have to pay and insure people. If we cut their service, it hurts, so we have been getting our increases. What sorts of new rules are you seeing co-op and condo boards institute these days that you haven’t seen in the past? We have a brand new condominium on East 93rd Street, and in its bylaws it states there is no smoking and people can’t smoke outside the building. ... On rental properties we have been doing much more in-depth background on people we rent to. Many of our landlords are doing in-depth searches going several landlords back. Some of them are even having us do home visits to rent to prospective tenants. They are very concerned not only that they can pay the rent, but also the type of tenant they are going to be getting. Many years ago, we used to do home visits, so it is interesting to see this come back. Are there any new (and ﬁnancially burdensome) laws that residential buildings in NYC have to deal with these days? Those buildings burning No. 6 oil have to go through the boiler upgrade process, and it is going to be extremely expensive. The stack that goes to the roof ... can cost up to $10,000 a ﬂoor to install. That’s a tremendous expense when you are talking about a 20-story building, plus the boiler must be changed.

Neil Davidowitz

president, Orsid Realty How are NYC building owners spending money to maintain their buildings today? Rising costs in real estate taxes, labor and energy have led to a careful review and ongoing monitoring of discretionary expenses. It is a difﬁcult balancing act. We are constantly looking for cost savings, but do not want to detrimentally affect the value of individual apartments and quality of life for residents.

Are management firms expanding into new arenas to stay competitive? Management firms are offering new techniques in communication, energy management, expanding financial reporting, compliance monitoring, construction management and insurance and risk management. Although there are benefits to be realized, buildings should be cognizant of potential conflicts of interest. How do today’s maintenance and common charge fees compare to past fees? Management fees and condominium fees have continually increased. The primary factor has been increases in real estate taxes. Labor and energy have also affected increases. Costs have increased an average of 4 to 7 percent per annum. What is the most worrisome trend when it comes to managing buildings in NYC? Controlling operating costs to protect residents on fixed income and to avoid costly and divisive litigations. Are there any new (and financially burdensome) laws that residential buildings in NYC have to deal with these days? The city’s newly enacted site safety requirements are causing delays and significantly increased costs on façade and Local Law 11 projects. The city is making it difficult, costly and sometimes impossible to maintain our buildings.

Paul J. Herman

president, Brown Harris Stevens Residential Management, LLC What sorts of new rules are you seeing co-op and condo boards institute these days that you haven’t seen in the past? Smoking is the main one; restricting open houses and ﬁlm crews for marketing purposes; escrows for all sorts of reasons. How are NYC building owners spending money to maintain their buildings today? Boards have reviewed expenses and considered costs, but when cost-cutting measures have been presented to the owners/shareholders, nine times out of 10 residents want to maintain service levels at the same standards. This has been true since the boom.

Michael Berenson

president, AKAM Living Services Inc. and AKAM Associates Inc. How is the ﬁscal health of NYC residential buildings now compared to a year ago, two years ago and during the boom?

As with the entire real estate industry, a few of our managed properties have experienced financial challenges owing to unit owners/shareholders whose personal finances have been affected by the economy. In co-ops where subleasing had been restrictive, we might suggest a more lenient policy to allow shareholders the opportunity to cover their obligations to the building [as one possible solution]. What kinds of new capital improvements are boards spending money on today? We see boards very interested in introducing FiOS into their buildings these days, which is a cost-free [service] that adds value to buildings. What are fees like today for third-party managing agents? Our contract calls for a standard periodic fee escalation, so our fees are keeping pace with general cost-of-living increases. Coop, condo and cond-op decision-makers who are shopping for new management and are attracted by very low fee quotes should beware because management companies whose fees are very low are either struggling to stay afloat and are quoting low fees out of desperation or are not providing the level of service their clients need. In management, as in all things, you get what you pay for. What is the most positive trend when it comes to managing buildings in NYC? The rapid development of communication technology is the best thing to happen to property management. Because we must be on-call and available 24/7/365, being able to be in touch at all times. What is the most worrisome trend when it comes to managing buildings in NYC ? We heard from new client buildings that their prior management company managed their building finances by co-mingling them with other clients. We had thought that unseemly activity had been eradicated in the 1990s, but apparently some firms have reactivated it, most likely for the benefit of no one but the management company. What sorts of new issues are unit owners and boards suing over these days? Loud noise, pets, illegal washing machine installations, unapproved structural or mechanical alterations — all of these are standard causes for litigation in communal buildings like the co-ops, condos and cond-ops. The smoking issue is really heating up, and a few buildings have invested a great amount of money and energy to create a smoke-free environment. TRD www.TheRealDeal.com May 2012 75

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�� LONG ISLAND SOUND

Mysterious research island could see residential development The U.S. Department of Homeland Security is planning to shut down the animal disease research facility on Plum Island, a 840-acre island in Long Island Sound, the Hartford Courant reported. The government-owned island, long closed to the public due to the biomedical research that goes on there, is valued at somewhere be-

Plum Island

tween $50 and $80 million, according to the Courant. The federal government is now accepting public input on what should happen to the island. Options listed in a recently released Environmental Impact Statement include building about 90 housing units for 200 residents on two or three acres each, or 750 residential units, mostly second homes and rentals. The island has never had a zoning designation because it has been a federal property since 1901. But the Long Island town of Southold — which counts the island as part of its jurisdiction — said it intends to assign it to a development zone before the end of the year.

NEW JERSEY

Trenton mayor arrested on corruption charges Trenton Mayor Tony Mack was arrested last month on charges of scheming to sell city property at a fraction of its value in exchange for some $119,000 in bribes, the New York Times reported. Federal prosecutors say Mack, his brother, and his chief political benefactor, Joseph Giorgianni, arranged to receive bribes from two men who had approached the city about building a parking garage on Trenton’s East State Street. The would-be developers were in fact cooperating with federal prosecutors, who recorded the

conversations. Giorgianni, acting as the middleman, allegedly accepted several bribes intended for the mayor and said the city would sell the land for less than half of its assessed value if they paid an additional $100,000 to be split among the mayor, Giorgianni and another ofﬁcial. The site of the proposed parking garage, at 142– 144 East State Street, is currently a 7,242-square-foot parking lot owned by the city and assessed at $278,000, according to the Times

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This year, home prices in Nassau and Suffolk counties in August were higher than August 2011, Newsday reported last month. According to the Multiple Listing Service of Long Island, the median Nassau home price saw a 4.8 percent jump over last year, while Suffolk saw a more modest increase of just under 1 percent. The median Nassau sale price in August was $435,000, and $322,360 in Suffolk. Sales velocity in the two counties has also increased, with the number of home sales up 12.2 percent in Nassau and 1.8 percent in Suffolk. Nassau’s sharp price increase is likely due partly to strength in the luxury market, brokers told Newsday, as well as buyers looking to take advantage of lower mortgage interest rates. At the same time, however, Long Island has seen an increase in the number of homeowners underwater on their mortgages: In Nassau and Suffolk counties in the second quarter, 48,546 homeowners owed more on their mortgages than their homes were worth. That amounts to 9 percent of all homeowners with mortgages, compared to 8.4 percent during the same period of last year. Compiled by Russell Steinberg

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OJAI, CALIF. Actress Reese Witherspoon listed her Ojai, Calif., estate, known as Libbey Ranch, last month for $10 million, according to the Hollywood Reporter. The sevenacre Spanish Colonial estate includes a four-bedroom house, three guest cottages, a carriage house, horse stables and a swimming pool, according to the listing with Billy Rose of the Agency, a Beverly Hills–based real estate brokerage.

California California cities like San Jose and Oakland have seen sharp drops in inventory over the past year, leading to faster home sales, the Wall Street Journal reported. The number of available homes listed for sale nationwide in August fell by 18.7 percent from the same period of last year and 34.1 percent from two years ago, the Journal said. The declines were largely due to strength in many parts of the Western U.S., which are beneﬁting from strong investor demand. Of the cities with the largest year-over-year declines, some 13 were in California, led by Oakland, which posted a 58.4 percent drop in available homes for sale. Other sharp drops came in Stockton, which saw its inventory fall 45 percent from last year, and San Jose, where the number of listings fell 41.1 percent. In a number of Western cities, meanwhile, this shortage of homes on the market is resulting in faster transactions. In San Jose, for example, more than 52 percent of all new listings in August went under contract in 14 days or less. Markets in other parts of the country saw less aggressive activity, however. Fewer than 10 percent of listings in Chicago, Long Island and Boston went into contract within two weeks. Median asking prices across the country, meanwhile, were nearly ﬂat compared to one year ago, according to the Journal.

Austin Four years after filing for bankruptcy, Lehman Brothers Holdings has finally unloaded its boom-time purchase of much of downtown Austin’s office market, according to published reports. In a deal valued at $859 million (including the assumption of $626 million in debt), Lehman sold a portfolio of eight Austin office properties to a team of Thomas Properties Group, the California State Teachers’ Retirement System and Madison International Realty. The deal accounts for a large chunk of Austin’s skyline and a major portion of the city’s prime office space. Among the buildings in the portfolio is the Frost Bank Tower, a recognizable 33-story glass tower with a crownlike roof. Thomas and CalSTRS already owned a 25 percent stake in the portfolio, while Lehman — which emerged from bankruptcy earlier 82 October 2012 www.TheRealDeal.com

this year under a liquidation plan — owned a 50 percent interest. The Abu Dhabi Investment Authority owned the remaining 25 percent stake. While commercial property values have been gradually improving, the price tag is still far below the hefty $1.2 billion Lehman, Thomas and CalSTRS paid for the portfolio in 2007.

Atlanta Tishman Speyer has sold Two Alliance Center, a 29-story trophy property in Atlanta, to Highwoods Properties for $152.3 million, Commercial Property Executive reported. The 492,000-square-foot office building, developed by Tishman in 2009, is in Atlanta’s trendy Buckhead submarket. Major tenants in the high-rise include the aluminum products manufacturer Novelis, which occupies 125,200 square feet in the building, and international professional services firm Marsh & McLennan Cos., which has 123,500. Tishman had hoped to garner approximately $172.6 million, or $350 per square foot, for the property, but in the end walked away with roughly $309 per square foot. The record for the sale of a Buckhead office property was set in 2011, when Parkway Properties picked up 3344 Peachtree for $167.3 million, or $346 per square foot.

Dallas Southwest Airlines broke ground on a $100 million, 492,000-squarefoot expansion of its Dallas headquarters, the Dallas Business Journal reported. The company, which is headquartered at 2702 Love Field Drive, is constructing two buildings across the street: a two-story, 100,000-square-foot operations building, and a four-story, 392,000square-foot ofﬁce and training property. The expansion will allow Southwest to house some 5,000 Dallas employees, up from the 4,000 it has now. Construction is slated for completion late next year, while occupancy will begin in 2014. According to data from Jones Lang LaSalle, Dallas had a total ofﬁce vacancy of nearly 36 million square feet, or 22.4 percent, in the second quarter of this year, and the average asking rent was $20.70 per square foot. Compiled by Zachary Kussin

WASHINGTON, D.C. Illinois congressman Jesse Jackson, Jr., listed his Washington, D.C., Victorian-style townhouse last month for $2.5 million, the Chicago Tribune reJesse Jackson, Jr. ported. For the past three months, Jackson has been on a medical leave of absence after receiving treatment for bipolar disorder and has not returned to the Capitol, though he faces reelection in November. The congressman purchased the property in 1998 for $575,000. The 2,936-square-foot townhouse has four bedrooms, ﬁve ﬁreplaces and a rooftop deck.

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CIM and Sapir seek $1.5 billion for 11 Madison Park The 2.3 million-square-foot ofﬁce tower at 11 Madison Park has hit the market with a sales price of $1.5 billion, the Wall Street Journal reported last month. To market the property, owners CIM Group and the Sapir Organization have tapped a CBRE Group team led by the ﬁrm’s vice chairwoman, Darcy Stacom. Sapir bought the building in 2003 for $675 million; CIM Group purchased a 49 percent stake in the property for $469 million in 2010. The building is about 80 percent occupied by Credit Suisse, which pays a below-market rent of $19 per square foot. That lease expires in 2017. The sale “will produce a very strong cash-on-cash return,” Stacom told the Journal.

Morgan Stanley seeks $350 million for Marriott East Side Morgan Stanley’s Prime Property Fund put its New York Marriott East Side on the block last month for $350 million. The fund hired Eastdil Secured to Marriott East Side market the 646-room hotel, at 525 Lexington Avenue and 49th Street, the Journal reported. Morgan Stanley acquired the hotel in late 2005 for $287 million and spent an additional $26 million on renovations. The debt-free property has a net operating income of $10 to $11 million, which is about half of what it took in during the boom, the Journal said. The hotel has a longterm management agreement with Marriott, but

Prime Property has secured approvals to convert the 16thﬂoor concierge lounge into 10 additional suites.

LES retail building on the market A three-story retail property at 126-130 Delancey Street is on the market with an asking price of $22.75 million. The building, which has approximately 22,875 126-130 Delancey Street square feet above grade, is located on the northwest corner of Delancey and Norfolk streets. The property’s retail spaces are fully occupied by three tenants: Payless Shoe Source, which has 3,300 square feet on the ground floor; the Children’s Place, which has 3,700 square feet on the ground floor and 2,500 square feet on the lower level; and the Comprehensive Center for Rehabilitation, which has 3,000 square feet on the lower level and 15,875 square feet on the entire second and third floors. Michael DeCheser of Massey Knakal is handling the sale.

Tribeca retail space hits the market A Tribeca retail condo that houses upscale Japanese restaurant Megu hit the market last month with an asking price of $17 million. The 12,000-square-foot space, located at 62–66 Thomas Street between Church Street and West Broadway, was listed for sale after the owner, Zar Property, received a number of unsolicited offers.

“We have received so many credible offers to purchase the property that a sale is a possibility now, if our pricing is met,” Zar principal Dario Zar said. Megu recently recommitted to the retail space for another nine years, according to Eastern Consolidated’s David Schechtman, who is marketing the space with colleagues Lipa Lieberman and Adelaide Polsinelli.

Inwood apartment building for sale A six-story apartment building at 4720 Broadway that has been approved for a condo conversion is for sale with an asking price of $12.5 million. The 56,852-square-foot elevator property, located at the corner of Arden Street overlooking Fort Tryon Park, has 48 apartments, one retail space and an ofﬁce unit. The residential units consist of 42 rent-stabilized apartments, one rent-controlled apartment and ﬁve vacant apartments, which can be converted to free-market status. “This of4720 Broadway fering is unique in that you have a tremendous amount of rental upside, in addition to a well-advanced condo conversion play,” Victor Sozio, vice president of Ariel Property Advisors, which is marketing the building, said in a news release. “A no-action condominium offering plan was approved in May.” Compiled by Linden Lim

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Deal Sheet summary

The Deal Sheet, on pages 88 to 96, covers transactions from 8/11/12 through 9/10/12. Please submit future deals to deals@therealdeal.com.

Sales

Overview

By type

Property sales Deals Dollars

47 $1,073,170,000

Financing Buildings Aggregate value

Development

Hotel

Industrial

Mixed-Use

Mixed-Use Multi-family

Transactions

By dollar volume (in millions)

161.04 0 30.00 16.50

Multi-family

467.39

Office

327.40

Retail

70.84

$67,200,000

Leases Office

Retail

Total

Leases square feet Office

552,632

Retail

133,594

Total

686,226

Office leases Office leases by industry Industry

Office leases sf by industry Leases

Industry

Top tenant reps for office leasing by sf

Square feet leased

Tenant representative

Square feet leased

Consulting

3,675

Studley

Education

7,986

Jones Lang LaSalle

143,100

Energy

1,514

Cushman & Wakefield

108,370

Entertainment

Fashion*

Financial

Food & Beverage

Health & Beauty

Legal

2,000

The Vortex Group

27,560

117,178

Prime Realty

15,000

99,335

Adams & Co.

14,258

1,150

Rice & Associates

13,664

7,300

Kenneth L. Beilin Commercial

8,395

67,892

Pinnacle Realty

7,200

Benchmark Properties

6,570

Cresa

6,200

CBRE Group

5,625

Williamson Picket Gross

5,000

Cogent Realty

3,969

NGO

40,116

Other

39,600

Publishing

Real Estate

Research

Science & Technology

Textiles

154,671

3,750 27,000 7,000 85,257 41,879

Norman Bobrow & Co.

3,675

Signature Partners

2,675

Retail leases Top tenant reps for leasing by sf

Retail leases by industry

Broker

Day Care

18,300

Square feet leased

Retail leases sf by industry

Cushman & Wakefield

57,000

Fashion

71,100

NAI Friedland Realty

32,051

Fine Arts

5,600 11,950

KZA Realty

7,300

Food & Beverage

Rice & Associates

5,600

Jewelry

Newmark Grubb Knight Frank

4,400

Other

GFI Realty

3,000

Robert K. Futterman & Assoc.

2,000

Right Time Realty

1,800

Thor High Street Advisors

1,200

SRS Urban

1,000

Dartmouth Urban

850

Neal Cabot Ohm

750

(*includes showroom space)

850 25,794

www.www.TheRealDeal.com October 2012 87

Deal Sheet

Commercial deals in New York City Deals are listed from largest to smallest in square feet leased or bought. The Deal Sheet covers transactions from 8/11/12 to 9/10/12. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

1120 Sixth Ave

96,350

Perry Ellis International / R. Martin, M. Astrachan, A. Chudnoff, B. Lane, Jones Lang LaSalle

Edison Properties; Huron Consulting / J. Cefaly, M. Burgio, C&W; L. Kiell, D. Neye, Huron Consulting

The fashion company signed a long-term lease to consolidate its menswear division into one location, the New York Post reported. The tenant, which has offices at 1114 Sixth Avenue and 42 West 39th Street, signed a direct lease with the landlord for 40,000 square feet and subleased 56,350 square feet from Huron Consulting. The sublease will convert to a direct lease after several years, according to the Post.

685 Third Ave

74,349

Salesforce.com / Gus Field, C&W

TIAA-CREF / R. Alexander, P. Amrich, A. Dattoma, H. Fiddle, Z. Freeman, M. Concannon, CBRE

The enterprise cloud computing company signed a 10-year lease for the entire sixth and seventh floors, as well as part of the eighth floor. The tenant is relocating and expanding from a smaller, 16,350-square-foot space at 2 Grand Central Tower.

1251 Sixth Ave

69,418

NM Rothschild & Sons / Michael Goldman, Studley

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

The U.S. subsidiary of U.K. investment firm NM Rothschild & Sons signed a new 10-year lease to relocate within the building, from the 51st and 44th floors to the entire 34th floor and part of the 33rd floor, the New York Post reported. The asking rent was $92 per square foot, according to the paper.

2 World Financial Center

43,374

Sedgwick / D. Goldstein, G. Taubin, Studley

Brookfield Office Properties / n/a

The San Francisco-based international law firm signed a 10-year lease to relocate to 125 Broad Street. The tenant is reducing its New York footprint, moving from about 75,446 square feet at the Broad Street office.

350 Fifth Ave (Empire State Building)

41,879

Kaltex / M. Goldman, C. Conklin, D. Posey, Studley

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

The textiles firm signed an expansion lease. The tenant, which has occupied space in the building for more than 30 years, is taking the entire 70th floor and a portion of the 71st floor.

740 Broadway and 2-10 Astor Place

31,721

Hetrick-Martin Institute / C. Lyon, T. Kaufman, R. Murphy, C&W

n/a / J. Gural, B. Steinwurtzel, D. Vogel, Newmark Grubb Knight Frank

The organization serving the LGBTQ youth community signed a lease renewal and expansion at 740 Broadway and the adjoining 2-10 Astor Place. The tenant will remain on the third floor at 2-10 Astor Place and on the third floor of 740 Broadway, where it will also occupy the entire eighth floor.

745 Fifth Ave

27,000

Carr Workplaces / A. Liebersohn, B. Wunsch, Jones Lang LaSalle

Paramount Group / Heather Kahn, Paramount Group

The executive suites firm signed a new 10-year lease for the entire fifth floor.

551 Fifth Ave

16,018

Schoeman Updike & Kaufman LLP / F. Marek, O. Petrovic, The Vortex Group; K. Friedland, Garth Organization

The Feil Organization / Kevin Driscoll, The Feil Organization

The law firm signed a lease for part of the 12th floor.

38 Delancey St

15,000

Kings Day Care Center / Stanley Piesh, Prime Realty

Yang Tze River Realty Corp. / Michael Chen, Bond New York

The adult day care center signed a 10-year office lease.

1140 Sixth Ave

12,750

Knighthead Capital Management / S. Panzer, J. Fischer, Jones Lang LaSalle

Equity Office Properties / D. Neye, R. Masiello, Jones Lang LaSalle; J. Glick, Equity Office

The hedge fund signed a lease for the entire 12th floor. The company is relocating from 623 Fifth Avenue.

950 Third Ave

11,542

Coller Capital / S. Grayson, F. Marek, The Vortex Group

n/a / n/a

The secondary-market investment firm signed a lease for the entire 29th floor.

231 West 39th St

9,079

Stargate Apparel Inc. / James Buslik, Jeff Buslik, Adams & Co.

n/a / James Buslik, Jeff Buslik, Adams & Co.

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

462 Seventh Ave

8,500

Konner Teitelbaum & Gallagher PC / Grant Greenspan, Kaufman Organization

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

The law firm signed a 10-year lease renewal. The reported asking rent was in the high $30s to low $40s per square foot.

75 Broad St

8,395

Urban Resource Institute / Ken Beilin, Kenneth L. Beilin Commercial

JEMB Realty / Frank Cento, C&W

The nonprofit signed a 10-year lease for its New York headquarters. The reported asking rent was $31 per square foot.

132 West 36th St

7,986

The New York Real Estate Institute / S. Kaufman, B. Raskob, Kaufman Organization

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

The real estate education company signed an eight-year lease renewal. The reported asking rent was in the mid-$30s per square foot. The new space is larger by 1,470 square feet, compared to its former space at 132 West 36th Street.

43-10 23rd St

7,200

145 Antiques / B. Burke, P. Bralower, Pinnacle Realty

n/a / B. Burke, P. Bralower, Pinnacle Realty

The antique company signed a lease for loft office space.

38 West 21st St

7,000

Kelton Research / Deborah van der Heyden, Jones Lang LaSalle

Jack Vogel & Associates / Doug Rice, Rice & Associates

The marketing research company signed a lease.

1385 Broadway

6,200

AMOREPACIFIC / Ed Wartels, Cresa

n/a / D. Gaines, D. Malawer, J. Serko, G. Greenspan, C&W

The South Korean cosmetics company signed a 10-year lease.

30 West 24th St

5,625

Winklevoss Capital Management / M. Blum, R. Zimbalist, CBRE

Twenty Three R.P. Associates / J. Buslik, A. Bonett, Adams & Co.

The venture capital firm signed a five-year lease. The reported asking rent was $39 per square foot.

515 West 20th St

5,000

The Soho House Group / P. Gross, J. Gross, Williamson Picket Gross

Kalimian / Justin DiMare, Newmark Grubb Knight Frank

The private members club for the arts and media industries signed a 10-year lease.

214 Sullivan St

4,200

Mr. X / Elizabeth Juviler, Rice & Associates

n/a / n/a

The tenant signed a lease.

26 Bruckner Blvd (The Bronx)

4,000

Winn Residential LLC / n/a

26 Bruckner LLC / Steve Kaufman, NAI Friedland Realty

The tenant signed a lease.

19 Fulton St

3,969

Aithent Inc. / Mitchell Waldman, Cogent Realty

n/a / Alan Wolpert, Seaport Associates

The information technology firm signed a lease. The reported asking rent was $34 per square foot.

60 Madison Ave

3,750

The New Republic / Elie Reiss, Rice & Associates

Madison Sixty LLC / Jovani Rampersad, The Moinian Group

The magazine signed a lease.

1350 Broadway

3,675

WCD Group / J. Berger, J. Senior, Norman Bobrow & Co.

W&H Properties / R. Silver, A. Sciacca, N. Rubin, Newmark Grubb Knight Frank

The environmental consulting firm signed a lease on the 19th floor.

35 West 36th St

3,400

Staple Design / M. Beyda, F. Rodriguez, Benchmark Properties

3536 Associates LLC / Robert Kaplan, Hidrock Realty

The apparel brand signed a lease on the seventh floor.

35 West 36th St

3,170

Born Fly / M. Beyda, F. Rodriguez, Benchmark Properties

3536 Associates LLC / Robert Kaplan, Hidrock Realty

The apparel company signed a lease on the third floor.

88 October 2012 www.TheRealDeal.com

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Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

514 West 24th St

3,000

Patrick Dawson / Earl Bateman, Rice & Associates

HAD Corp. / Michelle Ball, Rudd Realty

The tenant signed a lease.

135 West 20th St

2,675

Cmply Inc. / Mike Pinney, Signature Partners

A and G Real Estate LLC / Elissa Groh, Rice & Associates

The Internet software and services firm signed a lease.

231 West 39th St

2,605

Zinc & Matty M / James Buslik, Jeff Buslik, Adams & Co.

n/a / James Buslik, Jeff Buslik, Adams & Co.

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

370 Lexington Ave

2,300

Conviva Inc. / D. Glassman, B. San Antonio, C&W

Sherwood Equities / A. Weissleder, J. Burrowes, Sherwood Equities

The California-based Web technology firm signed a three-year lease for prebuilt office space on the sixth floor.

285 West Broadway

2,000

Doug Liman Inc. / n/a

285 West Broadway Associates LP / Joshua Salon, Salon Realty

The movie producer and director signed a two-year lease. The reported asking rent was $43 per square foot.

60 Madison Ave

1,964

Computer Solutions International / Jake Cunningham, Synergy Realty

The Moinian Group / Jovani Rampersad, Moinian

The reseller of business applications and software solutions signed a lease.

231 West 39th St

1,556

Between the Notes LLC / James Buslik, Jeff Buslik, Adams & Co.

n/a / James Buslik, Jeff Buslik, Adams & Co.

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

111 John St

1,514

Utility Expense Reduction LLC / Elie Reiss, Rice & Associates

Pearl St Parking Corp / David Braun, Braun Management

The energy services company signed a lease.

247 West 36th St

1,200

MyClean.com / Elie Reiss, Rice & Associates

247 Realty Associates / Shrage Rokosz, REDI Management Inc.

The cleaning services provider signed a lease.

285 West Broadway

1,150

World Sake Imports LLC / n/a

285 West Broadway Associates LP / Joshua Salon, Salon Realty

The sake importer signed a five-year lease. The reported asking rent was $42 per square foot.

17 Vestry St

1,100

Mackenzie Chambers Pilates / Chris Salizzoni, A.C. Lawrence & Co.

Paula Chin / n/a

The pilates studio signed a two-year lease for the second-floor office space. The reported asking rent was $37 per square foot.

231 West 39th St

1,018

Judith & Charles / James Buslik, Jeff Buslik, Adams & Co.

n/a / James Buslik, Jeff Buslik, Adams & Co.

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

Retail leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

589 Fifth Ave

57,000

H&M / R. Gibson, T. Citron, C&W

Western Management / Jedd Nero, CBRE

The apparel company signed a long-term lease for another location, which will serve as its flagship store. The new space, consisting of the first through fifth floors and a below-grade level, will be H&M’s largest store in the world.

50 Belmont Ave (Brooklyn)

11,000

Fiesta Adult Day Care LLC / Rick Stassa, NAI Friedland Realty

M & M Realty Corp. / Rick Stassa, NAI Friedland Realty

The adult day care center signed a lease.

2382 Creston Ave (The Bronx)

9,500

Creston Avenue Housing / NAI Friedland Realty

Pioneer Parking / NAI Friedland Realty

The tenant signed a retail lease.

3305 Third Ave

7,300

Forever Young Social Adult Day Care / Kathy Zamechansky, KZA Realty

TNS Development Group / Kathy Zamechansky, KZA Realty

The adult day care center inked a lease.

2511 Westchester Ave (The Bronx)

7,111

Dormitory Authority / NAI Friedland Realty

Abeken Apartments / NAI Friedland Realty

The state of New York’s Dormitory Authority leased retail space.

261-263 Canal St

6,500

Necessary Clothing / n/a

267 Canal Street Corp. / Represented in-house

The discount fashion retailer signed a lease. The reported asking rent was $250 per square foot. The company has four stores clustered on Broadway in Soho and one in Noho.

531 West 25th St

5,600

Driscoll Babcock Galleries / Earl Bateman, Rice & Associates

Related Group / n/a

The art gallery signed a retail lease.

145 East 57th St

4,143

Hammacher Schlemmer / n/a

Malzoni Group / n/a

The gadgets and gifts retailer signed a lease renewal, the New York Post reported. The company, which net leased the entire 53,602-square-foot building, will occupy the retail space on the first three floors and lower floors, totaling 4,143 square feet, according to PropertyShark.com. The tenant will sublease the upper floors to office tenants, according to the Post.

315 Broadway

3,600

Wendy’s International Inc. / J. Pruger, K. Ota, Newmark Grubb Knight Frank

315 Broadway Associates LLC / Ray Abramcyk, The Lawrence Group

The fast-food chain signed a lease for another location. The space has an additional 3,600 square feet in the basement.

1405 Fifth Ave

3,040

Rent-A-Center / S. Lorenzo, J. Rivera, NAI Friedland Realty

Yuco Management / S. Lorenzo, J. Rivera, NAI Friedland Realty

The rent-to-own consumer products retailer signed a lease.

55 Nassau St (Brooklyn)

3,000

Oak / Daniel Blumberg, GFI Realty

n/a / Daniel Blumberg, GFI Realty

The clothing retailer signed a lease.

217 Fifth Ave (Brooklyn)

2,000

Brooklyn Poppy Inc. / n/a

217 5th Ave Owners Corp. / Evan Duby, Prudential Douglas Elliman

The women’s apparel retailer signed a lease.

100 Maiden Ln

2,000

Roti Mediterranean Grill / M. Finkel, G. Covey, A. Schuster, RKF

Maiden Lane Properties / D. Rubens, L. Block, Winick Realty

The restaurant chain signed a lease for its first New York location, the New York Post reported. The asking rent was $150 per square foot, according to the paper.

154 Seventh Ave (Brooklyn)

2,000

Norman & Jules LLC / n/a

Gary Kasakian / Evan Duby, Prudential Douglas Elliman

The children’s toy store signed a lease.

8000 Cooper Ave (Queens)

1,800

Moe’s Sneaker Spot / Joe Ibrahim, Right Time Realty

Macerich / n/a

The sneaker retailer signed a 10-year lease at the Shops at Atlas Park shopping center for its fourth New York City location.

3555 Johnson Ave (The Bronx)

1,400

Menchies Frozen Yogurt / R. Herko, D. Scotto, NAI Friedland Realty

Friedland Properties / R. Herko, D. Scotto, NAI Friedland Realty

The frozen yogurt shop signed a lease.

750 Columbus Ave

1,200

Birch Coffee / Kyle Allen, Thor High Street Advisors

n/a / B. Cohen, J. Pennington, Ripco Real Estate

The café signed a lease at the base of the Archstone rental building. The shop will double as a community library.

484 Ninth Ave

1,000

Dunkin’ Donuts / n/a

n/a / Ryan Horvath, Massey Knakal

The coffee and donuts chain signed a lease for another location. The space has an additional 1,000 square feet of basement space, 25 feet of frontage on Ninth Avenue and 37 feet of frontage on West 37th Street.

414 Amsterdam Ave

1,000

Pinkberry / Mark Kapnick, SRS Urban

Rudd Realty / Michelle Ball, Rudd Realty

The frozen yogurt chain signed a 12-year lease for its 16th Manhattan location.

415 Myrtle Ave (Brooklyn)

1,000

n/a / n/a

n/a / Andrew Clemens, Massey Knakal

A restaurant operator signed a lease.

135 Prince St

850

Uno de 50 / Joe Mastromonaco, Dartmouth Urban

Slamit LLC / n/a

The Spain-based jeweler signed a lease for its first New York City store. The company plans to open additional locations in the city, according to Dartmouth Urban, the tenant’s representative.

90 October 2012 www.TheRealDeal.com

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Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

118 Spring St

800

Stuart Weitzman / J. Podell, I. Lerner, C&W; J. Pruger, Newmark Grubb Knight Frank

n/a / n/a

The shoe retailer signed a lease for its fifth NYC location, the New York Post reported.

1501 Broadway

750

Ben & Jerry’s / Neal Ohm, Neal Cabot Ohm

Paramount Leasehold LP / J. Roseman, J. Maurer, Newmark Grubb Knight Frank

The ice cream retailer signed a 10-year lease. The reported asking rent was $500 per square foot.

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

135 West 50th St

Land under 23-story office bldg

TPF Operating REIT / Brad Siderow, Siderow Organization;

14 E. 60th St. Associates / D. Stacom, B. Shanahan, CBRE

The UBS-controlled REIT acquired the land underneath the Sports Illustrated Building for $279 million, the New York Post reported, but plans to keep the building it owns on the site under a long-term operating lease. Independent broker David Werner was also reportedly involved in the deal.

743-763 Eighth Ave

Development site

Riu Hotels & Resorts / n/a

Glenwood Management / n/a

The development site, comprised of five parcels, sold for $111 million. The properties would allow the development of a building between 260,000 and 320,000 square feet, according to published reports. Last year, Glenwood executive vice president Gary Jacob said in an interview that his firm would build a mixed-use development at the site.

354 East 91st St

22-story, 144,000 sf apt. bldg, 163 units total

Carmel Partners / n/a

Forkosh Development Group / n/a

The property sold for $95 million, or about $582,822 per residential unit. In addition to the apartments, the building has 8,902 square feet of retail space, which is occupied by Duane Reade.

88 Lexington Ave

17-story, 152,310 sf apt. bldg, 180 units total

Westbrook Partners / n/a

Halstead Management Company / n/a

The rental building sold for $82 million. The seller acquired the property for $32 million in April 2007 from an entity named New Bilota Equities Coporation NV.

393 West End Ave

134,000 sf apt. bldg, 113 units total

Simon Development Group; Cube Capital / n/a

393 West End Avenue Holdings LLC / P. Leibowitz, D. Stacom, B. Shanahan, R. Garrish, CBRE

The prewar apartment building sold for $68.3 million. This is the second New York City joint venture for Simon Development Group and Cube Capital.

Manhattan portfolio

7 apt. bldgs, 140 units total

Jared Kushner / n/a

Benchmark Real Estate / Aaron Jungreis, Rosewood Realty

The package of buildings sold for $53 million, the New York Post reported. The properties, which have a combined 11 stores, are located at 54 Barrow Street, 120 MacDougal Street, 267 East 10th Street, 435 East 9th Street, 156 Sullivan Street, 311 East 11th Street and 311 East 6th Street.

444 Park Ave South

14-story, 90,000 sf office bldg

Moin Development; Sam Nazarian / David Berger, Rosewood Realty

444 Park Ave. South Associates LLC / David Berger, Rosewood Realty

The property sold for $45 million. The buyers plan to spend an additional $40 million to add five floors to the building and convert it into a boutique hotel, slated to open in the second quarter of 2013.

1059 Third Ave

52,000 buildable sf development site

Foreign entity / Clint Olsen, Massey Knakal

LLC associated with the Battaglia family / T. Siegel, K. Zhu, Marcus & Millichap

The property sold for $31.5 million, or about $600 per buildable square foot. The foreign buyer, which has not developed real estate in New York City before, will demolish the building and develop luxury condominiums on the site.

501 Broadway

9,200 sf retail condo

Vornado / Edan Cohen, Itzhaki Properties

Local real estate investor / Amir Aframian, Itzhaki Properties

The retail condo sold for $31 million, or $3,600 per square foot, the New York Post reported. The space consists of 3,800 square feet on the ground floor, 4,800 square feet of selling space in the basement, 500 square feet of storage space and a 484-square-foot mechanical mezzanine.

385 Gerard Ave (The Bronx)

410,000 sf industrial bldg

Public Storage / Jordan Gosin, Newmark Grubb Knight Frank

R Squared LLC / Bob Knakal, Massey Knakal

The warehouse building sold for about $30 million, the Observer reported.

515 East 72nd St

14 units in apt. bldg

Memorial Sloan Kettering Cancer Center / n/a

n/a / n/a

Fourteen units at the condominium tower formerly known as Miraval Living sold for $29.3 million. The cancer center “has purchased residences for longterm use by their senior medical doctors and staff at 515 East 72nd Street,” a spokesperson for the sponsor said in a statement. Christine Hickey, a spokesperson for the hospital, was not able to immediately comment on the deal, but noted that “we often acquire apartments for staff.”

57-63 Greene St

13,700 sf retail condo

Yaron Jacobi / n/a

Aion Partners / David Schechtman, Eastern Consolidated

The property sold for $17.25 million.

Upper West Side portfolio

Four 5-story apt. bldgs, 20 units total

The Naftali Group; Praedium Group / n/a

n/a / A. Aderet, I. Rossano, A. Doshi, Besen & Associates

The package of contiguous apartment buildings sold for $17.05 million. The properties are located at 176, 178, 180 and 182 West 82nd Street.

163, 165 and 167 Ludlow St

3 apt. bldgs

Magnum Real Estate Group / n/a

n/a / n/a

The contiguous walk-up buildings with ground-floor retail sold for $16.5 million, the Lo-Down reported.

30-60 29th St (Queens)

6-story, 55,373 sf apt. bldg

Grouper LLC / Aaron Jungreis, Rosewood Realty

n/a / Aaron Jungreis, Rosewood Realty

The elevator building sold for $15.95 million. The price represents a gross rent multiple of 11.8.

160-08 Jamaica Ave (Queens)

156,000 buildable sf development site

United American Land / Yosef Katz, GFI Realty

Petra Capital Management / Yosef Katz, GFI Realty

The property sold for $14 million. The site is currently configured as a 57,000square-foot, multilevel building. The property will be redeveloped and leased to a big box retailer.

62-64 East 34th St

6-story, 15,380 sf mixed-use bldg

Private investor / S. Shkury, V. Sozio, M. Tortorici, Ariel Property Advisors

Private investment partnership / S. Shkury, V. Sozio, M. Tortorici, Ariel Property Advisors

The property sold for $13 million.

102 Greene St

3-story, 7,000 sf apt. bldg

BLDG Management / n/a

102 Greene Street Realty / B. Quinlan, T. Coll, Charles Rutenberg Realty

The property sold for $11.9 million. The building has a retail space, which is occupied by shoe seller Galeria Melissa, and two floor-through apartments.

750 10th Ave

5-story, 15,506 sf apt. bldg, 20 units total

Local investor / Ohad Babo, GFI Realty

n/a / B. Jacobov, S. Paneth, GFI Realty

The walk-up building sold for $9.45 million, or $600 per square foot.

352 and 354 West 18th St

Two 5-story apt. bldgs, 32 units total

n/a / HPNY

The walk-up buildings sold for $9 million.

4112 Fourth Ave (Brooklyn)

5-story, 43,280 sf apt. bldg, 57 units total

Local family / Erik Yankelovich, GFI Realty

Local investors / Joseph Landau, GFI Realty

The prewar walk-up building sold for $8.3 million. The price represents a gross rent multiple of about 10. In addition to the apartments, the property has seven retail spaces.

119 Hester St

6-story, 17,025 sf apt. bldg, 25 units total

n/a / Paul Italia, Friedman-Roth Realty

n/a / Eric Lupo, Friedman-Roth Realty

The walk-up property with five ground-floor retail spaces sold for $7.4 million.

92 October 2012 www.TheRealDeal.com

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Real Deal - October 2012 - Final.indd 1

350 Park Avenue New York, NY Office Property 585,000 Sq. Ft.

$300,000,000

Balance Sheet Financing

Columbus Square New York, NY Retail Portfolio 500,000 Sq. Ft.

$280,000,000

Balance Sheet Financing

568 Broadway New York, NY Office Property 350,000 Sq. Ft.

$200,000,000

Conduit Financing

B&L Portfolio New York, NY Multifamily Portfolio 25 Buildings

$160,000,000

Agency and Balance Sheet Financing

9/21/12 1:00 PM

Buys continued Address

Size

Buyer/ Representative

Seller / Representative

Notes

Harlem portfolio

Three 5-story apt. bldgs and 1 vacant lot

n/a / Orly Hazan, Besen & Associates

n/a / Shoy McKen, Besen & Associates

The package sold for $6.75 million, or $171 per square foot. The price represents a capitalization rate of 6.4 percent and a gross rent multiple of 10.3. The properties are located at 2261, 2265, 2267-2269 and 2271-2273 Adam Clayton Powell Boulevard.

16 West 48th St

7,158 sf retail condo

n/a / n/a

n/a / B. Knakal, J. Nelson, Massey Knakal

The retail condo sold for $5.5 million. The space, located at the base of the Centria condo, is ideally suited for a restaurant, according to the news release from Massey Knakal, with a pre-installed kitchen flue and smog hog, a doublewide staircase to the cellar and private elevator.

1 West 182nd St (The Bronx)

6-story, 58,600 sf apt. bldg, 61 units total

n/a / Amit Doshi, Besen & Associates

The corner elevator building sold for $5.05 million, or $86 per square foot. The price represents a capitalization rate of 9.9 percent and a gross rent multiple of 5.9.

795 Broadway

2-story retail bldg

n/a / HPNY

The property sold for $5.04 million.

1007 Lexington Ave

5-story, 4,165 sf apt. bldg, 8 units total

n/a / n/a

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

The property sold for $4.55 million, or $1,092 per square foot. In addition to the residential units, the building has a retail space on the ground floor.

316-320 West 118th St

4-story, 22,340 sf garage bldg

Real estate development firm / S. Shkury, V. Sozio, M. Tortorici, Ariel Property Advisors

Private owner / S. Shkury, V. Sozio, M. Tortorici, Ariel Property Advisors

The property sold for $4.5 million. The building contains 3,500 square feet of below-grade space and has 1,877 square feet of available air rights.

208 Fifth Ave

3,700-sf retail co-op

n/a / Iris Rossano, Besen & Associates

n/a / Hilly Soleiman, Besen & Associates

The retail co-op sold for $3.9 million, or $1,054 per square foot. The price represents a capitalization rate of 7.7 percent and a gross rent multiple of 10.5.

203 West 144th St

6-story, 21,678 sf apt. bldg, 28 units total

Black Spruce Partners III LLC / Aaron Jungreis, Rosewood Realty

Standard 144 Venture LLC / Aaron Jungreis, Rosewood Realty

The walk-up sold for $3.7 million. In addition to the apartments, the building has two commercial units, one of which is occupied by a church and the other is vacant.

715 East 5th St

5-story, 9,300 sf apt. bldg, 20 units total

n/a / HPNY

The walk-up building sold for $3.65 million.

29-31 East 22nd St

5,600 sf retail condo

The Pen and Brush / P. Gavin, R. Haberman, Prudential Doulgas Elliman

Keith Mervis / Nick Poshkus, Corcoran

The retail condo formerly occupied by tabletop and gift seller Carole Stupell sold for $3.65 million, the New York Post reported. The space consists of 3,400 square feet at ground level with 2,200 square feet of lower-level space.

1429 Third Ave

4-story, 3,381 sf mixed-use bldg

n/a / n/a

n/a / Thomas Gammino Jr., Massey Knakal

The property sold for $3.5 million, or $1,035 per square foot. The building has about 7,400 square feet of air rights for future development.

2481 Adam Clayton Powell Jr. Blvd

1-story, 7,492 sf comm. bldg

Private investment group / n/a

Private owner / V. Sozio, S. Shkury, M. Tortorici, Ariel Property Advisors

The property sold for $3.4 million.

592-600 Union Ave (The Bronx)

6-story, 33,890 sf apt. bldg, 43 units total

n/a / Lev Mavashev, Besen & Associates

n/a / A. Doshi, L. Blumberg, Besen & Associates

The walk-up building sold for $3.3 million, or $97 per square foot. The price represents a capitalization rate of 9.98 percent and a gross rent multiple of 5.3.

117 Avenue A

4-story, 6,000 sf apt. bldg, 3 units total

n/a / HPNY

The walk-up building with ground-floor retail sold for $3.05 million.

1557 Second Ave

4-story, 4,349 sf apt. bldg, 15 units total

n/a / n/a

n/a / Thomas Gammino Jr., Massey Knakal

The property sold for $3 million, or about $690 per square foot. Thirteen of the residential units are single-room occupancy. The building has a commercial unit on the ground floor.

529 West 151st St

5-story, 13,916 sf apt. bldg, 21 units total

Monarch Realty Group / Michael Guttman, Rosewood Realty

ApAmsterdam 529 LLC / Aaron Jungreis, Rosewood Realty

The walk-up sold for $2.34 million.

512 West 180th St

5-story, 17,450 sf apt. bldg, 20 units total

n/a / Josh Orlander, GFI Realty

The walk-up building sold for $2 million. The price represents a gross rent multiple of 8.

214-11-13 35th Ave (Queens)

19,500 sf lot

n/a / n/a

n/a / Stephen Preuss, Massey Knakal

The property sold for $1.82 million. A one-story, 5,740-square-foot building occupies the site, while the remaining 13,760 square feet of land is currently being used for parking and outdoor activity.

277 West 150th St

5-story, 14,544 sf apt. bldg, 20 units total

KPP 150th Street LLC / n/a

n/a / n/a

The walk-up building sold for $1.58 million. The price represents a capitalization rate of 6.83 percent and a gross rent multiple of 6.19. The apartments consist of 17 rent-stabilized units and three rent-controlled units.

1978 Madison Ave

4-story, 4,260 sf apt. bldg, 10 units total

S&L 1978 Madison Avenue LLC / n/a

Real estate investment group / V. Sozio, J. Deutch, Ariel Property Advisors

The property sold for $1.51 million.

116 East 117th St

4-story, 4,470 sf apt. bldg, 10 units total

Local investor / Samuel Kooris, Rosewood Realty

117 Alexandria Property LLC / Michael Kerwin, Rosewood Realty

The walk-up building sold for $1.43 million.

25 Hope St (Brooklyn)

Development site

n/a / Shay Zach, Itzhaki Properties

The property sold for $1.37 million, or $220 per square foot. The new owner plans to build a multi-family rental building.

Manhattan development portfolio

5 vacant lots, 8,227 sf total

Private investor / S. Shkury, V. Sozio, M. Tortorici, Ariel Property Advisors

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

The five vacant lots sold for $1.35 million. The properties are located at 1840, 1846 and 1854-1856 Park Avenue and 61 East 126th Street.

1309 Clinton Ave (The Bronx)

5-story, 12,710 sf apt. bldg, 10 units total

1st Property Clinton Realty LLC / Alan Zucco, Besen & Associates

1309 Clinton Ave LLC / Alan Zucco, Besen & Associates

The walk-up building sold for $1.3 million, or $102 per square foot. The price represents a capitalization rate of 11.05 percent and a gross rent multiple of 5.9.

9425 Fifth Ave (Brooklyn)

3-story, 4,576 sf apt. bldg, 4 units total

n/a / n/a

n/a / Stephen Palmese, Massey Knakal

The property sold for $1.03 million, or $225 per square foot. The price for the building, which has two retail tenants, represents a capitalization rate of 6.3 percent.

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

66-36 Yellowstone Blvd (Queens)

240-unit apt. bldg

66-36 Yellowstone Boulevard Cooperative Owners Inc. / n/a

NCB / n/a

An $11 million first mortgage was arranged for the building.

870 United Nations Plaza

167-unit apt. bldg

870 East Tower Inc. / n/a

NCB / n/a

An $11 million first mortgage was arranged for the building.

Brooklyn portfolio

6 apt. bldgs, 46 units total

IWC Capital Management LLC / Efrat Sharon, TerraCRG

n/a / n/a

A $5.5 million first mortgage was arranged for the acquisition of the multifamily portfolio. The buildings are located in Brooklynâ&#x20AC;&#x2122;s Bedford-Stuyvesant neighborhood, at 654 Putnam Avenue, 319 Malcolm X Boulevard, 419 Marcus Garvey Boulevard, 804 Macon Street and 814 Macon Street.

East 60th St and Park Ave

8,600 sf mixed-use bldg

n/a / n/a

Emerald Creek Capital / Jeff Seidler, Emerald Creek Capital

A $5.4 million first mortgage bridge loan was secured for the refinancing of an existing mortgage on the property.

94 October 2012 www.TheRealDeal.com

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Financing continued Address

Size

Borrower / Representative

Lender / Representative

Notes

121 West 72nd St

91-unit apt. bldg

121 W. 72nd St. Owners Corp. / n/a

NCB / n/a

A $4.3 million first mortgage and a $500,000 line of credit were arranged for the building.

212-30 23rd Ave (Queens)

123-unit apt. bldg

Bay Terrace Cooperative Section XII Inc. / n/a

NCB / n/a

A $4.7 million first mortgage was arranged for the building.

311 East 71st St

94-unit apt. bldg

31171 Owners Corp. / n/a

NCB / n/a

A $3.7 million first mortgage and a $250,000 line of credit were arranged for the building.

40-01 Little Neck Pkwy (Queens)

63-unit apt. bldg

Westmoreland Apt. Corp. / n/a

NCB / n/a

A $3.2 million first mortgage and a $250,000 line of credit were arranged for the building.

6 Varick St

24-unit apt. bldg

222 West Broadway Owners Corp. / n/a

NCB / n/a

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

4380 Vireo Ave (The Bronx)

127-unit apt. bldg

4380 Vireo Avenue Owners Corp. / n/a

NCB / n/a

A $2.1 million first mortgage was arranged for the building.

129 West 22nd St

16-unit apt. bldg

Top of the Lofts Inc. / n/a

NCB / n/a

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

South St and Beekman St

6,000 sf mixed-use bldg

n/a / n/a

Emerald Creek Capital / Vijay Gogia, Emerald Creek Capital

A $2 million first mortgage bridge loan was secured for the acquisition and renovation of the property.

103 East 10th St

22-unit apt. bldg

3/10 Tenants’ Housing Corp. / n/a

NCB / n/a

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

1136 Fifth Ave

43-unit apt. bldg

1136 Tenants Corp. / n/a

NCB / n/a

A $1.5 million first mortgage was arranged for the building.

17-19 Chittenden Ave

33-unit apt. bldg

Chittenden House Inc. / n/a

NCB / n/a

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

1959-1979 Bruckner Blvd (The Bronx)

Retail bldg

n/a / Mike O’Neill, HoulihanParnes

n/a / n/a

A $1.2 million first mortgage was arranged for the property. The nonrecourse loan for the building, which is occupied by a Kentucky Fried Chicken restaurant and a Clean City laundry facility, has a fixed rate of 4.25 percent for five years. The financing is on a 30-year amortization schedule and is prepayable throughout the term on a declining scale, and also has a five-year extension option.

249 Eldridge St

25-unit apt. bldg

249 Eldridge Street Owners Corp. / n/a

NCB / n/a

A $950,000 first mortgage and a $200,000 line of credit were arranged for the building.

17 East 84th St

21-unit apt. bldg

17 East 84th St. Corp. / n/a

NCB / n/a

An $800,000 first mortgage and a $300,000 line of credit were arranged for the building.

32nd St and 31st Ave (Queens)

3,000 sf apt. bldg

n/a / n/a

Emerald Creek Capital / Mike Cleaver, Emerald Creek Capital

A $1 million mortgage bridge loan was secured for the building. The loan allowed the buyer to refinance while preparing the building’s units for sale.

Other Deals RFR enters $190 million contract for Madison Avenue office tower Aby Rosen’s RFR Realty is buying a much-maligned Midtown office building with an eye on converting it into hotel rooms. The firm entered contract last month to purchase 285 Madison Avenue for $190 million, according to Crain’s, just more than a month after reports emerged that Rosen is considering acquiring 350 Madison Avenue for $350 million. The 550,000-square-foot building at 285 Madison Avenue, between East 40th and East 41st streets, is owned by ad agency Y&R and was the site of a well-documented elevator accident last year that resulted in the death of one of its employees. (The deal was announced after the deadline for the Deal Sheet.)

Pfizer-owned Williamsburg development site trades for $12.75 million Pharmaceutical giant Pfizer has sold off the last of its big holdings in Williamsburg — a vacant development site on Wallabout Street — for $12.75 million, according to public records filed last month with the city. The land, which comprises two sites on four acres on Wallabout Street and Harrison Avenue, traded to an LLC named Harrison Realty and will likely be developed to include both residential and commercial uses, said Steven Barshov, a principal at the law firm of Sive, Paget & Riesel, who represented the buyer in the deal. Cushman & Wakefield marketed the property on behalf of the drug company. (The deal was announced after the deadline for the Deal Sheet.)

Dick’s Sporting Goods store backs out of Herald Square deal Dick’s Sporting Goods backed out of a fully negotiated deal to lease 56,000 square feet at 1333 Broadway from Anthony Malkin’s Malkin Holdings, the New York Post reported last month. The asking rent at the building, also known as 3 Herald Square, is $300 per square foot on the ground floor, the Post said. The sporting goods retailer had 96 October 2012 www.TheRealDeal.com The

also checked out 3 Columbus Circle — owned by SL Green and Joseph Moinian — which has 29,000 square feet of space available, for its first Manhattan store, as The Real Deal previously reported.

Core to open retail office on Upper East Side Boutique brokerage Core is set to open its second Manhattan retail location, this one on the Upper East Side, a company spokesperson told The Real Deal last month. The firm, which was recently ranked by TRD as the city’s top boutique brokerage based on the value of listings, inked a 10-year lease for a 3,500-square-foot office at 673 Madison Avenue that will open next spring, the spokesperson said. A gut renovation of the place will begin this fall. The retail office will occupy the second and third floors of a historic brownstone between 61st and 62nd streets. Jewelry brand Judith Ripka operates a boutique store on the ground floor of the building. (The deal was announced after the deadline for the Deal Sheet.)

Shop-Rite takes Walmart’s rumored location in East New York If Walmart still has its eye on New York City, it’s going to have to focus on another location. Related Companies’ Gateway II mall, the long-rumored East New York site of a city location for the retail giant, signed a deal last month with ShopRite Supermarkets to anchor the development, Crain’s reported. Opposition to Walmart was fierce following the rumors, as many labor activists feared the retailer would undermine local shops and disapproved of its nonunion hiring practices. “Walmart [last month] announced that we were unable to agree upon economic terms for a project in East New York,” a spokesperson for Walmart told Crain’s. (The deal was announced after the deadline for the Deal Sheet.)

The New Republic inks deal for NYC office The New Republic, the Washington, D.C.-based magazine

of politics and culture, has inked a 3,750-square-foot lease at 60 Madison Avenue, according to a Moinian Group announcement released today. Jovani Rampersad, commercial leasing director at Moinian, represented the owner; Elie Reis of Rice & Associates represented the tenant in the transaction. The office will be used for executive and editorial purposes. The asking and taking rents were not mentioned. (The deal was announced after the deadline for the Deal Sheet.)

Archdiocese closes on portion of NYU property that it sold three years ago After selling the vacant lot of its former Catholic Center at 58 Washington Square South at NYU three years ago for $25 million, the Archdiocese of New York bought a section of NYU’s new Center for Academic and Spiritual Life on the same lot for $10 million, the Observer reported last month. The closing reportedly makes good on a 2009 agreement between the university and the Church that there would be a Roman Catholic Church presence at the site. The new property, completed in May, rises to five stories and measures 92,000 square feet. (The deal was announced after the deadline for the Deal Sheet.)

Hakimian pays $8 million for Lower East Side development site The new investment arm of Ivan Hakimian’s brokerage HPNY has purchased a Lower East Side gas station site primed for residential development, The Real Deal has learned. The deal was said to be worth $8 million. The site, at 350 East Houston Street on the corner of Avenue C, is a 6,000-square-foot lot that is home to an Exxon Mobil station whose lease is coming due in the near future, a source close to the deal, which closed Sept. 14, said. Existing zoning allows for 43,000 square feet of residential development on the parcel, which has 120 feet of frontage on Houston Street. (The deal was announced after the deadline for the Deal Sheet.) TRD

The Real Deal Ad (Oct).pdf

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East Coast 45-45 Center Boulevard The 41-story, 820-unit rental building, the largest phase of TF Cornerstone’s East Coast development, has topped off. Units will include studios and one-, two- and three-bedroom apartments. Leasing is expected to start in April 2013. Contact: www.eastcoastlic.com. LEASING UPDATE

Bedford-Stuyvesant 879 Dekalb Avenue Leasing has launched at the 20-unit building, a converted 19th-century townhouse. Rent for the available three-bedroom units, which range in size from 850 to 1,000 square feet, starts at $1,800 per month. Breukelen Properties is the developer. aptsandlofts.com is the agent. Contact: www.aptsandlofts.com.

square feet. Amenities include a 24-hour concierge, ﬁtness room, spa with sauna and treatment room, and a rooftop lounge. Corcoran Group Marketing is the agent. Contact: www.151w21.com.

Flatiron The Story House 36 East 22nd Street The eight-unit condominium is now 75 percent sold. The two remaining units include a three-bedroom, 2,166-square-foot apartment listed at $3.995 million, and a three-bedroom, 2,217-square-foot penthouse priced at $4.75 million. Manhattan Skyline is the developer. Amenities include a virtual doorman and concierge service. Contact: www.thestoryhousenyc.com.

Harlem 5 West 5 West 127th Street 5 West

East Village Arabella 101 101 Avenue D The 78-unit rental building is now 50 percent leased. Available apartments in the 12-story building include studios and onebedrooms ranging in size from 448 to 595 square feet. Studio rents start at $2,400 per month, with one-bedrooms starting at $2,950 per month. Amenities include a virtual doorman, gym and roof deck. The Dermot Company is the developer. Contact: www.arabella101.com.

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SALES UPDATE

Battery Park

1 Rector Park 333 Rector Place 333 Rector Place

The 174-unit condominium is now 80 percent sold. Remaining units in the 15story building include studio to four-bedroom apartments sized from 540 to 2,600 square feet. Prices range from $550,000 to $2.55 million. Amenities include a residents’ lounge, ﬁtness center, bike storage and a children’s playroom. 333 Rector Park – River Rose LLC is the developer. Contact: www.1rectorpark.com.

Chelsea Chelsea Green 151 West 21st Street Alfa Development’s 51-unit condominium is now 90 percent sold with only ﬁve units remaining. Available homes in the 14story building range in price from $2.7 to $8.38 million and in size from 1,261 to 3,110

The six-story, 13-unit condominium is now 75 percent sold with just three apartments remaining. Available homes include one- and two-bedroom units ranging in size from 698 to 978 square feet and priced from $425,000 to $615,000. Amenities include a virtual doorman, ﬁtness center and roof deck. Kane Ventures is the developer and Halstead Property Development Marketing is the agent. Contact: www.5westcondo.com.

Upper East Side Philip House 141 East 88th Street Sales have launched at the Cheshire Group’s 79-unit condo conversion. Available units in the 11-story building range from 702square-foot one-bedrooms to 3,795square-foot ﬁve-bedrooms. Prices range from $850,000 to $8.14 million. Amenities include a full-time doorman, rooftop terrace, game room, music practice room, ﬁtness center and on-site storage. Stribling Marketing Associates is the agent. Contact: www.philiphousenyc.com.

Williamsburg 35 Havemeyer 35 Havemeyer Street The eight-unit condominium, developed by Ray Gentile, is sold out after just ﬁve months on the market, and closings have begun. The building includes one- and twobedroom units ranging in size from 662 to 853 square feet and priced from $325,000 to $629,000. Amenities include a furnished roof. aptsandlofts.com is the agent. Compiled by Russell Steinberg

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“The property was with a previous broker for about a year, but it was sitting pretty much idle. I took the listing, and about a month or so later, another broker came in with foreign buyers from Latin America who were interested in buying two apartments in the same building as a pied-à-terre. One would be for the parents, and one for the daughter and her husband. Luckily enough, there was another [apartment] available in the building. It was an all-cash deal for both units. [It] took a bit longer than expected to close because the buyers, since they were international, did a lot of due diligence, even though the apartment was in pristine condition. It took about two months. The seller had bought it as an investment and they just wanted to dispose of it, perhaps make other investments with the sale money.” Richard Tayar, Keller Williams NYC

Midtown $3.02 million 721 Fifth Avenue, Apt. 42B

The most recommended moving company in NYC FLATRATE.COM / 212.988.9292 Two-bedroom, two-bath condo unit at Trump Tower; building has doorman, concierge, health club; unit has marble baths, walk-in closets; common charges $2,454 per month; taxes $2,005 per month; asking price $3.35 million; eight weeks on the market. (Brokers: Enid Katze, Halstead Property; Raffaele Saccente, Global International Realty Group) 100 October 2012 www.TheRealDeal.com

“I represented [the seller] when he bought this apartment, which was when the market was sort of falling apart. He closed right after the Lehman crash. He had bought it as a piedà-terre — he lives in Switzerland — but never really used it, so he decided to sell it. We listed it for about two months. The buyer was also a foreigner, but from Greece. He had friends in the building. The building seems to attract a lot of foreign buyers — they like to be on Fifth Avenue. The apartment was in great condition, with all brand-new furniture that was hardly used, so basically the buyer just had to bring their clothes here. It was all-cash, both when the seller bought it and when the new buyer bought it. Neither buyer nor seller were here for closing; both were represented by attorneys, and there were no problems with approval or anything. At the end of the day, the seller lost some money, but not that much. So he was pleased, given the state of the market.” Enid Katze, Halstead

Upper West Side $1.71 million 10 West End Avenue, Apt. 23B

Two-bedroom, two-bath, 1,329 sf unit in new-construction condo; building has doorman; unit has hardwood floors, washer/dryer, private outdoor space; common charges $1,266 per month, taxes $277 per month; asking price $1.74 million; 49 weeks on the market. (Brokers: Roy Silber, Citi Habitats; William Ryan Hobbs, Evans & Nye) “I actually sold the seller the apartment originally, [when he bought it] from the developer in 2007. Back then, he was a single guy, an eye surgeon. He has since gotten married and had a kid, and it was time for him to upgrade to more space. The buyer was a lovely couple with a child. They wanted to be on West End [and] they loved the views of the water and the city. Plus, there’s a balcony. The apartment is new-construction, and there is an open flow between the kitchen, living and dining rooms, which the buyer liked, and is rare in older homes. There was a small bidding war, and so the buyers, who weren’t going to pay all cash necessarily, decided to do so. It’s in the seller’s interest because it was a much quicker close with no financing contingency. So we closed in 45 days.” Roy Silber, Citi Habitats

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Blogs from page 51 ings, because she knows people can’t always make the meetings, despite their interest in the issues. Recent real estate coverage has focused on the Lightstone Group’s plans to build 700 rental units near the Gowanus Canal. Now the site gets around 30,000 unique visitors per month, and Kelly said she is sometimes recognized on the street. She added that she now feels guilty if she takes a day off from posting. “What started as a passion has become a duty — I never leave home without my camera,” she said. Kelly, the site’s sole blogger, sees small proﬁts from Google Ads, but said she often posts free advertisements for friends’ businesses.

West Side Rag (www.westsiderag.com)

Neighborhood: Upper West Side Founded: 2011

est Side Rag is one of the city’s newer neighborhood blogs, but it has wasted no time in getting noticed. When its bloggers saw that a Times-Picayune reporter had called out Zabar’s lobster salad for using crawﬁsh instead of the namesake ingredient, they jumped on the story with a post headlined: “Zabar’s Committing Lobster Salad Fraud?” The New York Times noticed and mentioned the blog in a front-page story in the paper. Zabar’s ultimately changed the name of the salad. The site also covers real estate developments in the area, including Extell Development’s massive Riverside Center project on West 61st Street. Founded by an Upper West Sider who requested anonymity, the 18-month-old blog has 20 volunteer writ-

ers and editors and is growing steadily: A particularly strong recent month saw 42,000 unique visitors, according to site analytics. While the blog makes some money when local businesses advertise, the site’s staffers are volunteers, according to Robin Koo, one of the site’s editors.

Queens Crap

(www.queenscrap.blogspot.com)

Neighborhood: Queens Founded: 2006

ueens Crap chronicles the daily frustrations of residents, especially when it comes to real estate — the blog’s logo proclaims its focus on the “overdevelopment and ‘tweeding’ of a borough.” The blog’s unpaid and anonymous founder told TRD that the site focuses on “what many would consider to be small issues, but are big issues to those affected by them, like missing lane markers on a repaved highway, or a developer tearing down a quaint old one-family home and replacing it with a multi-unit nightmare.” But the site also covers large-scale developments, like the Bloomberg administration’s proposal for a new mall, tennis stadium and soccer stadium at Flushing Meadows Corona Park. Queens Crap — where all contributors and commenters are kept anonymous to protect them from retribution — has no advertising or monthly site stats, though it has gotten 5.2 million page views since 2006, according to a tracker on the blog. “I do it because I know many people throughout the borough are affected by the same issues, and in order to

effect positive change, they need to know they are not alone,” the blogger told TRD in an e-mail.

Ditmas Park Patch (www.ditmaspark.patch.com)

Neighborhood: Ditmas Park Founded: Became a Patch site in 2011

n 2011, the Ditmas Park Blog’s founder was hired by Patch, a network of hyperlocal blogs owned by AOL. The blog was renamed Ditmas Park Patch, and a new blogger, Caitlin Nolan, was hired as a full-time, paid employee, unlike most of her fellow neighborhood bloggers. The blog’s real estate coverage focuses mostly on the comings and goings of retailers in the up-and-coming Brooklyn neighborhood. “You name it — if it’s happening, it’s likely that I’m going to be writing on it,” Nolan said. During the recent New York Assembly elections, both 42nd District candidates — Assemblywoman Rhoda Jacobs and District Leader Rodneyse Bichotte — blogged on her site to reach out to residents. AOL declined to disclose the site’s readership, but according to the online web analytics website Compete, Ditmas Park Patch sees around 5,000 unique visitors per month. Patch launched hundreds of sites in late 2010 and early 2011, but is reportedly not yet proﬁtable and started scaling back freelance budgets and content toward the end of last year. AOL’s CEO Tim Armstrong has maintained that projections show future proﬁts for many of the sites. TRD

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Politicians’ homes

from page 43

if you have the temporary bad fortune of living above the construction areas, we owe you a great debt of gratitude.” Krueger — who sits on the Senate’s housing, construction and community development committee — has also worked to bring new public schools to the area to cater to the inﬂux of young families who have moved in. Last month, an elementary school and a high school opened at 250 East 57th Street, the 1 million-square-foot, mixed-use project developed by World-Wide Group that also includes a Whole Foods and, upon completion, will have 320 residential units.

Gale Brewer

City Council Member ity Council Member Gale Brewer has represented parts of Clinton and the Upper West Side since 2002,

but she has lived there much longer: Brewer and her husband bought a semidetached brick townhouse on West 95th Street in 1995 and have remained there ever since. The couple paid $614,000 for the ﬁve-bedroom, threestory home between Columbus Avenue and Central Park West. A member of the council’s Committee on Housing & Buildings, Brewer spearheaded efforts for the Upper West Side retail rezoning, which passed in June. The controversial measure limits the width of storefronts on Amsterdam and Columbus avenues between 72nd and 110th streets to a maximum of 40 feet. Banks are limited to 25 feet. (Citing a City Planning Commission study, Brewer noted that banks are disproportionally represented in the area.) Brewer saw the rezoning as a way to promote a diverse group of retail tenants without mandating what types of

business could occupy the scarce storefronts. “We squeeze a lot of retail into small numbers of avenues and that means the big guys take over,” Brewer told TRD. One of Brewer’s priorities is to preserve a range of housing types in the neighborhood. “We want co-ops and condos; we also want rental that’s affordable,” she said, citing the 500 units of affordable housing that will be part of Extell Development’s Riverside South project. She is currently involved in efforts to create a historic district on the Upper West Side. The ﬁrst phase of the plan — which covers an area bordering West End Avenue between 70th and 79th streets — has already been approved by the Landmarks Preservation Commission and the City Planning Commission. A hearing before the City Council is scheduled for this month. TRD

Nest Seekers entirely. (Shapiro said Parkview hired Halstead to avoid a conflict of interest.) Later, Shapiro sued the partnership, which Reisner said cost the group hundreds of thousands of dollars. Neither party would discuss the specifics of the suit, which has since been settled. Nest Seekers’ expansion into the Hamptons also resulted in some bad blood. Within months of taking over Engel & Völkers last year, Shapiro fired the two managers he had installed to run the offices — Barbara Feldman in East Hampton and Joseph DeCristofaro in Southampton — amidst complaints that he had stiffed contractors, defamed the managers in the press, and reneged on promises to lease ground-floor office facilities for them to help recruit agents. DeCristofaro is suing Nest Seekers, claiming Shapiro effectively stole his clients after abruptly changing the locks on his office. “It was a mistake for me to do business with him, one of the biggest of my life,” DeCristofaro said, declining to comment further. Feldman declined to comment. Shapiro largely dismissed the accusations as the gripes of disgruntled former agents and said DeCristofaro “wasn’t a good fit.” “Just like in any industry,” Gulivindala said, “if you interview anyone that is no longer with a firm, they’re not exactly going to paint that firm in the most positive light.” Additionally, the firm is the subject of an ongoing New York State Department of State investigation that, sources say, is centered on an unlicensed Nest Seekers employee, Geoff Gifkins. A DOS spokesman confirmed that Nest Seekers is under investigation, but declined to comment further. Sources familiar with the probe said it concerns claims that Gifkins, the senior vice president of human resources and talent acquisition, listed and sold properties while he lacked a real estate license. Gifkins came to Nest Seekers through Perspective Properties. He said he’s been a broker for eight years, but an adjustment to his immigration status currently precludes him from renewing his license. “There’s no smoke, there’s no screen, there’s nothing like that,” Gifkins said. Shapiro said Gifkins never had any listings, and his job focuses exclusively on recruiting and training. “He’s absolutely not, under no circumstances, doing anything whatsoever underhanded,” Shapiro said. It’s also worth noting that Nest Seekers is not the only firm to come under fire for licensing irregularities. Corcoran admitted in June 2010 that 79 of its agents were unlicensed or licensed improperly over a two-year span in the late 2000s, as TRD reported.

Another persistent allegation is that Nest Seekers agents have passed off other firms’ exclusive listings as their own. In February 2011, REBNY levied a $5,000 fine against the firm after two brokers posted a competitor’s exclusives on their agents’ pages, as TRD reported. The trade group also took the unusual step of sending out a mass e-mail to its residential members to notify them of the infraction. “We respect REBNY, we love REBNY, but we find it sometimes odd that the people that are there to regulate you and judge you are your direct competitors,” Shapiro said recently, referring to the brokers who sit on the ethics committee. At the time, Nest Seekers allowed agents to post listings live to the website without review, Shapiro said. Now, managers vet every listing first. A representative for REBNY said he could not disclose whether Nest Seekers was the subject of any pending or resolved ethics complaints.

Shapiro from page 59 Eddie and Nest Seekers is like working with my family and [being] home. ... A big part of my success I owe to Eddie Shapiro and the Nest Seekers team of professionals.” As Nest Seekers has grown, the ﬁrm has continued to bring in the same ratio of veteran and rookie agents, Gulivindala said. As one competitor put it admiringly, Shapiro does not simply lure top brokers with favorable splits; he trains newbies into successful agents.

Smoke and mirrors? Shapiro, who is licensed under the name Amir Eddie Shapiro, lives on the Upper West Side with his wife, Lauren, and their three young children. He grew up in a small suburb outside Tel Aviv, the eldest son of a homemaker and an airplane engineer. Higher education was prohibitively expensive — and “school was never my thing anyway” — so as an 18-year-old aspiring musician, Shapiro moved to New York City. Soon after, Shapiro got his real estate license and began working at Dwelling Quest, a now-defunct firm that also served as a training ground for Ilan Bracha. He also worked at the listing service BrokersNYC and at Churchill Corporate Services. “He’s very bright, he’s extremely focused, motivated [and] aggressive,” said Carol Friedman, whose career as a broker started at Nest Seekers nearly a decade ago. “I have a lot of respect for what he’s accomplished.” Yet for all the brokers who praise Shapiro’s business savvy, there are seemingly just as many ex-colleagues and former business partners who point to what they see as misconduct and claim his success is merely “smoke and mirrors.” (Many would not speak on the record for fear of retribution.) According to those sources, Shapiro is notorious for overstating his strengths and for ignoring the rules. Back in 2005, BrokersNYC filed a lawsuit accusing Shapiro of hacking into more than two dozen client accounts after he left the firm, and passing out the information to Nest Seekers agents. Shapiro denied the claims in court documents, but later pled guilty to a misdemeanor charge as part of a plea bargain with the New York district Attorney, according to court records. Shapiro declined to comment on the case. Several years later, his participation in the construction and sales of the 505 — a 108-unit condo project at 505 West 47th Street that went on sale in 2007 — alienated Parkview Developers, the majority partner in the development, according to managing partner Ian Reisner. Despite Shapiro’s involvement, Parkview brought in Halstead Property Development Marketing to help Nest Seekers with sales, and by the end, that firm had replaced 104 October 2012 www.TheRealDeal.com

Two steps forward To Shapiro and other Nest Seekers brokers, these criticisms and complaints are symptoms of the firm’s growth — an inevitable part of operating a decade-old business with hundreds of agents. “In 10 years, have we had a couple of incidents that had to be dealt with? We did, and we resolved them and moved on,” Shapiro said. In fact, Gulivindala said he expects there will be more DOS complaints as the brokerage grows. One industry executive at a rival firm noted that Nest Seekers no longer needs to poach listings from other companies since it can compete with them. Indeed, Nest Seekers is only set to expand in the coming months. At its current rate, Nest Seekers will break the 500agent mark in the first quarter of 2013, Shapiro said. Also, Mann Realty has hired the firm to market its 60-unit condo conversion at 478-480 Central Park West, at prices ranging from $1,000 to $1,700 per square foot, Mann said. He could not disclose additional details because the project has not yet been approved by the attorney general. Nevertheless, Shapiro is not resting on his laurels: He believes the best CEOs are the most paranoid. “We take two steps forward,” he said, “and then we look around — left, right — and make sure no one’s out there with a big knife trying to take us down. I know that now we’re probably a good target. A lot of people are pissed off. That’s just human nature.” TRD www.TheRealDeal.com January 2012 00

STI_The Real Deal_Sept2012_fin.pdf 1 8/29/2012 2:34:28 PM

Harney

from page 34

mists reported that rather than the 3 to 4 million families originally projected by the White House to be assisted with modifications by HAMP, the actual number will be barely one-third that target. The Democratic “platform plank on this issue is so disingenuous,” wrote David Dayen on Firedoglake, that “it makes Paul Ryan’s convention speech look scrupulously honest.” In the Nation, another publication on the political left, commentator George Zornick ridiculed the Democratic platform’s boasting of a “crackdown” on the fraudulent lenders who helped create the subprime crisis, noting that “no high-ranking Wall Street officials or firms have been held responsible for the subprime catastrophe” that they facilitated by buying and securitizing poorly underwritten, toxic mortgages.

The Republican platform, meanwhile, blamed the whole subprime mess and housing collapse on Fannie Mae and Freddie Mac, even though private investment banks such as Lehman Brothers and Bear Stearns played far larger roles in the securitization money machine that fueled the subprime mania. The roles of Wall Street and the big banks get no direct criticism by the Republicans, even though the private secondary market they control would be the foundation for any new system of mortgage finance under a Romney administration. Even on a subject that has broad popular support among voters — continuing tax benefits for homeownership, particularly the mortgage-interest deduction — the parties waffled. The Democratic platform avoids the issue entirely; Obama has proposed reducing the mortgage write-off for

owners with incomes above $250,000. The Republican platform drafters initially rejected any pledge of support but later relented with language agreeing to continue the deduction if Congress fails to enact comprehensive tax reforms. So why has housing, which traditionally leads the economy out of recessions, suddenly become a political orphan this election? Could it be that both parties feel vulnerable about any serious discussion of their own roles in the crash — regulators blind to widespread irresponsible lending during the Bush years — and the painfully inadequate response to the foreclosure explosion during Obama’s? Or the possibility that neither side has politically viable solutions for ﬁxing the system? Try both. Kenneth Harney is a syndicated real estate columnist.

Weiss said his ﬁrm had been approached recently by at least eight developers seeking guidance on how to make the sites of their projects appealing to schools. He noted that schools are especially attractive for projects on side streets rather than the high-trafﬁc avenues popular with major retailers. Schools “are a very under-served market,” he said. “New York City urgently needs more schools and classroom space.”

vationists say will block their views. In fact, opponents have charged that Two Trees’ offer to build the school was a political move meant to sidestep the city’s public review process. “The developer came back to the community with new drawings under the guise that they redesigned the building,” said Gus Sheha of the Dumbo Neighborhood Association, one of the ﬁercest opponents of the project. In fact, he said, the structure itself was largely the same, but with the addition of a school. In Sheha’s opinion, the school is “a red herring for politicians who accept gobs of money from private developers while ignoring residents’ wishes.”

Schools from page 60 to Forest City spokesperson Laura Dolan. In return for incorporating the school into the building, Forest City Ratner received $190 million in tax-exempt Liberty bonds to help ﬁnance the project. Forest City also felt that the presence of the school might help draw renters to the building, especially since the Financial District has seen a baby boom of sorts in recent years, noted Dolan. Cliff Finn, president of new development marketing at Citi Habitats, which is handling rentals at 8 Spruce, said that strategy has worked so far: A number of children in the building attend school downstairs. “We have three-bedroom apartments,” he said, and “most of those get rented by people with children.” There is one caveat, Finn said: The new school already has a waiting list, and children who live in the building are not guaranteed admission. And adding a school to an apartment building doesn’t seem to translate directly into higher prices or rents for units in the project, said Jonathan Miller, CEO and president at appraisal ﬁrm Miller Samuel. “The density is such in New York City that I don’t think it’s any different than if the school were next door,” he said.

Windward School

he Related Companies last month announced that the Windward School will take a 60,000-square-foot space in the first five floors of its planned 250-unit rental tower at 205 East 92nd Street. Based in White Plains, the private school works with students who have language-based learning difficulties. The new facility is expected to open in 2015 and could house up to 350 students. Related did not get any incentives or tax breaks for incorporating the school into the project, but felt it was a valuable addition, according to Newmark Grubb Knight Frank vice chairman Mark Weiss, who brokered the deal. “We are thrilled to partner with the Windward School to create a state-of-the-art educational facility on the Upper East Side and expand their critical work at a location convenient to New York families,” said Jeff Blau, CEO of Related Companies in a statement. The 92nd Street site was a park and playground before Related bought it from the city, and the plan to develop it has drawn opposition from neighbors. Last year, neighbors and local politicians held a rally asking the city to reacquire the land in order to “save the park,” the New York Post reported. The New York Proton Center, a nonprofit corporation backed by local hospitals, was previously in talks to lease the space, according to published reports. But the deal fell apart, leaving Related with no anchor tenant for the project. 106 October 2012 www.TheRealDeal.com

75 Morton Street

iming to ease neighbors’ concerns about a plan to build luxury housing on the former site of St. Vincent’s Hospital, this year the city orchestrated a deal to turn 75 Morton Street in Greenwich Village into a new public school. During negotiations between the city and Rudin Management, which plans to turn eight former hospital buildings into luxury housing, local residents lobbied politicians for a new school. Ultimately, the Bloomberg administration agreed to buy a state office building at 75 Morton Street, a few blocks from the hospital, and convert it into a school. While Rudin Management will not have a role in the construction of the school, sources said the city’s decision to build it was designed to quell opposition to the project and to the closure of St. Vincent’s. What’s in it for the city? Rudin agreed to donate $1 million in arts financing over 10 years to three other local schools, and $1 million to a legal fund to help preserve rent-stabilized housing in the Village. The firm also agreed to cut the number of apartments in the project to 350 from 450 and reduce the number of underground parking spaces to 95 from 152.

Dock Street

t the proposed 17-story Dock Street condo project in Dumbo, plans call for a new 300-seat middle school at the base of the building. A spokesperson for the developer, Two Trees Management Company, said Two Trees will pick up the bill for the core and shell of the 45,000-square-foot middle school, while the SCA will pay for the interior build-out. Two Trees said it is not receiving specific tax or financial benefits in exchange for building the school, but declined to comment further about the project. Sources said at least part of the motivation, however, may be mollifying neighbors who have voiced fierce opposition to the project. “A school in a design is appealing to the public,” noted Department of Education spokesperson Marge Feinberg. The promise of the school hasn’t quelled all opposition to the 17-floor project, which residents and other preser-

Riverside Center School The Upper West Side will soon get a new Pre-K through eighth-grade school at 61st and West End Avenue in one of several new residential buildings planned as part of Extell’s massive Riverside Center project. The school, called PS 342/Riverside Center School, will contain more than 20 classrooms for 488 students. It will be housed on the first four floors of the planned apartment building, known as Riverside Parcel 2, which is reportedly slated to begin construction next month. The Riverside Center project will eventually include five residential buildings, with an estimated 2,500 apartments. The project’s developer, Extell, agreed to build the school after contentious negotiations with the city and community members, who expressed concern that Riverside Center would cause overcrowding in local schools. “Clearly, this was the most important piece of infrastructure that had to come with new development,” Community Board 7’s Helen Rosenthal told the West Side Spirit. “We had learned our lesson that with many apartments going up, of course there’s a need for a public school.” The community board originally requested a 150,000square-foot school, but Extell reportedly balked at the cost. Eventually, however, Extell agreed to construct the “core and shell of the building”— walls, ceilings, electrical and HVAC systems — for a 100,000-square-foot school. The SCA will pay for the interior construction of the building. Extell did not respond to requests for comment. The company is reportedly now looking to sell Riverside Parcel 2 and another site so it can concentrate on other sections of the Riverside Center project. But the city’s land-use approvals for the project require a school to be located in one of the first two Riverside Center buildings, so a school must be built no matter who owns the land. TRD www.TheRealDeal.com January 2012 00

Air rights

from page 18

transit improvements in the area. For example, within the Grand Central Subdistrict, building a tower with a ﬂoor-area ratio of up to 15 — in other words, a building with 15 times as many square feet as on the underlying lot — would be allowed as of right. But in order to build more, up to a FAR of 18, developers would have to pay into the city fund. To build even higher than that, to a FAR of up to 21.6, developers could either make additional payments to the city or buy air rights from those like Argent who own them. Consequently, the amount the city sets for the price of the separate development rights that it will be selling will affect the value of the privately owned air rights.

A competitive edge Howard Goldman, a partner in the land-use law ﬁrm Goldman Harris, said in its current form, the proposed rezoning could put the city fund in competition with private air rights owners. “Any requirement that you use the city’s air rights ﬁrst basically creates serious competition,” Goldman said. “The city can set the price. They can underbid Grand Central if they want to and also give themselves a competitive advantage.” Selver expressed a similar concern. “In the past, the city has set the number at which they will ‘sell’ development rights too low,” he wrote in an e-mail. “They will tell you that they need to do so to encourage development, and even accepting that, I’ve never seen them set a number high enough.” Since so few air rights have been sold in the Grand Central Subdistrict, there are no comps and pricing is expected to be tricky.

A spokesperson for the Department of City Planning, which is overseeing the rezoning, said the city is still determining the payment amounts it would require for its fund. But she said that the decision-making process will take into account the value of privately held development rights in the area, and will be complete before the public review process begins in the first quarter of 2013. There is also the question of how many developers will be interested in buying extra development rights. The proposed rezoning would only allow taller new buildings on sites with full avenue frontage and at least 25,000 square feet of lot size. The goal is to encourage what the planning department calls “significant new commercial buildings.” Still, there are a few sites within the Grand Central Subdistrict whose owners — or future owners — would qualify. The Metropolitan Transportation Authority said early this year that it’s planning to sell its headquarters, a row of prewar office buildings at 341, 345 and 347 Madison Avenue that take up the length of the block between East 44th and 45th streets. Under the proposed rezoning, a buyer could demolish those buildings and construct a larger tower in their place. Meanwhile, 380 Madison Avenue, at East 46th Street, was left without a major tenant in March when Investment Technology Group moved out, and the owners are reportedly planning to renovate or tear down the building.

‘The real impetus’ Goldman called replacing Midtown’s aging ofﬁce stock “the real impetus” for the rezoning. East Midtown’s ofﬁce build-

ings are significantly older than in “competitor cities” like London and Tokyo, city planning officials say. To address that, Bloomberg’s proposal would also allow owners of qualified buildings that are “overbuilt” — meaning that their towers exceed the allowable height under current zoning guidelines, but were likely grandfathered in — to tear them down and replace them at their existing height or, in some cases, taller if they pay into the new fund. Goldman said he thinks many qualifying owners will seize the opportunity — despite the mandatory payments into the city fund. Another source, who asked not to be named, noted that the costs of rebuilding would be significant, but that landlords would look at the longterm financial benefits. “Potentially, it’s anyone who owns a property that’s either underbuilt — which very few of them are — or is old and tired, and the owner is willing to demolish it, lose his rent stream for a couple of years and build another one.” The city may not need many property owners to modernize to deem the rezoning a success: The city planning spokesperson emphasized that the goal is to seed the area with just a handful of modern and sustainable office buildings. All this depends, of course, on whether the proposal is approved (and in what form) before Bloomberg’s term is up. “I think the city put out a proposal within a relatively short time frame, and now I think they are in the process of listening to what people have to say about it,” Goldman said. “I’m absolutely certain there will be changes before it’s in its final form. What the changes are is a different question.” TRD

Europe from page 75 Since then, the report said, London “has seen a period of intense activity and price growth.” “Higher-value markets have been boosted by international investor and ‘safe haven’ demand,” the report added. “As a result, prime central London values are 21 percent above peak.” Indeed, while New York has seen a record-breaking sale at 15 Central Park West for $88 million in late 2011 and buyers signing contracts in the $100 million range at Extell Development’s under-construction One57, London seems to handily beat New York’s highest prices. For example, there was the $220.9 million, 25,000square-foot triplex sale in spring 2011 at the condo One Hyde Park (two wine cellars included), and the listing last month of the 45-bedroom Rutland Gardens manse of the late Saudi Arabian crown prince, Sultan bin Abdulaziz, for $487.3 million. Price reductions at the higher end, however, are not unheard of. And, a forecast by Knight Frank concluded that prices in 2013 would essentially be ﬂat in the higherend Central London housing market, where New Yorkers are most apt to buy. Also, prices are expected to grow by only 4 percent in 2014. It’s not necessarily that the London market is struggling — it’s that, like Manhattan, it recovered sharply and quickly (at least compared to other housing markets) from the recession. The same Knight Frank forecast noted that between March 2009 and September 2011, central London prices went up 37 percent — “the fastest rate of recovery seen in the market for 35 years.” “The London market’s been up historically, year over year, about 10 percent over the last few years,” Sroka said. “And, then, the last few months we’ve seen it basically go ﬂat.” 108 October 2012 www.TheRealDeal.com

Athens Ground zero for the euro crisis presents opportunities for Greek-Americans, according to Sroka, including those from the nation’s biggest Greek neighborhood, Astoria. While there is not as much evidence of more New Yorkers buying and home-hunting in the Greek capital compared to other European cities, the conditions would seem ripe for picking up Athens apartments. According to indices kept by the Bank of Greece, prices have been on a downward slide since the recession started. By 2012’s second quarter, the price index was at its lowest since at least 2007. The bank put it bluntly in an April statement looking back over the previous year: “The Greek real estate market, having shrunk substantially during the current crisis, remains at the same low level, without any signs of recovery as medium-term expectations are still negative.” The statement went on to cite very high inventory — “a considerable stock of unsold properties” — plus “very low demand.” Apartment prices in Athens appear to be on average one-tenth cheaper than cities like Rome and Paris, according to listings on the Global Property Guide, asking as little as $100 to $200 a square foot.

Dubrovnik Kieran Kelleher, a Savills broker based in Dubrovnik, had an unusual experience with a seller whose 1,076-squarefoot apartment (which overlooked the city’s medieval old town) had been on the market for a few months. When Kelleher called the owner to say the apartment had not sold, the seller responded by telling Kelleher to raise the price. That response was, of course, the opposite of what most sellers with a languishing property would do. But it worked: The

apartment sold to a Scandinavian for around $590,000. “The local people selling don’t seem to be in a tremendous rush,” Kelleher said. “Price goes up as the time goes on.” The Dubrovnik region, along the Adriatic coast, has seen intense interest from Americans, including New Yorkers, in recent years, and that has helped fuel its housing market. It’s been 15 years since the end of the Balkan wars, and Croatia will enter the European Union in July 2013 (and convert to the euro within a few years after that). Kelleher, and other brokers, have begun to see more New York home-hunters and buyers, a trend likely to continue. “There seem to be a lot of people who have started to vacation there and realize the value,” Sroka said. “You can own on the water in Croatia for about one-ﬁfth the price of what you would buy on the water in France or Italy.” The waterfront of Montenegro, a nation of barely 632,000 southeast of Croatia, is even cheaper. While it’s mostly Russians buying now (particularly near yacht berths), according to Kelleher, Croatia’s rising tide among New Yorkers could lift Montenegro’s housing market as well. Per-square-foot prices in Dubrovnik’s old town were running around $900 a square foot in early 2012, according to Kelleher. Prices for homes beyond the old town and with only partial water views can run $100 to $200 less per square foot. All of the prices have increased several percentage points over the last few years. Unlike other European cities popular with New York homebuyers, however, Dubrovnik has seen very little new development. That may change, Kelleher said, as more foreigners discover the region. Prices, too, could grow 5 to 7 percent annually in the next few years, he said. The locals would expect nothing less. TRD www.TheRealDeal.com January 2012 00

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A C C O U N T I N G

016541 Real Deal_v1.indd 1

T A X

Exactly Right.

A D V I S O R Y

9/24/12 2:23 PM

Kelly Mack

from page 31

leaving the company to do consulting, Mack, then 32, was tapped to head the newly formed Corcoran Sunshine. “Bruce Zipf, the president of NRT, called me on a weekend at home,” Mack recalled. “He was the first to ask me if I would step in as part of Louise’s departure. I don’t know if I was surprised as much as terrified. My first response was, ‘No.’ My second response was, ‘No.’ My third response was, ‘Yes, absolutely.’” Sunshine had been grooming Mack as her replacement for years, so the promotion was no surprise to others in the industry, despite her relative youth. Mack was viewed as having Sunshine’s directness and creativity, but without her mentor’s rough edges. Sunshine “was very tough,” recalled competitor Stephen Kliegerman, president of development marketing at Terra Holdings, the parent company of Halstead Property and Brown Harris Stevens. “She was not looking to score points with you. She had a clear vision of what her developments should be and she was not going to waver regardless of anyone else’s opinion. Kelly’s not any less decisive, but she has a warmer, softer approach.” Mack “does not mince her words at all, nor should she,” Silverstein noted. These qualities helped Mack hold her own in dealings with Sunshine and Liebman, who are both, in the words of Liebman herself, “strong personalities.” “It takes someone of Kelly’s caliber to be able to survive in a world where Pam Liebman and Louise Sunshine have just done this merger,” Liebman said. When Mack first took the reins, times were good, and Corcoran Sunshine had exclusives on all the hottest new developments in town, including the Time Warner Center, the Hubert and One Beacon Court. “In 2007 and 2008, when the new development market exploded, there were 8,000 new development units coming on the market,” Mack said. At that time, she added, “people, right or wrong, felt that you could almost do no wrong. Buyers weren’t asking a lot of questions.” But that all changed after the financial crisis. Construction halted at 56 Leonard, and there was only a trickle of transactions at the 53-unit Chelsea Enclave at 177 Ninth Avenue, which Corcoran Sunshine had also launched just before the Lehman collapse.

With far fewer new condos selling, Liebman and Mack eliminated a number of jobs, most of which were on-site sales positions. “There were a lot of unanswered questions, and the future of new development was uncertain,” Mack said. They also discussed the possibility of representing some new development rentals, in addition to condos. But ultimately they decided that they had just enough condo product to make it through the cycle. One saving grace for Corcoran Sunshine was its research team, which Mack had dedicated herself to building upon taking control of the firm. The team’s access to several years’ worth of market data — gathered not just from the company’s own projects but from the Corcoran Group’s transactions — became an asset to developers looking to reposition their projects to suit the new climate. “The banks and the lenders were now calling the shots and we were able to communicate with them in a way that, frankly, I don’t think any of our competitors were,” Mack said. “They didn’t have access to the data.” Kliegerman argued it was Corcoran Sunshine’s reputation, more so than its research team, which kept the projects coming. “We all bring very strong data and research capabilities to the table. I think it’s their reputation that precedes them,” he said. “They were really the first company to offer a full-service development marketing brand. They have that legacy behind them.” Corcoran Sunshine took on high-profile new accounts even in the darkest days of the financial crisis. In 2009, Corcoran Sunshine was hired to take over for Prudential Douglas Elliman in handling sales at the 581unit Manhattan House on the Upper East Side, and at the Georgica, a 58-unit condo by the Ascend Group. The firm was also brought in to reposition the building formerly known as Miraval Living at 515 East 72nd Street. A year later, Corcoran Sunshine also took over sales and marketing of the iconic Upper West Side condo conversion, the Apthorp, from Elliman. “There were many developers who were not working with us who then came to us during those difficult days ... to reposition their assets,” Mack said. “Despite the fact

that there weren’t a lot of sales happening or new building introductions, we were actually taking on new accounts.” Georgica is now sold out, and in the second quarter of 2012, 515 East 72nd Street was “one of our top-selling buildings,” Mack said. On the flip side, Corcoran Sunshine was replaced earlier this year as the exclusive marketing agent on two properties developed by SDS Procida: The Dillon, an 83-unit condo in Hell’s Kitchen, and On Prospect Park, the Richard Meier–designed project at One Grand Army Plaza in Brooklyn, which has been on the market since 2008. SDS’s Louis Greco told The Real Deal he had not been unhappy with Corcoran Sunshine’s work at the projects. Rather, the decision to switch to Brown Harris Stevens Development Marketing was made by his investors. “Those decisions were made basically because our investors wanted a change of pace,” he said. “They wanted us to try a new horse, so to speak.” Liebman, however, said that Corcoran Sunshine had not been dismissed from the project, but in fact chose to end its relationship with SDS. “Corcoran Sunshine does not lose projects that we don’t want to lose,” she claimed. “When we’re off a project, it’s usually because we want to be off it.” Meanwhile, Chelsea Enclave sold out in February 2011, and Corcoran Sunshine is now gearing up to put 56 Leonard back on the market. Still, Mack’s job is far different from what it was before the crisis. Though the market has improved and there are more projects coming on the market, Mack said she still spends a large amount of her time dealing with banks and lenders, working to restart stalled projects and arranging lending terms for new ones. “In 2006, maybe 5 percent of my time was spent having conversations with lenders and banks,” she said. “Today, it’s as much as 50 percent.” But Mack said her enthusiasm for the business is undimmed. “When there comes a day when I wake up and don’t want to go to the ofﬁce,” she said, “that’s when I’ll think about doing something else.” TRD

investing in the city. Recent sellers — who now may be on the hunt to buy more buildings with their fresh capital — include Savanna, William Macklowe Company and SL Green. And there are also always surprise purchases by outsiders. For example, the Spanish Riu Hotels & Resorts paid Glenwood Management $111 million in July for a Times Square– area development site, its ﬁrst acquisition in New York City.

Yet, even as some will demur, each buyer has their own assumptions of future values, expected returns and risk levels. “There are certain investors that are willing to accept lower returns for lower risk,” Litton said, noting a building might provide 6 or 8 percent returns per year, which is too low for Harbor Group, but “for some investors that can be an attractive yield.” And there are entire areas that are opening up for investors, such as the vigorous sector of retail condos. Craig Nassi, owner of BCN Development, which owns 315 Park Avenue South, anticipates more high-priced retail condos will come on the market on Fifth and Madison avenues, and in Soho and other areas. The property at “666 [Fifth Avenue] set the stage for what great retail is worth,” he said, referring to Vornado Realty Trust’s deal to pay $707 million to buy one of two retail condos at the building. (The deal is expected to close this quarter.) “Any owner of anything on prime Fifth Avenue saw that gigantic sale and said, ‘Maybe it’s time for me to sell,’” Nassi said. TRD

Biggest buyers from page 63 Buyers get busy By all accounts, there is no shortage of buyers ready to pick up the slew of $100 million-plus properties on the market. A list published by the city’s Economic Development Corporation — which is handling the sale of three prewar ofﬁce buildings, which some estimate could fetch more than $187 million — shows a vibrant market of buyers. In May, representatives from more than 40 ﬁrms came to look at 346 Broadway, 49–51 Chambers Street and 22 Reade Street, including Vornado Realty Trust, Kushner Companies, TF Cornerstone and Harbor Group International, the city’s list showed. Insiders said other major players, such as Rockrose and SL Green, are also hunting for properties. One source suggested that SL Green would be a likely contender for 11 Madison. SL Green did not respond to a request for comment. Some brokers are keeping an eye on owners who have recently sold properties, since those sellers may be looking to purchase other properties with the excess cash. In many cases, those investors need to buy another property quickly to defer taxes through a so-called 1031 exchange, or just want to keep

The big test Market analysts say this quarter will test the frequently heard refrain brokers used this year to explain the slow activity: There was just nothing to buy. Now, there is plenty of product. But will the buyers step up? Some investors said the high prices are turning them off. Harbor Group’s Litton said his ﬁrm thinks prices are too steep and is reluctant to do more than make mezzanine or preferred equity investments in New York City. The local ofﬁce market is at a “price point that just doesn’t provide as much upside as we like to see,” Litton said.

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Money

from page 44

said that he never donates to a politician simply because that person’s policies will beneﬁt him or the company. Asked why he structures the donations through LLCs, Kalikow said he leaves those details to his staff. “We only choose to support the guys that we think are good for business in New York State,” Kalikow said. “If it’s good for business, it’s going to be good for Kalikow.” Gary Jacob, Glenwood’s executive vice president, referred questions on donations to Litwin, who did not return a request for comment. Roth also did not respond to a request for comment. While it’s tough to say exactly what real estate players get in exchange for their campaign contributions — and “buying” favorable legislation with donations is illegal — developers and landlords do beneﬁt from their largesse, sources said. For some real estate donors, the main goal of giving is to maintain the razor-thin Republican majority in the state Senate, which is seen as a more landlord-friendly counterweight to the Democrat-dominated Assembly, experts said. In the last election, the real estate industry gave $3.2 million to Senate Republicans versus $2.7 million to Senate Democrats, NYPIRG said. Indeed, a quarter of all city and state campaign contributions from New York City’s real estate “elite” went to state Senate races, compared to 6 percent that went to state

Assembly races, according to Common Cause, a Washington, D.C.-based nonprofit public interest group. (To determine percentages, Common Cause totaled contributions in 2009 and 2010 from officers of the Real Estate Board of New York and members of the New York Observer’s “Power 100” ranking of the real estate industry’s movers and shakers.) Common Cause found that the elite real estate donors it tracked spent almost $9.7 million on state and local campaigns in 2009 and 2010, almost twice as much as in 2007 and 2008, when the same donors gave a total of $5.4 million. While some of this giving was no doubt related to the 2010 election — when the governorship and the attorney general’s office were up for grabs, as well as legislative seats — it also coincided with the period leading up to the review of both rent-stabilization rules and the 421a tax abatements on new rental and condominium developments, Common Cause noted. Frank Ricci, the director of government affairs at the Rent Stabilization Association, a Manhattan-based property owner trade group, said that even though the RSA has donated to state Democrats, the organization tends to back Republicans facing tight Senate races. “The Assembly’s philosophy when it comes to residential rental housing has been very anti-owner over the last 20 years,” Ricci noted.

In 2011, the group gave $168,800 to state politicians, including $100,000 to the New York State Senate Republican Campaign Committee, according to NYPIRG. “Our motivation is to get people in there who will listen to both sides of a story, not just be one-sided,” he said. For recent donors, the hot-button issues fueling donations have been rent regulations and tax breaks for building owners, experts said. “When upstate politicians get money from downstate developers and they’re trying to elect people in districts where they don’t do business, they’re talking about [these] big-ticket items,” said Mario Mazzoni, executive director of the Metropolitan Council on Housing, a tenants’ rights group based in New York City. Along with inﬂuencing the makeup of the Senate, real estate players often donate to politicians simply to gain access to them — or, as NYPIRG’s Mahoney put it, for a “better chance to talk to them about the issues.” For that reason, many real estate insiders give to both Democratic and Republican candidates, or to multiple candidates in a primary. For example, Litwin donated $25,000 each to four of the six contenders for attorney general in 2010, including Republican candidate Dan Donovan and the eventual winner, Democrat Eric Schneiderman, WNYC reported. “They have a better chance to show up and make their voices heard,” Mahoney said. TRD

Paul Weiss and camped out for days hashing out a deal. The result was a $1 billion long-term lease with the opportunity to transform a 26-acre development on the Far West Side. Lehman crashed just four months later, which delayed the project for months. But thanks to the timely infusion of capital the previous year and its 1990s restructuring, Related was in a far better position than many of its competitors. Even so, the firm did have some exposure; its projects in Aspen, Colo.; Waltham, Mass.; and Arizona derailed. In 2006, Related had entered into a partnership with camera giant Polaroid to transform its 119-acre headquarters in Waltham into a $500 million mixed-use development. But by December 2008, Polaroid had gone bankrupt. Eventually, lenders took control of the project and auctioned it off for $40 million. Related and its development partners also ran into problems on a $1.2 billion, 144-acre project outside of Phoenix. In June 2009, Nordstrom and Bloomingdale’s pulled out as anchor tenants, complaining the developers had failed to make sufficient progress. That bank foreclosed on Related’s partner that December. “Going into the downturn, we were probably more exposed than we wanted to be,” Blau said. “There are points in the cycle when you should just not be building when things get too frothy.” But, Blau added, “we went into this downturn in a much better position then we went into the 1990 downturn, so the company was much more able to weather the storm.” With development frozen, Related looked for other opportunities. It began doing advisory business for banks. In its most high-profile deal it even served as construction manager of the $4 billion Cosmopolitan Resort in Las Vegas on behalf of Deutsche Bank, which had made a $760 million loan that had gone into default. They also sought out development opportunities in Abu Dhabi, China and Saudi Arabia. In doing the advisory work, Related found that most of

the banks, however, had little interest in putting more capital into construction deals that had gone bad, even if there were profits to be had when the projects were fully developed. Some asked Related if it would be interested in buying the properties. So Related hired real estate financier (and fellow Michigan alum) Justin Metz from Goldman Sachs and launched a new business line, raising a $825 million distressed equity fund. Since no banks were lending, they also raised $250 million for a construction loan fund. As the market has picked up, the big deals for Related have continued. In addition to the 13 million-square-foot Hudson Yards project, Related recently won the right to build a 1 millionsquare-foot, retail-and-entertainment complex at Willets Point, and is developing the Hunter’s Point South housing project in Queens and the Gateway II shopping center in East New York, Brooklyn. As for Blau, “Jeff has done extremely well in any sense of the word,” Ross said. “He has been able to achieve all the financial success that he envisioned, and he is a very, very wealthy man today.” Indeed, last January, Blau sold the penthouse he designed back in the 1990s for $14 million. With a growing family — Blau and wife Lisa have two young children — he moved into a $21.5 million penthouse at 1040 Fifth Avenue soon after. Some observers wonder what impact the end of the Bloomberg years will have on Related’s fortunes — the firm has long enjoyed close ties with the administration, and some critics maintain it has helped win them the inside track on deals. But whatever the outcome, the company is only likely to continue to expand under Blau’s leadership. “Our goal here is to really create one of the world’s best development companies,” Blau said. “To do that you have to continue to expand, continue to push and be innovative. You can’t keep doing the same thing over and over again in this business, or you are going to be a dinosaur.” TRD

Blau from page 70 quickly expanded, as he took over the smaller affordablehousing projects that still comprised the ﬁrm’s bread and butter, and focused on big-picture projects and expansion to overseas markets. In recent years, Blau has “been kind of taking a lot of CEO responsibilities,” Ross explained, “with a lot of different areas reporting to him that I didn’t want reporting to me, so that I could do what I want to be doing.” Despite the change in title, Ross is likely to be at the center, alongside Blau, in many of the company’s endeavors. “Stephen, at this point, has the luxury of picking and choosing what he wants to work on and spend time on,” Blau said. “Today, he spends the largest part of his time on Hudson Yards. ... It’s so impactful, so city-changing — he spends more than half his time on that.”

Team players As their relationship has evolved over the last 10 years, Ross, Blau and, increasingly, Beal have worked hand in glove. In early 2007, when Related was putting together its first bid on the Hudson Yards project, the firm began to talk about ways to “set ourselves up for the long-term,” Blau said. For years, Related had been going to pension funds and banks to raise capital deal by deal. But the firm has since chosen a different path, selling a 25 percent equity-and-debt stake in the business to investors, including Goldman Sachs, computer magnate Michael Dell and the Kuwaiti Investment Authority among others. (Ross, Blau and Beal own a majority of the company.) The firm ended up losing their initial bid for Hudson Yards after its prime tenant, News Corp., pulled out just hours before final bids were due to the Metropolitan Transportation Authority, the state agency that owns the site. But a few months later in May 2008, Blau’s phone rang as he was preparing to leave for the day. Tishman Speyer, which had won the bid, had withdrawn, the caller told him. Was Related still interested? Blau headed straight to the offices of the MTA’s lawyers at

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Residential market

from page 16

owners are now buying higher-end apartments, allowing studio owners to move into one-bedrooms and ﬁrst-time buyers to get out of the rental market, he said. However, Akerly said that she is seeing ﬁrst-time homebuyers — “extremely active” in the market for homes priced under $600,000 — passing over studios to buy one-bedrooms. Part of the reason (which has been the case for the past several years) is low mortgage rates, which show no signs of rising. Last month, Ben Bernanke, the chair of the Federal Reserve, outlined a plan for a third round of quantitative easing, which will effectively keep interest rates near rock-bottom

levels until mid-2015. Brokers are now looking ahead to the next big date on the real estate calendar: the Nov. 6 election. (See stories starting on page 37.) While brokers acknowledged that the Manhattan housing market is less directly impacted by the occupant of the White House than it is by broader economic trends, they said that doubt about who would win the presidential election is keeping some buyers and sellers on the fence. Indeed, 25 percent of Americans said they would delay — or would consider delaying — a home purchase until after the

election, according to a poll conducted last month by market research giant Harris Interactive. Just over half of respondents said the election would not affect their decision. “The election itself will have a positive effect on the market just because it will be over with,” Corcoran Sunshine’s D’Adamo said. “It is the uncertainty that doesn’t help the market.” Navarro added: “Once the uncertainty of who’ll occupy the White House evaporates, equity markets will continue their gains and spur an increase in sales transactions — in New York ﬁrst, and more so than in any other U.S. market.” TRD

Frank’s Jeffrey Gural and Rudin Management’s Eric Rudin, who each gave $5,000 to Obama’s campaign in 2012. (The maximum that can be donated is $2,500 for the primary and the same for the general election.) Romney took in contributions of $2,500 from Prudential Douglas Elliman’s Raphael De Niro, H.J. Kalikow & Co.’s Peter Kalikow, Cushman’s Glenn Rufrano and Glenwood Management’s Leonard Litwin, campaign ﬁnance records show. On the residential front, agents and executives from the Corcoran Group provided more direct campaign donations this year than any other city real estate company, with a total of $20,621. Of that, about $17,500 went to Obama, and $3,000 to Romney. Agents and executives at Elliman also tended to lean toward Obama. Direct donations from Elliman totaled roughly $11,800, with about $9,000 of that going to Obama and the rest to Romney.

The majority of Halstead Property also appears to consist of Obama supporters. Halstead pros contributed $7,273, with $4,773 going to Obama and $2,500 to Romney. Romney supporters seem to be more numerous among the city’s über-high-end residential firms. At Sotheby’s International Realty — the city firm with the highest median listing price, according to TRD’s annual ranking — agents and execs gave $7,045, with $5,250 of that going to Romney. At Brown Harris Stevens, $4,705 went to Obama and $4,000 to Romney. Commercial brokers and execs seem to be more united within their firms. For example, Cushman’s personnel gave $11,750 to Romney and only $277 to Obama. Meanwhile, professionals at Eastdil Secured donated $8,898 — all of it to Obama. In addition, execs at Rudin Management gave $10,000 to Obama this year and $1,000 to Newt Gingrich — none went to Romney. TRD

York ofﬁce transaction market, if a higher value could have been realized if the B-note had not been restructured with a shareholder that had an ownership interest in the special servicer.” But other sources argued that Vornado is taking a substantial risk investing any money behind the massive debt. In addition, 666 Fifth is the only Manhattan property LNR had specially serviced in which Vornado took an ownership through negotiations. The only other property Vornado acquired where LNR had been special servicer was 334 Canal Street, which was purchased at a public auction. And other real estate ﬁrms have purchased special servicers, too. Andrew Farkas’s Island Capital Group purchased special servicer Centerline Holding, now called C-III Asset Management, in 2010. In August, Bethesda, Md.-based Walker & Dunlop completed the purchase of CWCapital, which is headed by Michael Berman. (LNR is headed by co-CEOs Tobin Cobb and Justin Kennedy.)

Perhaps one of the reasons the firms are holding onto many of their distressed loans is because building prices have recovered from the downturn. “It’s a testament to the resiliency of New York’s real estate market,” said Terrence Oved, partner at the law firm Oved & Oved. Accepting steep discounts, in hindsight, can look like poor decision-making. Indeed, one of the largest loan sales in Manhattan saw an enormous loss. On behalf of bondholders, LNR sold the Praedium Group’s defaulted $192 million loan, secured by 32 mostly rent-regulated buildings with 1,039 apartments, to Manhattan property investment firm Dune Real Estate, for just $120 million in November 2011, LNR documents show. Insiders hoping for more deals like that have argued that special servicers want to hold on to properties to earn the management fees, generally .25 percent of the value of a loan each year. But others argue that the exit fee that a special servicer receives — generally 1 or 2 percent of the loan (or the equivalent of four to eight years in management fee payments) — provides an incentive for the servicer to restructure it. “The biggest thing with CMBS is that it is an insider’s game,” said one real estate executive, who asked not to be identified because he was not authorized to discuss servicers. Zipkowitz said it is baffling to deal with the servicers’ bureaucracy and firm-specific standards. He added that the situation is compounded by high turnover at the companies. Overall, “borrowers have become more and more frustrated with the lack of cohesion and universal standards among competing special servicers,” Zipkowitz added. TRD

Romney-Obama from page 46 Obama well behind Romney’s campaign, which raised $344,325. Some view Obama’s besting of Romney this year as part of a broader political trend. “I think there is a little bit of disenchantment,” said Lawrence Longua, a clinical associate professor at the Schack Institute of Real Estate at NYU. He contrasted it with a period of GOP optimism after the party trounced Democrats in the 2010 midterm elections. Nationwide, Obama has outraised Romney in direct donations, pulling in $432 million versus Romney’s $279 million, ﬁgures from OpenSecrets.org show. Romney leads on the super-PAC front, however: Groups backing Romney have raised $155 million, and those supporting Obama have raised just $73 million.

Top 2012 industry donors Top industry contributors to Obama included Tishman Construction’s Daniel Tishman, Newmark Grubb Knight

Special servicers from page 56 in order to cut near-term debt payments, but not reduce the principal as a way to ultimately increase the likelihood that bondholders will come out whole. After Kushner defaulted on the original $1.2 billion in debt, Vornado and Kushner agreed in December 2011 to inject a combined $110 million in exchange for Vornado getting a 49.5 percent ownership in the office portion of the building. In the deal — which is no longer distressed — LNR cut the $1.2 billion loan into a $1.1 billion “A” piece, with an interest rate rising from 3 percent to 6.35 percent over five years, and a B note with an original principal value of $115 million. Over the next five years, that “B” note value will nearly triple to $304 million because of deferred interest payments, a TRD analysis of documents on LNR’s website shows. Vornado and LNR declined to comment for this article. Yet the restructuring calls for the bondholders and the owners to share in the losses or gains depending on what the building ultimately sells for. Brokers say LNR is not warm and fuzzy to deal with, though some criticize all firms equally. “LNR is notorious for being the most difficult to deal with, but also very well known for their structure to rework their loans,” said one active investment sales broker, who requested anonymity when discussing potential clients. (Special servicers will hire a brokerage to market the note on a distressed property — or in the case of a foreclosure, the property itself.) Still, some said Vornado appears to have gotten a sweetheart deal from the special servicer at 666 Fifth because of its partial ownership of LNR. Analysts at the Austin, Tex.-based research firm Amherst Securities Group said in a report from January that “investors must still wonder that in the fairly active New 114 October 2012 www.TheRealDeal.com

By the numbers Not all of the seven active special servicers in Manhattan operate from the same playbook. In fact, the difference in how special servicers deal with loans can be stark. Five of the seven most active New York ﬁrms — LNR, CWCapital, TriMont Real Estate Advisors, Berkadia Commercial Mortgage and Midland Loan Services — have ﬂushed most of their loans through their systems, either by selling or restructuring them, the TRD analysis shows. (In CWCapital’s case, that excludes Stuy Town, where they are still in control of the loan.) Meanwhile, two — Torchlight and C-III Asset — have continued to service at least 44 percent of their distressed assets without changing the loan terms.

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Commercial market

from page 24

The asking rent to lease Erbo’s building is $35 per foot, according to CoStar. That price is below the average asking rent in Midtown South, which rose last month by $0.05 per foot to $47.74 per square foot. The availability rate, meanwhile, fell by 0.1 points to 8 percent, Cassidy Turley showed. The average asking rent in Midtown South has climbed 23.7 percent over the past two years, according to Cassidy Turley. Still, deals in Midtown South are getting done at vastly different price points, even within the same single block. Colliers broker Given pointed to 23rd Street between Fifth and Sixth avenues, where the buildings have an unusually wide spread in asking prices. Some tenants in L&L Holding’s 200 Fifth Avenue are paying $85 per foot, for example, while some mid-block buildings are doing deals at about $55 to $60 per square foot. Further west,

some quality buildings on Sixth Avenue have done deals at about $37 per square foot, he said. “It’s really crazy when you look at Midtown South,” Given said. “There is a $50-per-square-foot swing within one block.” Herb Goldberg, commercial division manager for brokerage City Connections Realty, which represents the 350,000-square-foot Masonic Hall at 71 West 23rd Street, disputed that $37 ﬁgure. He said asking rents at the Masonic Hall building would likely be between $48 and $55 per foot. “We do not have any available space, and if we did it would be considerably higher than $37,” he said.

One of the largest Downtown spaces to hit the market last month was 82,274 square feet on two full ﬂoors at L&L’s 195 Broadway. The space is currently occupied by the advertising ﬁrm Havas, which is moving to Hudson Square. Jason Greenstein, a managing director at Newmark Grubb Knight Frank, is marketing the space. The Havas lease runs through December 2015, CoStar data shows, but L&L’s David Berkey said the landlord is open to terminating the Havas lease and striking a direct deal. The asking rent for direct space in the building is $45 per square foot, Berkey said. That’s a bit higher than the overall Downtown average asking rent of $39.38 per square foot, which was up $0.58 per foot last month from August. The availability rate was 10.3 percent, up 0.1 points from the prior month. TRD

Downtown The Downtown market was the only one to see an increase in availability last month, even as asking rents rose modestly.

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                     

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OC TOBER 2

The Association of Real Estate Women presents a luncheon featuring guest speaker Robert Selsam, a senior vice president and regional manager at Boston Properties. Club 101, 101 Park Avenue. 11:30 a.m. to 2 p.m. Fee: Free for AREW members, $90 for CREW Network members, $120 for nonmembers. Information and registration: www.arew.org.

ALM Media Properties presents the 11th-annual RealShare New York conference. Panelists include James Kuhn, president of Newmark Grubb Knight Frank; Glenn Rufrano, president and CEO of Cushman & Wakefield; Rob Speyer, president and co-CEO of Tishman Speyer; and Edward Minskoff of Edward J. Minskoff Equities. Grand Hyatt New York, 109 East 42nd Street. 7:15 a.m. to 1 p.m. Fee: $275. Information and registration: www.cvent.com.

16-19

The Urban Land Institute presents its annual fall meeting and networking event, entitled “What’s Next: Real Estate in the New Economy.” The keynote speaker is Alan Simpson, former U.S. Senator and cochair of the National Commission on Fiscal Responsibility and Reform. Additional speakers include Robert Gibbs, former White House press secretary and senior advisor to President Barack Obama’s 2012 reelection campaign, and Karl Rove, former deputy chief of staff and senior staff advisor to President George W. Bush. Colorado Convention Center, 700 14th Street, Denver, Colo. Fee: $750 to $2,150. Information and registration: www.ulifall.org.

The New York Building Congress presents a “Construction Industry Breakfast Forum,” featuring Robert Steel, New York City deputy mayor for economic development, and the release of the New York City Construction Outlook 2012-2014. Hilton New York, 1335 Sixth Avenue, Trianon Ballroom. 8 a.m. Fee: $85 for members, $800 for member tables, $150 for nonmembers, $1,250 for nonmember table. Information and registration: www.buildingcongress.com.

Columbia University presents its secondannual NYC Real Estate Expo. Panelists include Red Apple Group Chairman and CEO John Catsimatidis, Murray Hill Properties president and CEO Norman Sturner and Stonehenge Partners’ Ofer Yardeni. Columbia University – Alfred Lerner Hall, 2920 Broadway. 7 a.m. to 5 p.m. Fee: $80. Information and registration: www.nycrealestateexpo.com.

The American Institute of Architects presents its “Heritage Ball 2012.” Honorees include Cesar Pelli, senior principal at Pelli Clarke Pelli Architects, and Friends of the High Line cofounders Joshua David and Robert Hammond. Chelsea Piers, Pier Sixty. 6 to 9 p.m. Fee: $1,000. Information and registration: cfa.aiany.org.

C A L E NDA R 1

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The Mortgage Bankers Association of New York hosts “An Evening with the Tallest of the Tall: NYC’s Skyscrapers.” Special guest speaker Stacy Wallach, an adjunct professor at Pace Law School’s Real Estate Law faculty, will discuss the history of Manhattan’s best-known skyscrapers. A brief cocktail and networking session will be held prior to the start of the dinner presentation. Club 101, 101 Park Avenue. 6 to 8:30 p.m. Fee: $95 for members, $115 for nonmembers. Information and registration: www.mbany.org.

The Council of New York Cooperatives & Condominiums hosts a workshop entitled “Survival Strategies for Condo Boards & Unit Owners.” Attorney Stuart Saft, chairman of the board of CNYC, will discuss obligations and responsibilities for unit owners, condo boards and building sponsors. Location TBA. 7 p.m. Fee: Free for members, $35 for nonmembers in advance, $50 for nonmembers at the door. Information and registration: www.cnyc.com.

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CapRate Events hosts “Sale Leaseback Summit 2012,” addressing key themes in the sale leaseback arena. Speakers include Jonathan Hipp, president and CEO of Calkain Companies, and Gordon Whiting, managing director of Angelo, Gordon & Co. The Yale Club of New York, 50 Vanderbilt Avenue. 7:30 a.m. to 4:45 p.m. Fee: $499. Information and registration: www.cre-events.com.

The American Institute of Architects and Architectural Record magazine host “Innovation Conference 2012: Design Leaders Envision the Next Decade.” Presenters include Jeanne Gang of Studio Gang Architects; William Baker of Skidmore, Owings & Merrill; Francis Kéré, founder of Francis Kéré Architecture; and David Adjaye of Adjaye Associates. McGraw Hill, 1221 Sixth Avenue. 8 a.m. to 7 p.m. Fee: $495, $295 for AIA, AIANY, Architectural League NY, CTBUH, SMPS and Skyscraper Museum members. Information and registration: www.aiany.org.

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Professional Women in Construction hosts a networking event, “Meet the Movers and Shakers: 2013 Forecast and Beyond.” Guest speakers include Anthony Schirripa, chairman and CEO of Mancini-Duffy; Joseph Aliotta of Swanke Hayden Connell Architects; and Christopher Ward, executive vice president at Dragados USA. 101 Park Avenue. 5:30 to 8 p.m. Fee: $80 for members, $90 for nonmembers. Information and registration: www. pwcusa.org.

The New York City Bar Association and law firm Schulte Roth & Zabel host a networking forum, “Bridging the Gap,” with keynote speaker Douglas Durst, chairman of the Durst Organization. Other speakers include Steven Witkoff, chairman and CEO of the Witkoff Organization, and Wendy Silverstein, executive vice president and cohead of Acquisitions & Capital Markets at Vornado Realty Trust. The New York City Bar Association, 42 West 44th Street. 7:30 a.m. to 5 p.m. Fee: $599. Information and registration: www.srzbridgingthegap.com.

The Real Estate Board of New York presents the Residential Deal of the Year Awards and Charity Gala. This year’s theme is “REBNY Runway: Celebrating Fashionable New York.” The event will recognize the year’s most notable residential sales and rental deals. The Most Promising Residential Rookie Salesperson of the Year and Henry Foster awards will also be presented. The Metropolitan Pavilion, 125 West 18th Street. 6:30 to 11 p.m. Fee: $425. Information and registration: www.rebny.com.

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By GaBrielle Birkner The Mahopac, N.Y., man who jumped from the Bronx Zoo monorail into a tiger’s den was identified as David Villalobos, a former real estate agent with Bond New York. Villalobos, 25, suffered serious injuries, but survived after being mauled by a 400-pound Siberian tiger named Bachuta. Asked by police why he made the potentially fatal leap, Villalobos reportedly said: “Everybody in life makes choices.” Villalobos’s Facebook page features many photos of wild animals, including one posted a day before the incident of a mother tiger tending to her cub. The real estate agent, who primarily represented rental units, had worked at Bond for about seven months, beginning last year. A source told The Real Deal that he had simply stopped showing up A Siberian tiger for work, and another said he was no longer with the company as of about six months ago. Villalobos was in the tiger’s den — part of the zoo’s Asia Wild exhibit — for about 10 minutes before zoo officials were able to bring him to safety. He was charged last month with misdemeanor trespassing.

Fisher Bros. buys American Stock Exchange site: Sources By adam Pincus Fisher Brothers, a family-run real estate investment company, purchased the American Stock Exchange building and a neighboring development site in Lower Manhattan, multiple sources said. The sales price was $150 million. Fisher Brothers closed last month on the acquisition of 86 Trinity Place, the former home of the American Stock Exchange, and 22 Thames Street next door. The sellers, Michael Steinhardt and Allan Fried, purchased the two properties in 2011. They paid $17 million for the vacant American Stock Exchange building and $48 million for 22 Thames Street, city property records show. Steinhardt and Fried had discussed plans to build a 174-unit hotel with 100,000 square feet of retail at the Stock Exchange building and a 300,000-square-foot residential building at 22 Thames Street. 122 October 2012 www.TheRealDeal.com

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