The Real Deal October 2014 by The Real Deal

Crowdfunding field gets crowded

www.TheRealDeal.com

Midtown South’s priciest office leases

NYC’s newest developers

N ew Yo r k R e a l E s tate N e w s

De Blasio’s next big tests

166

A farewell to Tamir Sapir

Vol. 12 No. 10 October 2014 $3.00

Barnett vs. Everyone

The mega developer has become a poster child for controversial industry issues, but he’s digging in — and coming out ahead p88

A Gold Coast glut in Jersey? A roundup of the roughly 10,000 new residential units in the pipeline right across the Hudson p58

Rising construction prices hit developers Breaking down the cost of what it takes to put up a NYC building today p40

The comeback of

Michael Shvo

The bad boy broker-turned-developer opens up about his risky new Manhattan projects. Plus, other real estate bigwigs from TRD’s new book of Closing interviews. p93 & 170 PHOTOGRAPH BY MARC SCRIVO

LIVING THE MOMENT

O ve r l o o ki n g t h e s p a r kl i n g Pa ci f i c O ce a n , T h e Seych el l e i s i d ea l l y l o ca ted i n th e h ea r t o f Sa n ta Mo n i ca . T h e g ra ci o u s re s i d e n ce s b o a s t a n u n p a ra l l el ed a tten ti o n to d eta i l a n d a n a r ra y o f s e r v i ce s a n d a m e n i t i e s t h a t o f f e r re s i d e n t s t h e l u xu r y o f wel l n ess a n d co nven i en ce. Ren ow n ed C l o d a g h De s i g n h a s cra f t e d a r i ch , wa r m e nv i ro n m en t th a t rei n f o rces a co n n ecti o n to n a tu re’s m o s t cove t e d e l e m e n t s . H o n e d m a r b l e s co m p l i men t p o l i sh ed q u a r tzi tes a n d wa r m wo o d to n es a s wa l l s o f g l a ss o p e n t o ex p a n s i ve p r i va t e t e r ra ce s a n d o cea n v i ews. Th e b rea th ta ki n g ro o f to p p o o l a n d l o u n g e i nv i t e s re l a xa t i o n , w i t h eve n i n g s wa t ch i n g th e su n set over th e i n f i n i te h o r i zo n . E x p e r i e n ce a m a g n i f i ce n t l i f e . E x p e r i e n ce T h e S eych el l e.

CLOSINGS NOW IN PROGRESS One, Two and Three Bedroom Residences from $825,000 • Penthouse Residences from $10,000,000 Sales Gallery open Monday - Saturday 10am - 6pm by appointment only • 310.394.1100 1755 Ocean Avenue, Santa Monica, CA 90401 • SeychelleSantaMonica.com The developer reserves the right to make modifications to the floor plans, pricing and unit dimensions of residences or other areas at any time. This is neither an offer to sell nor a solicitation to buy in any state where prohibited by law or where prior registration is required. Developer shall have no obligation to sell any residence unless the purchaser executes a sale agreement and other documents required by the developer and such documents are executed and accepted by the developer. The development will be subject to the jurisdiction of a homeowners association and owners will be obligated to pay assessments to the association for maintenance of common facilities. Please review the association budget and Final Subdivision Public Report issued for the development by the California Department of Real Estate for more information. CA BRE #01005145.

ASHKENAZY

ACQUISITION

285 Lafayette Street

Premier Manhattan SoHo

NEW TO OUR PORTFOLIO

LOCATION Frontage on Lafayette, Jersey and Mulberry Streets in the heart of SoHo. SIZE SUBWAY PROXIMITY ±6,900 SF Available within 2 blocks *Divisions Considered within 2 blocks AVAILABLE FRONTAGE within 3 blocks ±43’-4” on Lafayette St. ±49’-4” on Mulberry St. INFORMATION • Frontage on both Lafayette & Mulberry Streets • B rick walls, arched brick doorways, tin ceilings, new wood floors • Neighboring retail includes REI, Equinox, Zara, Uniqlo, Forever 21, Bloomingdales, Hollister, H&M

249 Church Street

TriBeCa LOCATION Northeast Corner of Church & Leonard Streets

SIZE Ground: Cellar: Sub Cellar: Total:

±1,561 SF ±1,556 SF ±1,463 SF ±4,580 SF

FRONTAGE Over 85’ of frontage

*can be combined

FRONTAGE Over 75’ of frontage on Lexington Avenue & 40’along 93rd St. SUBWAY PROXIMITY within 3 blocks within 7 blocks

INFORMATION • Located i n the Upper East Side’s Carnegie Hill neighborhood •C urrent tenants include Ottomanelli Brothers Restaurant, Vela Pizzeria & Pet Central

1991 Broadway

Lincoln Square/Upper West Side FRONTAGE LOCATION SIZE Over 55’ of prime glass On Broadway between 67th Ground: ±4,600 SF frontage on Broadway Mezzanine: ±1,965 SF & 68th Streets Lower Level: ±2,074 SF SUBWAY PROXIMITY Total: ±8,639 SF within 5 blocks INFORMATION • D irectly adjacent to the Apple store at Lincoln Center • D irectly across from the World Famous Lowes Theater and only 3 blocks from Lincoln Center for the Performing Arts

145 Greene Street

SoHo LOCATION Corner of Greene Street & Houston Street

SIZE Ground: Lower Level: Total:

±1,936 SF ±811 SF ±2,747 SF

FRONTAGE Over 124’ of frontage along Houston Street

INFORMATION • Extraordi nary frontage in SoHo • N eighboring retail includes: Chanel, Louis Vuitton, Club Monaco, Ralph Lauren, Burberry, Dior • A t the cross-roads of SoHo, NYU, Greenwich Village, and NoHo

For Leasing Information Please Contact:

A.J. Levine • alevine@aacrealty.com • 646.214.0245 Daniel Iwanicki • diwanicki@aacrealty.com • 646.214.0251

NEW TO OUR PORTFOLIO

LOCATION Spans the entire city block between Wadsworth Avenue & Broadway on the South side of W. 181st St. SUBWAY PROXIMITY within 1 block within 4 blocks SIZE ±25,865 SF

FRONTAGE ±150’ on 181st St. ±102’ on both Broadway & Wadsworth Ave.

*divisions considered

INFORMATION • N eighboring retail includes: Capital One,Duane Reade, McDonald’s, Foot Locker, Citi Bank, The Vitamin Shoppe • Located 1 bl ock North of the GW Bridge Bus Terminal which serves over 4 Million passengers annually and is undergoing a $183.2 million renovation with an array of first class retail and will quadruple in size to 120,000 SF

Upper Manhattan LOCATION Southwest Corner of 5th Avenue & 116th St.

SIZE Available ‘A’: ±3,295 SF* Available ‘B’: ±2,444 SF* Total: ±5,739 SF *can be combined

SUBWAY PROXIMITY within 1 block within 3 blocks within 4 blocks

1400 Fifth Avenue

INFORMATION • 13’ average ceiling heights • At the base of Harlem’s first sustainably constructed condominium building

Upper East Side LOCATION SIZE Northwest corner of Available A: ±895 SF Lexington Avenue & 93rd St. Available B: ±480 SF Total: ±1,375 SF

ACQUISITION

4250 Broadway @ 181st Street

Washington Heights

FRONTAGE ±45’ on Fifth Avenue; ±119’ on 116th St.

INFORMATION • Excel lent access to transportation in a central, highly accessible location • D irectly opposite 56 Leonard, the largest residential development in TriBeCa • Over 15’ -9” ceiling heights with two additional below grade levels

1424 Lexington Avenue

Retail Opportunities

ASHKENAZY

Philip House (1311-1337 Lexington Avenue)

Upper East Side LOCATION Located on Lexington Avenue between 88th & 89th Streets

SIZE Up to ±4,000 SF

SUBWAY PROXIMITY within 2 blocks

INFORMATION • Situated at the base of Philip House, a classic 12-story prewar condominium conversion containing 71 luxury residences • Located in the heart of Carnegie Hill, home to some of the world’s wealthiest residents

Lower East Side LOCATION Corner of Delancey & Clinton Streets, at the foot of the Williamsburg Bridge FRONTAGE Over 100’ of frontage along Delancey Street

SIZE Ground: ±2,725 SF Up To: ±5,250 SF* *with proposed 2nd level

SUBWAY PROXIMITY within 1 block

156 Delancey Street

INFORMATION • Be seen by over 111,189 vehicles and over 200k people traveling the bridge each day • Directly across from the newly approved Essex Crossing Development, a 1.9M SF mixed use project including 1,000 new housing units

TriBeCa LOCATION Southeast Corner of Church Street & Leonard Street

SIZE Ground: Cellar: Sub-Cellar: Total:

241 Church Street (66 Leonard Street) ±7,080 SF ±8,155 SF ±13,236 SF ±28,471 SF

FRONTAGE ±125’ on Church Street ±40’ on Leonard Street

INFORMATION • Located at the base of the premier residential building in TriBeCa and directly across the street from 56 Leonard, the largest residential development in TriBeCa (145 units over 60 stories) • Central, highly accessible location situated between Wall Street and the Financial District to the South and the West Village and SoHo to the North

Join our Leasing Team:

careers@aacrealty.com

ASHKENAZY

ACQUISITION

285 Lafayette Street

Premier Manhattan SoHo

NEW TO OUR PORTFOLIO

249 Church Street

TriBeCa LOCATION Northeast Corner of Church & Leonard Streets

SIZE Ground: Cellar: Sub Cellar: Total:

±1,561 SF ±1,556 SF ±1,463 SF ±4,580 SF

FRONTAGE Over 85’ of frontage

*can be combined

FRONTAGE Over 75’ of frontage on Lexington Avenue & 40’along 93rd St. SUBWAY PROXIMITY within 3 blocks within 7 blocks

INFORMATION • Located i n the Upper East Side’s Carnegie Hill neighborhood •C urrent tenants include Ottomanelli Brothers Restaurant, Vela Pizzeria & Pet Central

1991 Broadway

145 Greene Street

SoHo LOCATION Corner of Greene Street & Houston Street

SIZE Ground: Lower Level: Total:

±1,936 SF ±811 SF ±2,747 SF

FRONTAGE Over 124’ of frontage along Houston Street

For Leasing Information Please Contact:

A.J. Levine • alevine@aacrealty.com • 646.214.0245 Daniel Iwanicki • diwanicki@aacrealty.com • 646.214.0251

NEW TO OUR PORTFOLIO

LOCATION Spans the entire city block between Wadsworth Avenue & Broadway on the South side of W. 181st St. SUBWAY PROXIMITY within 1 block within 4 blocks SIZE ±25,865 SF

FRONTAGE ±150’ on 181st St. ±102’ on both Broadway & Wadsworth Ave.

*divisions considered

Upper Manhattan LOCATION Southwest Corner of 5th Avenue & 116th St.

SIZE Available ‘A’: ±3,295 SF* Available ‘B’: ±2,444 SF* Total: ±5,739 SF *can be combined

SUBWAY PROXIMITY within 1 block within 3 blocks within 4 blocks

1400 Fifth Avenue

INFORMATION • 13’ average ceiling heights • At the base of Harlem’s first sustainably constructed condominium building

Upper East Side LOCATION SIZE Northwest corner of Available A: ±895 SF Lexington Avenue & 93rd St. Available B: ±480 SF Total: ±1,375 SF

ACQUISITION

4250 Broadway @ 181st Street

Washington Heights

FRONTAGE ±45’ on Fifth Avenue; ±119’ on 116th St.

1424 Lexington Avenue

Retail Opportunities

ASHKENAZY

Philip House (1311-1337 Lexington Avenue)

Upper East Side LOCATION Located on Lexington Avenue between 88th & 89th Streets

SIZE Up to ±4,000 SF

SUBWAY PROXIMITY within 2 blocks

Lower East Side LOCATION Corner of Delancey & Clinton Streets, at the foot of the Williamsburg Bridge FRONTAGE Over 100’ of frontage along Delancey Street

SIZE Ground: ±2,725 SF Up To: ±5,250 SF* *with proposed 2nd level

SUBWAY PROXIMITY within 1 block

156 Delancey Street

TriBeCa LOCATION Southeast Corner of Church Street & Leonard Street

SIZE Ground: Cellar: Sub-Cellar: Total:

241 Church Street (66 Leonard Street) ±7,080 SF ±8,155 SF ±13,236 SF ±28,471 SF

FRONTAGE ±125’ on Church Street ±40’ on Leonard Street

Join our Leasing Team:

careers@aacrealty.com

4 43 G R E E N W I C H S TR E E T

4 43GREENWICH.CO M

A TRIBEC A L ANDMARK. REIMAGINED.

212.87 7.4 4 3 3

HAYES DAVIDSON

E xc l u s i v e S a l e s A g e n t C A N TO R- P EC O R E L L A

Architec ture & Interiors

Developer M E T RO LO F T D E V E LO P E R S , L LC

Sponsor: SGN 443 GREENWICH STREET OWNER LLC, c/o Metro Loft Management LLC,5 Hanover Square, 3rd Floor, New York, New York 10004. THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE FROM SPONSOR. FILE NO. CD140063.

SEAMLESS

seam•less adjective \’sēm-l s\ e

our

proven

and

integrated

S O L U T I O N S deliver a responsible and cohesive approach to your individual project

the make-believe schedules, change

eliminating the layers.

budgets, unpredictable orders and expensive

eliminating the excuses.

that’s why we’re here.

THE DESIGN/BUILD SOLUTION

THE RENOVATED HOME T H E R E N O VAT E D H O M E .C O M

MY “LIBRARY ” KITCHEN, c.2014 FOLLOW US

therenovatedhome.com

President

SEAMLESS

seam•less adjective \’sēm-l s\ e

our

proven

and

integrated

S O L U T I O N S deliver a responsible and cohesive approach to your individual project

the make-believe schedules, change

eliminating the layers.

budgets, unpredictable orders and expensive

eliminating the excuses.

that’s why we’re here.

THE DESIGN/BUILD SOLUTION

THE RENOVATED HOME T H E R E N O VAT E D H O M E .C O M

MY “LIBRARY ” KITCHEN, c.2014 FOLLOW US

therenovatedhome.com

President

Contents O C T O B E R 2 0 1 4

INSIDE OUT

Listings play follow the leader

The new divide and conquer

Crowdfunding gains steam

Tight inventory, high prices spur waves of listings in some buildings.

A growing number of NYC investors spread cash across multiple units. More real estate crowdfunding sites are grabbing investors’ dollars.

Prodigy Network used $25 million raised through crowdfunding to buy 17John.

At the desk of: Jim Gricar The Halstead Property president talks about life in a Broadway touring company, his retro office decor and falling in love with France. Halstead Property President Jim Gricar

Want to know what goes on at the New School? Passersby need only glance at the institution’s new University Center in Greenwich Village to understand that progressive design education happens here. The building by Skidmore, Owings & Merrill expresses the school’s interdisciplinary approach through a brass-shingled facade crisscrossed by a series of glass-enclosed stairways that highlight a vivid tableau of students circulating within. The unique system encourages collaboration—and a new dialogue between campus and community that is sure to be conversation for decades to come.

Transforming design into reality

In their words ...

Credit scores in spotlight

NYC’s construction craze

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

Congress eyes mandating changes to how scores are calculated.

Building boom accompanied by increase in non-union labor, rising materials costs.

dollar buildings 43 Billion A look at three of the most expensive buildings under construction in NYC.

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

The Times Square Shuffle Rising rents and lucrative LED signage leads to a surge in development and building sales in the tourist-packed area.

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

How pricey is Midtown South? A rundown of the priciest office leases in the city’s hottest submarket.

Times Square

New players in the game

Architect: Skidmore, Owings & Merrill Photograph: Tex Jernigan

10 October2012 2014 www.TheRealDeal.com www.TheRealDeal.com 8 October

A look at the upstart developers and established national builders that have been making gains in NYC since the bust several years ago.

HAP Investment Partners is building this 98-unit rental in Washington Heights.

www.TheRealDeal.com March 2012 00

Recent Transactions

$31,000,000

$15,000,000

$12,000,000

Loan Origination Mixed-Use Conversion Brooklyn, NY September 2014

Loan Origination Multifamily Development Northvale, NJ September 2014

Mezz Loan Origination Multifamily Brooklyn, NY September 2014

$19,000,000

$33,000,000

$2,000,000

Loan Origination Multifamily Manhattan, NY August 2014

Loan Origination Multifamily Manhattan, NY July 2014

825 Third Avenue 37th Floor New York, NY 10022

(646) 472-1900

www.madisonrealtycapital.com

Includes deals closed by Sullivan Realty Capital, LLC, an investment adviser registered with the Securities and Exchange Commission doing business as Madison Realty Capital, and its afďŹ liates. Past performance does not guarantee future results. It should not be assumed that the recommendations made in the future will be proďŹ table or will equal the performance of the securities listed. Holdings are subject to change.

Contents continued Coast boom 58 Gold A large number of new residential

NEW TWIST

towers are going up along the New Jersey waterfront.

Kushner’s Journal Squared development in Jersey City

Lee goes upscale 62 Fort Two new luxury developments may help the New Jersey city join the Gold Coast.

The next big tests for de Blasio Affordable housing is just one of the big real estaterelated challenges before the mayor.

Preserving affordable apartments in Stuyvesant Town and Peter Cooper Village is one of the mayor’s top challenges.

This City Councilman doesn’t do dinner The influential Land Use chair David Greenfield tries to stick to the middle ground when dealing with developers.

The new ideas that poured into Lower Manhattan’s rebuilding resulted in a stronger infrastructure—and some architectural gems. A key piece in the undertaking is Pelli Clarke Pelli’s new Pavilion at Brookfield Place, a public space serving the 35,000 commuters who use the PATH system daily. Because the system’s track network runs underneath, the pavilion’s soaring roof and hanging glass curtain wall could only be supported at two points. Thornton Tomasetti met the challenge with a pair of 54-foot-tall “basket” columns, each gathering its loads in an expressive weave of lightweight, brightly painted twisting steel tubing that spirals down to plaza level in an ever-tightening array. It is innovative design, with a twist.

Structural Steel Right for any application

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

Commercial Market Report

Queens borough president Melinda Katz

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

Beeps get busy A look at the real estate agendas of New York City’s five borough presidents.

128

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

133

NYC’s hybrid revival

The Deal Sheet

Condo-rental combo buildings are back in vogue as developers face high land prices and try to hedge against a market bubble.

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

148

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

Larry Silverstein

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

Development Updates

What real estate pros are reading

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

Three industry titans help us kick off our new monthly feature.

Residential Deals

150

An inside look at how home sales really happen.

164

Calendar of Events Architect: Pelli Clarke Pelli Architects Structural Engineer: Thornton Tomasetti Photograph: Tex Jernigan

Check out this month’s activities.

Borough commercial craze Behind the record level of building sales in Brooklyn and Queens.

168

We Heard A lighter look at industry buzz.

10 12 October October2014 2012 www.TheRealDeal.com www.TheRealDeal.com

www.TheRealDeal.com March 2012 00

The Federal Savings Bank has partnered with New York City’s Largest Real Estate Firm, Douglas Elliman, to form DE Capital: A Division of The Federal Savings Bank. We provide the perfect loan product coupled with unmatched customer service.

What We Offer: • Th e Bank Controls the Entire Lending Process • Ju mbo Loans Up to $10,000,000 • Non -Warrantable Condos and Co-Ops • 24 Hou r Scenario Review with Underwriting • F ast Turn Times - Close in 30 Days or Less • F oreign National Programs

To learn more about us, please visit:

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Manhattan

Long Island CITY

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

10-29 48th Ave. Long Island City, NY 11101

(646) 568-3600

(646) 668-3204

Melville

560 Broadhollow Road Mellville, NY 11747

(516) 430-5555

Highlights Oct. 2014

88 Gary Barnett’s big battles

The Extell chief has become a poster boy for controversial industry issues — from the “poor door” debate to the Moreland Commission probe.

The Closing Book

In sync or worlds apart?

A sneak preview of a new book featuring the first 100 of our popular back-page interviews with industry leaders.

New York City’s housing market reflects some national real estate trends, but with several big differences.

A rendering of 60 Water Street

118

Slab and drab Two Trees’ planned 17story complex in Dumbo delivers pure real estate, but nothing in the way of architectural achievement, TRD’s critic says.

14 October 2014 www.TheRealDeal.com

170

Michael Shvo on the go The broker-turned-developer talks about his extensive art collection, his low profile during the recession and why he won’t do a reality show.

The Real Deal N e w Yo r k R e a l E s tat e N e w s

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

You need Rosewood Realty Group

Publisher Amir Korangy Editor-IN-CHIEF Stuart W. Elliott Managing Editor Jill Noonan DEPUTY Managing Editor Eileen AJ Connelly EXECUTIVE Web Editor John Goff Art Directors Ronald Gross, Keziah Makoundou Senior Reporter Adam Pincus ReporterS Hiten Samtani, Rich Bockmann, E.B. Solomont SOUTH FLORIDA BUREAU CHIEF Eric Kalis

212.359.9900

www.rosewoodrealtygroup.com

Rosewood Ranked #1 Investment Sales Firm In Outer Boroughs for 2013.

Contributors C. J. Hughes, David Jones, Adam Piore, Jennifer White Karp EDITORIAL OPERATIONS MANAGER Linden Lim ASSOCIATE WEB EDITOR Julie Strickland SENIOR WEB PRODUCER Mark Maurer Web Producers/WEB REPORTERS Thomas DiChristopher, Zachary Kussin, Claire Moses SOCIAL MEDIA COORDINATOR Kerry Barger EDITORIAL ASSISTANT Brendan O’Connor Interns Juan Zielaskowski, Maurice Mayfield

*As published in The Real Deal.

Photographer Marc Scrivo

We are pleased to announce the following results for the year-to-date September 23rd 2014, Rosewood has completed total sales of

$1,608,704,000 which include:

Manhattan: Aggregate sales of

$564,168,000

57 Buildings / 1,480 Residential Units / 89 Commercial Units Brooklyn: Aggregate sales of

$313,575,000

50 Buildings / 1,905 Residential Units / 19 Commercial Units Bronx: Aggregate sales of

$252,156,000

48 Buildings / 2,285 Residential Units / 56 Commercial Units Queens: Aggregate sales of

$478,805,000

16 October 2014 www.TheRealDeal.com

Director of mARKETING OPERATIONS Yoav Barilan ASSOCIATE SALES DIRECTOR Ross Fox Advertising Sales Eran Evron, Nick Mascaro, Robert Stearns, Nicki Chadi, Sigalit Levi, Marcus Guest, Chris Cuomo, Barry Holland, Frankie Grima DIGITAL TRAFFic MANAGER Junaid Zahid WebmasterS Nima Negahban, Andrew LoCascio ASSOCIATE WEB DEVELOPER Amir Ghaheri Finance director Kenneth Cyrus OFFICE MANAGER Virginia Durso Circulation Paul Destanko Distribution Mitchell Newman, Patricia Hofmann, Forero Express ATTORNEY Barry J. Friedberg Trachtenberg Rodes & Friedberg LLP Accountants William T. McCallum, CPA, P.C., Christine Wang The Real Deal is a registered trademark of Korangy Publishing Inc. Copyright © 2014. Call 212-2601332 or e-mail news@therealdeal.com. Warning: It is illegal to photocopy or reproduce any part of The Real Deal without express written consent. For reprints and duplication rights, call 212-260-1332. Principal office: 158 West 29th St., New York, NY 10001. The Real Deal is published monthly. Annual subscriptions cost $95. Send check or money order to 158 West 29th St., New York, NY 10001.

V I S I T

G A M E C H A N G E N Y C . C O M

The support and services of a traditional 50/50 firm while still paying commissions from 70% to 100%. The maximum the company can earn is $22,500, 70% on the first $75K GCI, after which 100% is yours. Are you being charged technology, marketing, franchise, E+O, and administrative fees? We donâ&#x20AC;&#x2122;t. Contact Mary Cooney to discuss your next move. maryc@ccrny.com

Schlamm Dunk

ETHICAL, EXPERIENCED, ENTREPRENEURIAL.

David Schlamm, President & Founder

Miami the time is now

A truly international city offering endless, first-rate entertainment, fine dining and ideal weather year round, Miami is a booming area ideal for investors and second-home seekers alike. Miami’s million-dollar-plus residential market, while consistently growing, is still far more accessible than most major metropolitan cities.1 An iconic city not just to play but to stay — Miami is on the rise.

THE POWER OF

ONE Miami’s Top Real Estate Firm for Luxury Condo Sales ONE Sotheby’s International Realty is comprised of 400 local real estate experts with a global network spanning 750 offices in 55 countries and territories.

Top U.S. Market for All-Cash Transactions

One of the Few Cities that Matter to Global Investors

Strongest Housing Market in the U.S.

as reported by Bloomberg.com2

as reported in Knight Frank’s 2014 Wealth Report3

as reported by the National Law Review

On a Global Scale Annually representing $60 billion in real estate sales worldwide, Sotheby’s International Realty is one of the most interconnected networks in the world. We are affiliated with 15,000 estate agents, providing our local team with unparalleled, global reach. Our Local Statistics4 • #1 company for condo sales over $500,000 in Miami • Highest production rate per real estate agent in Miami

$5 Billion of Recent / Planned Development only in Downtown, the heart of Miami

14 Million Annual Visitors

Second Largest Financial Center in the U.S. following New York City

• Highest average price earned for residential sales in Miami

Beyond a Brokerage Firm Global Real Estate Advisors ready to expertly guide you through the South Florida market.

#1 Cruise Terminal Worldwide

Leading International Airport

$500 Million in World-Class Museums

Port of Miami: over 5 million annual passengers

39.5 million annual travelers

Frost Museum of Science Pérez Art Museum

888.998.5560 ONESOTHEBYSREALTY.COM ©MMXIV ONE Sotheby’s International Realty, licensed real estate broker. Sotheby’s International Realty® is a licensed trademark to Sotheby’s International Realty Affiliates LLC. An Equal Opportunity Company. Equal Housing Opportunity. Each Office is Independently Owned and Operated. The information contained herein is deemed accurate but not guaranteed. 1. As reported in the 2014 “Wealth Report” by London-based consulting firm Knight Frank LLC. 2. Bloomberg. com’s Markets Where Buyers Are Bringing the Money on July 7th, 2014. 3. As reported in the 2014 “Wealth Report” by London-based consulting firm Knight Frank LLC. 4. ONE Sotheby’s International Realty’s Local Statistics section based on Miami-Dade data by BrokerMetrics® (sales in last 12 months).

Miami the time is now

THE POWER OF

Top U.S. Market for All-Cash Transactions

One of the Few Cities that Matter to Global Investors

Strongest Housing Market in the U.S.

as reported by Bloomberg.com2

as reported in Knight Frank’s 2014 Wealth Report3

as reported by the National Law Review

$5 Billion of Recent / Planned Development only in Downtown, the heart of Miami

14 Million Annual Visitors

Second Largest Financial Center in the U.S. following New York City

• Highest average price earned for residential sales in Miami

Beyond a Brokerage Firm Global Real Estate Advisors ready to expertly guide you through the South Florida market.

#1 Cruise Terminal Worldwide

Leading International Airport

$500 Million in World-Class Museums

Port of Miami: over 5 million annual passengers

39.5 million annual travelers

Frost Museum of Science Pérez Art Museum

Artist Yoni Alter

LUXURY REAL ESTATE IS A GLOBAL BUSINESS. AND NOW SO ARE WE.

RESIDENTIAL

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LUXURY REAL ESTATE IS A GLOBAL BUSINESS. AND NOW SO ARE WE.

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G I N G E R C . B R O K AW L I C E N S E D A S S O C I AT E R . E . B R O K E R

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

J A S O N P. K A R A D U S L I C E N S E D A S S O C I AT E R . E . B R O K E R

I S M A E L L E Y VA , N E W Y O R K .

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1 3 5 5 F I R S T AV E N U E B E T W E E N 7 2 N D A N D 7 3 R D S T R E E T S

CHARLESNYC.COM

TOWN Residential LLC is partnership of Buttonwood Residential Brokerage, LLC and Thor Equities, LLC. No representation is made as to the accuracy of any description. This is not intended to solicit property already listed. The number of bedrooms listed above is not a legal conclusion. Each person should consult with his/her own attorney, architect or zoning expert to make a determination as to the number of rooms in the unit that may be legally used as a bedroom. TOWN Residential LLC is a licensed real estate broker, proud member of REBNY, abides by federal and state equal housing opportunity laws and owns the following subsidiary licensed real estate brokers: Town Astor Place LLC; Town Fifth Avenue LLC; Town Flatiron LLC; Town Gramercy Park LLC (“Town Gramercy”); Town Greenwich Street LLC (“Town Financial District”); Town Greenwich Village LLC; Town Soho LLC; Town West Village LLC; and Town 79th Street LLC (“Town Upper East Side”).

EXCLUSIVE SALES & MARKETING BY

TOWN New Development

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G I N G E R C . B R O K AW L I C E N S E D A S S O C I AT E R . E . B R O K E R

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

J A S O N P. K A R A D U S L I C E N S E D A S S O C I AT E R . E . B R O K E R

I S M A E L L E Y VA , N E W Y O R K .

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1 3 5 5 F I R S T AV E N U E B E T W E E N 7 2 N D A N D 7 3 R D S T R E E T S

CHARLESNYC.COM

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They go with their gut

n 20 years, will condo buyers say, “I want to live in a Shvo building?” That is the hope of real estate bad-boy Michael Shvo, who embodied the excess of the last real estate boom as a broker and, after a hiatus during the recession, has re-emerged as a developer with ambitious plans for three new condo projects amid a much-hyped luxury market. They include what will likely be one of the tallest buildings in Lower Manhattan, rising near the World Trade Center site. It’s easy to say that Shvo — who burst back onto the scene only last year, paying a record price for a development site in Chelsea — only makes his appearance at market peaks, like some sea creature rising from the depths (or rather, emerging from his condo in the Time Warner Center). His appearance as things get frothy may herald the market’s downturn. Or Shvo might be timing it exactly right and we’ll all know what living in a “Shvo” building means two decades from now. Either way, you’ve got to admit he’s got guts and a good dose of chutzpah, too. As he tells us in this month’s Closing interview, it’s not worth doing something to gain mass approval (see page 170). “I would hope I have critics,” he said. “If everyone thinks it’s OK, then there’s truly no value to the creation.” Not listening to critics, or at least putting criticisms in their proper place, is a lesson that’s been offered in other Closing interviews, along with a lot of wisdom shared by top real estate pros in our regular back-page feature spanning nearly a decade. After 100 interviews with industry titans on topics both personal and professional, we are publishing all the interviews as a coffee table book. We have an excerpt of some favorite pieces starting on page 93, so check it out. Being comfortable taking risks is a common attribute of those we’ve profiled over the years. And back to our most recent Closing, while there may be egg on his face if

Which billionaire investor had Mike Tyson as his best man? Which developer raises chickens on his roof? You’ll have to read our new book to find out. the market turns, the much-criticized Shvo will still have more homes and artwork than all but a few 1 percenters, I’m sure. It seems taking a leap of faith in the first place is probably the greatest predictor of success. The upcoming book is chock full of details about what New York’s real estate elite do when they are not in the office too. Which billionaire investor had Mike Tyson as the best man at his wedding? Which developer raises chickens on the roof of his Upper West Side home? You’ll have to read the book, which is available later this month, to find out. Go to TheRealDeal.com for ordering information. This issue also features an in-depth profile of another bad boy of real estate, Gary Barnett of Extell Development. This long-time developer (prolific where Shvo is merely fledgling), who has built the current tallest residential tower in New York, among countless other projects, is what one industry observer called a “magician and one of the smartest guys that I’ve met in my three decades in NYC real estate.” But lately, as reporter Hiten Samtani writes, Barnett seems to have become the poster boy for controversial industry issues ranging from the “poor-door” debate to the Moreland Commission. In many ways, his luxury projects run counter to Mayor de Blasio’s real estate agenda. At the same time, he’s battled many of Manhattan’s other behemoth developers. Check out the story on page 88. Inside, we also take a look at the huge number of new towers rising on New Jersey’s Gold Coast right across from Manhattan (page 58) as well as examine building sales activity in Brooklyn and Queens, which is poised to shatter records this year as more institutional money gets comfortable investing there (page 83). Elsewhere, we tally up at the priciest leases in Midtown South, Manhattan’s strongest office market, where tech companies are proliferating. And finally, while many in real estate are fixated on high land costs impeding development, construction costs — the other big piece of the development equation — are also on the rise (see page 40). Whether this will play a factor in preventing developers from reaching for the stars remains to be seen. Enjoy the issue.

Stuart Elliott

Ralph Walker

Beaux-Arts Ball, 1931

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residential market

The domino effect on sales

High prices, gentrifying markets are creating clusters of listings as more sellers try to cash in

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By E.B. Solomont here goes the neighborhood — or, rather, the neighbors. In the current upmarket, multiple apartments in the same building are hitting the market in rapid succession, as sellers look to replicate the high sales prices obtained by their neighbors, brokers said. The trend is particularly noticeable in gentrifying neighborhoods, especially in Brooklyn. And in many cases, it’s being led by opportunistic sellers, who are looking to unload their apartments before the price-inflating inventory crunch eases. “People talk, and people start to follow each other when the market is right,” said Jamie Fedorko, an agent at Warburg Realty. “Everyone knows what’s going on in their building. They know the prices are changing; they know there are bidding wars.” Danny Davis, a broker at Town Residential, recently represented sellers at 415 Greenwich Street in Tribeca who listed their apartment, Unit 7C, as a test of the market. “The seller was not a serious seller, but more of an opportunistic seller, taking

cision to sell,” Salvatore said regarding the third unit, which sold for the listed price of $385,000. In some cases, of course, a cluster of listings is related to new development units coming online. Meanwhile, some sellers have banded together to market their apartments as potential combinations. By doing so, they are trying to capitalize on the higher prices that large units fetch. For example, five owners at the Gloucester, at 200 West 79th Street, have joined forces to try to sell five 16th-floor apartments as a package deal for $8.1 million. Combined, the apartments would measure more than 4,000 square feet, a rarity in the neighborhood. “At the end of the day, we’re in a sellers’ market. It’s a money move,” said Roger Covin, a Bond agent who’s working, though not exclusively, with one of the sellers. “On the Upper West Side, there are very few properties that provide 4,000 square feet. The more square footage, the more you can get for it,” he said.

“It’s a numbers game. Everyone is a seller at a certain price.” Danny Davis, Town Residential advantage of a hot market,” Davis said. The three-bedroom, 2,279-square-foot condo sold for $4.9 million in July. “When we got over $2,200 per square foot, the domino effect began.” In short order, Davis said, units 6C, 3C, 2C and 7F were on the market. Davis said the rush to sell is motivated by several factors: Owners at 415 Greenwich, who paid around $1,000 per square foot in 2006 when the former warehouse was converted to condos, are striking while prices are high. Others see the pipeline of new development units in Tribeca, and are selling before those new units hit the market — to buyers who want to move now. “Listen, it’s a numbers game,” Davis said. “Everyone is a seller at a certain price.” In a similar situation, Town’s David Salvatore sold three apartments at 310 West 56th Street over the course of several weeks in April and May. The first was Unit 11C, which was listed at $375,000 and sold after one open house for the full asking price. After the sale, Salvatore sent mailers around the building and received a call from the owner of Unit 8H. He ended up selling that apartment for $429,000. Soon after, the owner of a pied-à-terre in the building contacted him, Salvatore said. “Low inventory levels and the incredible new developments in the area along 57th Street also played a major role in their de-

In gentrifying neighborhoods, one sale after another may reflect growing demand from buyers willing to pay higher prices, and eagerness among longtime owners to cash out. For example, early this year, Warburg’s Fedorko represented a buyer who paid $675,000 for a one-bedroom at 1103 Cortelyou Road in Ditmas Park, Brooklyn. Developers of the 12-condo building had been renting the units until this year, when prices in the neighborhood reached new highs. Since February, Fedorko said, five other units have closed, each at higher price points. In May, Unit 4C sold for $713,000; Unit 2C went for $734,000 a few weeks later; 5A closed at $746,000 in August, and 3C sold for $776,000 in September. Similarly, at 636 Leonard Street in Greenpoint, Bond agent David Kazemi said he started getting calls from neighbors after he represented the seller of Unit 4A, a one-bedroom measuring 815 square feet. The apartment sold for $815,000 in August. Kazemi said after he sold 4A, he was contacted by the owners of Units 1A and 3B. “This is in an eight-unit building,” he noted. Unit 1A, measuring 1,177 square feet, last sold in 2007 for $569,000. Unit 3B, with 588 square feet, last sold for $410,000 in 2007. TRD

Investors choose to spread wealth

Wealthy NYC buyers bucking the trophy trend in favor of acquiring multiple small apartments By E.B. Solomont nvestors with $10 million to $15 million to spend have no shortage of New York City real estate to choose from. As of the middle of last month, there were 218 apartments listed in Manhattan in that price range, according to the real estate website StreetEasy. But a growing number of well-heeled buyers are spreading their wealth among several apartments, instead of buying a single trophy unit, according to brokers. Those brokers said that some investors are taking advantage of the city’s strong real estate market, while at the same time hedging against any future softening. For example, Blu Realty Group’s CEO Alon Chadad said he recently represented a client with $40 million to spend. Within a week, the client — who was visiting from China — dropped more than $20 million on

units instead of apartments with three-plus bedrooms. The reasons vary. For those who were burned during the recession, it’s to minimize risk in case they don’t immediately find a tenant. “They feel if they buy a one-bedroom and a two-bedroom, and one takes longer to rent out, then they’re at least receiving rent on one property,” said Golding, who estimated that 50 percent of her clients are investors. Other investors believe a diverse portfolio boosts their chances of securing a high return. “If some [apartments] don’t appreciate, others will have appreciated, versus putting all their money into one apartment and taking a chance,” Golding said. Dylan Pichulik, chief executive of property management firm XL Real Property Management, said in the past few months his clients have also mixed things up in

“Divide the risk. Think about not putting all your eggs in one basket. You have more people that can afford $7,000 a month than $25,000 a month.”

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Jacky Teplitzky, Douglas Elliman several properties, including a three-bedroom apartment in Midtown ($4 million), two retail condos ($5 million each) and a four-bedroom unit on the Upper West Side ($8 million) that the client plans to use personally. “They’re coming in to spend that much money,” said Chadad, who has another client from Israel looking to spend $15 million on multiple one-bedroom units or retail condos. Jacky Teplitzky, a top broker at Douglas Elliman, said owning a trophy apartment can be a good investment when the market is strong, but in recent months she’s advised her investor clients — those looking to rent out units — to mix up their holdings, because the inventory of large luxury units is poised to grow. “I say to them, ‘Maybe you should divide the risk. Think about not putting all your eggs in one basket,’ ” she said. “You have more people that can afford $7,000 a month than $25,000 a month.” Teplitzky recently represented a client from Brazil who paid $1.5 million for a one-bedroom on the Upper East Side and $2 million for a two-bedroom in Gramercy. “They definitely wanted to diversify their risk, so they went to different areas and different sizes,” she said. According to Tracie Golding, an agent at Stribling & Associates, a growing number of investors want one- or two-bedroom 52 March 2014 www.TheRealDeal.com

terms of the location of their investment properties. “They’ll buy an apartment in a neighborhood like the West Village that won’t give them the highest return on an annual basis, but it’s a prime neighborhood,” he said. “Then they’ll go to a neighborhood like Bushwick and be a little bit more speculative.” One of his clients, for example, recently bought five apartments, all priced between $1 million and $2 million, in the Financial District, West Chelsea, the Upper East Side and in Midtown. Now the client is looking in Brooklyn for further investments. Chadad said the strong market has prompted some of his clients to buy several units on one floor of a building, with the intention of renting the apartments for several years and later combining them and selling if prices and demand for large units continue to rise. Chadad said he recently brokered a sale at Extell’s Rushmore on the Upper West Side, where his clients spent $5.5 million on two units, combined them and then sold the larger 3,600-square-foot unit for more than $8 million. Teplitzky said she guides investors to buy in buildings with low common charges or tax abatements in place. She also recommends buildings without tons of amenities. “You rent them for the same rental amount, but your expenses are less,” she said. TRD

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the

Numbers

$10 billion Total funds projected to be raised

in 2014 globally by all types of crowdfunding platforms, not limited to real estate. That’s nearly seven times the $1.5 billion raised in 2011.

Crunching the numbers on crowdfunding A look at the rise of the fundraising platforms helping to bankroll projects from New York to Nevada

New To market

CityShares, a startup that aims to invest in gentrifying NYC neighborhoods. It’s first planning to raise $5 million to buy properties in Bedford-Stuyvesant, then will buy up to $20 million in Harlem.

12% Portion of the total $313 million poured $5,000 into all crowdfunded investments in the Minimum investment Fundrise U.S. from September 2013 through June that went to real estate. Development companies raised $10 million, while real estate investment firms pulled in nearly $24 million. Only the energy sector has raised more.

accepted toward its $1 million fundraising goal to build a 3,500 square-foot home in the Hamptons. The projected annual return on the project, which was fully funded, was 10.5 percent, or $525 on the minimum investment.

70 Total number of real-estate companies

using crowdsourcing to solicit investors, out of more than 4,300 crowdfunding companies overall. Real estate crowdfunding has a 39 percent success rate meeting funding targets, versus 18 percent for all crowdfunding.

$200,000 Annual income required to be certified

he growth of real estate crowdfunding platforms on the Internet in the last year has given developers the ability to appeal to the public to help bankroll their projects, rather than relying solely on traditional investors. In New York City, crowdfunding platforms have raised millions for projects that run the gamut from Prodigy Network’s purchase of an extended-stay hotel on East 46th Street to Fundrise’s renovation of an East Village mixed-use building. Even the venerable Carlton Group has launched a crowdfunding platform. Those running crowdfunding sites, which in some cases allow investors to get a piece of the action for as little as $100, say the model democratizes real estate investments. While much is still being hammered out and returns for investors vary, growth has been explosive, and is expected to continue. Read on for a look at how much the sector has taken off. Fundrise’s East Village renovation By Brendan O’Connor

12% Annual return for investors targeted by

an “accredited” investor. The Jumpstart Our Business Startups Act of 2012 opened up crowdfunding by allowing unaccredited investors to invest up to $2,000 a year, or 5 percent of their income or net worth, into closely held companies regardless of income.

$70 million Equity raised by Prodigy Networks

for New York projects through crowdfunding. Prodigy has completed three crowdfunded acquisitions in NYC and six overall.

$25 million Portion of the $85 million purchase price Prodigy raised for its project 17John through crowdfunding. The minimum investment was $50,000.

By the Numbers

The Dune Road home partially bankrolled by Fundrise.

$1 million Minimum investment accredited

investors can make on the Carlton Group’s crowdfunding platform. It is now accepting up to $30 million toward funding a $220 million development to be built through a joint venture “with a prominent Manhattan developer.”

32% Portion of investments in real estaterelated crowdfunding raised by companies run by woman. Overall, women-run companies account for 18% of real estate crowdfunding companies.

$75 Revenue per available room targeted

by the new hospitality crowdfunding site Hotel Innvestor. Average revpar in New York City hotels is about $243. Sources: UCLA Ziman Center for Real Estate, GlobeSt. com, Crowdnetic, the New York Times, Bloomberg News, Crowdfund Insider, Curbed, DNAinfo and TRD reporting.

3 East 77th Street, Apt. 8A | Offered at: $2,500,000

JEANNE H. BUCKNAm Associate Broker | 212.606.7717 | jeanne.bucknam@sothebyshomes.com NIKKI FIELD Senior Global Real Estate Advisor, Associate Broker | 212.606.7669 | nikki.field@sothebyshomes.com | www.nikkifield.com East Side Manhattan Brokerage | 38 East 61st Street, New York, NY 10065 Sotheby’s International Realty and the Sotheby’s International Realty logo are registered (or unregistered) service marks used with permission. Operated by Sotheby’s International Realty, Inc. 10-14-field.indd 1

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: f o k s e

D e h t t

Jim Gricar

leveland native Jim Gricar, president of Halstead Property, moved to New York as an actor in 1989. He appeared on Broadway, including in “Sweeney Todd” and “Jesus Christ Superstar.” But he eventually tired of the nonstop work and wanted to “feel tangible success.” He became a broker with the Corcoran Group in 1998. His network of friends didn’t do much to jumpstart his new career. “My friends were all actors who couldn’t afford cabs, let alone apartments,” he said. A few years later, founder Barbara Corcoran asked Gricar to try management. At first he resisted. “Barbara said, ‘You’re a very good sales agent, but you’ll never be at the utter top of the pile … [but] you would be an exceptional sales manager.’” In 2000, he became associate managing director in the firm’s Madison Avenue headquarters. In six months, he was running their Downtown operations. In 2004, he jumped to Brown Harris Stevens, where he opened operations focusing on the burgeoning West Side condo market, and saw the firm jump to 80 agents from 40. In 2011, Gricar became president at Halstead, and since then, the number of brokers there rose to 1,200 from 900. His West Side experience gave him a jump on the expanding condominium market there, and his team handled a number of deals at the Zeckendorfs’ 15 Central Park West, including the penthouse sale to former Citigroup chairman Sandy Weill. Last month, Gricar showed The Real Deal around his Midtown office.

By Julie Strickland

“Jesus Christ Superstar”

Eiffel Tower

Before making the leap to real estate,

Gricar added a model Eiffel Tower to his office

Gricar spent a year on the road with

coffee table after his first trip to Paris in 2004.

a national Broadway tour of “Jesus

“After the whole ‘freedom fries’ thing, when

Christ Superstar.” He played a number of different roles in the production, including Pontius Pilate, Caiaphas and “the third apostle from the left.”

everyone was mad at the French, I had the exact

1960s lamp

opposite reaction and became a Francophile,”

The lamp on Gricar’s desk is a reproduction of a lamp

he said.

from the 1960s that his father, who was president of sales for a heating and cooling company, had in his

For the duration of the show, he was

office. “I used to love to go to my dad’s office when

held to a no-haircut clause, which

I was a kid,” Gricar said. “He was kind of a hipster

by the end of the run left him with a

— he had modern furniture and a Flokati rug. I just

shoulder blade-length mane.

thought it was magical.” Gricar never uses overhead lighting, which he considers “severe.”

U.S. Constitution Gricar is a member of the American

Skittles jar

Hot Wheels car

Civil Liberties Union, and often

Gricar’s office is never without a

Gricar loved Hot Wheels cars as a

hands out small booklet copies of

tall jar of Skittles. “I’m addicted,”

kid. The 1967 Dodge Challenger was a favorite. When the car

the U.S. Constitution. He views the

he said.

was reissued in 2008 in the original orange color, he bought the real thing, too.

document as a guide to fairness and fair play, he said. “I just like what it says.”

1959 executive chair The chair behind Gricar’s desk is a reproduction of the 1959 designed

Chinese fu dog

Thai Buddha

Gricar picked up this

Gricar purchased this Buddha sculpture at a

specifically for the Time

Eames Executive Chair, which

was

porcelain Chinese fu dog

tag sale in Connecticut. The figurine, he said,

Life building in New

figurine and leather gorilla at

exhibits the peace and calm he strives to

York. He also has an

a flea market. The gorilla on his

project in his 499 Park Avenue office. It also

original Florence Knoll sofa,

coffee table is actually meant to

connects to yoga, which he began five years

which he admits is “a little

be used as a doorstop, but one of

ago, after “30 years of going to the gym and

lumpy, but you know, it’s

his three dogs — an Australian

hating every minute of it.”

50 years old.”

cattle dog — kept picking it up and carrying it around.

30 October 2014 www.TheRealDeal.com

PHOTOGRAPH OF Jim Gricar FOR THE REAL DEAL BY tobias Truvillion

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Commercial Ma r k e t

Downtown gets crop of fresh spaces

Despite fears that Lower Manhattan was out of big office blocks, three new ones hit market

By Adam Pincus crop of new big blocks of office space will keep the Lower Manhattan market in the running when it comes to wooing large tenants, according to commercial brokers. On the heels of Brookfield Property Partners’ frenetic yearlong leasing run — during which time the company inked more than 3 million square feet of deals — some feared that the Downtown market would be out of fresh spaces for potential office tenants to choose from. Brokers say there are new blocks hitting the market now that will keep tenants interested. (There remains more than 4 million square feet available within towers 1, 3 and 4 at the World

Trade Center, as well — see page 162. But that space has been on the market for years.) “Firms looking for a diverse environment will still have options,” said John Wheeler, managing director at commercial firm JLL and director of the firm’s Lower Manhattan office. At least three new big spaces are hitting the market in the coming months. The largest of those three is about 1.1 million-square feet in 1 Chase Manhattan Plaza, which is located on Liberty Street between Nassau and William streets. The Chinese investment firm Fosun International purchased the 2.2-million-square-foot building last year for $725 million and last month tapped a JLL team, includ-

34 October 2014 www.TheRealDeal.com

Manhattan office stats AVAILABILITY AVG. ASKING RATE RENT

3Q ’14 3Q ’13

Manhattan 10.2% $65.97 11.9% $59.21

Midtown 3Q ’14 10.6% $75.74 3Q ’13 11.6% $69.36 Midtown South 3Q ’14 8.5% $58.19 3Q ’13 9.7% $53.23

3Q ’14 3Q ’13

Downtown 12.2% $51.70 15.9% $47.48

Source: Colliers International

ing Wheeler and New York Regional President Peter Riguardi, to lease up the empty space. In addition, Brookfield will begin marketing two large blocks at 1 Liberty Street and another at 300 Vesey Street, at Brookfield Place. David Cheikin, senior vice president of leasing at Brookfield, said he is seeing “good corporate confidence” among companies on the prowl for new offices. That, he said, is allowing potential tenants to look “a little bit further ahead and to make the investment in their business” — and generating activity in the real estate market. Neither JLL nor Brookfield would disclose asking rents for the properties. However, a preliminary third quarter report by JLL showed average Class A ask-

ing rents in Lower Manhattan at $57.66 per foot. The overall Manhattan asking rent was $65.97 per square foot in the third quarter, up 11.4 percent from the same period a year ago, according to commercial brokerage Colliers International. In addition, the availability rate, which tracks space that is currently vacant or that will be available in the next year, declined by 1.7 points over the last year to 10.2 percent.

Midtown Asking rents in the Midtown market crept up over the past year. There were only two deals for more than 100,000 square feet in Midtown during the third quarter, an analysis by The Real Deal Continued on page 152

In their words...

The funniest and most insightful comments on real estate

“When they call me with a deal, I pay attention.” Former New York Governor and active real estate investor Eliot Spitzer, on receiving calls from Massey Knakal Realty.

“We are at a stalemate with them at the moment.” David Emil, president of the Lower Manhattan Development Corp., on its dispute with the Port Authority over the cost of building Five World Trade Center.

“Nimbyism has its place — when the offending structures are illegal toxic-waste dumps or brothels.” NYT editorial board, on the need to embrace development, with some exceptions.

“They are like mushrooms, they proliferate everywhere.” Ideal Properties Group’s Aleksandra Scepanovic, on the rise of market reports.

“How many people can really live like this? Not many. It’s obscene.” Elliman broker Frances Katzen, on how some wealthy buyers buy luxury pads all around the world and then leave them vacant.

“I can’t even keep up with the emails from retail CEOs and restaurateurs.” Related Companies executive Kenneth Himmel, on the deluge of interest in the Hudson Yards retail complex after it secured luxury brand Neiman Marcus as an anchor tenant. 36 October 2014 www.TheRealDeal.com

“I think of these apartments as paintings ... I’m not surprised when the architectural treasures of Manhattan reach new highs.” Brown Harris Stevens superbroker John Burger, on the continual upward march of the uberluxury market.

“You’ve got to have a building that signals, ‘You are welcome here. You are just as valuable as every person in this neighborhood.’ ” HPD commissioner Vicki Been, on steps the city and Silverstein Properties took to make a “poor door” more palatable at 10 Freedom Place.

“I think there came a moment where we realized we were maybe a little behind the times.” River House condo board president, John Allison, on the loosening of restrictions at the legendarily stuffy co-op.

“That does not diminish the pride we all should, and do, feel.” Larry Silverstein, on how despite its immense delays, the World Trade Center project is still a big achievement.

“My dad falls in love with buildings. I am an unemotional seller.”

Real estate scion Andrea Olshan, on how her style differs from that of her father, Morton Olshan.

“I think he made a little bit of a faux pas.” NYU professor Mitchell Moss, on City Planning chief Carl Weisbrod’s recent comment that the city would require affordable units for any new housing development, which unnerved developers. Sources: Crain’s, Downtown Express, Real Estate Weekly, DNAinfo.com, the Wall Street Journal, Bloomberg News, the New York Times, New York Daily News.

GOVERNMENT BRIEFS

REGULATING REAL ESTATE

Credit score revamp in play Debate heats up over data used on credit reports

By Kenneth Harney ould prospective homebuyers have a better chance to qualify for a mortgage if negative items in their credit files were erased in four years rather than the current seven? How about if credit reports included information on utility bills, rent, cable, mobile phone and other monthly payments? Wouldn’t paying these bills on time give a nice jolt to credit scores? Shouldn’t this be federal law? Millions of Americans have stakes in the rules governing credit, especially people who could use a little credit help to qualify for a mortgage. A hearing before the House Financial Services Committee last month touched on potential legislative fixes to the national credit system. But some of the answers that emerged weren’t quite straightforward. Start with removing negatives. California Rep. Maxine Waters proposed amending the federal Fair Credit Reporting Act to require credit bureaus to delete most negative information, from delinquencies on credit cards and mortgages to foreclosures, within four years. Bankruptcies would stay for seven years, instead of 10. In effect, this would erase most traces of the credit troubles many consumers encountered during the housing bust and recession, and administer adrenalin boosts to their credit scores. Waters, the committee’s ranking Democrat, said adopting a four-year standard would end the unreasonably long time that most adverse information can remain on a report. She said a change would treat borrowers more fairly and better conform to practices in other major economies. In Sweden, she said, the standard

retention period is three years. In Germany, it’s four. But the credit industry says it’s a terrible idea. The fact that a homebuyer experienced a serious delinquency or foreclosure is still relevant, and statistically predictive of future problems, for more than four years. Dumping information too early would hamper lenders’ capacity to evaluate the true risks posed by loan applicants. Stuart Pratt, president and CEO of the Consumer Data Industry Association, testified that “82 percent of credit systems” worldwide require credit bureaus to retain negative data for anywhere from four to 10 years. What about including in credit reports rent, utilities bills, cable and other services requiring monthly payments and factoring them into scores? Some consumer groups think it’s not a great idea. At the hearing, Chi Chi Wu of the National Consumer Law Center said including utilities payments in credit reports could actually depress many consumers’ scores, especially those with lower incomes. Studies show when money is tight, between 20 percent and 30 percent of consumers pay utilities late rather than the rent or other bills. They make it up, but if utilities reported late payments to the credit bureaus, large numbers of consumers could end up seeing their credit scores plunge. Bottom line: Congress is beginning what could be an important long-term review of credit reporting and scoring-system practices. But figuring out how to treat everybody fairly could be a challenge. Kenneth Harney is a syndicated columnist.

De Blasio to issue new affordable housing plan The city is crafting a plan that would require developers to include a certain number of affordable-housing units in any project that would require a zoning change from the city. Only 13 percent of the approximately 21,000 new units built since 2005 — or about 2,700 units have been affordable housing, the New York Times reported. The de Blasio administration aims to build 80,000 new units of affordable housing in the next decade. The exThe city will soon propose new rules act percentage of a new building for affordable housing development. that would be required to be affordable is not yet decided. A preliminary plan is due to be published by the end of the year; the mandate will take effect by fall 2015.

City hopes to use federal funds to map waterfront The de Blasio administration is seeking to use federal relief funds to complete a 13-year-long project to map every property on New York City’s waterfront, and identify the construction history and materials used to build each structure. Once complete, the information would be used to make the coast less vulnerable to destruction from natural forces. The project began in 2001 and is being overseen by the NYC Economic Development Corp. and the Office of The city aims to map all waterfront properties ahead of future storms. Recovery and Resiliency. Thus far, all city-owned shoreline property was mapped, Crain’s reported. The EDC issued a request for proposals from private companies to map all state, federal and private waterfront property in the five boroughs. To pay for the last stage of the project, which is estimated to run through April 2016, the city anticipates having to draw upon some of the $16 billion federal grant authorized after Superstorm Sandy, which was partially designated to help the city prepare for future disasters.

Gowanus developer to clean up toxic soil The Environmental Protection Agency reached a deal that will see two subsidiaries of the Lightstone Group spend $20 million to clean up the toxic soil on the site of the developer’s planned 700-unit, 12-story tower at Bond and Second streets on the Gowanus Canal. The cleanup will include removal of some 17,500 cubic yards of contaminated soil; tests will also be conducted to determine the contamination’s cause, DNAinfo reported. The land where Lightstone plans to build is riddled with heavy metals and chemicals containing PCBs, a legacy of the area’s industrial past. The Lightstone subsidiaries will also build a bulkhead along the canal to prevent the contamination from spreading and construct a new storm-drain system to keep storm water runoff from further polluting the canal.

Whoever Said

“It will never happen to me,”

State of NYCHA housing increasingly deficient

wished they had implemented

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38 October 2014 www.TheRealDeal.com

The New York City Housing Authority appears to be in a state of crisis. The agency reported a $191 million deficit in 2014, DNAinfo reported, and expects to receive $230 million less in federal funding than it is eligible for every year through at least 2018. NYCHA has over $13 billion in unfunded capital needs. A report from Comptroller Scott Stringer found that in 2011, 79 percent of the agency’s 400,000 residents lived in apartments with at least one deficiency, up 19 percent from 2002. In that same year, 6,000 NYCHA apartments had broken or NYCHA housing needs over $13 missing windows, a 945 percent inbillion in repairs and maintenance. crease from 2005. Also, in 2011, 37 percent NYCHA residents reported sighting rodents in their buildings, up from 26 percent in 2005. Since de Blasio took office, the agency received $210 million from the city. Compiled by Brendan O’Connor

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Construction

Amid boom, costs for building break $1,000-per-foot barrier

By Adam Pincus Those construction figures put increased pressure on $10 billion in government construction spending.) he skyrocketing price of land has been on the developers to sell residential units for upwards of $2,500 New York City “will have about $30 billion in lips of every developer and investment sales per foot. And that’s just to break even. construction this year,” said Midtown-based construction broker in New York City for the last few years. “You would have to be damn sure of your ultimate selling attorney Barry LePatner. “That is the largest construction But less talked about is the fact that the price to take that kind of a bet,” said real estate developer value that we have had since 2007. We are really back in cost of actually constructing a building is breaking price Cary Tamarkin, who said his Manhattan developments terms of new construction.” That activity is pushing up construction prices. records as well. have not come close to $1,000 per foot, and that most A few years ago, the highest-end condominium projects high-end condos cost up to $600 per foot to build. Many of the high-priced line items for buildings have in the city cost about $650 per square foot to build. And Either way, overall hard construction costs have been risen by more than 20 percent over the past several years, back in 2005, the developers of 15 Central Park West steadily rising in New York City, where total spending for according to a comparison of several New York City projects shelled out only about $400 by IVI International. per foot to construct their goldFor example, the price for concrete work, which standard condo project. But now some developers includes the cost of labor, are routinely paying nearly is projected to hit $92 per $900 per foot to erect their foot this year, up from $75 in under-construction, amenity2011. Other cost jumps are filled condo towers, and one even more dramatic, such project has broken the $1,000 as electrical, which rose by Louis Coletti, Building Trades Employers’ Association 45 percent, to $45 per foot, per foot marker, according to Robert Barone, president of the White Plains–based residential and commercial construction is expected to hit according to a comparison of two condo projects IVI construction analytics firm IVI International. He declined a record $18 billion this year, figures from the New York analyzed, one from 2011, and one from 2014. Building Congress show. (That’s not including another to identify any individual projects. Yet the biggest thorn in the side of builders when

“The non-union market has made significant inroads in new construction in 10- to 30-[story buildings], primarily in residential and hotel, and in interior renovation. That has been a problem for us.”

40 October 2014 www.TheRealDeal.com

Construction it comes to hard costs is the sharp rise in insurance premiums, which have roughly doubled over the past five years to as much as 10 percent or more of the average project’s budget. Labor costs also jumped, but that rise has been mitigated by the surprising growth of non-union contractors in the city. And a host of materials like steel remain below peak pricing, in part because of the decline in demand from China, where the economy, and therefore development, is slowing down. Below is a rundown of some of the construction costs in today’s booming building business.

Insurance issues

nsurance is one of the largest line items in the construction field. And in New York, it’s even pricier than it is elsewhere because of a state law that creates strict liability for property owners and contractors, said Louis Coletti, CEO of the Building Trades Employers’ Association, which represents 1,700 unionized contractors throughout the city. As a result of that legislation — which dates back to 1885 and is commonly known as the scaffold law — when a worker is injured on the job, the owner and contractor are fully liable, regardless of whether the worker is at fault. Despite the fact that the law has been around for over a century, it has recently led to skyrocketing claims and insurers fleeing the state, Coletti said. Insiders offered differing reasons for why insurance rates have only shot up recently. Some say juries have been granting huge awards during the current building boom for on-the-job injuries, while others say underwriters have been pulling out of the market, reducing competition. Coletti cited the city’s School Construction Authority’s predicament as a prime example of the impact of increased insurance costs. The SCA was paying about $95 million per year for construction insurance from 2011 to 2013. But that figure jumped to $234 million for 2014 alone. A spokesperson for the agency confirmed the figures, but declined further comment. “On the private side, increases are similar,” said Coletti, noting that construction insurance premiums have risen from about 4 percent of the hard costs to 10 percent or more, in some cases. For example, at Tishman Speyer’s planned $3.2 billion tower at 509 West 34th Street in the Hudson Yards area, insurance costs are $155 million, or about 9 percent of the $1.8 billion in hard costs, according to the company’s filing for a city tax exemption. Meanwhile, at one recent outerborough residential apartment project with a budget of roughly $400 million, the insurance costs are about $28 million, or 7 percent of the total, according to the developer, who did not want to be named.

In addition, major construction firms that historically worked exclusively with unions are beginning to branch out because they’re seeing competition from a growing bench of non-union contractors such as Flintlock Construction Services, Triton Construction, E.W. Howell, and CNY Construction Management. In a telling sign, the mega-firm Tishman Construction recently said it would manage non-union projects. That newfound competition for stalwart construction unions has helped keep costs down for developers. “The non-union market has made significant inroads in new construction in 10- to 30- [story buildings], primarily in residential and hotel, and in interior renovation. That has been a problem for us,” said Coletti. He said unions have seen a net loss of work despite the overall growth in the industry. (Residential construction spending alone has jumped 50 percent this year compared to 2013.)

buildings over 10 stories logging in between $400 and $600 per square foot, according to IVI International’s Barone. By comparison, construction costs in Brooklyn and Queens are about half that, because finishes and labor are typically less expensive.

Materials matters

ew York, of course, doesn’t operate in a vacuum. It’s part of the global economy. So the economic tumult in China, and the development slowdown that’s gone along with it, has had an impact on construction costs here. At the moment, the drop in demand from developers in China is good news for New York developers when it comes to pricing on some key materials. For example, U.S. structural steel prices are down 7 percent from a 2008 high, an index from the trade publication BNi Building News shows. On the commodities exchanges, some steel products are down more sharply, from a high of more than 56 cents per pound in 2008 to just over 33 cents last month. Aluminum, too, is down from the 2008 peak of nearly $1.40 per pound to just over 90 cents last month, data from the information and data company InvestmentMine shows. Other costs are near historic highs. The price of gypsum board, or Sheetrock, has surged 50 percent in the last year after remaining level since 2008, BNi reported. Typically the most expensive line items are concrete superstructure, windows, electric systems, drywall, carpentry and plumbing. Prices for cement and concrete, which surged about 40 percent over the past decade, however, are nearly flat over the last year. Still, concrete remains a huge line item for developers at about 10 percent to 15 percent of a construction budget for a concrete shell building. At that aforementioned residential building, where hard costs reached about $400 million, nearly $55 million of that, or roughly 13 percent, is going to pay for concrete alone. Yet, the rising or falling prices of materials have not individually had a major effect on development costs, LePatner said. “The cost of the product, however marked up, is only a small part of what the bids are,” he said.

The biggest thorn in the side of builders when it comes to hard costs is the sharp rise in insurance premiums, which have roughly doubled over the past five years. Yet developers see risks with the smaller, non-union companies popping up to take advantage of the building boom, said Craig Nassi, principal with the Manhattanbased BCN Development. “There is some risk with the small guys because they can just put their hands up and walk away,” if they run into problems or get a more lucrative job, Nassi said. But non-union firms are competing for ever-larger projects, said Gary Rosenberg, a partner with the real estate law firm Rosenberg & Estis. He pointed to the 37-story Hilton Garden Inn at 136 West 42nd Street that opened last month and which was built by Flintlock. “They really established that non-union can build substantial buildings,” Rosenberg said.

Still, a host of materials like steel remain below peak pricing, in part because of the decline in demand from China, where development is slowing down.

Labor losses

abor costs have also been on the rise recently. “The reason building costs more is contractors are finally at the saturation point, where they are so busy that they can charge [developers] more,” LePatner said. Yet as noted above, in a sea change for the industry, non-union contractors have made inroads — even among established developers.

Coletti said non-union shops are still able to underbid union shops by 15 to 25 percent. Some of that discount stems from paying workers lower wages. But Rosenberg said the main savings comes from not having to adhere to “archaic or onerous requirements” such as stationing a mechanic next to the construction elevator, or hoist, at all times. In addition, because they are saving developers money, non-union labor costs can also make it easier to secure a loan, said David Pfeffer, a partner and chair of the construction practice group at the Midtown-based law firm Tarter Krinsky & Drogin. In a response to the decline in business, construction unions have inked several agreements to cut costs for developers. For example, in August a group of unions backed a plan to cut wages for junior workers by 40 percent on affordable housing projects in select neighborhoods. In addition, not all boroughs are created equally. Manhattan is, not surprisingly, the most expensive borough in which to build, with average hard construction costs for

What’s ahead

evelopers and contractors know cyclical spikes in demand for construction don’t come without spikes in costs, said Plaza Construction CEO Richard Wood. “There has been a tremendous escalation of demand,” which is driving the higher costs, Wood said. At the same time, the strong demand is helping to rebuild New York’s construction industry, which thinned out after the collapse of Lehman Brothers in 2008. In addition, the astronomical price of land is partly responsible for higher construction costs, as developers need to distinguish their projects and recoup their investments, Barone said. “The problem is that as the costs go up, there are fewer options for what can be done with the parcel. If you are paying [a huge amount] for land, it does not pencil out as a rental. It has to be luxury. But it can’t be luxury, it has to be super-luxury,” Barone said. TRD www.TheRealDeal.com October 2014 41

Construction

Calculating the cost of The price of getting a building up in the notoriously expensive NYC market

By Adam Pincus few years from now New York City’s skyline will look a lot different. New buildings will soar on the Far West Side, Long Island City will be even more filled out than it is today and the finishing touches will be put on highprofile residential buildings both Uptown and Downtown. This month, The Real Deal looked at the recordbreaking cost of constructing these buildings (see related story on page 40). Below is a look at what TRD excavated.

Where does the money go? A breakdown of what developers spend on a single project

hen most real estate players talk about development projects, they refer to the bottom-line cost, whether it’s $300 million or $3 billion. But the White Plains-based construction analytics company IVI International, which acts as a consultant for developers, provided TRD with a deeper breakdown of how costs are actually distributed. The below breakdown is based on dozens of New York City projects that they’ve consulted on in 2014 so far.

The distribution of cOSTS on the average NYC building

The four big construction costs

The hard costs that developers can’t ignore

slew of factors go into setting the price of construction materials and labor costs, from the state of the economy in China to the political environment for New York City unions. But the four big hard costs — concrete, carpentry, heating and cooling (aka HVAC) and electrical — remain at the top of every developer’s radar because they account for the biggest chunk of the materials budget. Below is a look at how much the “all-in” costs per square foot of the four biggies, including the labor, have increased in the last three years. The numbers are based on four buildings that IVI International reviewed in 2011 and 2014 — two Manhattan condos and two Manhattan rentals. TRD

Manhattan Condo Building 2014 (PPSF)

$90 $80

$75

$70 $60 $50 $40

$42 $33

$30

Construction manager fee Elevators

2011 (PPSF)

$92

$45

$42

$31

$29

$20 $10

Finishes

Concrete 3%

9% Site work

Electric

2014 (PPSF)

42% Building shell

$90

2011 (PPSF)

$85

$80 $70

$68

$60

14% 15% Mechanical

$50 $40

Miscellaneous

HVAC

ManHattan Rental Building

6% 9% Electrical

Carpentry

$32

$30

$31

$26

$25

$24

$20

$19

$10 Concrete Source: IVI International

42 October 2014 www.TheRealDeal.com

Source: IVI International

Carpentry

HVAC

Electric

Construction

The $1 billion-plus club

A look at three New York City office towers with mega construction costs

By Adam Pincus t’s no shock to hear that 1 World Trade Center, the centerpiece of the famed Lower Manhattan development site, has a construction price tag of $3.8 billion dollars. But that world-famous tower is not the only New York City building that developers are forking over that much money to construct. “New York developers are long on Manhattan and long on New York City,” said David Pfeffer, a co-chair of the construction practice at the Manhattan-based law firm Tarter Krinsky & Drogin. “They feel this is the place they can invest in these massively expensive buildings and get long-term returns on their investments.” This month, The Real Deal looked at three other planned and under-construction Developer:

towers — all located in the Hudson Yards area — which have $1 billion-plus price tags, according to paperwork that the development companies filed to obtain tax breaks with the New York City Industrial Development Agency, which is tasked with spurring economic development in the five boroughs. The developers at those projects are apparently confident enough in the market to take the gamble and move ahead — that is once they have an anchor tenant. Scott Singer, president of the financial advisory firm Singer & Bassuk, characterized the prevailing optimism: “It is the willingness to stake your reputation and financial well-being and relationships on a bet as to what market conditions will be years out in the future,” he said.

Related Companies

in 2019, is slated to be one of the largest in the city, although at only 61 stories, it will be shorter than the planned towers at Related’s neighboring Hudson Yards site. Tishman Speyer, which is headed by the father-and-son duo of Jerry and Rob Speyer, is financing half of the building with its own equity and the other half with debt, according to the tax-cut filing. The 50-50 split is not unusual for an office tower, Singer said. “Office development has historically been the most difficult to finance,” he said. “It is not surprising to see a high amount of equity expected to be required.” He noted, however, that developers typically wait to start construction until they have an anchor tenant signed on.

Address: 30 Hudson Yards

(351 10th Avenue) and Shops at Hudson Yards Buildings size/type: 2.7 million square feet (office), 1.1 million square feet (retail) Total cost of project: $4.1

billion

elated is set to spend a massive $4.1 billion on the 84-story office tower dubbed 30 Hudson Yards and an adjacent retail complex called Shops at Hudson Yards. The company made headlines last month when it confirmed that the high-end department store Neiman Marcus will anchor the 1.1 million-square-foot mall with its debut 250,000-square-foot outpost in New York City. No tenants have been announced yet for the 2.7 million-square-foot office tower, which has an address of 351 10th Avenue. Jacking up the price of the two towers is the cost of the land ($193 million) and the platform ($721 million) that needs to be built over the famed rail yards. The joint price tag for both of those line items comes to $913 million, tax-abatement documents showed. “If you look at Hudson Yards, you almost can’t compare anything to it because of the cost of the platforms,” said Jeffrey Schotz, an executive vice president at developer SJP Properties, which developed the 1.1 millionsquare-foot office building 11 Times Square. The rest of the $4.1 billion price tag was made up of roughly $2.2 billion in hard costs — for things like constructing the building and installing mechanical systems — and $1.1 billion in soft costs for financing and leasing the office space. According to the Related’s tax filing, it funded 34 percent of the project with equity, 27 percent through debt, 24 percent from future tenants pitching in for construction costs, and 14 percent from mezzanine financing. Related, which is headed by Stephen Ross and Jeff Blau, did not respond to requests for comment. Developer: Tishman

Speyer

Address: 509 West 34th Street Building size/type: 2.55 million

square feet (office and retail) Total cost of project: $3.29 billion

he massive tower that developer Tishman Speyer has planned for Hudson

74 April 2014 www.TheRealDeal.com

Developer: Related

Companies

Address: 10 Hudson Yards A rendering of Related’s 30 Hudson Yards and the Shops at Hudson Yards, which together will cost $4.1 billion. Right, top: Related’s Stephen Ross; right, bottom: Related’s Jeff Blau.

(380 11th Avenue) Building size/type: 1.2 million

square feet (office and retail) Total cost of project: $1.25 billion

From left: a rendering of 10 Hudson Yards and Tishman Speyer’s Rob Speyer and Jerry Speyer.

Yards will be one of the most expensive office buildings ever built in Manhattan. The 2.55 million-square-foot building planned for the block bounded by 34th and 35th streets and 10th Avenue and Hudson Boulevard East is slated to cost $3.29 billion — or about $1,289 per buildable square foot. Construction is expected to start in the third quarter of 2015 and to be completed in four years. The hard costs for the project — which include things like demolishing the existing buildings on the site and constructing the exterior shell — are estimated at $1.4 billion, according to Tishman Speyer’s IDA filing. The soft costs, meanwhile, are pegged at about $1.1 billion. Among other things, that includes $356 million in loan interest charges and $200 million in commissions and addi-

tional leasing costs to rent the building, which does not yet have any signed tenants. Add in the cost of the land (which includes multiple parcels purchased at different times), and the total cost of the project comes to nearly $3.3 billion. (Tishman Speyer pegged the land at $768 million in its tax filing.) “The scale of these buildings is massive,” said Pfeffer, referring to both Tishman Speyer’s project and Related’s 30 Hudson Yards. While Tishman Speyer declined to comment, real estate insiders told TRD most developers would expect a building to throw off an annual return of about 6 percent of the total construction cost once it is fully occupied. That would imply revenue of about $200 million per year — assuming office rents of about $90 per square foot. The building, which is expected to open

elated’s smaller project in Hudson Yards — 10 Hudson Yards at 380 11th Avenue — will still cost a pretty penny. The total price tag on the building is $1.25 billion, according to the company’s IDA filing. Construction of the building, which will be home to the corporate offices of the handbag company Coach, and will also have a ground-floor Fairway Market, is underway. (The groundbreaking took place in December 2012 after Coach became the first anchor tenant to sign on at the larger Hudson Yards site.) While the overall price of constructing the building may not be as high as Tishman Speyer’s 509 West 34th Street or Related’s other Hudson Yards towers, the cost is not that much lower on a price-per-square-foot basis. Indeed, the all-in per-square-foot cost for building the project is $1,000, compared with $1,289 per foot for the Tishman Speyer project, for example. The building’s $1.25 billion total breaks down like this: $640 million in hard costs, $317 million in soft costs and $289 million for land. The buildings, mechanical systems and finishes will be high-end, according to Schotz. “You’re talking about marble in the bathrooms, and lobbies with stone finishes,” he said. TRD www.TheRealDeal.com October 2014 43

Senate votes to strike down ILSA requirements for condos President expected to sign bill into law that reduces red tape for developers By Hiten Samtani ondominium developers scored a major coup last month when the U.S. Senate voted unanimously to pass a bill that exempts condominiums from filing and registration requirements mandated by the Interstate Land Sales Full Disclosure Act, commonly referred to as ILSA. The bill previously cleared the House of Representatives, and is expected to be signed into law

by President Obama. Once that happens, developers of new condos or time-shares with at least 99 units will no longer have to register their buildings with the federal Department of Housing and Urban Development. New York Sen. Charles Schumer, on behalf of himself, his fellow New York Democrat Sen. Kirsten Gillibrand and Republican Sen. Dean Heller of Nevada, introduced the bill in March. Prominent members of the

Real Estate Board of New York, including board president Steven Spinola and Kramer Levin attorney Jay Neveloff, lobbied to have ILSA repealed for condos. “I’ve been working on this for over two years, I’m so excited.”

Real estate attorney Adam Leitman Bailey

Midtown We represented a major, high-end retailer in the 20-year lease extension and major expansion at the Peninsula Hotel on Fifth Avenue.

NoMad We helped Meliá Hotels lease space in a new 20-story tower going up just north of Madison Square.

Meatpacking District We advised the owners in a ground lease and JV agreement with the Rockpoint Group to develop a 150,000-square-foot boutique hotel.

HOT DEALS IN HOT NEIGHBORHOODS Think Lower Manhattan. Think Far West Side. Think about the neighborhoods people are talking about. Our New York real estate lawyers are making deals where they count— NoMad, Hudson Yards, Chelsea, Midtown, the Meatpacking District, and the South Street Seaport. Backed by nearly 900 attorneys in 14 offices nationwide, BakerHostetler is the right firm in the right place at the right time. Andrew Drogen Andrew Partner Drogen Partner 212.589.4292 212.589.4292 adrogen@bakerlaw.com adrogen@bakerlaw.com 45 Rockefeller Plaza, New York, NY | bakerlaw.com

44 October 2014 www.TheRealDeal.com

ILSA dates back to 1968, and was seldom used in New York City until the 2008 market crash, after which it became a popular exit strategy for condo buyers looking to get out of their deposits. Buyers were able to overturn

“Although we were proud to assist thousands of purchasers [using ILSA], we also agree the statute no longer has any utility and agree with Congress’s action.”

Hudson Yards We advised Sherwood Equities in the $200 million sale of almost half a block to Tishman Speyer.

Chelsea We guided a group of syndicated lenders through a $165 million credit facility secured largely by over $80 million in artwork.

Neveloff told The Real Deal. “ILSA was enacted decades ago to deal with abuses relating to the sale of swampland,” he added. “There were provisions of that law that made it very clear that it didn’t deal with condos.”

South Street Seaport We advised in the acquisition of what will soon be the Jade Hotel, designed to reflect Seaport history and Colonial Williamsburg.

Gina Mavica Gina Mavica Partner Partner 212.589.4672 212.589.4672 gmavica@bakerlaw.com gmavica@bakerlaw.com

Dennis Russo Dennis Chair of Russo NY Real Estate Chair of NY Real Estate 212.589.4648 212.589.4648 drusso@bakerlaw.com drusso@bakerlaw.com

contracts even when developers made seemingly trivial ILSA filing errors. Repealing ILSA for condos will not hurt buyers, Neveloff said. “They don’t lose any antifraud protections, especially in a state like New York where there are extensive offering-plan requirements” that safeguard buyers. As for developers, repealing ILSA’s condo provision will bring more certainty to projects, Neveloff said, and also help to reassure construction lenders. Real estate attorney Adam Leitman Bailey, who pioneered the use of the ILSA provision to get buyers out of contracts during the financial crisis, said that “in the time of the nation’s greatest real estate crisis, ILSA provided a surprise weapon causing developers to discount prices on newly constructed units, to either allow purchasers to receive enough of a discount to be able to close on the unit after lenders pulled the original loan, or it allowed purchasers who could no longer afford the home to be able to terminate the contract.” “Although we were proud to assist thousands of purchasers,” Bailey continued, “we also agree that the statute no longer has any utility and agree with Congress’s action.” TRD

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Spotlight

The Times

Square shuffle

Rising retail rents, big potential profits for LED billboards spur new frenzy for deal-making in high-trafficked area

By C. J. Hughes ew Yorkers who avoided Times Square in years past, when it was the seedy underbelly of Manhattan, are now just as likely to steer clear of the city’s tourism epicenter because of the pedestrian-packed sidewalks. But those same crowds are irresistible for New York City developers and high-flying investors. The high-traffic area not only hit new retail rent records recently — asking rents for stores hit a record $2,400 per foot this spring, according to the Real Estate Board of New York — but also, the potential for raking in cash from high-tech LED billboards is spurring a real estate frenzy. Since 2012, more than a dozen key buildings have changed hands in the core part of Times Square, from roughly West 41st and 52nd streets, around Broadway and Seventh Avenue. For example, 5 Times Square, the headquarters of Big Four accounting firm Ernst & Young, sold for $1.5 billion in June. That came on the heels of Mort Zuckerman’s Boston Properties selling its 45 percent stake in the ground-lease of neighboring 7 Times Square last fall. Meanwhile, investor Jeff Sutton and real estate investment trust SL Green Realty are strategically consolidating their grip on Times Square retail. And although residential construction is still rare in the area, developers are going gangbusters on hotels, offices and retail. “What you’re seeing is a combination of things: a lot of restaurants opening up, hotels opening up, some lounges, the whole place becoming more of a 24-7 environment,” said Elliott Ingerman, a principal of Tribeca Associates, which bought 130 West 42nd Street with a partner. This month, with the help of research firm Real Capital Analytics, The Real Deal runs down some of the recent activity in the area. 46 October 2014 www.TheRealDeal.com

1 Five Times Square The $1.5 billion sale of the Ernst & Young building was the highest price paid for a New York City office building since Google’s roughly $2 billion purchase of 111 Eighth Avenue in late 2010, sources say. The buyer of the 1.1 million-square-foot, 42-story glass office tower, which sits on Seventh Avenue between West 41st and 42nd streets, was a partnership led by local investor David Werner. The seller was AVR Realty. The accounting firm, whose lease expires in 2022, was paying about $52 million in annual rent, or $48 a square foot, in 2007, according to regulatory filings. But office rents often rise over time, so that’s presumably higher today. The building also has 37,000 square feet of retail space, which is divided in three. One of those spaces houses a Red Lobster, which as of 2007 was paying about $105 a square foot for its 14,500 square feet, though terms were likely renegotiated when that lease expired last year. The Disney Store and Champs Sports occupy the other two storefronts. Werner, who did not return a call for comment, has been active on other nearby blocks, too. Last year, he bought the ground lease for the Milford Hotel, on Eighth Avenue at West 45th Street, for $325 million, as part of a joint venture with Deutsche Bank’s wealth management arm. But Werner has unloaded investments in the past and could do the same here, analysts say. In 2012, he and his partners purchased One Court Square in Long Island City for $481 million and then reportedly sold the controlling stake to Savanna Partners this year for an undisclosed price. The deal hasn’t closed. “David Werner is a flipper. He’s not a holder,” said Robert Shapiro, a longtime land assemblage expert with City Center Real Estate, who’s had a hand in many key Times Square deals over the years, and owns minority stakes in the Renaissance New York Times Square Hotel and in 1600 Broadway, a nearby condo.

3 Jeff Sutton

Marc Holliday

Mort Zuckerman

Steve Witkoff

2 Seven Times Square Last fall, the sovereign wealth fund of Norway bought a 45 percent stake in this 43-story office tower, on Broadway between West 41st and 42nd streets for $684 million in cash. The seller and developer, Boston Properties, retained the majority stake in the tower and will manage and lease the building, according to a company earnings report. The deal was apparently a good one for the REIT. It reported a $386 million profit on the sale. The 1.3 million-square-foot building is almost fully occupied and has a roster of tenants that include law firms as well as Ann Inc., the parent company of Ann Taylor clothing stores. Office rents range from $45 to $85 a square foot, according to the data firm CoStar Group. The restaurant chain Ruby Tuesday, which opened in 2007, has a 5,600-square-foot space on the ground floor.

Howard Lorber

Photographs OF times square FOR THE REAL DEAL BY juan ZIELASKOWSKI

In This wasn’t Zuckerman’s only sale to the sovereign wealth fund. His firm recently sold the fund, which is rich in oil revenue, a stake in 601 Lexington Avenue. Bruce Mosler, the chairman of the global brokerage at Cushman & Wakefield, and an active player in Times Square’s 1990s redevelopment, said the neighborhood should continue to fare well, even if firms like Condé Nast are decamping for locations Downtown. (The publishing giant is, of course, moving to One World Trade Center.) “I think Times Square continues to be very attractive,” Mosler said. “It still has relatively new product and that’s efficient.” 3 1619 Broadway Perhaps no building embodies the transitional nature of Times Square like the prewar 11-story, 175,000-square-foot Brill Building at 49th Street. The building is best known for the music studios it housed in the mid and late 20th century — marquee names including Carole King and Phil Spector wrote some of their hits there. For years, Colony Music, which sold sheet music, occupied the 45,000-square-foot retail space. But that store shuttered in 2012, after owner Stonehenge Partners reportedly raised rents. Stonehenge did not return a call for comment. A year later, Stonehenge sold the building for $186 million to Allied Partners in a deal that included 30,000 square feet of air rights, as well as approved exterior signage that was expected to be a significant source of revenue. Sources familiar with the site say Allied will not add extra floors to building, but does plan to install 10 city-approved billboards imminently. Building owners have increasingly created commercial “condos” for their billboards — selling them as separate real estate. When those billboards are rented, they can fetch millions of dollars annually. “The sum of the parts is worth substantially more than the whole,” Howard Michaels, the founder and head of the real estate investment advisory firm the Carlton Group, told TRD last summer. “Selling an asset in pieces brings in more money than selling the whole thing.” The retail spaces, and the billboards will be the major revenue drivers at the address, brokers say. Yet Allied has not yet announced any permanent tenants for its three floors of retail space. The current tenant in the ground-level space sells New York–themed souvenirs, but that store is slated to close soon, brokers say. Four more permanent tenants are close to signing, said Newmark Grubb Knight Frank’s Jeffrey Roseman, who is marketing the retail spaces. Asking rents are $1,000 per square foot for the ground floor, he said. Roseman also said the Songwriters Hall of Fame will relocate to the building from Los Angeles in a portion of the retail space. “This place is like the Yankee Stadium of the music world,” Roseman said.

the

Spotlight The upstairs offices, which were initially envisioned for entertainment companies, according to news reports, appear to still be empty. Eric Hadar, the chair of Allied and an investor in Halstead Property and Brown Harris Stevens, did not return calls for comment, and neither did Brickman broker Paul Kotcher, who is leasing the office space.

Stephen Roth

4 1552 Broadway/1560 Broadway/ 155 West 46th Street Many of the older buildings in Times Square are far narrower and shallower than national retailers prefer, making it tricky to orchestrate sophisticated deals, brokers say. But SL Green and Jeff Sutton have teamed up to find novel ways to tap the area’s lucrative retail market, which is exactly what they did at this prime corner of 46th Street and Seventh Avenue. Today, that corner is home to Express. But installing the clothing store, which replaced a longtime TGI Friday’s, was anything but simple. It started back in 2011, when the duo purchased 1552 Broadway — a four-story landmarked building known as the I. Miller Building for the famed shoe store that was once located there — for $137 million. That structure offered Express 15,000 square feet of space, but it was not enough. So SL Green and Sutton struck a deal later that year to purchase a 99-year lease for three floors next door at 1560 Broadway, a 17-story office tower owned by the Actors’ Equity Association union and controlled by Newmark & Co. Real Estate. The interior walls were then removed to create a wider retail space. But Express wanted even more room, prompting SL Green and Sutton to buy 155 West 46th Street for $8.4 million in 2012. The partners then razed the narrow building and, in an architecturally complicated move, built a new structure to serve as the entrance to the elevated main lobby for 1560 Broadway, which the building’s owners have leased back from Sutton and SL Green. In shifting the lobby slightly to the east, Express was also able to grab more space for the rear of its store. That store, with 30,000 square feet, opened last spring. Meanwhile, SL Green and Sutton also replaced some conventional billboards with a massive 9,000-square-foot LED billboard that’s mounted to 1560 Broadway and features ads from Express. The owners couldn’t mount it on 1552 Broadway because the building is a landmark. All in, Express is paying $20 million a year for its 15-year lease, for both billboard and buildings, according to a source close to the deal. Sutton and SL Green’s 99-year lease at 1560 also includes the ground-floor retail space, which currently houses a McDonald’s and the Times Square Alliance, the business improvement district. Real estate sources say those spaces will also likely be combined for a retail play, though no building permits have

been filed yet. SL Green was not available for comment. A call left at Sutton’s Wharton Properties was not returned. 5 719 Seventh Avenue In June, SL Green acquired this 8,000-square-foot building, which mostly fronts West 48th Street, for $41 million, from Kenneth and Jeffrey Rothstein. The REIT, led by CEO Marc Holliday is now preparing to demolish the three-story structure and tap the unused development rights to construct a 25,000-square-foot retail complex, according to published reports. No building permit applications had been filed at press time. Brokers say a spat between SL Green and Great Locations New York — which pays an annual rent of about $840,000 and sublets the space to the Smiler’s deli and the other existing tenants — has delayed the project. Great Locations’ lease expires next year. 6 701 Seventh Avenue This site, at the northeastern corner of West 47th Street, is one of the most significant projects in the city. In 2012, a team including developer Steve Witkoff, Howard Lorber’s New Valley, Boston-based Winthrop Realty Trust and the Indianapolis-based shopping center developer Maefield Development paid $430 million for the site, according to Real Capital Analytics. In 2013, Winthrop chipped in another $340 million, records show. In addition, Barry Sternlicht’s Starwood Property Trust and other firms kicked in $815 million in construction financing, according to news reports. The owners are planning a 39-story hotel-and-retail mixed-use tower to be anchored by a 452-room Marriot Edition by Ian Schrager that’s set to open in 2017. The site’s former building, which contained a Tad’s Steaks and Sbarro pizza joint, has been razed. Besides the hotel, the project — which has been dubbed 20 Times Square — will contain 40,000 square feet of entertainment space, including several floors of restaurant, event and outdoor spaces, at the base of the hotel. That will be the real cash cow, brokers say: 76,000 square feet of retail spanning six levels — with four floors above ground and two below. In addition, the building will be wrapped in a 20,000-square-foot LED billboard, the largest in Times Square, according to Maefield’s website. That sign, plus retail rents, could be worth $50 million a year, Witkoff said in 2012, so presumably even more today. Witkoff did not return calls for comment. As for the retail lease up, no tenants have been signed yet, said Andrew Goldberger, a vice chairman with CBRE, who is part of the team marketing the space. But “we’re talking to people for the whole Continued on page 156

www.TheRealDeal.com October 2014 47

How pricey is Midtown South?

A rundown of the most expensive office leases in the submarket that’s seeing an explosion of tech firms

By Tom Acitelli ewmark Knight Grubb Frank’s Paul Ippolito recently spent time touring properties with a technology company on the hunt for Manhattan office space. He showed the company executives Class A office space in Midtown and Downtown — but they weren’t interested. “They won’t even walk in the lobby,” said Ippolito, an executive vice president at Newmark. Instead, the tech firm, which is looking for 20,000 to 25,000 square feet, had its eyes set almost exclusively on Midtown South, specifically on Broadway. It’s no newsflash that Midtown South has a near-cult following among tech companies and other start-ups. At the same time, more-established firms continue to lay down commercial roots in the submarket, often for their digital operations. This month, The Real Deal looked at the priciest leases by taking rent in the submarket for 2013 and the first half of 2014, to see what exactly the area’s popularity means for building owners — both in terms of dollars and cents and tenants. The priciest leases for the time period TRD looked at were dominated by tech firms that inked leases in 2014, according to data from commercial firm Colliers International. Clocking in at No. 1 was a 25,401-squarefoot lease signed by asset manager Claren Road at the newly opened 51 Astor Place. Also in the top five were software firm Infor; British newspaper the Daily Mail, which is headquartering its U.S. web branch at 51 Astor; online consumer review website Yelp;, and First Look Media, the new-media startup founded by former Rolling Stone writer Matt Taibbi. In a telling sign about how Midtown South is continuing to gain steam, the taking rents for these leases were higher than the top five for 2013. For example, in the first half of 2014, the starting taking rents in Midtown South’s five priciest deals went from $85 a square foot to $110. In 2013, they went from $72 a square foot to $82. Nonetheless, the priciest leases for both years hewed toward tech. While the abundance of tech-tied tenants do not surprise brokers, the rental amounts do. “I’ve been in the business for over 40 years and I don’t think I could have predicted years ago that buildings would be more attractive and rents would be higher in Midtown South than they are on Fifth Avenue and Grand Central,” said Andrew Roos, vice chairman of Colliers.

48 October 2014 www.TheRealDeal.com

Midtown South’s priciest office leases, 2013–2014 Location

LEASE LENGTH (YEARS)

LEASE SIGNED IN

TAKING RENT (PER SF)

51 Astor Pl.

2014

$110

635 Sixth Ave.

2014

$101

51 Astor Pl.

2014

$98.35

11 Madison Ave.

2014

$85

114 Fifth Ave.

2014

$85

IBM Watson Group

51 Astor Pl.

2014

$84.42

1Stdibs

51 Astor Pl.

2013

$82

WPP

114 Fifth Ave.

2014

$78

Two Sigma Investments

101 Sixth Ave.

2013

$78

330 Hudson St.

2014

$77

Google

75 Ninth Ave.

2014

$75

Mashable

114 Fifth Ave.

2014

$73.50

Major League Baseball Productions

75 Ninth Ave.

2013

$73

245 West 17th St.

2014

$72

770 Broadway

2013

$72

450 West 15th St.

2013

$72

101 Sixth Ave.

2013

$72

Company

Claren Road Asset Management Infor Daily Mail Yelp First Look Media

General Motors Technology Center

Twitter Facebook Intercept Pharmaceuticals Unbound Philosophy

Source note: Data is from Colliers International and includes deals from 2013 and the first half of 2014. Leases were ranked by starting taking rents only. Those rents do not include free rent offered by landlords. In cases where one company had multiple transactions on various floors in one building, only the deal with the highest taking rent was counted. In addition, each company was only included once, even if they had separate deals in both years.

No jackets and ties The roster of firms leasing in Midtown South in both years reads like a who’s who of the top tech firms in the U.S.: Twitter, Facebook, Google, Mashable and Yelp, among others. But that’s not to say that other, more-established companies, particularly those expanding their technology arms, aren’t also planting their flags there. Major League Baseball’s production wing, for instance, signed an eight-year, roughly 19,500-squarefoot lease at 75 Ninth Avenue in the middle of last year. The company will pay $73 a square foot for the first four years and $78 for the latter four. In addition, investment bank Credit Suisse and electronics giant Sony also signed mega leases in the submarket, both at 11 Madison Avenue. They were not included

in the ranking because their taking rents were not available. However, data company Costar Group pegged asking rents for Credit Suisse’s space at $70 a square foot, while asking rents for other space in the building has been reported at $92 a square foot. Meanwhile, the vast majority of the priciest deals in Midtown South were new leases rather than renewals or expansions, further suggesting that despite the age of some of the areas buildings, new tenants are flooding in. That’s because the area has garnered a reputation for accommodating their informal cultures, brokers explained. “They want to take their dogs to work,” said Ippolito, who represented Facebook in two deals at 770 Broadway — in 2013 and again when the networking giant expanded earlier this year. “They’re on a very strong growth path and yet they’re still very young

companies,” Ippolito added. He declined to discuss Facebook’s deals specifically. David Falk, tri-state president of Newmark, represented online marketplace 1stdibs in Midtown South’s priciest lease of 2013: A 15-year, 42,232-square-foot deal at 51 Astor Place, which developer Edward J. Minskoff finished in 2013. The company, which locked in starting rents of $82 a square foot and moved from 156 Fifth Avenue, never considered leaving Midtown South, said Falk, who also represented Google in its two expansions at the Chelsea Market. The cutting-edge tenants who sign in the area “don’t want to walk into a building where everyone is wearing a suit and a tie,” he said. “They want to walk into a building where everyone is wearing jeans, T-shirts and headphones.” Continued on page 156

www.TheRealDeal.com January 2014 35

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Behind Elliman’s new partnership

What does the firm’s new alliance with London-based Knight Frank really mean?

By Rich Bockmann et used to saying “Douglas Elliman Knight Frank Residential.” The two firms are launching a new “global brand alliance” that is several years in the making. That new partnership will mean a new branding campaign in New York City and in select Knight Frank locations around the world — such as Hong Kong and Russia — aimed at selling the top 10 percent of each company’s listings to international buyers. To do that, the firms will solidify a global network of brokers who will refer business to each other, akin to relationships that several of Elliman’s competitors have forged with other firms around the world. Elliman and Knight Frank Residential, the London-based international brokerage, began working together informally in 2011. “It was the engagement before we got married,” Elliman Chairman Howard Lorber described the period. “We wanted to know if they were right for us, and they wanted to know if we were right them.” Since then, the firms’ agents have been quietly referring clients to each other and showcasing select luxury listings on each other’s websites. This isn’t Elliman’s first marriage. The firm was, of course, affiliated with the national franchise Prudential for nine

Elliman to open an office in New York City. More recently, the two began more formally branding themselves with the joint release of a supplement to the closely watched Knight Frank Wealth Report. The new partnership gives Elliman entrée to overseas markets, particularly those in Europe and Asia, where Knight Frank has an established presence. In return, it gives the British company a strong presence with the largest real estate brokerage in New York, as well as in markets such as the Hamptons, Westchester, South Florida, Los Angeles and Aspen, where Elliman either has offices or is planning to expand. Elliman COO Stephen Cotler said the two firms will begin prominently displaying their top listings on each other’s websites within the coming months and the New York brokerage’s literature will be distributed to Knight Frank offices overseas. “You’re going to see more interactivity between the companies,” Cotler said. Select U.S. offices will also have Douglas Elliman Knight Frank Residential signage.

Unlocking value The partnership is centered on agents referring clients to one another when they’re looking to buy overseas, where a local broker has more in-depth knowledge

“[The last three years] was the engagement before marriage. We wanted to know if they were right.” Howard Lorber, Douglas Elliman years until 2012, when it decided not to renew its agreement. Elliman said the split was partly prompted by the fact that the partnership prevented it from expanding to locations such as Boca Raton and South Beach, where it now has offices. It’s also not the first time Elliman and Knight Frank have teamed up with each other. In 1979, Knight Frank — then known as Knight Frank & Rutley — partnered with

of the market. While brokers in New York receive a referral fee for sending buyers to agents abroad, sources said the real value of an exclusive affiliation is building a network of trustworthy colleagues to hand off clients to. (Elliman declined to comment on referral fees.) The international cache of the relationship could also attract more top brokers to Elliman. In September, the firm made two big Continued on page 156

www.TheRealDeal.com March 2010

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Development

New Players get in the game The upstart developers and established national builders making inroads in NYC since the bust

By E.B. Solomont The proof is in the numbers: Manhattan land prices hit an average of $511 per square ew York City’s strong residential market has prompted a slew of new players to foot during the first half of the year, compared with $377 during the dark days of 2009, join the development fray here. according to Massey Knakal Realty Services. In Brooklyn, meanwhile, prices hit $166 per While the majority of the 6,000 new development units set to come online in square foot during the first half of the year, compared with $127 in 2009. 2015 are being built by household names such as Extell Development, Related Still, some 2,500 units are set to come online in 2014 — a 151 percent increase from 2013, Companies and others, a new batch of first-time developers, along with some developers according to data from the new development marketing firm Corcoran Sunshine. well-established in other parts of the country, have thrown their hats into the New York City The new players range from big names in other industries, such as former L.A. Dodgers ring since the downturn. owner Frank McCourt, who paid $167.3 million for 360 Tenth Avenue in August 2013, to “When you have an up market, everyone thinks they can do it,” said Andrew Barrocas, little-known developers such as the Losquadro family, who’ve long owned 870 Metropolitan CEO of the brokerage MNS. “They think, ‘When the market’s as hot as it is, even if I make Avenue in Williamsburg and are now planning a 20-unit rental there. mistakes, the market can absorb them,’ ” he said. Not surprisingly, the established players But there are plenty of barriers to entry in coming into New York for the first time are today’s market. targeting Manhattan more often than not, After getting burned during the downturn, while those truly new to development are largely banks are still conservative about to whom they’ll focused on untapped Brooklyn neighborhoods. lend money. As a result, many first-time developers “The residential market has much more are turning to other sources of capital. For those upside potential than the commercial/ who do secure financing, land prices are sky-high industrial side in North Brooklyn,” said Anthony Andrew Barrocas, MNS and available parcels are few and far between. Losquadro, whose family previously housed In addition, determining the right time to jump into the development game is not a their heating oil and HVAC installation business at 870 Metropolitan. science. That’s especially true because it takes about three years to bring a new building to Whether all the newer players to the scene will succeed remains to be seen. market. So those who picked up land for relatively cheap after the downturn are now reaping “Being a developer in a market like today’s is not a challenge,” Barrocas said. “It’s being a the rewards of higher condo prices and a lower overhead. Those looking to buy development developer in a down market, a challenging market; that’s where it becomes more difficult.” sites today, on the other hand, are faced with record-breaking land prices that make penciling Below is a look at some of the developers who’ve broken into the New York market out projects harder. since the last bust.

“When you have an up market, everyone thinks they can do it. They think, ‘When the market’s as hot as it is, even if I make mistakes, the market can absorb them.’ ”

Bluejay Management Since 2003, Bluejay Management’s Marc Jacobowitz and Yerachmeal Jacobson have amassed a portfolio of more than 30 retail properties in New York. But at the height of the recession, they snagged a retail space at the prime intersection of Eastern Parkway and Franklin Avenue, which prompted them to shift gears and dive into residential development in Brooklyn. In 2009, their firm obtained a hard loan on the site, though according to public records, they didn’t close on the $8.26 million purchase until 2012. In May, the firm completed construction on a 63-unit rental building — with a sizable 8,000 square feet of ground floor retail — at the site 341 Eastern Parkway, in the rapidly gentrifying neighborhood of Crown Heights. The retail tenants in the building, which was dubbed 341EPW, include Capital One and Starbucks. Leasing on the residential side launched in July and is currently 50 percent complete, with rents starting at $2,200 for studios and jumping up to $4,500 for large twobedrooms. Dave Maundrell, whose brokerage 54 October 2014 www.TheRealDeal.com

Bluejay Management’s Marc Jacobowitz

Aptsandlofts.com is marketing the property, said Jacobowitz and Jacobson are up-andcoming on the residential scene. In addition to 341EPW, Bluejay is working on two more residential projects in Brooklyn, where Jacobson said he sees continued “upside opportunities.” In late 2013, the firm paid $800,000 for 608 Ocean Avenue in Flatbush, where it’s planning an eight-story, 20-unit rental. Also in late 2013, it shelled out $1.1 million for 258 Empire Boulevard in Crown Heights, where it plans to build 40 to 50 apartments.

Bluejay built 341 Eastern Parkway, a 63-unit rental building in Crown Heights.

Over the years, Jacobson said, Bluejay bought and sold residential buildings. But they were becoming increasingly expensive to run and manage. Jacobson said Bluejay has leveraged its prior relationship with lenders and investors for its current projects. “Now the real way to add value is through development,” he said.

Great Point Properties After more than a decade in real estate finance, Great Point Properties’ Darren Anikstein completed his first project, a 20-

unit residential building in Williamsburg, during the summer. Anikstein, who worked at Lehman Brothers, property management firm Walter & Samuels and Fortress Investment Group, launched Great Point in 2011. With financial backing from family, he started as a hard-money lender, providing a $7 million loan to a condo developer in Tribeca for his first deal. But then he himself got the itch to develop. So in 2012, he paid $3.4 million for a vacant lot at 171 North 10th Street in Williamsburg. He then secured a $5.5 million building loan from First Niagara Bank in Buffalo to cover a chunk of the $11.25 million development costs, according to public records. Anikstein said he personally guaranteed 50 percent of the loan, which he probably would not have needed to do if he’d been an experienced developer with a track record. “If you’re a guy with 20 years of experience, there’s probably no principal guarantee,” he said. He also relied on his experience in real estate finance to help navigate the loan process and secure a lender. “I spoke the

Development language of the lenders,” he said. In addition, during college at the University of Michigan, Anikstein also worked at his family’s subcontracting company, Woodbury, N.Y.–based Cord Contracting, so he is comfortable with the ins and outs of construction. His Williamsburg building — where studios start at $2,600 and three-bedrooms rent for $7,500 — is 95 percent leased after launching in July. Meanwhile, Great Point, which is currently a one-man operation based out of an office at 570 Lexington Avenue, also owns a development site at 174 North 11th Street in Williamsburg. Anikstein bought that site in 2012 for $3.4 million, and is weighing two options: gut renovating the commercial space, or building a new 50-unit apartment building. Since November 2013, he’s also picked up several more properties, including 194 North 9th Street and 92 Berry Street, both in Williamsburg, and three coop units at 916 Union Street in Park Slope.

Great Point Properties’ Darren Anikstein

Carmel Partners’ 33-story tower at 325 Lexington Avenue launched last month.

Carmel Partners California investment firm Carmel Partners is hardly a stranger to real estate, currently managing $3.6 billion in real estate assets nationwide for 60 institutional investors. But the firm, led by CEO Ron Zeff, is now developing its first condo building in New York City. The 33-story tower, which is at 325 Lexington Avenue and launched last month, will include 123 studios to two-bedroom units. Carmel bought the site in January 2013 for an undisclosed amount from Time Square Construction and Development, which is now a partner on the project. (Time Square’s development stalled there in 2008.) In addition, the company is actively looking for additional development sites in Manhattan, Brooklyn and Queens, according to Lee Bloch, vice president of development. “We just think the market fundamentals are very strong,” Bloch said. “Demand definitely continues to outstrip supply.” Bloch said Carmel sees a shortage, in particular, of smaller condo units as other developers bring larger condos online. Carmel, which opened a one-man office in the city in 2010, now employs eight staffers in New York. Although land prices in New York are higher than other parts of the country, Carmel has come into the market with considerable muscle. As of July, it raised $1.03 billion via its fifth investment fund. “We can move quickly because we have discretionary funds,” said Bloch. Besides ground-up development, Carmel also acquires, rehabs and manages real estate. In New York, it’s taken on three projects since 2011: 15 Cliff, a 157-unit rental in the Financial District that it picked up for $95 million in January; the Electra, a 168-unit rental at 354 East 91st Street, which it also snagged for $95 million, and the Renoir House, a 151-unit rental at 225 East 63rd Street, where it bought the ground lease for $44.5 million.

In 2012, Anikstein paid $3.4 million for a vacant lot at 171 North 10th Street in Williamsburg.

Carmel Partners’ Lee Bloch

Real estate scion Jacob Toll is making his name in Williamsburg.

Leasing at Jacob Toll’s Lewis Steel Building is set to launch early next year.

Red Sky Capital Cornell University graduates Benjamin Bernstein and Benjamin Stokes like to fly under the radar — but the duo has spent more than $120 million on development sites in prime Brooklyn neighborhoods since 2012. Today their portfolio includes property near the Barclays Center and a parcel of buildings in the heart of Williamsburg. Yet another Ben, Ben Tapper, a senior director at Eastern Consolidated, said the duo’s instincts in prime Brooklyn has been spot on. “I would use the word ‘prescient,’ ” said Tapper, who represented Red Sky in its

acquisition of 143-157 Roebling, which went into contract two years ago for $32.35 million. Following litigation over the property between the seller and another interested buyer, Red Sky closed this spring, paying half the price the property would fetch today, according to Tapper. Bernstein — previously an analyst at investment management firm Pimco and venture capital firm Blue Martin Ventures — and Stokes, a former project manager at Warren Claytor Architects, made their first investment in 2007, picking up an apartment building at 759 Manhattan Avenue in Greenpoint for $3.9 million. By 2012, the Wall Street Journal reported

they’d amassed 170 Brooklyn apartments. Since then, Red Sky Capital has become a visible player in Williamsburg, where it began snapping up prime real estate following the 2008 bust. In 2012, a joint venture between Red Sky and Waterbridge Capital, one of Red Sky’s sources of financing, paid $66 million for a group of parcels along Bedford Avenue in Williamsburg, with plans to redevelop 50,000 square feet of retail and 39 rental units. The firm, which did not return calls for comment, also owns three properties near the Barclays Center: 76 Saint Marks Avenue (which it bought in July 2013 for $15 million), 267 Flatbush Avenue (which it picked up in May 2013 for $6.2 million) and the Triangle Building at 182 Flatbush Avenue (which it bought in September 2012 for $4.1 million.) It’s unclear what their plans are for those sites, but Tapper said Red Sky has been “aggressively” buying real estate, with no sign of slowing down. “They still are very active in their acquisitions,” he said.

MC3 Jacob Toll, the son of real estate mogul Robert Toll, has planted his flag in Williamsburg, where he’s developing an 83-unit building at 76 North 4th Street — just two blocks from Toll Brothers’ Northside Piers project. The younger Toll, in a partnership with property manager and developer Cayuga Capital Management, paid $17 million in 2010 for the former Lewis Steel Products factory, which he converted into a rental building, with leasing set to launch early next year. MNS’ Barrocas, whose firm is marketing the property, said Toll is a developer to watch. “He comes from a family background of development, but this is his first project here in New York and it’s been a great success,” said Barrocas. Toll said although he helped out in Toll Brothers’ Williamsburg office for a time, he always wanted to strike out on his own. “Why work for a public company with a starting salary when you can work for yourself?” he quipped. Toll connected with Cayuga at a fundraiser in 2009. As he got to know the firm’s cofounders, Jacob Sacks and James Wiseman, they discovered that they were interested in pursuing similar projects, including adaptive reuse of historic buildings, he said. “It’s been a huge learning experience,” said Toll, who added that the biggest lessons were related to working around the older building’s existing condition. Unlike other first-time developers, financing for Toll’s project was less of a challenge. Toll and Cayuga acquired the site in an all-cash deal and obtained a construction loan. “Financing is not a factor for us,” said Toll, who tapped his personal money to purchase the Lewis Steel building. Having grown up in a real estate family (not only is his father the co-founder and chairman of Toll Brothers, his mother also developed custom homes in Philadelphia), www.TheRealDeal.com October 55

Development Toll’s first solo development was in Telluride, Colorado, where he rehabbed an old Victorian home and sold it for $5.7 million in 2007. He moved to New York in 2006 to get a master’s in social work at NYU, during which time he began shopping for development sites in Brooklyn. Besides the Lewis Steel project, Toll redeveloped a 10,000-square-foot warehouse at 234 Starr Street in 2010 on the East Williamsburg-Bushwick border, turning it into a commercial space with four restaurants and three offices. Last year, he bought six walk-ups in Bushwick for less than $6 million combined. “I’m a long-term-play guy right now,” he said. “I got a good price, and after I fix them up and justify some market rents, they’ll start to be positive.”

Adam America Real Estate Investment One newcomer gained his experience far afield: Dvir Cohen Hoshen developed 1,700 residential units in Romania, shifting his focus to New York in 2011. Since then, Adam America Real Estate Investment has put $130 million into 12 residential properties, according to the developer’s website, which notes that the firm is backed by “an established network of high-net-worth international investors.” Sean Kelly, managing director specializing in development and conversion at CPEX Real Estate, said Adam America is a prolific Brooklyn developer and often teams up with Slate Property Group. Prior to founding Adam America with Omri Sachs, Hoshen founded Adama Holding Public Ltd. Sachs was a senior manager at that company, which developed housing in Eastern Europe starting in 2004. In all, Adam America’s New York City portfolio includes 570 rental units and 115 condo units. The rentals include 53 Broadway and 247 North 7th in Williamsburg, 180 Franklin Avenue in Clinton Hill, 500 Sterling Place in Prospect Heights and 275 Fourth and 470 Fourth in Park Slope. The condos include 51 Jay Street and 201 Water Street in Dumbo, and 100 Norfolk Street in Lower Manhattan.

“Some of the companies that did affordable housing didn’t go through the severe downturn of 2008, 2009 and 2010, allowing them to continue to keep their platform as robust as it was prior to the recession,” Weiss said. Access to capital is now enabling such companies — including Maddd — to do market-rate deals. Madruga, a native of Cuba who runs Maddd with his wife, Francesca, first waded

at 127 West 23rd Street. It also has several other projects in the works in other parts of the city.

HAP Investment Developers HAP Investment Developers had already built more than 70 office and apartment buildings in Tel Aviv, Budapest and Kiev when, in 2010, co-founders Eran Polack, Amir Hasid and Nir Amsel set their sights

“Why work for a public company with a starting salary when you can work for yourself? It’s been a huge learning experience.” JACOB TOLL, SON OF REAL ESTATE MOGUL ROBERT TOLL into New York City real estate nearly a decade ago as a partner on a South Bronx condo project near Yankee Stadium. In 2009, he developed a 641-unit rental building at St. Ann’s Terrace in the Bronx. But Madruga, who did not return calls

on New York. They’ve been gobbling up real estate ever since. Since 2011, HAP has acquired 12 development properties throughout Manhattan and in Jersey City. Projects range from the $4 million gut renovation of 419 HAP Investment Developers is building this 98-unit rental building in Washington Heights.

Maddd Equities Developer Jorge Madruga got his start as a parking-lot owner and spent the better part of the last decade building affordable housing. But since the bust, Madruga’s Maddd Equities has been on a development tear, with a spate of market-rate projects. This year alone, Maddd Equities has nine projects under construction, including several on Manhattan’s Far West Side, where it’s developing a 155-room hotel at 444 Tenth Avenue and two sister buildings, 411-421 West 35 Street (187 luxury rentals) and 445-451 West 35 Street (125 luxury rentals). It’s developing all three with Joy Construction, a firm it started working with on affordable housing more than a decade ago, said Eli Weiss, Joy’s managing vice president. 56 October 2014 www.TheRealDeal.com

HAP Investment Partners’ three co-founders (from left): Amir Hasid, Eran Polack and Nir Amsel.

for comment, moved on to the Manhattan development scene after the bust. And in the last two years, the company has taken on deals in highly visible areas, including near Hudson Yards. In 2012, Maddd developed a 98-unit rental building called the Mantena on West 37th Street. This year, meanwhile, Maddd launched an 86-unit rental building at 74-84 Third Avenue in Manhattan and a hotel-rental

East 117th Street, an eight-unit apartment building, to the $40 million 500 Summit Avenue in Jersey City, a 915,000-squarefoot mixed-use project. Polack said that in 2011 and 2012, there was little competition for development sites because the market was still recovering and banks weren’t lending. “It was very easy to buy,” he said. “In 2013, it started to be harder to buy. There was much more competition to buying land.”

HAP has also had the benefit of longtime investors who have funded the firm’s developments in New York. “When we came here, the [investors] came with us,” Polack said. “It’s a long-term relationship with the investors,” many of whom are from Israel and Europe. More recently, though, local investors have thrown their backing behind HAP, too. Polack said HAP plans to double its portfolio in the next several years. For the most part, HAP is investing Northern Manhattan neighborhoods like Washington Heights, Inwood and East Harlem. “We see a lot of potential over there,” he said. “We think this is the land reserve of Manhattan.” Although the majority of HAP’s projects are rental buildings, there are three condos, including 215-219 West 28th Street, which will have 130 condos.

Slate Property Group Developers Martin Nussbaum and David Schwartz have had a busy year. Slate Property Group, founded in 2013, has 15 ground-up projects under development, plus another five rehab projects, according to principal David Schwartz. All in, he said, Slate is developing some 1,500 units — mostly in Brooklyn. CPEX’s Kelly said Slate is one of Brooklyn’s most prolific developers. Nussbaum and Schwartz met more than 12 years ago when both were working for large developers. In 2009, Nussbaum cofounded Manhattan-based Silverstone Properties with Josh Zegen and Brian Shatz. Nussbaum left Silverstone in 2013 and formed Slate. Schwartz joined him in February. The pair takes a pioneering approach to site selection. “We’re willing to go into a market that may not look proven to people and take what some people would perceive as a risk,” Schwartz said. Having developed projects in prime Williamsburg and Dumbo, Schwartz said he and Nussbaum are currently bullish on the South Williamsburg-East WilliamsburgBushwick border. In September, Slate partnered with Adam America and Israelbased Naveh to buy a development site at 120 Union Avenue in East Williamsburg, where the joint venture is planning a $65 million mixed-use property with 100 rental units. The purchase price was $15.5 million. Slate also signed a contract to buy 100 Union, where it’s planning 40 rental units, though the $6 million deal hasn’t closed. “What we’re doing there is we are going to be developing a handful of sites, all within a block of each other, creating a little neighborhood,” Schwartz said. Slate has financed acquisitions with equity – both its own, via successful investments, and from investors — and then sought construction loans. Although in general banks are less willing to lend, compared with the last upcycle, Slate has leveraged its track record and strong balance sheet to work with repeat lenders, Schwartz said. TRD

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Development

Gold Coast glut? TRD analysis finds nearly 9,000 residential units slated to hit the market along the Jersey waterfront

By Rich Bockmann ew Jersey’s Gold Coast, the stretch of waterfront running along the Hudson River opposite Manhattan, is in the midst of a building boom, with dozens of developments (mostly rentals) in the pipeline. And as prices in Manhattan and the outer boroughs climb, Gold Coast towns with strong transit links are increasingly shedding their second-fiddle status. “This side of the river used to be considered more of a niche market,” said David Barry of Hoboken-based Ironstate Development, which has multiple residential projects in the area. “It’s now considered much more a piece of the fabric of greater New York.” Over the course of the next few years, the towns along the Gold Coast — which include Jersey City, Hoboken, Weehawken, West New York and Edgewater — are expected to add just shy of 9,000 new apartments, riding a wave of demand that has been growing since 2010. This month, The Real Deal compiled a list of more than 30 development projects that are either currently being marketed or will come to market in the next two years (see chart). The data came from municipal records, news reports and TRD sources. Of those projects, 24 are in Jersey City. Weehawken, meanwhile, has four, and Hoboken and Edgewater have three each. The towns along New Jersey’s Gold Coast have, of course, long attracted apartment hunters looking to get more for their money than they can in New York City. But as Manhattan and Brooklyn — and increasingly other areas in the outer boroughs — become even more expensive, Jersey is becoming even more appealing, especially given the new development that’s now available there, sources say. “In general, Jersey City and the outer boroughs behave much like Manhattan does,” Barry said. “When Manhattan is tight and it’s hard to find an apartment, in general that bodes well for the outer boroughs.” At the end of last year, the vacancy rate for multi-family rentals in Hudson County, which covers many of the Gold Coast cities, was 4.7 percent, according to the research firm Reis. That was level with 2012, but a 13 percent drop from 2011. Residential rents have been rising, too. In 2013, the average effective rent in Hudson County was $2,650, up 1.7 percent from the previous year, Reis’ data show. By comparison, average rents in Manhattan climbed 2.1 percent for an annual price of $3,875 in 2013, according to ap-

58 October 2014 www.TheRealDeal.com

praisal firm Miller Samuel. In addition, demand in Hudson County is expected to grow steadily, with rents projected to increase more than 1.6 percent annually over the next five years, according to the commercial firm HFF, which did more than $380 million worth of deals in

rental glut would be a short-term “blip.”

Driving demand Bullish insiders point to the rapid rate of lease-ups as proof that the Gold Coast’s most active markets can absorb the rush of new product.

completion in the final phase of the Newport campus. “It did extremely well. It was our most successful lease-up ever,” said Mario Gaztambide, LeFrak’s vice president of residential properties. “We were at 100 percent in less than six months from opening.” Other buildings that have come online in the last year in Jersey City include Fields Development’s 131-unit Madox Apartments and the Manhattan Building Company’s 155-unit Cast Iron Lofts, which the developer has dubbed Soho West. In addition, in June, Ironstate launched 18 Park, which the company developed with KRE Group, a firm headed by Jonathan Kushner, the cousin of Kushner Com-

Lennar’s Avenue Collection is a multi-phase condo complex on the Hudson River in Weehawken, where prices start at $800,000 for a one-bedroom unit.

Left: Ironstate & Kushner are building the 670-unit 235 Grand in Jersey City. Right, the tallest of the three towers at Kushner’s Journal Squared will have 70 stories.

Hudson and Bergen counties over the last 18 months. But there are some concerns about the large amount of residential product coming to the market. To wit, the vacancy rate is expected to tick up to 5.4 percent in 2017. Still, others are confident there will be enough demand to absorb the new units. “People like to say you can overbuild,” said HFF’s Jose Cruz. “The reality is, they will come for those units.” Cruz added that if any of the Gold Coast markets have the potential to overbuild, it is Jersey City. But even there, he said, any

Most of the recent development has been, and will continue to be, centered in Jersey City, where trendy new shops are popping up and an industry-friendly mayor is using tax incentives to encourage developers to put shovels in the ground. Recently completed residential projects include the LeFrak Organization’s 158-unit rental tower Laguna that’s part of Newport, the 600-acre, mixed-use city-within-a-city that the company has been developing for nearly 30 years. The building, which sits across the river from Hudson River Park’s Pier 40, was the first

panies’ Jared Kushner. As of the middle of last month, nearly half of its 422 units were leased, at rents ranging from about $2,600 for a one-bedroom to $3,500 for a three-bed unit. Compared to similar outer-borough neighborhoods that have benefited from a rush of renters priced out of Manhattan, Gold Coast towns offer even deeper discounts, brokers and developers noted. At Avalon Bay’s Avalon Cove in Jersey City, for example, the average rent per apartment was $3,246 in 2013, according to the REIT’s SEC filings. That’s compared www.TheRealDeal.com February 2014 49

Development

New Jersey Gold Coast Development Pipeline Jersey City Project/Location

Developer

# of Units Completion date

Rental/condo

URL Harborside 1

Mack Cali/Roseland & Ironstate Development

766

2015

rental

235 Grand St.

Ironstate Development & Kushner Real Estate Group

670

2015

rental

70 Columbus

Ironstate Development & Panepinto Properties

543

2015

rental

Journal Squared Phase 1 Kushner Real Estate Group & National Real Estate Advisors

540

2016

rental

30 Journal Square

Kushner Companies & KABR Group

525

2016

rental

110 First St.

Urban Development Partners, ARES Management & BLDG Management

451

2015

rental

Trump Bay Street

Trump Organization, Kushner Companies & KABR

447

2016

rental

18 Park

Kushner Real Estate Group & Ironstate Development

422

leasing

rental

Provost Square

Toll Brothers Apartment Living

417

2015

rental

Modera Lofts

Mill Creek Residential & Rockwood Capital

366

2015

rental

Mack-Cali/Roseland & Garden State Development

311

2016

rental

3 Journal Square

Hartz Mountain Industries, Panepinto Properties & Garden State Development

240

2015

rental

Cast Iron Lofts Phase II

The Manhattan Building Company

232

2015

rental

The Beacon

Building and Land Technology & Metrovest

232

leasing

rental

Warren @ York

BNE Real Estate Group

139

leasing

rental

The Art House

The Shuster Group

119

leasing

rental

Charles & Co.

Silverman

2015/2016

rental

Bright and Varick

Rushman-Dillon Projects

n/a

rental

19 Rock

Tovaste

leasing

rental

Kennedy Lofts

Hopkins Group & Skyrock 100 Newkirk

leasing

rental

223-231 First St.

Arthur Pronti

2014

condo

Two Ten Ninth St.

Silverman

leasing

rental

TelCo Lofts

Brunelleschi Construction

leasing

rental

95-97 Montgomery St.

95-97 Montgomery St. LLC

n/a

condo

Park Place

Bijou Properties

212

2015

rental

Willow 14

Advance Realty

140

2016

rental

900 Monroe Street

Bijou Properties

135

2015

rental

The Estuary

Mack-Cali/Roseland & Hartz Mountain Industries

589

leasing

rental

RiverParc

Mack Cali/Roseland

280

2014

rental

The Gateway

Tom Heagney

150

n/a

rental

1000 Avenue

Lennar Urban

selling

condo

The Alexander

Daibes

300

leasing

rental

Infinity

Demetrakus/Kaufman

100

leasing

rental

Edgewater Harbor

National Re/Sources

leasing/selling

rental/condo

Hoboken

Weehawken

Edgewater

Source: Data from municipal records, news reports and TRD sources. Includes projects that are either currently being marketed or will come to market in the next two years.

From left: The pool at the Art House, a new rental in Jersey City; KRE Group’s Jonathan Kushner; Richard LeFrak; 18 Park in Jersey City, another Ironstate/Kushner project; David Barry of Ironstate Development; a rendering of 1200 Avenue, one of the projects Lennar is building at Port Imperial in Weehawken; and the Kushner Companies’ Jared Kushner.

with an average of $3,460 at the company’s Avalon Riverview in Long Island City.

Looking ahead Developers and institutional investors are 28 March 2012 www.TheRealDeal.com

crossing the Hudson to markets where rentals still make economic sense. That, in turn, is pushing up valuations for Gold Coast properties and prompting more developers to build. The soaring price of

building residential properties in New York City is fueling building as well (see related story on page 40). Jersey City’s pipeline includes Toll Brothers’ 417-unit Provost Square and

the two-tower 99 Hudson, the mixed-use development project China Construction America bought last year for $70 million from N.J.-based Hartz Mountain IndusContinued on page 62

www.TheRealDeal.com October 2014 59

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Development

Gold Coast continued from page 59 from N.J.-based Hartz Mountain Industries. China Construction’s site will include 1,000 rentals and condos, as well as a hotel when it is completed in 2019. Tall towers are nothing new to downtown Jersey City. Yet as TRD and others have reported, new projects are creeping further inland into the Journal Square area — which runs along the PATH train line, but has yet to see the kind of largescale development punctuating the coastline. “Journal Square, that area hasn’t been tested yet,” said local developer Robert Lehrer. “We won’t know how good it is until the first building is built and occupied.” In downtown, which includes the waterfront, one-bedrooms go for an average of $2,500. Journal Square rents average $1,450, according to Jersey City brokerage JCity Realty. Projects in the pipeline include the first phase of KRE’s Journal Squared, which will bring 540 rentals to the PATH station area. Construction began in August. By the time the three towers are done, the project will have close to 2,000 apartments, including the state’s tallest residential tower. In Hoboken, there are three projects set to bring almost 500 units to market. Sources said the comparatively low number of projects stems from the fact that the area is more mature and that development sites are harder to come by. “Hoboken is a mile square,” said Brent Jenkins of development firm LCOR, which is working on a plan to develop more than 2 million square feet of mixed-use property along Hoboken’s NJ Transit tracks. “It has seen a resurgence that goes back two-decades-plus, through multiple economic cycles. It’s only natural that after a while, you’re going to run out of land.” In Weehawken, north of Hoboken and with two ferry stops plus easy Lincoln Tunnel access, condos are more prevalent. For example, the Avenue Collection, the recently completed first phase of a project by Lennar Urban, includes 74 condos ranging from $800,000 to $4 million. Sales launched in July and by mid-September, more than 60 percent were sold. Lennar already broke ground on the 103-condo second phase. On the rental front in Weehawken, leasing is underway at Roseland’s 589-unit project known as the Estuary near the Lincoln Harbor ferry stop, and the developer’s River Parc at Port Imperial will bring 280 rentals to the market. To the north, in West New York, Roseland is also leasing its 316-unit rental River Trace at Port Imperial. And in Edgewater, leasing is underway at James Demetrakis’ 100-unit Infinity, while Daibes’ 300-unit the Alexander is still under construction.

Fort Lee goes upscale

Could two new luxury rentals help the N.J. city join the so-called Gold Coast?

hen conversations turn to New Jersey’s Gold Coast

Along with the neighboring towns of Edgewater and Cliff-

there is one locale that’s invariably left out: Fort

side Park, Fort Lee is part of the largest rental market in

Lee. Atop the Palisades cliffs at the foot of the

Bergen County, according to local broker Fred Sokolich, the

George Washington Bridge, Fort Lee doesn’t sit on the waterfront and hasn’t seen the same kind of residential development that Gold Coast towns have in recent years. But the city is set to get a pair of new developments that could increase its caché.

brother of the mayor. But most of the tall apartment towers facing the Fort Lee waterfront are either co-ops or condos, and the majority of the rental product is decades old. “There hasn’t been much new building in Fort Lee in a

“Fort Lee used to be known as the envy of east Bergen

while,” said Adrienne Albert, CEO of the Marketing Directors,

County,” said Mayor Mark Sokolich, a real estate and zoning

which will handle leasing for the Modern and Hudson Lights.

attorney by trade. “I think [the new developments are] going

Both projects are being developed on a site in the heart

to allow us to regain our status as the place to shop, the place

of Fort Lee that sat fallow for 40 years. Efforts to develop

to eat and the place to raise your kids.”

the 16-acre site, which was once owned by real estate mogul

The new projects — one dubbed the Modern, the other

Harry Helmsley, had long fallen flat. The property had run into

called Hudson Lights — will add nearly 1,400 rental units to

a number of roadblocks, including a bribery scandal in the

the area where surrounding apartments weigh heavily toward

1970s and decades of false starts. In 2005, the Helmsley estate sold the plots to a developer who went bankrupt. Frustrated by the lack of progress, Fort Lee elected officials issued a request for proposals and in 2012 approved plans by SJP and Tucker Development Corp., the developer behind Hudson Lights. Albert said the target demographics include empty nesters and millennials from Bergen County, as well as transplants from Manhattan looking for easy access to the city. Rents at the Modern start at around $2,500 for a one-bedroom apartment, she said. That’s compared to about $2,300 for a comparable apartment across the street at Twenty50 — the first luxury rental building to hit the Fort Lee market in some time when it

The first of the twin 47-story rentals at the Modern in Fort Lee began leasing last month. (Inset) Steven Pozycki, CEO of SJP Properties, the developer of the Modern.

62 October 2014 www.TheRealDeal.com

The Modern’s twin 47-story buildings will tower over all of the surrounding buildings and even soar higher than the George Washington Bridge itself, while Tucker’s project will consist of several lower-lying

New names Just as New Jersey land prices are lower than in development hot spots like Williamsburg and Greenpoint, so are the rents. Still, developers who have not built in the area are now trying to get a piece of the pie. For example, the Edison, N.J.-based real estate investment trust Mack Cali, known mainly for office properties, acquired a large multi-family portfolio in 2012 when it purchased local development company Roseland. In addition to River Parc at Port Imperial, the REIT is now developing the 766-unit tower URL Harborside with Ironstate in Jersey City. Chinese developers are active, too. In addition to the aforementioned 99 Hudson purchase by China Construction America, which is a subsidiary of the Beijing-based China State Construction Engineering Corp., another Chinese company, the Landsea Group, announced plans to build a 200-unit condo on the Weehawken waterfront in the future. Brokers are also ramping up their efforts. New York Citybased commercial firm Massey Knakal Realty Services recently expanded its New Jersey office, and earlier this year, a Keller Williams franchise opened an office in Hoboken. And recently Natalie Miniard, a former broker with the new development firm the Marketing Directors — which has more than two dozen projects in Gold Coast towns — started her own firm. “I saw the demand for a Jersey City-based real estate office that really focused on Jersey City,” said Miniard, whose company, JCity Realty, has six agents and is handling leasing for the 119-unit Art House. TRD

opened last year.

buildings. The first phase of the mixed-use Hudson Lights development — a 276-unit rental building with 175,000 square feet of retail — is slated to begin leasing in the fall of 2015. Rich Tucker, president of Tucker Development, said 50 percent of the project’s retail space has already been leased and that The mixed-use Hudson Lights development is slated to begin leasing next year.

older co-ops and condos. These projects will also offer the kinds of amenities associated with new construction buildings in Manhattan. “It’s unprecedented in terms of scope,” said Allen Goldman of SJP Properties, which is developing the Modern and began marketing the project’s first 450-unit tower last month. “It’s really a unique product in so many ways.”

the anchor tenant is a luxury movie theater called iPic that offers a meal with a flick.

“It’s a quality, luxury reserve-seating theater. It’s really the best theater around,” Tucker said. Construction on the second phase of the project — a 201-unit rental building and a yet-to-be-named 175-room hotel — is expected to begin toward the end of next year. Tucker said it was too early to discuss pricing for the residential portion of the project — where amenities will include

SJP is betting that the development will entice renters

a pool, lounge, fitness center and rooftop terrace — but said

with its 75,000 square feet of amenities, which include a

that with the retail component, Hudson Lights offers some-

pool, golf simulator and shuttle service to Manhattan that

thing its competitor does not.

goes “directly across the bridge to the 175th street subway station,” Goldman said. “Bergen County is the 16th-wealthiest county in the coun-

He added he was not concerned about the Modern getting a head start on leasing. “I think it’s great,” he said. “They’re providing a great prod-

try,” Goldman added. “There are many, many people looking

uct in the market. I look forward to complementing them.”

for this kind of product.”

By Rich Bockmann

www.TheRealDeal.com January 2014 35

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Real Estate

and

Politics

De Blasio’s big tests A look at the mayor’s upcoming challenges on affordable housing, rezoning and development, and how he’ll deal with the real estate industry in addressing them

By Adam Pincus obody ever said the job would be easy. But as Mayor Bill de Blasio moves deeper into his tenure, the challenges he’s facing on the real estate front are coming into greater focus. Despite any idealistic goals, every mayor has to balance interests from all corners of the city if he wants anything to get done. For example, de Blasio needs to navigate a pro-tenant City Council that is very much behind him, while also ensuring that he doesn’t alienate developers, who he must rely on to reach his ambitious housing goals. The mayor also needs to spur office development in Midtown, where many industry players argue that the aging supply of buildings can’t compete with the state-of-theart structures rising in Hudson Yards, Lower Manhattan and other global cities that New York competes with to attract international firms. This month, The Real Deal looked at four key real estate-related issues that de Blasio is facing, and what he’s doing to deal with them.

Mayor Bill de Blasio

CWCapital Asset Management, a financial firm that represented the complex’s bondholders. The de Blasio administration is now

housing preservation. Meanwhile, Brookfield is at the center of another large affordable housing preservation

negotiating with CWCapital, which is trying to sell the buildings, to preserve the roughly 6,000 affordable units in the project. The complex seen as the highest profile preservation test for the mayor. “Because of its size and tumultuous recent

tussle. The Toronto-based property giant signed a contract during the summer to purchase the nearly 4,000 units in the Putnam portfolio from a group led by the New Jersey-based Urban American Management.

headline deals, if he is going to have a shot of reaching his goal. And the administration is already diving into a host of issues, from a repeal of the state’s Urstadt law, which would bring control of rent regulation back to New York City from the state, to anti-harassment legislation aimed at stopping landlords from aggressively pushing tenants out. The City Council passed legislation last month to double the maximum fines on harassment to $10,000 from $5,000. On the Urstadt front, the administration announced in de Blasio’s 10-year housing plan that it was pushing for its “effective repeal.” Some local advocates are aiming for a more aggressive measure: blocking vacancy decontrol entirely, which would keep the current group of approximately 1 million rent-regulated apartments in that status permanently. “Repeal of vacancy decontrol is key,” said David Hershey-Webb, a housing attorney and partner in the Manhattan-based law

firm Himmelstein, McConnell, Gribben, Donoghue & Joseph. “We have to stop losing Challenge: Affordable rent-regulated apartments. I would go farther housing preservation than that and call for an expansion of rentThe mayor largely staked his election on stabilization. I think the movement on the ensuring that lower- and middle-income whole should not be on the defensive.” residents could afford to live in New York Another preservation tactic de Blasio City, and pledged to preserve is pursuing is new lending and build 200,000 units over programs for property owners. 10 years. The city has arranged and A key part of making that contributed to a $350 million happen is the maintenance of loan pool that the non-profit existing affordable housing. He Community Preservation has declared a goal of preserving Corp. will administer, aimed 120,000 units, which would put at maintaining and refurbishing him ahead of his predecessor, private properties with 20 to 100 Michael Bloomberg, who David Hershey-Webb, Himmelstein, McConnell, Gribben, Donoghue & Joseph units. It is expected to finance oversaw preservation of the rehabilitation of 7,500 units Almost half of those units are occupied about 106,000 units between 2004 and history, it requires not only a commitment to through low-cost loans to landlords. 2013, according to figures from the city’s long term affordability, but also some creative by tenants holding a less common version of outside-the-box thinking,” said City Council the federal Section 8 housing voucher, which Challenge: Affordable Independent Budget Office. One of the biggest tests in this arena is Member Daniel Garodnick, who represents in this instance remains with the tenants. housing development dealing with the giant 11,200-unit Stuyvesant the area, and is a tenant there. “How it gets That means if the tenants move, their former While it’s the pursuit of the same goal, Town and Peter Cooper Village complex on resolved will be an important measure of how apartment becomes market rate. affordable housing development is a Housing advocates want the city to preserve different beast than preservation. It generally Manhattan’s East Side, and the 3,962-unit the city handles its biggest housing challenges. Upper Manhattan and Roosevelt Island We will forcefully resist any deals that repeat these units as permanently affordable. requires more capital to build a unit than to recent history and put a big target on the “We would like to see some kind of rehabilitate one, and because of that is riskier. package known as the Putnam portfolio. preservation plan for the buildings,” said Katie Bloomberg struggled with new affordable Over the past decade, the two complexes backs of tenants.” CWCapital agreed in August to extend Goldstein, executive director of the housing development, and fell short of his initial have lost thousands of affordable units. The challenge for the city is to stem that steep negotiations, and no deadline has been made advocacy group Tenants & Neighbors. targets. public. The city acknowledged that it has been decline. De Blasio’s goal of 80,000 new affordable The complex’s tenants are working with speaking with Brookfield over a deal, but had units is far more than the approximately In 2010, at the height of the recession, the owners of Stuy Town — Tishman Speyer and Brookfield Property Partners on a tenant- no comment on specifics. 50,200 units that were built between 2004 The mayor’s efforts to maintain affordable and 2013 under his predecessor. BlackRock Realty — defaulted on their loan led purchase bid that would include a and turned over control of the complex to condominium conversion and affordable housing will have to spread beyond the Marquee projects like Two Trees

“We have to stop losing rent-regulated apartments. I would go farther than that and call for an expansion of rent-stabilization. I think the movement on the whole should not be on the defensive.”

PHOTOGRAPHS FOR THE REAL DEAL BY studio scrivo

www.TheRealDeal.com October 2014 65

Real Estate Management’s Domino Sugar site in Williamsburg, and Alma Realty’s Astoria Cove in Queens have attracted the most attention. But insiders predict the vast majority of the 8,000 units per year needed to reach de Blasio’s target will be in projects that are not in the spotlight. Carl Weisbrod, who de Blasio appointed chairman of the City Planning Commission, put the real estate world on notice with the declaration that all rezoning projects would require some element of affordability, under a policy known as mandatory inclusionary zoning. “You can’t build one unit unless you build your share of affordable housing,” Weisbrod said in August. The idea is applauded by housing advocates, but some land use insiders said such a proposal could make the permitting process less predictable and therefore make real estate sales more complicated, because buyers won’t know exactly what the city wants out of each parcel of land. At Domino, the administration negotiated the addition of 40 units of affordable housing, bringing the total to 700 out of the more than 2,200-units planned for the $1.5 billion project. And late last month, the City Planning Commission approved the 1,700-unit Astoria Cove project, which includes 345 affordable units. Critics said that number isn’t high enough, and also questioned the pricing plan. The project now moves to the City Council for a final vote. Subjecting projects like these to multiple levels of review adds another level of unpredictability to the development process, further driving up costs and making developers nervous about complex, large projects. While these large projects are grabbing attention, insiders reiterated it’s smaller projects that will make up the lion’s share of new affordable construction. Yet today, developers are cooling their heels, waiting for City Hall to release details on programs that will be used to underwrite and finance such projects. Specifically, they are waiting for new term sheets, which define the conditions under which loans are made and how much the city will provide to developers per unit. They are expected to be released in the coming months. “We have not seen the particulars, but we are very enthusiastic,” said Jolie Milstein, CEO of the trade group New York State Association for Affordable Housing. “We would rather they take the time and get it right than rush to get it out. That can cause a lot of uncertainty or confusion.” But for some, the movement is not fast enough. “The mayor has only discussed his affordable housing agenda in macro terms and has discussed very little with regard to specifics,” said Robert Knakal, chairman of the commercial firm Massey Knakal Realty Services. “This has developers concerned that the percentage of affordable units [required] will go up, which dramatically impacts the 66 October 2014 www.TheRealDeal.com

and

Politics

The preservation of affordable units at Stuyvesant Town and Peter Cooper Village is one of the biggest tests for the mayor’s agenda.

A deal to include an additional 40 units of affordable housing at Two Trees’ Domino Sugar site is seen as an early victory for the mayor. City Planning director Carl Weisbrod

rejected that characterization, and maintained the project has a clear public benefit, pointing to the $210 million SL Green pledged to spend to rehabilitate the area through subway and street improvements. Kathryn Wylde, CEO for the business group the Partnership for New York City, dismissed the idea that the targeted rezoning was done just for SL Green. “I think that it’s a demonstration that [the administration is] pro-development and wants to move these big projects forward,” Wylde said. But the industry is still waiting to see what de Blasio will do in terms of rezoning the rest of Midtown East, a change that they argue is desperately needed in order to upgrade the office supply and compete with other global cities. Of course, doing so would also bring major financial benefits to them, because it would allow them to charge higher rents and sell their buildings at higher prices. The Vanderbilt rezoning is expected to be certified this month by City Planning. Without rezoning, “landlords will not have an incentive to invest in new construction, and will see a continued migration away to the West Side,” said John Ryan, a leasing broker at the commercial services firm Avison Young.

Challenge: Neighborhood development The de Blasio administration is looking to increase development in a number of neighborhoods citywide. The challenge is to The de Blasio administration acted to rezone a parcel in Midtown East in a move many viewed as a boon to SL Green, which plans to build One Vanderbilt,right, there.

The City Planning Commission gave the goahead for the Astoria Cove project in Queens, but critics say it doesn’t include enough affordable units.

economics of these sites.”

Challenge: Office development Just before leaving City Hall, Bloomberg abandoned his efforts to rezone a major swath of Midtown East that would have allowed some developers to build taller and revitalize the aging office stock there. The issue has been very high on the industry’s agenda ever since.

The administration’s first major move was a bold one: Rather than tackling the entire area head on, it approved a rezoning for one carved out portion. The move was a boon to SL Green Realty, the only developer with advanced plans for new construction in the five-block carve out known as the Vanderbilt Corridor. To some, that raised questions of whether the deal would help only one company. Sources close to the city and developer vehemently

bring significant and sustained development, while at the same time involving the community in the process. That has been a difficult task since figures such as legendary Greenwich Village activist Jane Jacobs figured out how to oppose powerful development forces like Robert Moses. City Planning has already started a comprehensive analysis of two neighborhoods that flew under the radar during the last boom, as part of an ambitious plan to review 15 local areas for new development. The first two on tap are East New York in Brooklyn and an area dubbed Cromwell-Jerome in the western portion of the Bronx. “East New York is a good example of an area [that’s] underdeveloped despite having significant transportation access,” Wylde said. City Planning’s plans for East New York have not yet been released, but another analysis the agency made public in June centered on major development proposals around the Broadway Junction subway and Long Island Rail Road stations in the neighborhood. It called for industrial development south of the station, and significant commercial development around the transit hub. The report used the Forest City Ratner retail and office building on top of the Atlantic Terminal in Downtown Brooklyn to illustrate the kind of large development needed to anchor the area, which is now under-utilized. The other 13 neighborhoods have not yet been identified. TRD

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This councilman doesn’t do dinner

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Influential Land Use chair David Greenfield navigates middle ground in dealing with developers, community By Mark Maurer f New York City real estate developers want David Greenfield’s ear, they’ll have to make the trek downtown to City Hall. While developers often attempt to wine and dine the chair of the City Council’s Land Use Committee, they can expect the man who now holds that powerful position to decline most social invitations. “I’m not big on the socializing aspect,” Greenfield said. “I’m concerned about what that leads to. I have an open-door policy, but that’s in my office.” Still, leading the panel that gets the second-to-last pass at crucial zoning changes and transfers of property, and in turn heavily influences the City Council’s final vote, ensures that Greenfield gets plenty of visitors. In these meetings, smaller developers primarily complain that the Uniform Land Use Review Procedure governing is slow and cumbersome, while big developers are worried about anything that might hinder building, Greenfield said. Greenfield said he spends about half of his workweek on land-use duties. The 36-year-old Orthodox Jewish lawyer, who formerly practiced corporate law at Rosenman & Colin, considers himself politically moderate and, in the context of the committee, very much a middleman between conflicting interests. “He has to walk a very thin line between long-term solutions to affordable housing needs and the demands of the development community, because the latter is creating jobs,” said Democratic strategist and lobbyist Hank Sheinkopf. “It’s not an easy time to be in that position.” Greenfield’s appointment to the Land Use helm was one of the first moves Melissa Mark-Viverito made as City Council speaker in January. The position is said to often serve as a political trade-off, in which,

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Smaller developers complain about the ULURP process; larger ones worry about anything that might hinder building. for example, a borough’s Council delegation supports a candidate for speaker and in return, one of those members gets the seat. His predecessors, Melinda Katz and Leroy Comrie, have gone on to higher-profile opportunities. The former was elected Queens borough president in November (see related story, page 70).

The latter won a State Senate primary in a Queens district last month, ousting embattled Sen. Malcolm Smith, who is facing federal bribery charges. He is unopposed on the general election ballot next month.

City Councilman David Greenfield

Greenfield is also in a unique position due to a loophole in the term limits law. Elected the City Council member representing Midwood, Borough Park and Bensonhurst in a 2010 special election, he is eligible to serve through 2025. That’s because his predecessor, Simcha Felder, stepped down to work for the city comptroller three years prior to the end of his term, but Greenfield is still able to run for three terms of his own. His potential remaining time — 11 and a half years — exceeds all others on the Council. And because he will be around longer, developers perceive him as carrying more power and influence. Members of the real estate community describe Greenfield as hardworking, accessible and engaged, but note he has not faced many challenges yet. The two major projects he has steered through committee approval, TF Cornerstone’s 1,025-unit rental project at 606 West 57th Street and Two Trees Management’s Domino Sugar Factory redevelopment, both went relatively smoothly. Continued on page 154 PHOTOGRAPH BY TOBIAS TRUVILLION www.TheRealDeal.com March 2010

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Boroughs

‘Beeps’get busy

A look at the five borough presidents’ development and land-use agendas

By Claire Moses tripped of much of their power when the city Board of Estimate was dissolved in 1990, the city’s five borough presidents seem to play a minor role in city politics these days. But one area where they can still carry significant weight is development. Perhaps the biggest sway they have on the real estate front is in the so-called ULURP process — the official public review in which they issue an official recommendation on whether or not to approve a project. They also appoint members to the city’s 59 local community boards and get one appointee each on the City Planning Commission. And they can play key roles in landmarking and rezoning,

plus have a bully pulpit when it comes to advocating for their boroughs. This month, The Real Deal spoke to the city’s five borough presidents to find out what their development priorities are and which projects will get their attention in the coming years. Four of the five beeps took office in January, at the same time as Mayor Bill de Blasio. They have varied experience dealing with development matters, from Manhattan Borough President Gale Brewer’s stints with multiple city agencies, to Queens’ Borough President Melinda Katz’s tenure as chair of the City Council’s Land Use Committee, dealing with major rezonings under former Mayor Michael Bloomberg. And developers often want the beeps on their side. Read on to find out more about each of their real estate priorities.

MANHATTAN

Gale Brewer

anhattan Borough President Gale Brewer has never been shy about ruffling industry feathers. A few years ago, as a member of the City Council, she proposed controversial restrictions on the amount of space new retailers, and specifically banks, could occupy on some of the main drags of the Upper West Side. Much to the dismay of the real estate and business communities, the proposal, which was backed by the Bloomberg administration, went into effect. Today she’s got other things on her agenda. For example, Brewer — along with other elected officials, vendors and members of the public — attended weekly public meetings for 11 straight weeks to try to convince the developer of the proposed residential tower in the South Street Seaport Historic District to change the location. Brewer and other opponents argued that the proposed spot for the tower would strongly alter the area’s look and feel. “We don’t know what will come out of it,” she said, but “that set a good precedent.” As a result of the new guidelines proposed by Brewer and other elected officials, Howard Hughes Corporation is in the process of revising its proposal, which it will present anew later this fall. Brewer vowed to follow the same protocol to discuss other big development proposals too, including the rezoning of Midtown East, and eventually the development surrounding Madison Square Garden and Penn Station. Brewer was also one of several elected officials who came out against Gov. Andrew Cuomo’s plan, which was crafted behind closed doors, to fund the redevelopment of Pier 40 on the West Side through the sale of the air rights to the owner of a nearby industrial building. The de Blasio administration decided the proposal must go through ULURP, which will give Brewer a say.

70 October 2014 www.TheRealDeal.com

Gale Brewer

Eric Adams

Brooklyn is just the place to build it. To achieve that goal, Adams is hoping to upzone multiple areas in the borough — such as the swath around Broadway Junction on Nostrand Avenue on the border of Bedford-Stuyvesant and East New York, as well as parts of Flatbush — to allow for more residential development. He also backs de Blasio’s mandatory inclusionary zoning policy that would require developers to include affordable housing in projects that need zoning approvals. Of course, past Brooklyn rezonings — in areas including the now-flourishing Williamsburg and Dumbo — did not include mandatory affordable housing stipulations. Median rents in Dumbo are now higher than those in Manhattan — something Adams would like avoid replicating in newly rezoned parts of the borough. While Adams is a staunch supporter of de Blasio’s housing policy, he told TRD he’d prefer to see the existing 80-20 market rate-to-affordable housing ratio tweaked by adding a middle-income housing component to the equation. “My ratio,” he said, “is 50-30-20. That’s my goal.” (In that plan, 50 percent of the units would be market-rate, 30 percent middle-income and 20 percent affordable.) Adams said creating middle-income and affordable housing will not only prevent Brooklynites from being priced out of their borough in the next few years, but will also enable the generation of children growing up there now to raise their own kids there. Adams is actively talking to religious leaders in the borough, he said, noting that many religious institutions have available air rights or parking lots that could be used for new housing developments. He said those assets could be used strike deals with developers.

QUEENS

Melinda Katz

Affordable housing is another issue on Brewer’s agenda. She thinks the emphasis in Manhattan should be on preserving existing units. “Manhattan has very little land,” she said, “and that land is expensive.” The beep has drafted a list of Manhattan buildings, both empty and occupied, that could be used for affordable housing. But there’s one more thing: She doesn’t want those buildings to include a so-called “poor door.” She plans to push for a change to the rule that currently has developers build separate doors for tenants in affordable units, such

as at Extell Development’s 40 Riverside Boulevard and Larry Silverstein’s 1 West End Avenue (see related story on page 88). Until the law can be changed, she said, developers will have to be convinced to use one entrance. “The two-door issue has been a challenge,” she said.

BROOKLYN

Eric Adams

or Brooklyn Borough President Eric Adams, one goal sticks out among the others: creating more affordable and middle-income housing. And if you ask him,

Melinda Katz

elinda Katz, who during her eightyear stint as a City Council Member chaired the body’s powerful Land Use Committee, has a clear goal when it comes to real estate in her borough. “We need housing,” she said, “desperately.” The borough president said she wants development to take place by planning out entire neighborhoods, instead of adding developments piecemeal. And she said Queens especially lacks senior housing. “Our economy is dependent on our seniors being able to take care of their grandchildren, so their parents can work,” she said. While she is a big proponent of the mayor’s affordable housing plan, Katz said the current 20-percent mandate will not create enough affordable housing, especially if it involves a large-scale development such as Astoria Cove, where 345 of the approximately 1,700 proposed units would be below market-rate. “My suggestion is 35 percent,” she said, adding, “I’d probably settle for less.” In addition to ensuring that residents of Queens stay in the borough, Katz said she also wants to attract young professionals, like those who will graduate from Cornell University’s Roosevelt Island tech campus, Continued on page 72

www.TheRealDeal.com January 2014 35

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which is slated to open in 2017. The beep — who between political gigs worked at the white-shoe law firm Greenberg Traurig, specializing in land use and government affairs — will also look to revitalize underdeveloped areas of the borough such as parts of the Rockaways, where she would like to see more commercial tenants, and Jamaica. “We need to have adequate transportation to get investors to [the Rockaways],” Katz said. “We’re only getting the right type of development if we work with the city to create incentives.”

STATEN ISLAND

James Oddo

hile Brooklyn, Queens, Manhattan and the Bronx largely welcome residential projects that include hundreds of units, that’s not the case on Staten Island. The city’s smallest borough is a “bedroom community,” according to Borough President James Oddo, the only Republican out of the five beeps. “Folks want to keep it that way.” Yet, Staten Island has something the other boroughs lack: land. In the nine months since he moved into Borough Hall, Oddo said many developers and investors have come through his door for meetings. For a good number, it’s the first time they’ve ventured to the island. “The price point in other boroughs has increased,” Oddo said. “So they look to Staten Island as their last resort. Now they’re fascinated by it, and are finally paying attention.” Oddo said he welcomes sensible commercial development, particularly the effort to bring technology companies to the island’s North Shore, something the mayor also supports. Relatively affordable office space, combined with well-developed highspeed Internet infrastructure, could make the area attractive for tech firms, Oddo said.

the

Boroughs

As far as residential development goes, Oddo said, “you have to be very intelligent as to where it goes and where it fits.” Through ULURP Oddo said he tries to exert his influence to prevent unwanted development. But it doesn’t always work. For instance, he joined the vehement opposition to the Savo Brothers’ purchase and redevelopment of the former Mount Manresa Jesuit Retreat House in the Fort Wadsworth section of the borough. The 15-acre site will soon see 300 townhouses “that nobody wants,” Oddo said. “There are moments when we have no leverage.” Yet while Oddo is against the addition of tall, large-scale residential developments, he

Lighthouse Point, a mixed-use waterfront development with retail, hotel and residential components. Oddo said he’s hopeful that the new developments will lure visitors off the ferry to spend time on Staten Island. Another issue the borough must face, Oddo said, is creating more resilient housing stock, especially on the East Shore, which was heavily damaged by Superstorm Sandy.

THE BRONX

Ruben Diaz

orough President Ruben Diaz, who took office after winning a special election in April 2009, knows what he wants to see happen in the Bronx. He envisions the borough’s

James Oddo

Ruben Diaz

does not object to the $150 million project Ironstate Development is building along the Stapleton waterfront. The first phase of the project, dubbed URL Staten Island, will include 571 apartments. That’s one of four major projects underway on the island’s North Shore, including three near the Staten Island Ferry. The others are the largest Ferris wheel in the Western Hemisphere; an outlet shopping mall, and

waterfront being developed much like the other boroughs’. But first, Diaz is looking forward to the Metropolitan Transportation Authority’s plan to add four new Metro North stations in the borough, which will cost roughly $800 million to build. The stations, he believes, could transform the neighborhoods of Hunts Point, Morris Park, Parkchester/Van Nest and Co-op

City, as well as attract nearby residential and commercial developments, by significantly improving the connections between the Bronx and Manhattan, as well as between the borough and Connecticut. The Connecticut transportation improvement would make it easier for Bronx residents to travel north to work. The Bronx is also anticipating several major developments in the coming years. They include Young Woo’s transformation of the General Post Office in Mott Haven into a marketplace; Donald Trump’s Ferry Point Park golf course in Ferry Point; FreshDirect’s planned move to the Harlem River Yard, and the Kingsbridge National Ice Center in Kingsbridge. The borough has also seen an uptick in hotel development, both large ones and boutiques, which will add hundreds of rooms to the borough. “I welcome hotels,” Diaz said, “I do not welcome motels.” The beep added that, rather than so-called “hot sheet motels,” he would like to see the addition of flagship hotels, especially surrounding Yankee Stadium in the borough’s Highbridge section. Another good place for them, he added, would be in the Fordham area, close to large institutions such as the university, the New York Botanical Gardens and the Bronx Zoo. Diaz stressed the importance of considering community input in these and future projects, and said ensuring that they provide jobs to Bronx residents is crucial. “We know what happened in Harlem; we have seen what happened in Downtown Brooklyn, and the good that came out of it,” Diaz said, referring to the resurgence of those neighborhoods. But in both areas, the gains meant longtime residents could no longer afford to live there. “We also examined where they could have done a better job with the local community.” TRD

Streak of rising rents in Brooklyn comes to an end

In Manhattan rental market, vacancy hits the highest level in five months, unusual for busy time of year By E.B. Solomont rooklyn’s 14-month streak of rising rental prices ended in August, according to Douglas Elliman’s rental report issued last month. The borough’s median rental price in August was $2,808, down 1.5 percent from July. That’s also down 1.5 percent from the median rental price in August 2013. Overall, the drop occurred even as the market split somewhat — with prices rising for studios and one-bedrooms but slipping for larger units, said Jonathan Miller, president of real estate appraisal firm Miller Samuel, who wrote the report. For studios, the average rent in August was $2,266, up 7 percent from July and up more than 9 percent from last August. Two-bedroom units, however, registered an average rent of $3,292, down 3.8 percent from July and down more than 6 percent from the prior year.

72 October 2014 www.TheRealDeal.com

ry dropped 2.8 percent to 5,540. “There’s a lot of inventory that’s been coming to market in new construction. It seems at this point it’s sort of reached a certain plateau,” said Yuval Greenblatt, an executive vice president A two-bedroom at 44 Sterling Place in Park Slope is listed at $2,800 monthly. at Douglas Elliman. Brooklyn’s median rental price was $367 “It could just mean lower than Manhattan, where the median the market is taking a breather and waiting rental price rose 0.8 percent to $3,175, ac- for the next wave of projects to come in.” cording to the report. The average rental The report also underscored the increasprice in Manhattan edged up more than 2 ing demand for rentals in the outer boroughs. percent to $3,946, compared with July 2013. In Queens, while median rental prices In July — the throes of the rental market’s dropped 1 percent to $2,788, the average busiest season — Manhattan’s vacancy rate rental price per square foot increased more stood at 1.87 percent, while listing invento- than 10 percent to $43.12, driven by new

development. Queens also saw 289 new rentals in August, a 338 percent increase from the same time last year. “That’s a reflection of new product coming onto the market,” Miller said. The increase in rentals was also seen in Brooklyn, which had a 72 percent increase in August from the prior year, compared with a 5.9 percent drop in new rentals in Manhattan in August. Further reflecting the market’s price sensitivity, Citi Habitats said in its own report last month that the vacancy rate in Manhattan in August was 1.27 percent, the highest in five months and an “unusual” rate for the summer season. The East Village had a 2.08 percent vacancy rate and the West Village had a vacancy rate of 1.58 percent in August. “Tenants have been feeling the sting of high rents,” Citi Habitats’ President Gary Malin said. TRD

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City retires recession-era “stalled sites” list Brokers once scoured distressed-projects source weekly, now fewer potential deals exist By Adam Pincus ven as some believe New York City might be in the middle of another real estate bubble, the city’s Department of Buildings last month removed from its website the clearest reminder of the pain of the last recession: a rolling list of stalled construction sites. Buildings removed from its website links to hundreds of spreadsheets that formed a weekly accounting of properties identified as stalled sites. The spreadsheets debuted in July 2009 after the department formed its Stalled Sites Unit to track the growing number of distressed construction parcels as development ground to a halt during the recession. The city also launched its Stalled Sites Program that year, designed to help developers extend their permits and then restart their projects. The webpage for stalled construction sites became a resource for both communities to track derailed projects and for investors to look for troubled developments they might take over. That webpage remains in place, but the long list of the spreadsheets going back to July 21, 2009 was removed, and the agency

stopped providing public updates to it. The last list available, through Aug. 17, included more than 530 addresses. That figure of more than 530 stalled sites is misleading, a review during the

summer by The Real Deal found. Many of those buildings changed hands, new plans were filed or projects were recapitalized. They could remain on the list, however, until construction actually started again and a

426 South 5th Street in Williamsburg is stalled with just a foundation and first floor in place, but sources told TRD a new developer plans to build a hotel on the site.

Developer Sheldon Solow, right, planned a 6.1 million-square-foot development at 700 First Avenue in Midtown, left, but the project was derailed and the sprawling site remains dormant.

DOB inspector visited the site to ascertain that it was active. Brokers once scoured the weekly lists looking for potential deals, but as the economy improved, fewer and fewer of the properties remained distressed. So the list grew less valuable over time. “I think a lot of the [projects] have been worked out,” said Alan Miller, a managing principal with 5Points Group, an investment and brokerage firm. “People got crushed and others prevailed.” Either way, most of the significant sites were restructured. “If it was still 20 percent [truly distressed], we’d be all over it,” Miller said. A Buildings spokesperson said the city continues to maintain a stalled-sites list internally, but officials did not see the need to continue to update the list publicly after the Stalled Sites Program ended in mid2013 as the economic recovery made stalled sites rarer. The info on the stalled sites — lacking recent updates — can still be viewed at the nonprofit website Internet Archive, and data for the years 2009–2010, 2011, 2012 and 2013 are available through nonpublic links on the Buildings Department site. TRD

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74 October 2014 www.TheRealDeal.com

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NYC’s hybrid revival

Condo-rental hybrids back in vogue after dying down post recession

By E.B. Solomont n the annals of New York City real estate, the residential development at 400 Park Avenue South is something of an anomaly. The 40-story building is part rental, part condo, with two developers sharing a general contractor and little else. At the base, Sam Zell’s Equity Residential is installing 269 rentals that will occupy floors two through 22. At the top, Toll Brothers City Living, run by David Von Spreckelsen, is building 81 condos on floors 22 through 40. “It’s almost as if we’re developing two separate buildings within the same shell,” said Todd Dumaresq, marketing manager for Toll Brothers City Living, which is reportedly spending $155 million for its part of the building, compared with Equity’s $251.9 million. While hybrid projects have been around for more than a decade, and became especially popular in the wake of the 2008 financial crisis when the sales market was weak, they are now back in vogue — but for different reasons. Today, the sales market is strong, yet rising land prices have diminished the viability of rental projects in Manhattan. At the same time, developers and lenders are looking for ways to mitigate risk for fear of a market bubble, particularly as lenders shy away from underwriting large condo projects, which they did frequently before the recession. Two-in-one projects like 400 Park Avenue South, where two developers are joining forces, are also new. Recently launched hybrid projects as well as those in the pipeline include Stahl Organization’s 388 Bridge in Downtown Brooklyn, with 234 rentals and 144 condos, and 250 East 57th Street, where World Wide Group is planning 93 condos and Rose Associates is developing 173 rentals. Rose is also developing 70 Pine Street, which will have 612 rental units and 165 extended-stay suites. Sources said developers increasingly are considering the hybrid model for future projects, as well, where rental units can generate immediate cash flow, and condos — typically on higher floors — can be sold at a premium. “I believe we will see more down the road as larger developments are built, primarily in Brooklyn,” said Stephen Kliegerman, president of Halstead Property Development Marketing. “When you have that many units, it makes sense to mix it up so you don’t cannibalize yourself and introduce so many units to the marketplace that you actually diminish the value of your units.”

Rentals not viable The key driver of this new wave of hybrid buildings, according to developers and marketers, is the rising cost of land. Citywide, average prices for development sites jumped 17 percent, to $224 per buildable square foot, during the first half of the year, according to Massey Knakal Realty Services. 78 October 2014 www.TheRealDeal.com

Manhattan saw a 14.7 percent jump, to $511, during that time, while Brooklyn saw a 23.2 percent increase, to $166. Much has been made in recent months of the fact that rental buildings, particular in Manhattan, are no longer a viable backup option for developers planning condos. “The price of land is such that you can’t afford to build rentals,” said Nancy Packes,

Wagner, director of brokerage services at Bond New York Properties, which is marketing the property’s rentals. The rentals include a 6,000-square-foot penthouse asking $34,500 monthly, a 4,800-square-foot triplex asking $28,500, and a 3,200-square-foot triplex, asking $19,500. Wagner said particularly in boutique buildings, a developer may hold several units to see

and One Carnegie Hill, on East 96th Street, where construction started that same year. More recently, Extell Development’s Lucida, at 151 East 85th Street, hit the market in 2009, and the Aldyn, at 60 Riverside Boulevard, launched in 2011. At that time, developers were adding rentals to their condo projects because sales were slow in the wake of the recession. In the last several years, the popularity of hybrids faded somewhat as the sales market took off, only to re-emerge recently. In contrast to the waxing and waning popularity of rental-condo hybrids, the hotel-condo model has been strong. The most recent batch of those buildings includes Extell’s One57, which has a Park Hyatt Hotel at its base. In addition, while condo-office hybrids are rare, they also exist. For example, an investment group led by Alchemy Properties is developing 34 condos on the top 30 floors at the Woolworth Building. The bottom floors will remain offices.

The amenity balance

Left: 400 Park Avenue South, where Toll Brothers is building 81 condos and Equity Residential is building 269 rentals. Right, from top: Sam Zell, the head of Equity Residential; David Von Spreckelsen, the head of Toll Brothers City Living; 388 Bridge in Downtown Brooklyn, where Stahl Organization is building 234 rentals and 144 condos; 250 East 57th Street, where World Wide Group is planning 93 condos and Rose Associates is developing 173 rentals.

president of her eponymous residential marketing firm. Packes, however, added that banks also don’t want to underwrite large condo projects because of the risk. “So you can’t do very big buildings, you also can’t build rentals as a standalone,” she said, describing the conundrum that some developers face. That’s where hybrids come in. At 46 Lispenard Street, a former textile warehouse in Tribeca that was converted to condos in 2013, the developer sold six of the building’s 11 units and held onto the rest as rentals. “The strategy is cash flow,” said Douglas

if the market gets even hotter. “If a developer has their mind set on a particular price, collecting revenue in the interim is definitely a solution.” In this case, he said, the developer — who Wagner identified as the Jangana family — will be able to recoup the cost of construction by selling some units and renting others.

Different this time To be sure, hybrid residential buildings are not new to New York. More than a decade ago, major developers started to build the first rental-condo hybrids, such as the Related Companies’ Caledonia, on West 17th Street, which hit the market in 2006,

In rental-condo buildings, of course, the big question is often what access tenants have to the building’s amenities. For example, 388 Bridge has one entrance and one elevator bank. Amenities are shared, though some — like a 24-hour concierge, pet spa and attended parking garage — are exclusive to condo owners. Although tensions over separate amenities has yet to reach the level of acrimony of so-called “poor doors” (or separate entrances for affordable-housing residents), Bond’s Wagner said that differing levels of amenities can “create an imbalance.” “But I think there’s a market for it as long as the developer is sensitive to providing amenities for the renters and owners, even if they’re separate,” he said. At 400 Park Avenue South, there will be two entrances — one on 28th Street for rental tenants, and one on Park Avenue for condo owners. The condo portion of the building will have studios through four-bedrooms and prices listed from $1.3 million to over $18 million. According to Toll’s Dumaresq, residents will mostly share amenities, but an additional indoor/outdoor residents’ lounge on the 27th floor called the Sky Lounge will be reserved for condo owners. The logistical challenge of building separate projects inside one building aside, Dumaresq said the project made sense for Toll and Equity, who came together after separately eying the site. (A former Toll executive who now works at Equity connected the two.) Dumaresq said the site was too large for Toll. “Our sweet spot is around 100 units,” he said. But it was appealing because the previous owner, A&R Companies, had already obtained approval for the exterior design by French starchitect Christian de Portzamparc. “With the market where it is, land prices are getting very expensive, and a joint-venture situation like this can sometimes help to create an opportunity where there wouldn’t be one otherwise,” Dumaresq said. TRD www.TheRealDeal.com January 2014 35

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Chairman, Silverstein Properties What are you reading right now or what did you finish most recently? I just started reading “Flash Boys: A Wall Street Revolt,” by Michael Lewis, immediately after finishing “Duty: Memoirs of a Secretary at War,” by Robert Gates. What spurred you to read those books? I found “Duty” very powerful. I read a review of it in the book review section of the New York Times and decided it’d be worth reading. I am reading “Flash Boys”

because the guys in the book are tenants of mine at 7 World Trade Center. They operate an alternative trading system dedicated to building a fair and balanced market. It’s fascinating stuff! Has anything you read stuck with you? “Duty” offered terrific insight into the world of the Secretary of Defense, into his feelings for his servicemen and servicewomen, and for the enormous responsibility he felt when he sent them into harm’s way. The documentation was suburb, especially with regard to his relationships with the president, with military leaders, and with senators and members of the House. I would recommend it because it goes beyond the headlines — it provided me with a vastly superior insight that I otherwise wouldn’t have had, from just reading the papers. The book gives you an understanding of what really goes on inside the Pentagon and the White House under extremely difficult and pressure-packed conditions.

Daun Paris President, Eastern Consolidated What are you reading right now? I’ve just started reading “Things a Little Bird Told Me: Confessions of the Creative Mind” by Biz Stone, the co-founder of Twitter. What spurred you to read that book? My son, Phil, actually inspired me to read this. He is the co-founder of Yo, a new app that the Wall Street Journal recently said … might turn out to be even bigger than Twitter! So of course I wanted to learn more about Twitter in particular. But even beyond Phil’s involvement with Yo, Twitter is a critical component of our social media efforts at Eastern Consolidated. From what I’ve read so far, and what others have told me about “Little Bird,” the book’s focus is on creative, collaborative environments, which is the cornerstone of our business approach. It’s also important that we better understand what the future may hold for the Twitter platform, so that we can makes decisions accordingly. We always strive to stay ahead of the curve, and that includes listening to others — like my son Phil! — who have expertise in areas not necessarily specific to real estate. Some of our best ideas come from outside our comfort zone. Compiled by Alexandra Barrett www.TheRealDeal.com March 2010

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Commercial

Commercial sales catch the Brooklyn fever Investment sales in the hot borough rise mightily, both in numbers and dollars

By Tom DiChristopher he Brooklyn investment sales market is well on its way from rising star to fixed point in the firmament. In the first three quarters of the year, overall transaction and dollar volume accelerated substantially and 2014 is on pace for a record number of large deals. “We’re projecting a little shy of $7 billion for the borough, which would shatter any record in previous years,” noted Adrian Merca-

“It’s institutional buyers coming in, really looking at Brooklyn as a viable alternative to Manhattan, or looking at Brooklyn on its own as a viable market,” he said. That marks a change from just two-anda-half years ago, said Adam Hess, senior vice president of investment sales at Brooklyn-based commercial brokerage TerraCRG. “Institutional investors were still kind of checking it out,” Hess explained. “They were exploring it. They were excited about

and president of TerraCRG. Perched at the top of the list is the Chinese firm Greenland Holding Group’s purchase of a 70-percent stake in Forest City Ratner’s Atlantic Yards project — recently rechristened Pacific Park Brooklyn — which CoStar and Massey Knakal data place at $383 million. The borough’s second-biggest deal took place just across Atlantic Avenue: In February, Scott Rechler’s RXR Realty and American Landmark Properties paid $194.5 mil-

idential development in Greenpoint. The plan is to build an 800,000-square-foot tower, with 600 apartments and retail space. Greenpoint is also home to Brooklyn’s priciest purchase of an existing residential complex this year. HK Organization teamed with investor Jo-Ann Obergfell and real estate private equity firm Brickman to buy the Chocolate Factory lofts at 275 Park Avenue for $68 million, in a deal that closed last month.

The top 10 commercial deals in Brooklyn so far this year Address

Property Type

Date

Price

Buyer

Seller

Atlantic Yards (Pacific Park), Prospect Heights

Development

June 30

$383 million

Greenland Holding Group

Forest City Ratner Cos.

470 Vanderbilt, Fort Greene

Office

February 28

$194.5 million

RXR Realty and American Landmark Investments

Starwood Capital Group and GFI Capital Resources Group

145 West Street, Greenpoint

Development

August 8

$120 million

Mack Real Estate Group

Palin Enterprises

8-building southern Brooklyn portfolio, Gravesend and Brighton Beach

Residential

January 15

$78 million

Sentinel Real Estate Corp.

Bay Associates

Chocolate Factory Lofts, 275 Park Avenue, Clinton Hill

Residential

August 12

$68 million

HK Organization, Brickman and Jo-Ann Obergfell

Century Building Associates

Kingswood Plaza, 1630 East 15th Street, Midwood

Office/Retail

August 7

$67.5 million

Infinity Real Estate and Nightingale Properties

Alan V. Rose Realty Co.

The Standish, 169 Columbia Heights, Brooklyn Heights

Residential

June 13

$60 million

Westbrook Partners

Taurus Investment Holdings

Colony 1209, 1209 DeKalb Avenue, Bushwick

Residential

April 3

$58 million

Spruce Capital Partners

Read Property Group

Storage facilities at 892, 908 and 1050 Atlantic Avenue, Prospect Heights

Specialty Retail

April 16

$55 million

CubeSmart

Storage Deluxe Management

100-116 South 4th Street, Williamsburg

Residential

August 7

$52 million

Meadow Partners

Jonathan L. Flaxer Estate

Source: CoStar, Real Capital Analytics and Massey Knakal.

The Atlantic Yards project site, since rechristened Pacific Park, was the largest commercial sale in Brooklyn this year. (Right) The second largest sale in Brooklyn so far in 2014 was 470 Vanderbilt.

do, vice president of research at commercial brokerage Massey Knakal Realty Services. To provide a snapshot of the bull market, The Real Deal this month compiled a list of the most expensive commercial real estate sales in Brooklyn through September. At the heart of the boom is what Massey Knakal calls the “Manhattanization of the investment sales market,” said Mercado. 74 April 2014 www.TheRealDeal.com

it, but they weren’t jumping in.” A number of this year’s top transactions are not straightforward deals, in which one party buys a property outright. Instead, many investors are taking stakes in buildings or development sites, a trend that started in earnest last year when Jamestown Properties took a roughly 50 percent stake in Industry City in Sunset Park, said Ofer Cohen, founder

lion for the long-term ground lease on the 710,746-square-foot office building at 470 Vanderbilt Avenue. The deal, RXR’s first of its kind in Brooklyn, was part of the firm’s plan to invest $1 billion in emerging submarkets, primarily in the outer boroughs. In August, Mack Real Estate Group bought a $120 million stake in Palin Enterprise’s long-stalled 145 West Street res-

The pace of transactions is blistering: the dollar volume of deals completed in the first half of the year nearly matched the deal volume for all of 2013, according to data provided by Massey Knakal. Sales stood at $3.4 billion at the end of June, compared with $3.8 billion for all of 2013. In recent years, dollar volume was inContinued on page 154

www.TheRealDeal.com October 2014 83

Commercial

The ‘quietest borough’ is making some noise Queens commercial sales spike, with gains for office, multifamily and development sites

By Claire Moses fter Manhattan and Brooklyn comes Queens. The city’s largest borough in land mass is typically among the quietest in commercial transactions. But this year, Queens is set to break sales records, if the recent uptick in activity stays on pace. “Queens is on pace for $3 billion of sales activity,” said Adrian Mercado, head of re-

borough through mid-September, using data from CoStar, Real Capital Analytics, Property Shark and Massey Knakal. The results show heavy trading in office- and multi-family buildings. “Traditionally, Queens is the quietest borough,” said Yosef Katz, senior director of investment sales at GFI Realty. Katz said that in his previous 10 years of experience, he saw relatively few transactions in Queens. That

because they don’t often change hands — are typically a bit smaller, averaging six stories and between 60 and 90 units, Katz said. Long-time owners of multi-family buildings in the borough are increasingly looking to sell their properties, sources noted, seizing on rising prices that reflect accelerating turnover and higher demand. Last year, investors shelled out $1.36 billion on multifamily buildings in the bor-

Another sign of the borough’s growing profile is the increased interest of institutional investors. Many of the city’s top real estate firms — including real estate private equity firm Brickman, the Emmes Corp. and Tishman Speyer— have been active this year. In Long Island City, for example, Scott Rexler’s RXR Realty purchased the Standard Motors Building at 37-18 Northern Boulevard for $110 million in August in the No. 1

The top 10 commercial deals in Queens so far this year Address

Property Type

Date

Price

Buyer

Seller

37-18 Northern Boulevard, Long Island City

Office building

August 19

$110 million

RXR Realty

Acumen Capital Partners LLC

4216-42-33 West Street, Long Island City

Four development parcels

June 13

$73.5 million

Tishman Speyer

Modell Realty Company

4725 34th Street, Long Island City

Flexible

March 14

$60 million

Brickman, Steve Klein

BLDG Management/Lloyd Goldman

131-01 39th Avenue, Flushing

Retail/neighborhood center

September 3

$54.6 million

King’s USA Group Inc.

Rhee Brothers Inc.

29-36 Northern Boulevard, Long Island City

3-property mixed-use

April 9

$53.5 million

Simon Development Group

The Rabsky Group

2211 New Haven Ave, Far Rockaway

5-property, multi-family

March 7

$52 million

E&M Associates, Irving Langer

Urban American Management, Douglas Eisenberg

26th Avenue, Astoria

Development site, part of Astoria Cove

August 12

$40 million

Alma Realty Corp.

Superior Steel Studs Inc., Ray Froboliso

2856-2860 Steinway Street, Astoria

Retail/neighborhood center

August 14

$32 million

Werber Management

Skyline Developers LLC, Orin Wilf

35-37 36th Street (Studio Square), Long Island City

Industrial

June 6

$29.2 million

Emmes Group

S Hospitality Group

28-20 Borden Avenue, Long Island City

Parking lot

July 2

$28.5 million

GTJ REIT

SunCap Property Group

Source: CoStar, Property Shark, Real Capital Analytics and Massey Knakal.

Scott Rexler’s RXR Realty paid $110 million for the Standard Motors Building in Long Island City in August, the top commercial trade in Queens so far this year. (Right) The $29 million sale of the building that houses a popular beer garden at Studio Square in Long Island City was the eighth largest deal in Queens so far this year.

search for commercial brokerage Massey Knakal Realty Services. Some $1.6 billion of sales activity took place in the borough in the first half of the year, Mercado said. Massey Knakal figures show the borough saw sales of $2.4 billion in 2013. The prior sales record was set in 2006, when $2.6 billion was spent on commercial transactions in Queens. To illustrate the accelerated pace, The Real Deal compiled a list of top sales in the 84 October 2014 www.TheRealDeal.com

has definitely changed, he said, citing an uptick in both transaction and dollar volume. Katz was the broker for the buyer of a multi-family property at 88-15 168th Street in Jamaica, which traded for $27.4 million in March. The seller owned the building for more than 20 years. The nine-story, 190unit elevator building went for $145,500 per apartment. Queens multi-family properties — the most popular ones in the borough, mostly

ough, roughly twice the amount spent in 2012, according to Ariel Property Advisers. Sales continued apace in the first quarter of this year, with $288.7 million in multifamily trades, but hit a bump in the second quarter, dropping to $82 million. Ariel noted in a report that “sales took a breather” during the second quarter, but also pointed to “positive momentum” for multifamily in some sections of the borough, including Jamaica.

transaction in Queens this year. The six-story structure houses, among other tenants, Jim Henson Co.’s puppet-making shop. The seller, Acumen Capital, had purchased the 315,000-square-foot property in 2008 for $40.6 million. Second on the list was Tishman-Speyer’s purchase of a four parcels on West Street in Long Island City for $73.5 million. The firm has not made plans for the strip public. Continued on page 154

www.TheRealDeal.com January 2014 35

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25 West 39th Street 212.398.9800

110 Fifth Avenue 212.633.1000

26 Astor Place 212.584.6100

730 Fifth Avenue 212.242.9900

239 East 79th Street 212.929.1400

337 West Broadway 212.924.4200

530 LaGuardia Place 212.557.5300

88 Greenwich Street 212.269.8888

446 West 14th Street 212.604.0300

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Profile

Gary Barnett against everybody The developer has become something of a poster boy for controversial industry issues, but he’s digging in, and coming out ahead

By Hiten Samtani ome developers faced with public outrage over creating a so-called “poor door” would, well, duck out the back door. Not Gary Barnett. As controversy over the poor door — a separate entrance for lower-income tenants in luxury buildings — at his planned 33-story building at 40 Riverside Boulevard erupted over the summer, the founder and CEO of Extell Development dug in, defending the practice and arguing that without it, developers would opt out of incorporating affordable housing into their projects. “I don’t think it’s worth making such a big issue over,” Barnett told The Real Deal during an interview in his Midtown

88 October 2014 www.TheRealDeal.com

East office last month. “Let’s get the affordable housing and let’s not worry about these optics.” Barnett’s appetite for risk is fabled in real estate circles. But lately, he’s become the poster boy for controversial industry issues, ranging from the poor-door debate, to a probe by a state ethics commission over 421-a tax breaks he received for his super-luxury tower One57, to his alleged cozy relationship with GovernorAndrew Cuomo. And against the backdrop of the city’s new political climate ushered in by Mayor Bill de Blasio, who is trying to tackle the gaping income gap between the rich and poor, Barnett is unapologetically developing some of the most opulent residential towers in the city.

Extell is “a sort of emblem of what the divided New York is, and what the average voter was worried about in the 2013 election,” said CUNY political science professor John Mollenkopf. Barnett is, of course, building two mega skyscrapers on “Billionaires’ Row” on West 57th Street — the Christian de Portzamparc-designed One57 and the Nordstrom Tower at 225 West 57th Street, which is slated to be the tallest residential tower in the city. He’s also putting up a 68-story residential tower on the Lower East Side, and is angling to acquire a site that would let him develop a large condo on West 66th Street. Yet Barnett isn’t just ruffling feathers of the average voter. PHOTOGRAPHS FOR THE REAL DEAL BY studio scrivo

Profile He’s also tangled with industry rivals along the way. A few years ago, he feuded with fellow developer Bruce Ratner after making last-minute — and ultimately unsuccessful — bids for the New York Times headquarters and the Atlantic Yards site. He also enraged Donald Trump when, unbeknownst to the Donald, he bought a majority stake in the giant development site the mogul partially owned known as Riverside South. More recently, he completed tense deals with archrivals Vornado Realty Trust and the Related Companies, and pulled off an audacious transaction to wrest control of the Ring brothers’ office building portfolio, which many others tried, and failed, to do. But it’s the most recent controversies that have, to some, made Barnett the embodiment of everything that’s unsavory about New York’s development industry. “When I think of Gary Barnett, I think of what’s wrong with New York City real estate,” said Jaron Benjamin, executive director of the Metropolitan Council of Housing, the city’s oldest tenant union. “It seems like everything he does, I have to look into what’s legally and ethically wrong with it.” Real estate attorney Adam Leitman Bailey, who is fighting Barnett in court on behalf of some clients, said that the developer is bound to attract criticism given the high visibility of his projects. “When you build the biggest buildings, you’re going to be glued to controversy,” Bailey said, “and that’s what’s happening.”

out a deal to sell ground leases for four of the 14 buildings to Manhattan-based landlord the Kaufman Organization. That deal, valued at upwards of $175 million, closed in April. “Gary had the wherewithal to move exceptionally fast,” said broker David Ash of Prince Realty Advisors, who represented Kaufman in the deal.

at stake.” Barnett has also sparred with Stephen Ross’ Related. In 2012, Extell announced plans to build an office tower dubbed One Hudson Yards at a site on 34th Street and 11th Avenue that he owned since 1998. The proposal did not sit well with Related, which is developing the giant Hudson Yards complex adjacent to that site. Barnett was also planning on asking rents that would have undercut Related’s asking rates. “We were in the position of being the low-cost provider,” he told TRD, noting that Extell had purchased the land at a low cost, and that the infrastructure was in place. “We would have been quickest to market.” In September 2013, Extell and Related buried the hatchet and agreed to a property swap — Barnett traded the One Hudson Yards site for a development site farther away, at Eighth Avenue and West 45th Street, that Related co-owned with Boston Properties. To sweeten the deal, Related also paid Barnett $168 million in cash. Now, Related is planning a 1.1-million-square-foot, 51-story office tower known as 55 Hudson Yards at the site. Representatives for the firm declined to comment.

“He’s a magician and one of the smartest guys that I’ve met in my three decades in NYC real estate. He’s the master assembler.”

Put a ring on it Though it didn’t generate citywide headlines like the poordoor issue or the 421-a probe, Barnett’s recent dust-up with the Ring brothers showed industry insiders just how cunning he can be. The deal, which was finalized in October 2013, involved the complicated takeover of a coveted 14-property, 1-millionsquare-foot package of office buildings owned by Frank and Michael Ring in Manhattan’s white-hot Midtown South. It essentially became an end-run around Frank Ring, who was trying to hang on to his family portfolio for dear life, despite the fact that he and his brother, who each held a 50 percent stake, had left it largely run down and vacant for years. In a nutshell, here’s how it unfolded: In 2011, Princeton Holdings’ Joseph Tabak and his partners entered into an agreement with Michael Ring to buy a controlling interest in his stake for a reported $112.5 million. But soon after, Michael got cold feet and tried to back out, leading to a court battle with Tabak. “It was a transaction that he [Michael] regretted pretty shortly after going into it,” Barnett said. “He’s nervous about it, so he comes to us. He knows that we are honorable businessmen.” Barnett then swooped in, paying Tabak and his partners $74 million in June 2013 to get them to walk away from the deal. He then paid Michael Ring an undisclosed sum to buy most of his stake. But that was just Barnett’s opening gambit. “We instantly filed for partition for all of the other Ring properties,” he said. “I think at this point Frank, who’s a very smart guy, realizes that the jig is up.” The court battle culminated with Barnett buying Frank’s 50 percent portfolio stake for $308 million. “To give him [Frank] credit, we paid through the nose,” Barnett said, “but at the end of the day, we end up with a whole portfolio under our control.” The very next month, Barnett and his team began working

Alan Miller, 5Points Group Alan Miller, a principal at commercial brokerage 5Points Group who closely followed the deal, said that the Ring portfolio deal was Extell being “their crafty and expert selves, taking down a fabled New York City portfolio over the many different suitors that were gunning for it.” “Extell outmaneuvered everyone to get those buildings, and now is taking advantage of a rising market by flipping the buildings they don’t plan on developing themselves,” Miller added. The piece de resistance, however, came in July, when Barnett and co-owner Jared Kushner sold Frank Ring a 235,000-square-foot building at 80 West End Avenue for $195 million. That’s a stunning $110 million mark-up over the $84 million the partners bought it for less than a year earlier. “It’s just obvious that Frank Ring overpaid,” said a broker active in the area. “Jared and Gary are probably pretty happy.” “It’s a nice trade,” Barnett said with a grin, but added that he and Kushner created value by bringing a long-term tenant, United Cerebral Palsy of New York City, to lease most of the building.

Real estate chess In other instances, Barnett has fought a war of attrition. In 2011, Extell had six years left on a garage lease beneath Vornado’s planned $400 million residential condo project at 220 Central Park South, and rebuffed the REIT’s buyout offers. It took two years before Barnett agreed to give up his lease, at which time he also sold Vornado his development lot at neighboring 225 West 58th Street, along with additional air rights, for a total of $194 million, according to a release from Vornado. That price tag translates into about $1,400 a buildable square foot — a huge premium over development rights around the city. A source said that Vornado “had to take care of him [Barnett]” to make the 220 Central Park South project feasible.

Not free agents Unlike many New York mega developers, Barnett isn’t a fixture on the real estate social scene. Although he builds Manhattan’s most ostentatious residences, the father of 10 lives in the middle-class neighborhood of Richmond Hill, Queens, and remains mum about his private life. He’s also a lifelong Democrat, something of a rarity in the development world. Still, there’s one key Democrat with whom Barnett is not scoring brownie points: de Blasio. Although de Blasio, then a City Council member, voted in favor of the 2009 zoning change that allowed developers more design discretion and square footage in exchange for building a certain number of affordable apartments, his administration is now working to reverse the change. During his mayoral campaign, de Blasio was extremely critical of what he saw as Mayor Bloomberg’s overly cozy relationship with the development community, saying it needed a “reset.” Since coming into office, however, the new mayor has shown a willingness to work with developers. And sources say despite the fact that he was not at the city’s helm when the law allowing poor doors was passed, that he is facing political backlash from tenant groups over the issue. A City Hall source familiar with the poor-door discussions disputed that, saying that given how far along Extell’s project was when de Blasio took office, the administration “had pretty limited ability to affect the outcome.” The administration source cited Silverstein Properties’ 10 Freedom Place, which also has a poor door, as a project where the mayor was able to step in earlier and secure concessions such as lower-income residents getting shared access to a courtyard and a roof deck. Those changes made the separate entrance more palatable, said the source, who noted that the project would serve as a model until new zoning codes are in place. Barnett said that without the poor door, developers could walk away from the inclusionary housing program, exacerbating the city’s affordable housing shortage. “It’s complete obfuscation and does a disservice to the

“It’s complete obfuscation and it does a disservice to the problems of income disparity and inequality [to go] after the rich door/poor door [issue].” Gary Barnett But Barnett said the trade was mutually beneficial and that Vornado did not pay an inflated price. “You think it’s high, but it’s not high at all,” he said. “They turned around and refinanced at $1,500 a foot. I’m not sure Vornado has a dollar left in that project!” Vornado declined to comment on the Extell deal. But a source familiar with the Steve Roth-led REIT said that “it was a big game of real estate chess, in which both sides had something that the other wanted — and a lot of value was

Continued on page 152

www.TheRealDeal.com October 2014 89

In sync or worlds NYC vs apart? U.S. NYC’s housing market reflects national real estate trends, but with key differences

By Janna Herron ew Yorkers love to brag about the unique characteristics that separate the city from the rest of the country: Bagels, thin-crust pizza and fearless subway rats. Housing is no different. Whether it’s a breakfast nook passing as a studio for rent or $100 million luxury condos, New York residents believe that housing here is distinct from real estate in any other U.S. city. But recent data from one of the most-watched housing indices suggests that the city’s residential market is not that far off from the national one, where price gains are slowing down. The Real Deal set out to determine who’s right. And, more importantly, is there a housing downturn in the future for the Big Apple? The most recent Standard & Poor’s/Case-Shiller composite index showed that U.S. home values in June increased both yearover-year and month-over-month, but the gains were smaller than in May. This slowdown in price appreciation was seen in all metro areas in the 20-city index, including New York’s. “The rate of change is still positive, prices are still going up,” said Craig Lazzara, global head of index investment strategy at S&P Dow Jones Indices. “But the rate at which they are going up is decelerating pretty much across the board.”

In fact, some market watchers say any U.S. index can be inherently flawed. “The ‘national market’ is a broad term. I prefer a plethora of micro markets,” said Doug Heddings, executive vice president of sales at CORE. “Taking Miami and averaging it with Cincinnati is meaningless, because you have to analyze each micro-market by itself.” One period where it’s easy to see a divergence is the end

York,” said Barry Hersh, a professor at NYU’s Schack Institute of Real Estate. “It caused a stir, because everyone thought the housing crisis wouldn’t be extreme here, because we have more rentals and more co-ops. But we saw that New York is not immune to what happens to the rest of the country.” Only after Lehman Brothers collapsed on Sept. 15, 2008 did the NYC housing market lose its footing. In the third quarter of 2008, median prices in Manhattan plunged 9.4 percent from the previous quarter, according to Miller. “We were delayed by two years because of Wall Street and bonus compensation and the explosion of new development,” he said. “But we caught up virtually in one day after Lehman collapsed.”

As history shows, the U.S. and New York City markets don’t always play out the same way. One divergence now is inventory. Unlike the nation as a whole, New York has been suffering for years from a shortage of homes for sale.

Imperfect comparisons Case-Shiller data shows other similarities between the nation and the New York metro area. Since 2000, the broad national index and its New York metro numbers moved nearly in tandem. For example, national prices peaked in July 2006, while the New York metro area hit its high one month earlier. However, it is important to note that Case-Shiller measures only the values of single-family homes — not condominiums, co-operatives or new development, which represent the lion’s share of the housing stock in the five boroughs. Jonathan Miller, president and CEO of Miller Samuel, the real estate appraisal firm located in New York, pointed out that the Case-Shiller index also captures a wide swath of activity under the “New York” umbrella, including home price data in Long Island, southern Connecticut, and as far away as Pennsylvania. These areas bear some similarities to suburbs in the rest of the country, but including them makes it harder to tease out what’s going on in just the urban jungle of New York, Miller said. 90 October 2014 www.TheRealDeal.com

of the 1980s. From September 1988 to April 1991, national housing prices increased by almost 4 percent, according to Case-Shiller. Yet the New York market — and, perhaps more significantly, the New York City apartment market — took a dive. “They are not always in sync, and one of the biggest periods when they were out of sync was following the 1987 stock market crash,” said Miller. “There were lots of co-op units coming onto the market, and when the U.S. economy ended up in the 1990-91 recession, New York was hit far harder than the U.S., in terms of lost employment and housing prices.”

Major differences Stripping out New York’s suburbs and focusing on just the five boroughs reveals that the national housing market and New York City’s are not in lock-step. Data compiled for The Real Deal by Zillow shows, for instance, that the median home value in the U.S. is one-third of that in New York City, when condos and co-ops are included. Secondly, while Zillow shows both markets peaking in 2007, with the U.S. topping out two months earlier, only New York City has more than fully recovered from the bubble burst. Getting even more granular and concentrating on just Manhattan, the differences become starker. Using Miller’s historic data, the median value of a Manhattan home peaked in the second quarter of 2008 at $1.025 million. By then, the Case -Shiller U.S. index had fallen every month for a year and a half. In fact, at the time it appeared that Manhattan had escaped the downturn hammering the rest of the country. “I remember in 2007 at [The Real Deal’s] big conference in Lincoln Center, that Robert Shiller got up and said that the subprime crisis affecting the country will come to New

Looking ahead As history shows, the U.S. and NYC markets don’t always play out the same way. One divergence now is inventory. “New York City is suffering from [a two-year] shortage of inventory,” said Alan Lightfeldt, a StreetEasy data scientist. That keeps for-sale prices high, and inflates rental prices. The low inventory is not being helped by developers who are building mainly luxury product in New York, a trend playing out in only a handful of other U.S. cities. So far, the New York market is gobbling up these upscale offerings due to its high proportion of well-paid residents and international buyers. ”The wealthy see the New York market as an investment,” said Sofia Song, head of research and external affairs at Urban Compass. ”Properties here are a relatively better bargain in comparison to other international cities.” It’s also notable that New York’s proportion of renters to owners is inverted compared to the U.S. overall. In New York, two-thirds of residents rent, while only one-third own. Nationwide, only one- third of residents rent, while twothirds are homeowners. Still, a slowdown may be better news than one would expect, especially when considering that double-digit annual increases in home values preceded the last housing bubble burst. ”We all want appreciation in the market if you own something,” said Alan Mark, president of the Mark Co., which markets new housing developments across the country. ”But at some level it needs to stop. A 12-percent annual increase is just not sustainable.” Even for high-flying New Yorkers. TRD

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The Closing Book

A preview of the new book featuring all 100 of our popular back-page interviews over the past decade By Stuart W. Elliott he Real Deal’s Closing interviews have been one of the most popular features in the magazine since they began nearly a decade ago. Now, after 100 interviews with New York real estate’s heaviest hitters under our belt, we are publishing the collection as a coffee table book. Available later this month (go to TheRealDeal.com for ordering information), the book features the wide-ranging and candid discussions, touching on the personal and professional, that the monthly feature has come to be known for. (Common questions over the years have included “How much money do you have in your wallet right now?” and “What’s your biggest professional gaffe?”) On the following pages, check out a selection of 10 of the 100 interviews, including discussions with Nobel Prize winning Robert Shiller, hotel and nightlife pioneer Ian Schrager, starchitects Robert A.M. Stern and Richard Meier, top building sales broker Darcy Stacom, Jonathan Tisch of the dynastic Tisch family and of course, Donald Trump. The collected interviews offer up the wisdom these figures have obtained through decades of climbing to the top and holding onto their place there. These are lessons learned at the school of hard knocks — and a lot of them involve money. “Don’t sign personally, don’t cross collateralize and if you live long enough, your real estate may be worth a lot of money,” is what Newmark Grubb Knight Frank CEO Barry Gosin said he has learned over the years. For developer Jeff Levine of Douglaston Development, the key to success is “having a high threshold for aggravation,” and being able to deal with headaches coming from all directions at all times, something that anyone overseeing a lot of people or projects would understand. For Shiller, meanwhile, the biggest obstacle on the path to success has been that he is “always short of time,” he said, citing a famous quote from Napoleon: “Ask anything of me but my time.” Of course, many of those who are the most successful in real estate are those who aren’t

afraid to take “no” for an answer. On cold-calling early in his career, retail broker Robert K. Futterman said he would always shoot as high as possible and see what happened. “I’d ask for Harry Helmsley, I’d ask for Donald Trump. If they directed me somewhere else, then so be it.” Residential superbroker Michele Kleier got her first big celebrity deal by sending around a handwritten note to each hotel in the city that Warren Beatty might be staying at after she heard he was looking for a place. Of course, there is no one path to success, as these interviews clearly show. It’s not necessarily all about glad-handing and looking the part. Schrager said he is comfortable in business meetings, but holds his wife’s hand at cocktail parties and is happy staying on the sidelines. Steiner Studios’ Doug Steiner’s casual attire often gets him mistaken for a bike messenger when he goes to business meetings in Midtown, which he doesn’t mind. And Stacom said she learned early on that wearing a business suit or playing golf wouldn’t get her anywhere. The interviews also offer a glimpse at how these 1 percenters spend their time and money when they are not in the boardroom or glued to their phone, from their favorite restaurants to where they have their vacation homes. And some leisure pursuits are farther afield (a result of having a lot of money, no doubt). Richard Mack likes to off-piste in Chamonix with his kids. (We had to look up where that is and what it was — it’s basically skiing in France.) Chris Schlank of Savanna is really into gyrotonics (a three-dimensional Pilates.) And no fewer than two of our 100 Closing subjects have had a llama farm. Finally, there is the balance between business and personal issues, between striving to be wildly successful and living in a world with others that every mini-mogul and tycoon must grapple with. “For the most part, people who have worked for me tell me they didn’t like me much, but they learned a lot,” said investor Jeff Greene. “I’m very proud of that. It would be worse if they said, ‘Boy, he was a sweet guy, but I learned nothing.’” Developer Miki Naftali struck a softer note. “Some people might say that I’m, maybe, too aggressive. I hope that people see me as fair.”

www.TheRealDeal.com October 2014 93

The Closing Book Describe your personality back then. I was always kinda passionate and competitive, but also very shy. And it’s still the same. I can get up and talk about my work in front of a million people, no problem, but when I go to a cocktail party, I’ll hold onto my wife’s hand and gravitate toward the corner. Funny. How’d you first get into the nightclub business? I was a practicing lawyer for a couple of years. I didn’t really like it. I happened to be Steve Rubell’s lawyer at the time. Is that how you two met? Actually, we met in college [at Syracuse University]. Didn’t you date a woman at the same time as him? He was a few years older. He was dating her, and then I got up to school and I started dating her while he was dating her. We weren’t friends at that point. But I think it’s the way that we dealt with each other through that process that made us become friends. What was your favorite celebrity sighting at Studio 54? [Legendary pianist] Vladimir Horowitz because he was such an unlikely person to be there. He came to watch with earplugs in. Crate & Barrel named a sofa, “Ian,” in your honor and you sued them. Why? Because they didn’t even have the courtesy to ask. They kinda have this attitude that they can do whatever they want to do. They had to withdraw the name. If they would’ve asked, I probably would’ve said no … but they just went and did it and then they had the nerve to tell me that it had nothing to do with me — even though the [store merchandise] buyer said it was inspired by Ian Schrager. What’s your favorite hotel to stay in? It’s really only my hotels that I like 100 percent. Photo by Marc Scrivo

Ian Schrager chairman & CEO | Ian Schrager Company Schrager established his eponymous hotel and real estate development firm in 2005, and his high-profile New York projects have included the 2006 redesign of the Gramercy Park Hotel as well as residential properties such as 40 Bond and the Gramercy Park Hotel’s 50 Gramercy Park North condos. Schrager is famous for pioneering the boutique hotel concept, but the hotelier is also known for a more value-oriented hospitality — having launched the mid-priced Public hotel chain. Presently, he is working with Marriott to bring his Edition hotel chain to New York’s Madison Square Park Clock Tower. Prior to starting the Ian Schrager Company, Schrager was at the Morgans Hotel Group, which he co-founded in 1984 with the late Steve Rubell. But Schrager is probably best known for the legendary nightclub Studio 54, which he created with Rubell in 1977. Interview by Lauren Elkies

What’s your date of birth? July 19, 1946. Where did you grow up? In East Flatbush, Brooklyn. Do you still live in the 8,500-square-foot penthouse at 40 Bond? Yes. Do you have any other homes? In Southampton. How many kids do you have? I have two kids from a former marriage. My wife has two kids, and we have a oneyear-old baby son. His name is Louis. He’s named after my father. How’d you and your wife [of three years, Tania Wahlstedt] meet? She used to dance with the New York City Ballet. I knew her because my first wife also danced with the ballet. For some strange reason, I have a preference for ballerinas. What were you like as a kid? Very active, obsessed with basketball — the way I became obsessed with business — and very competitive. I played guard. I had a bunch of scholarship offers, but my father wanted me to concentrate on my studies, so I didn’t play in college.

Do you think some of the W hotels in New York City are similar to yours? No. To me, the Ws have no ethos, no originality, no vision. They’re replications of what they see. It’s like between Coca-Cola and Royal Crown Cola. … My customers don’t go to the W. It’s not their cup of tea. What’s your biggest pet peeve with hotels today? I think I’m kind of bored with this over-the-top design with no reason for it, no vision for it. It’s not authentic. Do you think you’re compromising your hip, sleek, cool brand by partnering with the Marriott? No, not at all. I’m a consultant to Marriott. It’s my own private label.

“I’ll talk about my work in front of a million people, but at a cocktail party I’ll gravitate to the corner. Funny.” You’ve moved into the value-oriented hotels sector with Public. Why? It’ll have a bigger impact on the industry than the boutiques had. … They’re value-oriented hotels with great service and style. That’s the new twist. I got the idea from an Apple store. When I went in there, with the Genius Bars and the way everything is so much like a cult, where you get great service by their brand ambassadors, I came out thinking, ‘Is that luxury service, or what is that? It’s essential.’ Everything you needed they gave you [without the] array of services nobody really cares about. In 1979, you and Rubell pleaded guilty to income tax evasion at Studio 54 and served nearly two years in prison. What did you take away from that? It was unreported $400,000 in gross income. I guess I must’ve been thinking the rules didn’t apply to me. It didn’t take away my enthusiasm or passion for life, but I came out of it knowing that I had to play by the rules that everyone else does. … We lost everything. We had nothing. But we were able to come back and pick ourselves up off the floor and dust ourselves off. TRD Originally published February 2012

94 October 2014 www.TheRealDeal.com

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The Closing Book How did it develop? Well, I read a lot about Frank Lloyd Wright when I was young, and he always talked about organic architecture, that there was a relationship between the interior and exterior space of a building. In the first house I designed, I created walls which began on the inside of the living room and extended into the garden. When it was completed, I observed that the outside of that brick wall had moss on it, it changed colors when it rained, and the inside never changed. I said, ”You know, you have to think of architecture as manmade. It doesn’t change with the weather or with the seasons, it’s inert.” So you may as well paint it white to reflect back the colors of nature. You must get sick of explaining that. Yes. What is your greatest professional accomplishment? The Getty has 5,000 visitors a day, almost the same as when it opened 10 years ago. So it’s remarkable; people keep going there and going back there. Is there anything you regret, any mistakes you’ve made in your career? If so, I’ve blocked it out. What do you do in your free time? I’ve been doing collages for 40 years. I’ve made individual collages, and I also do them in books with blank pages. I’ve completed 150 books. How did you start doing that? I was on the airplane a lot. I carried a box with glue and scraps of paper, and did them on the trips between New York and Los Angeles to pass the time away.

Photo by Ben Baker

richard meier Managing partner | Richard Meier & Partners The noted Modernist architect, perhaps best known for the Getty Center museum in Los Angeles, has also designed 173 and 176 Perry Street in Manhattan and On Prospect Park in Brooklyn locally. In 1984 Meier became the youngest-ever recipient of the Pritzker Architecture Prize — the field’s highest honor. Newer projects include two luxury residential towers in Bogota, Colombia and Teachers Village in Newark, a mixed-use complex with charter schools and middle- and lower-income housing. Interview by Candace Taylor

You carry glue with you when you travel? Well, I used to use rubber cement. I remember I was on a trip and I had to change planes in Kansas City. And they went through my box, took out the rubber cement and they said, “This is flammable; we have to take it away.” I said, “What do you mean you’re taking my glue away?” They said, “You can have it back when you come back to Kansas City.” I said, “Don’t worry, I’m never coming back to Kansas City.” What I use now is not flammable. [Takes out a glue stick.] They can’t take this away from me. Making collages on planes must be difficult with all the security now. I can’t take scissors, so I cut the paper before I leave. I noticed your bracelet — is that from Turkey? Yes, it’s an evil eye [intended to ward off curses]. I’ve just worn it for years. It’s like the copper bracelets I wear — it doesn’t hurt, and maybe it helps. What is the significance of the copper bracelets? Well, the copper is supposed to be good for your bones. It keeps you from getting something, I don’t know — rheumatism. It’s very good for you, I recommend it. What kind of boss are you? Terrific. [laughs] You have to give people freedom to do what they do best and hope that they do it well. And if they don’t, well, then you have to make a decision.

What’s your date of birth? The 12th of October, 1934. Where did you grow up? In Maplewood, N.J. Where do you live now? Manhattan. I live in a building that was built the year I was born, 1934. It’s a conventional apartment that I made into a loft. Do you have children? I have two. The oldest [Joseph] lives in Washington, D.C. The youngest [furniture designer Ana Meier] got married in September, at my house in East Hampton. What’s the status of your project in Newark? Hopefully, in a year we’ll start construction. Do you have a particular emotional connection to that project? I love that you don’t have to get on an airplane to get to the site. I feel very strong ties to Newark, growing up in New Jersey. For us, it’s a very, very significant project. I read that one of your influences was the burger chain White Castle. I don’t know if you’d call it an influence. I remember as a young person going to White Castle, and I liked the white metal panel. Your trademark is using white. Well, it didn’t come from White Castle. [laughs]

“You have to give people freedom to do what they do best and hope that they do it well.” What do you make of the criticism of the house you’re building for [English actor] Rowan Atkinson? Critics have said it looks like a space-age petrol station. This is a very conservative part of England, Oxfordshire, so there are no modern houses. There are very few modern houses in England at all. So it’s a real event, and everyone has a comment. How do you want to be remembered as an architect? As an architect, I’d like to be remembered for the quality of the work. But ultimately, I’d like to be remembered as a good dad. TRD Originally published November 2010

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The Closing Book Do you have any other homes? We have a home in Connecticut that we do own. How long have you been married? This is a big year for our family because we have been married 25 years, we’re both turning 50, and our two girls [Teal and Amber] are turning 13 and 16. What are you doing to celebrate? We are planning a big family vacation, but are vacillating between Europe and South America. How do you juggle a career with being a mom? I think if I had stayed home I would have driven them crazy, so it was a good balance. You just prioritize. If you have to work from 9 p.m. to midnight to make up for the fact that you were gone from 5 p.m. to 8 p.m., you do it. I’m proud of one thing: My daughters and I get along great. I can’t say I fight with my daughters. Do you think it’s been good for them to see the success you’ve had in your career? Sometimes they’re like, “OK, yeah, you sold that building,” but in general I’m hoping it will have been a good, positive influence. My mom worked and that was a good, positive influence on me. My dad was a little worried I was going to be ne’er-do-well of the family. Why? I was a bit of a slacker as a kid. If a class really appealed to me, I did well; if a class didn’t appeal to me, I didn’t do so well. But when I got to real estate, I loved it. When did you start in real estate? The first summer I worked in the Cushman & Wakefield mailroom, I was 14.

Photo by Hugh Hartshorne

d a r c y s ta c o m vice chairman | CBRE Group Stacom got her start at the commercial brokerage Cushman & Wakefield, where her father, Matthew Stacom, was a veteran broker who was involved in developing and leasing the Sears Tower. Her late mother, Claire, became a Cushman broker after marrying her father, and her sister Tara Stacom is a top broker as well. Darcy left Cushman in 2002 for competitor CBRE, where she’s vice chairman and has since brokered more than $60 billion in deals. Stacom represented the seller of the GM Building, which fetched the highest price ever paid for a single office property in the U.S. at $2.8 billion. She also set records when she represented MetLife in the $5.4 billion sale of Stuyvesant Town and Peter Cooper Village in 2006. Interview by Candace Taylor

What’s your date of birth? November 24, 1959. Where did you grow up? I grew up primarily in Greenwich, Connecticut. I was born in New York and briefly lived in Ridgefield, but really pretty much Greenwich. Where do you live now? New York City, in Midtown, in a rental building. I’m the shoemaker with no shoes. Have you always rented? Yes. Every time we [Stacom and husband Chris Kraus, a managing director at Jones Lang LaSalle] thought we were going to buy, for some reason we decided not to. I love the location that I’m in. We’ve been there for over 20 years. I was only seven blocks from my office when we started to have kids. We’ve had different-size apartments in the building: We started in a one-bedroom, went to a two-bedroom, then went to a three. Are you in a rent-stabilized apartment? No, we’re fair market. When the rent hit a certain level many moons ago, we just said, “OK, fair market.”

Was it difficult that there were so few women in the field when you started? Actually, it was a very positive challenge. I’ve always been a non-conformist. I’ve never owned a business suit and I never will. It’s just not me. A lot of brokers use entertaining as a means of creating new relationships and establishing new clients. I just didn’t do that. I remember once being scheduled to play golf with clients, and then they found out what my handicap was and they cancelled. I realized that socializing wasn’t going to get me anywhere. If you’ve never owned a business suit, what’s your standard work outfit? I’m just very eclectic in my dress. I’m sitting here today in a hot-pink top over a long black skirt and wedge heels and earrings that come down to my shoulders. You never know; it’s whatever I feel like in the morning. You come from a family of brokers. What was the dinner conversation like? Growing up it was a lot of real estate a lot of the time. When dad sold the land for the Sears Tower, that took up conversation for a very long time. What’s your secret to winning a negotiation? I only lose my temper once a deal. When I lose my temper, and I do have a temper, it is very clear that I’m adamant about what I’m speaking. There’s always some point in the transaction where somebody’s going to finally push the deal too far. You’ve got to be prepared to really take a stand and say, “Look, it’s now or never.”

“I’ve always been a non-conformist. I’ve never owned a business suit and I never will.” Do you treat yourself to a big gift after closing a deal? Usually I will pick some eclectic piece of clothing or a cool piece of costume jewelry and add to my collection. Early in our marriage my husband tried to buy me real jewelry. I said, “Can you just get me costume stuff?” Why do you like the costume stuff? Because you can buy more of it. TRD

Originally published May 2009 98 October 2014 www.TheRealDeal.com

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The Closing Book estate. Richard LeFrak — who’s a great friend of mine — was a host recently on the Miss Universe Pageant, which I own. He was on “Celebrity Apprentice,” and he did a fantastic job. How has being a TV star changed your life? I was well-known before “The Apprentice,” but certainly I’m much better known now. It’s very hard to walk outside, whereas before I was able to do that. When you have a major hit television show, it’s a different level than anything else. You have five children, including a four-year-old son, Barron. How are you different as a parent this time around? I think I appreciate it a little bit more. I think when you’re getting older and you have a young baby, it makes you appreciate all of them more. Your daughter [Ivanka] was recently married [to real estate scion Jared Kushner]. How do you feel about her marrying into another prominent real estate family? I thought it was great. She married a wonderful guy and I really like the family. Charlie Kushner is a fantastic guy. Do you and Jared have bonding activities? We have bonded. He’s very smart; he’s a very good person. I’m very happy with Ivanka’s choice. Was it an issue that she converted to Judaism? No, not for me it wasn’t. That was her decision. When you look back at your career, what would you do differently? You have to learn from your successes and your failures. And if you don’t learn from mistakes, then you’re a fool. Now, ideally you want to watch other people and learn from their mistakes, because that’s less costly and less traumatic. But… I wouldn’t want to do it much differently. For instance, I was told, “Don’t do ‘The Apprentice’ because it can never succeed on television, because very few shows do succeed.” And I did it against the wishes of many people, so you have to just sort of go by your wits.

DONALD TRUMP president | the Trump Organization Trump started his career working alongside his father, real estate developer Fred C. Trump, in Sheepshead Bay, Brooklyn. Today, his firm, the multibillion-dollar Trump Organization, is one of the most recognizable real estate brands in the world, with holdings like Trump Tower on Fifth Avenue and Trump Park Avenue, as well as hotels, golf courses and casinos. Trump has authored several books, including the best seller “The Art of the Deal,” and is a partner in the Miss Universe and Miss USA Pageants. In 2004, he began producing and starring in the television reality show “The Apprentice.” Among his current projects is an 18-hold public golf course in the Bronx. Interview by Candace Taylor

How old are you? 63. Where did you grow up? Jamaica Estates, Queens. My father lived there, in the same house on Midland Parkway, up until his death. He amassed a fortune in his lifetime — why didn’t he ever move? My father loved Queens and he loved Brooklyn, and that’s where he did his business. He never came to Manhattan. You live here in Trump Tower. What other homes do you have? I have a home in Bedford, N.Y.; I have a home in Palm Beach, Florida. I have homes in other locations, but I generally split my time between Bedford, Palm Beach and Manhattan. Which is your favorite? Nothing can top, to me, Trump Tower. But Palm Beach is great. I stay at the Mar-a-Lago Club. That’s where I had my wedding [to third wife Melania Knauss in 2005].

Which of your decisions have gone the other way? Many decisions don’t go well because of timing. You’ll buy a building, make a great deal on a building, and then the market crashes. All of a sudden your great deal isn’t so good. In the early ’90s, they changed the tax code. You bought stuff and they changed the rules of the game. It’s hard to blame yourself for that.

“Ideally you want to watch other people and learn from their mistakes, because that’s less costly.” What lessons did you take from the recession of the early 1990s? I think I became much more conservative. We’re sitting on a lot of cash and I’m looking to buy, whereas in the early ’90s I can honestly say it was the exact opposite. So I either learned something, or was luckier — maybe a combination of both. Which parts of your holdings would you be most worried about in a down market? Frankly, if the market went down, I’d be extremely happy because we’re not sellers, we’re buyers. I think the market will stay at pretty low levels and then ultimately start getting better, but it could go down further. On a selfish basis, if it did, I wouldn’t be unhappy.

Did you always know that you wanted to go into real estate? I learned so much from my father. He enjoyed what he did so much, it made him happy. I saw that, and it rubbed off on me.

What is something people don’t know about you? I think my image is a lot different than the fact. The image is a tough image. I’m actually a nice person that has a lot of compassion for people. I like doing the right thing. And I happen to be a very honest guy, sometimes too honest. My honesty gets me into trouble.

You’ve taken a very different path from the other old New York real estate families, like the LeFraks. That’s true. It’s a very different track than probably has ever been taken in real

Did the “you’re fired” thing give people the wrong impression? Actually, people like me better now that they see me on television and all I do is fire people. What does that tell you about my reputation before? It couldn’t have been so great. TRD Originally published June 2010

100 October 2014 www.TheRealDeal.com

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The Closing Book my brother and I each turned 20, we got to work as a tour guide in a country that my dad did business in. I picked Italy. Do you speak fluent Italian now? I do. And that eventually led to a restaurant, Maialino, which is really an homage to Rome. Because I was working for my dad’s company during that summer, I was called Meyerino — which means “little Meyer.” I consistently took my tours to a local trattoria. All I ever ate there was the roast suckling pig, so my name changed to Maialino. It means “little pig.” So they were calling me Little Pig all summer. Being a successful restaurateur is partly about real estate, of course. How do you pick your locations? We don’t ever open a restaurant unless a number of us fall in love with a location. Does your company own any of the buildings where your restaurants are situated? We own the space that is Gramercy Tavern. Is that the only one? Sadly. I’m sometimes frustrated we haven’t shared in the real estate boom that some of our restaurants have helped make happen. What are your favorite dishes at your restaurants? The pimento cheeseburger at Untitled is the stuff of dreams. The bacon and maple croissant at North End Grill — if that were the last thing I ate before dying, I’d be pretty happy. And Nancy Olsen’s chocolate bread pudding at Gramercy Tavern. If you had to eat at Burger King, McDonald’s or Wendy’s, which would you choose? I wouldn’t. I would just wait until the next meal. If someone said, “You’ve got to eat your next two meals at American fast-food restaurants,” I would do one meal at Chipotle and one meal at Popeyes fried chicken. Photo by Marc Scrivo

danny meyer founder & CEO | Union Square Hospitality Group Meyer’s company operates such hot-ticket New York City restaurants as Gramercy Tavern, Union Square Cafe, Blue Smoke, Maialino and North End Grill, as well as the Whitney Museum eatery Untitled and restaurants in the Museum of Modern Art. Union Square Hospitality also runs the rapidly expanding chain of Shake Shack burger joints, with locations in New York, Florida, Washington, D.C., Dubai, Kuwait City and elsewhere. Meyer has co-authored several books, including the business tome “Setting the Table.” Interview by Lauren Elkies

What’s your date of birth? March 14, 1958. Where did you grow up? St. Louis, Missouri. I’m still a Cardinals fan. Where do you live now? I live in a co-op in the neighborhood where most of our restaurants are, so in Flatiron-Gramercy, in the 20s. Why so close to your restaurants? To stay as close to our staff members, our guests and our community as possible. How’d you get into the restaurant business? I wanted to be in New York. The first job I got was as a salesman selling electronic tags to stop shoplifters. I worked out of my apartment. My uncle reminded me that all he had ever heard me talk about was food and restaurants, so I started taking a restaurant management class. How did you and your wife meet? We met in 1984 at my first restaurant job at a [now-defunct] restaurant called Pesca on 22nd Street. I was the assistant lunch manager, and Audrey was an actress waiting on tables. Who does most of the cooking in your home? During the weekdays, Audrey and our four kids. During the weekends, our kids and me. They are 12 through 18. Our oldest daughter just won the Iron Chef competition at Yale University as a freshman. I hear you worked as a tour guide in Rome for a summer when you were a student at Trinity College. My dad’s company sold group tours in about eight European cities. When my sister,

When you opened the original Shake Shack in Madison Square Park (which pays rent to the city and the park), did you ever think it would become so popular? I had been one of the co-founders of the Madison Square Park Conservancy. We never saw it as being anything other than an amenity for this park, to raise money and to increase the population of park users. It did both of those things, and then some. We actually opened our second Shake Shack in hopes that it would help reduce the line a little bit; if anything, each time we’ve opened another Shake Shack, it’s only increased the length of the line. What has been your greatest setback? Probably the biggest setback was closing [Tabla, in 2010]. Because, somehow, I had this sense that everything was forever.

“I’m sometimes frustrated we haven’t shared in the real estate boom that we have helped make happen.” Why’d you close it? After 12 years, the restaurant was not able to fill its 283 seats on a consistent basis every lunch and every dinner. It was our biggest restaurant in terms of seats, in terms of overhead. It was also our most narrowly focused concept. It was Indian cuisine. Keeping Tabla as busy as we did for 12 years was actually a great accomplishment. At the beginning of the year, Related purchased a portion of Union Square Events, the catering division of your company, to partner on future ventures. Why did you do that deal? Related won the opportunity to develop the Hudson Yards. Union Square Events is overlooking the Hudson Yards, at 640 West 28th Street. We’ve always had an interest in that area. And what we’ve found to be somewhat taxing, for a company whose specialty is food service and hospitality, is the amount of time we were spending just trying to source locations for clients’ events. TRD Originally published May 2012

102 October 2014 www.TheRealDeal.com

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The Closing Book Didn’t you also have a TV show? I had my own show for seven years [called “Beyond the Boardroom with Jonathan Tisch”]. It was the only show where CEOs were interviewed by other CEOs. I did 52 interviews in seven years. Were you ever stonewalled by a CEO? I’m not sure that they always gave me the answers I was hoping for. Hopefully I came back with another way of trying to get the information. How long have you been married to your wife Lizzie? Five and a half years. She has a business that introduces new designers to clients in New York City. She’s very knowledgeable about the up-and-comers of Paris and London. She’s very attuned to what people are wearing. How many kids do you have? I have two kids in college from my first marriage and a step-daughter. I first got married in 1988. My ex-wife [Laura] and I are very close. Your first wedding was a big society affair with guests like Barbara Walters. Did you go for something smaller this time around? I’m not answering that. Your family owns a stake in the Giants. What’s it like when they win the Super Bowl? They’ve won twice in the last five years. It’s a truly remarkable experience. In both of our wins, the game wasn’t decided until the final seconds. When you look back at the games, you realize how much could have gone wrong, but it went right. It tells you a lot about life. For my father, a kid growing up starting with not a lot in Brooklyn, to be able to buy half of his hometown NFL franchise, it was wonderful. Until he passed away seven years ago, it brought him so much pleasure to go out to Giants Stadium on a Sunday and stand on the field.

Photo by Marc Scrivo

Jonathan Tisch co-chairman | Loews Corporation Loews — the company that Tisch’s grandparents started back in the 1940s — is now worth in excess of $50 billion, with interests in off-shore drilling, insurance and commercial real estate with a major focus on hospitality. The Tisch family owns 50 percent of the New York Giants. Tisch, the son of late business mogul Robert Tisch, is also chairman of Loews Hotels; the subsidiary owns and operates hotels in more than a dozen major cities in the United States and Canada. Among its properties is the Loews Regency Hotel at 540 Park Avenue, where real estate executives have long gathered for their “power breakfast.” Tisch is also a co-founder of Walnut Hill Media, which invests in movies and TV projects. Interview by Katherine Clarke

What’s your date of birth? December 7, 1953. Pearl Harbor Day. Where were you born? Atlantic City, N.J. I spent my early years in New Jersey. Did you move around a lot as a kid? We moved to Miami Beach for one year when I was six. Then, when I was eight, we moved to Scarsdale, N.Y., and from there it was a combination of Westchester and New York City. I went to a prep school called the Gunnery in Washington, Connecticut. What was your childhood like? Were you aware that your dad and uncle were creating a business empire? Certainly, my siblings and cousins and I were very much aware. My uncle Larry was always referred to as “the inside Tisch” and my father was “the outside Tisch.” Larry was a financial genius and my father was the one who knew everybody. … Today I run the corporation with my two cousins, Andrew and Jim. But there are seven of us — three on my side and four on my cousins’ sides. We were virtually raised as one family. Did you ever consider staying out of the family business? I didn’t go into Loews for many years. I graduated from Tufts University in 1976 and I was hired by WBZ, then Boston’s NBC station. I was a cinematographer and editor. I spent three years there, producing sports, public affairs and children’s shows, and was nominated for three local Emmy Awards. I didn’t win any of them. I’ve since been nominated for two more and didn’t win those either. I’m 0 for 5. I’m the Susan Lucci of my generation.

You’re renovating the Loews Regency. Are you attached to that property? It’s certainly a labor of love. The power breakfast there goes back more than 30 years to when the federal government was turning its back on New York and the city was about to go broke. The leaders of the day — including my father, Lew Rudin, Felix Rohatyn and others — would gather to talk about how to save New York. My father lived at the Regency, so they had breakfast downstairs. There was a story a while back speculating on whether or not New York hot shots will return for the breakfast after the renovation. Are you worried that they’ll find another spot? My feeling is not only will they come back, but they will be so pleased with what they see that the fact that we inconvenienced them for 10 months will be a distant memory. Speaking of power breakfast, are you a morning person? I’m usually up by 5:30. I only sleep about five hours a night. Most days I’m at Soul Cycle by 6 or 7 a.m. What are your hotel pet peeves? I don’t think that people should be obsequious when they offer service. Don’t shout in my face that you’re giving me service.

“When you look back at the games, you realize how much could have gone wrong, but it went right.” What’s been your biggest personal gaffe? Probably some of the dates I went on. The people I dated probably thought it was their biggest gaffe. Who are your friends in the industry? Billy Rudin [son of Lew Rudin] is a dear friend, Jeff Wilpon, whose family owns the Mets, and Jeff Blau at the Related Companies. I’m also fortunate to know Rob Speyer. What’s your biggest vice? French fries from Balthazar and Pastis.

TRD

Originally published May 2013

104 October 2014 www.TheRealDeal.com

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Photo by Hugh Hartshorne

sharon baum Senior vice president | The Corcoran Group A specialist in high-end properties, Baum has sold more than $2 billion of real estate in some of New York’s most exclusive co-ops since she joined the Corcoran Group in 1991. A graduate of Randolph-Macon Woman’s College, Baum was one of seven women in the first co-ed graduating class of Harvard Business School. Before entering the real estate field, Baum worked at Chemical Bank for 17 years, where she was Chemical’s first female vice president. In 2011 she received the Henry Forster Award from the Real Estate Board of New York for her professional achievements. Interview by Candace Taylor

What’s your date of birth? January 3, 1940. Where did you grow up? In Jefferson City, Missouri. Where do you live? On the Upper East Side, Park Avenue. We also have a home in Greenwich, Conecticut. My husband is a fourth-generation Manhattanite. I didn’t even know those people existed when I was growing up in a small town in the Midwest. I have a seven-month-old baby granddaughter, so I try to get to Minnesota once a month [to see baby Hannah, son Ben and daughter-in-law, Heather]. They live in a place called the Calhoun Beach Club, on a big lake in Minnesota. They have two guest apartments. We can be right in the same building but not tripping over each other. Do you still have a “Sold 1” license plate on your Rolls-Royce? I do. Do you really have a yellow Vespa? It is a yellow Vespa. It has a leopard-print seat. We have it up in Connecticut. I’ve always been fascinated with motorcycles and motor scooters. A few years ago we did get a custom Harley Davidson. When we told our sons, they said, ‘We’re disowning you. It’s not safe.’ So we owned it for like one day. We never even got one ride on it. But we do have fun with the Vespa in Connecticut. Do you have any pets? No pets. [But] I love pets. I especially love cats. Part of my youth was on a farm. We had every kind of pet known to man … baby foxes whose mothers had been killed, flying squirrels, you name it, we had it. I always loved animals … When I was young I was a member of 4-H. I raised registered Black Angus cattle. I had my

favorite heifer whose name was Roxanne. She was my prized show heifer. I joke that I really learned my skills as a broker by taking care of Roxanne, because she needed a lot of care and attention. What was the first job you ever had? I almost don’t remember a time I didn’t work. In fifth grade, I was maybe 11, I wanted to buy these charms out of a gum machine but my mother said it was ridiculous. I was thinking, ‘How could I make money?’ As I walked home from school, I noticed a men’s barbershop with hair on the floor. I went in and asked if I could sweep the floor on my way home from school for 25 cents. They said that sounded like a good idea. But after about five days, somebody told my mother, and that was the end of that. What did you think you’d be when you grew up? I really wanted to be a doctor. I had quite a few doctors in my family. But I found out that I was not cut out for physics and science. How can you be a doctor if you don’t excel in science?

“[What do I make of all the fuss over me having dated Mayor Bloomberg?] Not much.” How did you get into real estate? When it became clear I was not going to become the chairman of Chemical Bank, I was looking for something else to do. I had met Barbara Corcoran years before that. She said, ‘You should go into real estate.’ I thought, why not? That’s what I did, and the rest was history. It was really a total fluke because I never would have thought about it. But I love what I do. I don’t have any plans ever of retiring. I just want to keep doing it. What do you make of all the fuss over you having dated Mayor Bloomberg? Not much. He’s a terrific person. Such a strong work ethic. He was one year behind me at Harvard, but we really met here in New York. On the day I got married, in March 1969, he sent a dozen red roses with a card that said ‘I wish you a lot of happiness.’ That’s the kind of stand-up guy he is. I can’t imagine that our city could have anyone better to run it than Michael Bloomberg. TRD Originally published March 2009

106 October 2014 www.TheRealDeal.com

The Closing Book Were you surprised at how much attention 15 Central Park West received? Well, pleasantly surprised. I would have been even more surprised if it hadn’t gotten attention because in my immodest way, I do think it’s a very beautiful building. And of course the public spaces within the building, the lobbies, the private dining room, the health club and all of that are pretty swell. Why did you use limestone instead of brick? Limestone takes the light very beautifully. A glass building may reflect the light at certain times, but oftentimes it just swallows it up and doesn’t give much back. With a limestone building, whether it’s sunny or cloudy, the building glows. How do you feel about the retail in the building? For example, there’s a Best Buy at 15 Central Park West. Well, it’s Broadway. The way we designed the retail is totally related to Broadway and the character of Broadway, though the detail of shop fronts is very fine. I’ve never been in a Best Buy; it looks nice to me. Every shop in New York cannot be Tiffany’s. When did you know you wanted to be an architect? I kind of announced it when I was 13, 14, something like that. I always was busy playing with blocks, making drawings of hypothetical cities. How do you feel about the term “starchitect”? That architects have been given some kind of star status is nice. On the other hand, I don’t think architects should be celebrated like movie stars. We’re much more interesting than movie stars and much more important, and what we do is much more enduring. If you don’t like the movie you’re watching, you can turn it off or walk out of the theater or fall asleep. I do all of those things. But if it’s a building and it’s across the street from your window and it’s an abomination, what are you going to do about it? Not much. Do you get recognized while walking down the street? People do recognize some of us, but I don’t think they’re confusing me with Brad Pitt. Photo by Hugh Hartshorne

Robert A.M. Stern founder | Robert A.M. Stern Architects A celebrated architect, Stern has been behind some of the most successful residential developments in New York. His architecture firm designed 15 Central Park West, the limestone condominium where total sales topped $2 billion — making it the most successful apartment building in New York history — and 18 Gramercy Park, where a penthouse went for $42 million, setting a record for Downtown Manhattan at the time. Other projects include the Superior Ink on West 12th Street and 30 Park Place downtown, as well as Philadelphia’s Comcast Center. Stern serves as dean of the Yale School of Architecture. He is the author of countless books on the subject, including “New York 1880” and “New York 2000.” Interview by Candace Taylor

What’s your date of birth? I was born in 1939. Where did you grow up? Flatbush, Brooklyn. Where do you live now? Manhattan. I live in a building that we designed, the Chatham, so that’s nice. I rent a loft in New Haven, and I have a weekend house in East Hampton. Where do you spend most of your time? I just go back and forth between New York and New Haven. Which architects have inspired you? Paul Rudolph was my teacher. I learned a tremendous amount from him. Robert Venturi was a teacher and mentor. Philip Johnson, Frank Gehry and Eero Saarinen … I’ve learned from so many. Sometimes I learn what to do and sometimes I learn what not to do. Which buildings do you admire in New York City? There are many that I admire, but the nice thing about New York City is the space, the places between the buildings. There are many cities that you go to where you see a few buildings and you take your snapshots and you leave. But in New York, it’s not the experience of the buildings, it’s the experience of the spaces and places that they make.

How do you relax in your free time? First of all, you’re deciding that I have free time. I’ve spent my entire life trying to not have free time. When I’m not in the office, I like to work on my writing. I like to travel, not for work but for pleasure. That’s my greatest recreation. What are some of your favorite places to travel? London is a favorite. Paris is great, but my French is so terrible that I always feel I’m not getting the maximum out of it. Rome, I don’t have any Italian so I blunder along in complete happy pleasure. This summer I’m going to Vienna. I haven’t been there in 10 years. It’s kind of on my B-list. Tell me about your offices [at 460 West 34th Street]? This is an industrial building on the West Side, built for the printing trades. It has high ceilings, big, muscular columns, and it’s flooded with light on all sides. We keep it very open. There’s virtually no office with a door.

“Architects are much more interesting than movie stars and what we do is much more enduring.” Including yours? Definitely not. People usually walk through. I don’t mind that, and I don’t like to pick up a phone and call. My preferred method of communication is a very refined shout. What do people do in offices with doors? They close the door and fall asleep or talk to their girlfriends. Why don’t you have a computer? I don’t even know how to turn a computer on and I don’t want to. I use pen and paper, tracing paper, make sketches. That’s the way I work. TRD Originally published June 2009

108 October 2014 www.TheRealDeal.com

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The Closing Book Where do you invest your money? Eighty percent of my money is in my own business, 10 percent is in art, another 10 percent is with various types of very conservative money managers. I buy very low-yielding paper, stuff that you sleep well at night with. What is your greatest professional achievement? Probably to own the Seagram and the Lever House [located at 375 and 390 Park Avenue, respectively]. Those are two of the greatest office buildings in America I think. They are basically pieces of art. It fits exactly what I want to do — meld the art and the architecture together. What’s your greatest social gaffe? I walk around with a T-shirt and some jeans while other people get dressed up. If they call that a social screw-up, that’s OK with me. What’s your biggest professional gaffe? I wish I would have been less conforming earlier on, break the mold earlier on. Today, when you’re established, it’s easier to break the mold and do things that are more challenging and more out of the box. Given your success, are you arrogant? No, but I’m very cautious. I’m very selective when it comes to people. But I do make instant judgments, which I think is a mistake sometimes, but I still do that. Who is your favorite celebrity and why? I love Henry Kissinger because this guy came over here almost 65 years ago and still has a strong German accent. It’s a guy that doesn’t want to fit in somewhere with his accent. Also, I like him as a person. Are you impulsive? Most of the stuff I ever did I did it right on the spot. I bought my townhouse on the spot. I saw it at noon and by three o’clock I had a signed contract. Photo by Hugh Hartshorne

aby rosen Co-founder & Principal | RFR Holding Rosen is one of the most prominent developers and landlords in New York City, noted for boutique office buildings and luxury condos controlled by the RFR Holding firm he co-founded in 1991. RFR’s Manhattan properties include the Lever House and the Seagram Building as well as luxury condominium projects such as 530 Park Avenue and One Jackson Square. The firm also owns the Paramount Hotel and the Gramercy Park Hotel. The Casa Lever Restaurant in the Lever House is festooned with Warhols, among other artists’ work, from Rosen’s own collection. RFR also has extensive holdings in Stamford, Connecticut; Tel Aviv; Las Vegas; and South Florida. Interview by Lauren Elkies

What’s your date of birth? May 16, 1960. Where did you grow up? Frankfurt, Germany. What was your childhood like? I had a great childhood growing up in Frankfurt, born to nice parents, lots of friends. Growing up as a Jewish child in Germany, I was a little bit of an outsider. It was rough at some points of my life. Where do you live? I live in the East 80s in a townhouse.

How do you deal with antagonists? Confront or ignore them? I think ignore them. People don’t change. What piece of artwork would you love to own? I would like to own a lot more work from the ’60s by lots of different painters like Warhol. What’s the most expensive piece of art you own? A Francis Bacon. What do you have on your night table? A photo of my kids and my wife, an alarm clock and some water, gummy bears and white chocolate. I like sweets. I eat white chocolate every day and I eat gummy bears every day. Who is the boss at home, you or your wife? I think we’re both pretty much even.

“Most of the stuff I ever did I did it right on the spot.”

What was the first job you ever had? My first job I ever had in New York, I was an investment associate, selling real estate to German institutions and private investors.

What kind of staff do you have at home? Lots of people helping with the house, to clean, a chef, a nanny, a laundry lady, people who serve. It’s a huge house and we entertain a lot. You need people there. The worst thing is to invite people and not give them decent service.

Do you have a mentor? Not really. Is that bad?

What’s your favorite music? I love Pink Floyd. I just saw Roger Waters a couple of weeks ago and it was insane.

How much money do you have in your wallet right now? Probably a couple thousand bucks. This is not a cash society anymore, but I always have a couple of thousand bucks in my pocket. Aren’t you afraid of getting mugged? No. Nobody mugs anybody in New York City anymore. This is the safest city, I swear to God. Do you earn as much money as you’d like to? Yeah. I always spent more than I earned. Finally a couple of years ago, I caught up with all that stuff and I make more than I can spend.

What do you like to read? I read tons of magazines. It’s a mirror of what’s going on in this world, a very focused mirror. I have, like, 50, 100 magazines around me all the time. If you could work on any real estate project, what would it be? I would like to do something in the area of the High Line. What would you want people to say about you after you die? That I had a great eye and lots of fun. TRD Originally published December 2006

110 October 2014 www.TheRealDeal.com

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The Closing Book the Wall Street Journal, the New York Times, Forbes, the Economist, BusinessWeek, and I particularly enjoy Science and Nature. Do you feel rich? Successful? Happy? Yes. I am happily married. I have two fine children. I have a wonderful job that brings me in contact with young people. What is your philosophy on love and money? I’ve been married to the same woman for 30 years, so I believe in long-term consistency, and money is just a game to me as long as you have enough. My parents would be surprised, because as a child I never showed any interest in monetary things. I wanted to be a professor. I found it amusing to make money. What’s the secret to a happy marriage? Mutual support. I try to look at the positive things of it. I married a psychologist, so she thinks there is a science to it. What’s your idea of the perfect Sunday afternoon? Sitting by the seashore thinking about the intricacies of economics with my wife sitting beside me. How do you size up people when you first meet them? I value sincerity and if they look you in the eye. If you were mayor of New York, what is the first thing you would change about the city? I might not rebuild the World Trade Center. It’s challenging the terrorists. A little park and monument is not backing down. And what would you fight to keep the same? I guess it was under Mayor Giuliani that we got rid of a lot of the graffiti and trash, and it’s a brighter, safer and more civilized place, and I would want to keep that. Photo by Hugh Hartshorne

Robert Shiller CO-FOUNDER | S&P/Case-Shiller Home Price Indices Shiller is a Nobel Prize–winning economics professor at Yale University widely known as the co-founder of the S&P/Case-Shiller Home Price Indices, composites of housing markets in several metro regions, including New York City. The indices are some of the most oft-quoted measures of U.S. real estate. Shiller is also well-known as one of the few prominent economists to warn of a housing collapse during the national real estate boom of the 2000s. The prominence that the prediction afforded him helped lead Shiller to sharing the 2013 Nobel Prize in economics. He had made a similar prediction about the bull stock market in 2000, right before it also nosedived. Interview by Amir Korangy

What’s your date of birth, and what’s your sign? March 29, 1946. I am an Aries, not that I believe in such things. Who are your parents? Benjamin and Ruth. Where did you grow up, and where did you attend college? Detroit. I went to the University of Michigan in Ann Arbor and then I got a PhD at MIT in economics. What is your job? Professor of Economics at Yale. What are your greatest achievements professionally? I wrote the first edition of “Irrational Exuberance” in 2000, about the stock market [which correctly predicted the dot-com bust]. The second edition was then released, on the real estate market as I interpreted it. I’ve written five books and over 100 journal articles. What has been your biggest contribution to society? Education. I’ve been teaching since 1972. I also co-developed a futures and options market on real estate [which began trading on the Chicago Mercantile Exchange].

How do you deal with antagonists? Going back to my childhood, I would tend to not pacify people, but I would tend to stall and hope they would turn their aggression to someone else. What’s your biggest pet peeve? Conventional thinking. What do you consider to be your greatest vice? I work too hard. It sometimes takes away from the finer things in life. Give advice to someone 20 years younger. I think young people often underestimate their own human capital. Your investment in yourself is to improve yourself with education, improve your knowledge, your skills. With every decision, you have to ask yourself, “How will I grow from this experience?” What’s the biggest professional gaffe you’ve ever made? Waiting too long to take a broader view of economics. I started out in economics studying some very narrow things. As I got confidence, I became a lot more of a broad thinker.

“My mission in life has been to use our wit and intellect to reduce the role of chance as much as possible.” What was the biggest obstacle on the path to succeeding? I am always short of time. There is a famous quote from Napoleon: “Ask anything of me but my time.”

Who is your hero? Why? The original Adam Smith, who wrote “The Wealth of Nations” in 1776. He launched the field of economics, and because he was a moral philosopher, he had a sense of law and purpose in what he did.

What should be the first sentence of your eulogy? “Time and chance happeneth to them all.” It’s Ecclesiastes 9:11. I don’t always quote the Bible, but I thought that was a very profound passage about the role of chance in our lives. My mission in life has been to use our wit and intellect to reduce the role of chance as much as possible. But there is an irreducible component.

What do you read every day? I have an addiction to reading, and I’ve always been very broad. But I subscribe to

What is people’s biggest misperception about you? I wish I knew the answer to that. TRD Originally published August 2006

112 October 2014 www.TheRealDeal.com

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114 October 2014 www.TheRealDeal.com

biggest real estate stories

1934: Notorious, colorful real estate mogul dies

successful real estate operator and publicity hound renowned for lavishing attention on children and a scandalous marriage to a 15-year-old, died 80 years ago this month. Edward Browning was 59 when he passed away at a rented mansion in Scarsdale, N.Y., after falling ill months earlier at a Manhattan hotel-apartment where he spent much of his time. He gained the nickname “Daddy” for the attention he gave children through personal contact and philanthropic enterprises. He was also a frequent subject of gossip columns of the day for his unusual marriages. He built up a large portfolio of real estate in New York over three decades. One of the few investors in the late 1920s to sense the oncoming crash, Browning sold about $6 million in holdings in 1929, directing much of the proceeds to a foundation for children. His assets at the time of his death were estimated at about $6 million to $7 million, or roughly Peaches Browning, who infamously married Edward $106 million to $124 million in today’s dollars. Browning at 15 He frequently sought the limelight and papered his offices with press clippings. In 1915, at the age of 40, he married a woman 15 years younger. They had no children, but adopted two young girls. They divorced in 1923, and Browning kept the younger child. Two years later, Browning advertised that he wanted to adopt a “girl of 14” who would be the older sister to the child, then 8. After some 12,000 letters came in, he adopted a girl from Queens who claimed to be 16, but was in fact 21, and he had his guardianship annulled. In 1926, at 51, he married a 15-year-old schoolgirl he met at a dance. The pair had a rocky relationship, and she left their home after just six months, initiating years of litigation that ended after his death with her winning the right to a third of his property.

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1955: J-51 predecessor introduced Council A look back at some of New YorkinCity’s

ayor Robert Wagner’s office introduced legislation providing a tax abatement and exemption for landlords upgrading heating systems in old apartment buildings in the City Council 59 years ago this month. The plan targeted the city’s so-called “oldlaw” tenements, or apartments constructed before 1901. The impetus was to convert heating from room units that often used kerosene, to safer, building-wide systems. The plan gave exemptions and abatements to building owners and was part of a wider Mayor Robert Wagner signing a bill into law push to “clean up unhealthy slum conditions.” Wagner signed it in December 1955. The plan, then known as J-41, for its placement in the city’s administrative code, was superseded with the J-51 language in 1963. Today the J-51 program is the city’s second-largest tax exemption program, after the 421-a program, meant to spur new development.

1914: Recession brings large foreclosures

two-year recession that stretched into late 1914 precipitated a string of property foreclosures in Manhattan, including the once-regal department store at 641 Sixth Avenue along Ladies Mile, 99 years ago this month. The lender on the property, the Equitable Life Assurance Society, filed to foreclose on $1.4 million in loans for the building and related properties between 19th and 20th streets, once occupied by the venerable Simpson-Crawford department store. The store was a pioneer on Sixth Avenue in the 1860s. But the recession, in combination with a move by larger competitors like B. Altman to Fifth Avenue, spelled ruin for Simpson-Crawford, which closed in early 1914. In 1916, the store was repurposed as a U.S. Post Office building and a mail-order warehouse. Earlier in 1914, the famous Bijou Theater, at 1239 Broadway between 30th and 31st streets, was sold at a foreclosure auction for the second time in less than 12 months. It had a mortgage of $438,000. It was The Simpson-Crawford department store demolished the following year. The recession ended as the U.S. ramped up production to supply European nations devastated by World War I. Compiled by Adam Pincus

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DAY IN THE LIFE OF:

Sean Ludwick

The BlackHouse chief talks about conversing in Chinese, painting abstract murals and late-night fried chicken

BlackHouse Development’s Sean Ludwick, who’s has developed roughly $500 million worth of real estate projects since 2007.

ean Ludwick is the co-founder and principal at BlackHouse Development, best known for developing the 56-room Hotel Americano in Chelsea in 2011. He said his firm has a portfolio of more than 30 New York City buildings and has developed roughly $500 million worth of real estate projects since launching in 2007. Ludwick — who started out in investment banking and later worked at the Manhattan-based development firm RWO Acquisitions — told TRD that he’s currently a partner on a Hudson Yards hotel-condo tower being developed by Chinese investor Kuafu Properties. Earlier this year, he made headlines when he was accused of entering his ex-girlfriend’s apartment and creating lewd drawings on murals he had painted. Ludwick said the apartment belongs to him. (In April, he pleaded guilty to second-degree harassment, according to the Manhattan district attorney’s office.) Generally the 41-yearold divides his time between Manhattan, the Hamptons and China — where he is often sourcing capital for his New York City projects. When he’s not traveling, he uses a Citi Bike to scope out Manhattan neighborhoods for potential investments.

7:30 a.m. I wake up in my townhouse at Sutton Place and drink green juice. I like to have a lot of ginger.

8 a.m. A tutor comes over twice a week and teaches me how to have informal conversations in Chinese. When I don’t have a lesson, I drive my sons [ages 8 and 10] to school.

9 a.m. I go to the gym. I’ll take either a boxing class or a yoga class. Then I take a shower, check emails and read newspapers.

10 a.m. I arrive at the BlackHouse office [at 520 West 27th Street]. I make phone calls 116 October 2014 www.TheRealDeal.com

to check in with colleagues and brokers. A lot of my work is finding the deal — researching opportunities, finding partnerships and finding the capital. Then I kick it off to other people to run on a day-to-day basis.

11:30 a.m. I operate and manage an assemblage of multi-family apartment buildings in Northern Manhattan and the Bronx, so I [visit our apartment buildings a couple times a week] to check in. I meet with the property manager to review the progress of renovations. I catch up with the leasing broker because we always have apartments for rent. Multi-family assets are like slow-burning grains. They’re very nutritious, but not very tasty, in that they’re low yield, so … you won’t make more than 8 or 9 percent.

1 p.m. I typically meet with Asian investors for lunch, rather than drinks. Lunch is more of a formal process. It’s a bit more of a ritual. We go to Del Posto, Bondst or the Four Seasons Restaurant’s Pool Room. I usually eat tuna or sashimi with a bowl of white rice. We started another company, Ludwick China LLC, to focus on raising capital throughout China to buy more real estate in Manhattan. The projects are either high-end condos or hotels. These deals have more risk but also a greater return. 2:30 p.m. I meet with my partner Zhao Jin, who runs a Chinese investor network, and we discuss the status of our prospective investors. It’s easy to find investors abroad for Manhattan, less so for Brooklyn, the Bronx and Queens. But those areas have great fundamentals. 4 p.m. I pick up my sons from school, and take my youngest to soccer league or lacrosse practice and my oldest to Asphalt Green for a karate lesson.

Ludwick often scopes out investments on a Citi Bike.

Del Posto is a regular lunch spot for meeting with Asian investors.

BlackHouse developed the Hotel Americano in Chelsea.

6 p.m. I go to dinner and drinks with a realty or mortgage broker, banker or property owner. We get a cocktail on the 18th floor of the Standard Hotel or the roof of Hotel Americano. I often meet with Jordan Roschlab of Newmark Grubb Knight Frank, James Nelson of Massey Knakal [Realty Services] and Simon Ziff [of Ackman-Ziff Real Estate Group]. Right now, I’m looking to sell some buildings in the Bronx … There’s a lot of trepidation in the market at the moment because everything is so expensive. People have a lot of fear we’re in another bubble. 9 p.m. After I put my boys to sleep, I paint 10-by-6-foot abstract oil murals in the art studio in my house. I find it very therapeutic. I have painted about 30 of them; several hang in hallways of the buildings I own. 10 p.m. I shift to dealing with China and have several conference calls with investment trusts and vehicles looking to bring money to the U.S. I don’t speak Chinese, but I work with someone at BlackHouse who does. I have spent time in Singapore, Hong Kong and Shanghai. I also have a degree in international affairs from the University of Pennsylvania. 12 a.m. I spend a lot of time watching TV shows such as “Breaking Bad” and “Sons of Anarchy.” In around one week, I watched all 62 episodes of “Breaking Bad.”

An oil mural by Ludwick.

1 a.m. I read the Economist magazine, which puts me to sleep nicely. If I’m out, I get fried chicken as a late-night snack at the Blue Ribbon [in the East Village], sometimes with work colleagues or with a girl. By Mark Maurer PHOTOGRAPH OF Sean Ludwick FOR THE REAL DEAL BY Briana E. Heard

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Architecture Review

Ja m e s G a r d n e r

Slab and drab in Dumbo

Two Trees’ 60 Water Street in Brooklyn is complex without being interesting

t a time when every developer, it would seem, is reaching for the stars (or at least for the starchitects in his Rolodex), it is somewhat reassuring that the people at Two Trees have taken a decidedly different approach at the development formerly known as Dock Street Dumbo, now rechristened 60 Water Street. Which is not to say that we should take comfort in what they are building: Rather, they seem to be channeling the anonymous and anodyne four-square white-brick mediocrity of 50 years ago. The present project consists of two fairly low-lying and interconnected slabs that make not the slightest effort to prepossess the viewer. There is also a commercial area that is integrated with both. Taken together, what these structures deliver is pure real estate, pure development: a roof over one’s head, a valuable location, marketable views and a few amenities … but absolutely nothing in the way of architecture. This is by no means to be confused with the spare, minimalist architecture that has gained a certain following over the past few years. It is, rather, the programmatic desertion of any artistic ambition or any architectural commitment to the neighborhood. As a critic, I am constantly beset by renderings of buildings that may one day become a reality. Half the art of these renderings is to take an essentially mediocre concept and — through perspective and composition, through vivid colors and meteorological enhancements (the late afternoon sun slanted across the façade, for instance) — to infuse with drama and beauty a building that, more often than not, is entirely bereft of both. It is rare indeed that renderings are published that appear to be entirely unadorned. And yet, I do not believe that I have ever seen renderings as drab as the two that have been released relative to the 60 Water Street development in Brooklyn. In substance, these renderings appear to be nearly identical. The atmospherics of an earlier version, released in 2008, seemed to present an overcast, menacing, even Gothic air of foreboding, which imparted to the generally modernist vocabulary of the building in question all the charm of Albanian public housing under Enver Hoxha, the last of the Stalinists. The more recent rendering is a slight improvement: The sun has come out, humans can be seen in proximity to the site, and there are even trees in the street, suggesting that the development is not entirely incompatible with life. Now one might indeed think of living in this development, which effectively provides shelter and is located in a newly desirable section of the city, not far from the East River and the Brooklyn Bridge. In fact, you can even make out

118 October 2014 www.TheRealDeal.com

the reflection of the Brooklyn Bridge in the glass curtain wall that clads the building in the rendering. But whatever charms the neighborhood might possess, it will not be found in the architecture itself. The construction of 60 Water Street (which is scheduled to contain 290 units, of which 58 will be affordable housing) is now proceeding apace. While the glazing of the façade is hardly complete, already we can gain a decent idea of what the finished structure will be. Unfortunately, it fully bears out, rath-

er, secondary slab conceived in the same style, with a slight inflection in the two terminal bays, which are a few stories lower than the rest of the structure. Finally, filling out the square footprint of the development is a commercial center that appears to be largely of a piece with the rest of 60 Water Street, except for a slightly irregular treatment of the ground floor, which rises and descends in a shape that vaguely resembles a boomerang; and yet, one suspects that its entirely gratuitous nod to Deconstructivism will do little or nothing for the devel-

appears, in a rendering, to be cracking up before our very eyes. Ismael Leyva, I suspect, was the driving force behind this latest design as it is being built, since his work of late — as can be seen in his designs for 155 West Street in Brooklyn, One Carnegie Hill and 85 Flatbush Avenue — combines a low-key mainstream modernism with a few of the bells and whistles of Deconstructivism. The rendering of 155 West Street, for instance, is essentially a mainstream modernist affair, with the slight irregularities in the windows and a slight bulge around the middle,

Architect Ismael Leyva

The 17-story residential development at 60 Water Street in Dumbo also includes a retail component, in the foreground.

er than giving the lie to, the renderings. The overall structure, with its several interconnected parts, is fairly complex, but it is hardly an interesting complexity, such as has been sought in recent years by architects of a Deconstructivist vein, like that of Cook + Fox’s One Bryant Park, whose faceted and torqued façade creates a striking profile from a number of angles. The dominant component of 60 Water Street is a slab, 17 stories tall, that, if the renderings are to be believed, promises to be clad in a curtain wall that will permit us to see into the underlying structure of the building. This appears to be divided into something like bays. There is no inflection or qualification of the fundamental form, other than the two-tiered mechanical core on the roof. Perpendicular to the building is a low-

opment itself or for the neighborhood in which it is rising. And although one hesitates to pass judgment on the material quality of a building that is still under construction, it certainly looks to be the beneficiary of value engineering, of a certain level of adequacy that one fears will hardly improve the overall effect of the project. The general dreariness of 60 Water Street is especially surprising, given the architectural firms behind it, LEESER Architecture and Ismael Leyva, who are usually capable of more interesting fare. LEESER Architecture tends to work in the Deconstructivist mode, with which it concocts such curious forms as the Helix Hotel project, conceived for Abu Dhabi, and the Rockwell Hotel Tower, intended for Brooklyn. As regards the latter, it

that one associates with Deconstructivism. But however committed he and LEESER Architecture may or may not be to the cause of Deconstructivist architecture, none of its real or assumed rebellion is anywhere to be seen at 60 Water Street. The main selling point of the development will be its proximity to the Brooklyn Bridge and to the picturesque warehouses that abound in that part of the borough. And in supplying that commodity, it will doubtlessly satisfy a large number of its occupants. But the architectural style of the development (not to mention the tedious use to which that style has been put) more or less insures that it will not fit in famously with its new environment, whose appeal, if anything, will be weakened by this massive new arrival. TRD

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Q&A

Can Harlem’s rise roar on? Prices are up, but the question remains: How much growth can the area — popular since the mid-aughts — sustain?

By Brendan O’Connor ow much more can Harlem real estate rise? That’s the key question concerning area developers and investors who have been flocking to Harlem since the mid-aughts, during both the last real estate boom and again during the current development craze. This month The Real Deal talked to residential brokers who specialize in Harlem to get a sense of what kind of growth is really left in a neighborhood that has become a destination for more affordable condos and brownstones (where more exist than in Manhattan). Our sources insist prices have not yet peaked and that there’s plenty of room left for growth. They also argue that as long as residential real estate in Harlem can be had for a discount, prices will continue their upward trajectory. “As long as Harlem is viewed as a bargain, meaning prices are at least 25 percent or more below a similar unit south of 110th Street, Harlem condo prices will continue to rise,” said Willie Suggs, owner of Willie Kathryn Suggs Licensed Real Estate Brokers. Robb Pair, president of Harlem Lofts Inc., echoed that point. “You can come to Harlem and get a three-bedroom apartment for less than a

Willie Suggs

owner, Willie Kathryn Suggs Licensed Real Estate Brokers How much is sales activity in Harlem up or down by compared to last year? This year our office is twice as active as it was last year. The problem is inventory. There are not enough units to sell at all price points. There are some income-restricted units and ultra-highend condos, but the mid-price range pickings are slim for condos and townhomes. TRD recently reported that the price per square foot for residential properties in West Harlem has jumped 17 percent since 2007. Do you expect condo prices to continue rising in Harlem, or is there concern that they may have peaked? Condo prices have not peaked. There is a segment of homebuyers who want the convenience and security of a staff that comes with high-end condo buildings, even if it means paying as much as twice per square foot [more than they would] for a private townhome. As long as Harlem is viewed as a “bargain,” meaning prices are at least 25 percent or more below a similar unit south of 110th Street, Harlem condo prices will continue to rise. We will never match Downtown prices because we are simply not Downtown. What can you tell us about the differences between East Harlem, Central Harlem and West Harlem when it comes to prices and activity? Which of those areas is performing best and worst? The best performing part of Harlem for the past five or six years is the area of Central Harlem from 110th to 125th streets, 122 October 2014 www.TheRealDeal.com

from Fifth Avenue to Morningside Park. This encompasses the neighborhoods of Central Park North, Manhattanville, and Mt. Morris Park. Buyers love the treelined blocks of row houses off the parks and the easy access to the rest of the city. You can also dine out every night for a month and still have more places to go. New [restaurants] seem to open every week. The opening of Whole Foods at 125th and Lenox next year is the last remaining piece the neighborhood needs. West Harlem, which includes Hamilton Heights, has equally beautiful housing stock, three major parks — Riverside, Riverbank and St. Nicholas — but it’s still building its stock of dining establishments and shopping options. Plus it’s another stop or two on the subway. East Harlem is popular with people who already live and/or work on the East Side, [but] while the housing stock is improving, it’s seen as too isolated for those who do not live or work that far east. The demand for townhouses is up citywide, and many people who are getting priced out of the Upper West Side are moving to Harlem. What’s going on with the Harlem townhouse market? Townhouse prices in Harlem have rebounded. There are numerous examples of townhouses in need of substantial work closing well over $1 million. Paying $1 million for a four-story row house in need of total renovation was once unheard of — but not anymore. Two 16-footwide homes on West 113th Street each closed at $1.95 million this past January. Two others on West 141st in the Hamilton Heights Historic District closed at $2.4 million. Buyers we talk to are hoping to spend no more than $2.5 million. [But] everyone is waiting for the first home to close for over $4 million; the $3 million barrier fell in 2006.

one-bedroom on the Upper East Side or Upper West Side,” Pair said. And some predict that Harlem will experience an even greater boost when Brooklyn, where prices are quickly catching up to Manhattan, is no longer the “discount option.” The neighborhood is, of course, already a magnet for hot restaurants like Red Rooster. And former Time Warner CEO Richard Parsons has now revived the bebop and jazz mecca known as Minton’s Playhouse, as well as its accompanying restaurant, the Cecil. Plus, brokers say more restaurants and small shops, which form the backbone of Harlem, are opening weekly. That’s in addition to the Whole Foods that’s slated to open on 125th Street and Lenox Avenue next year and Columbia University’s massive expansion, which is having a spillover effect on the entire area. Nonetheless, some areas of Harlem are doing better than others on the real estate front. And brokers say that like much of the city, Harlem’s main challenge is its lack of inventory. For more on which areas of Harlem are performing best and worst, which projects insiders are watching and what other challenges the area is facing, we turn to our panel of experts. Which new groups are moving into Harlem these days? Harlem has always had the student crowd, thanks to Columbia University and City College. But the neighborhood is attracting even more students now because on-campus housing has jumped so much in price; it’s cheaper for students to find a roommate and rent off campus. Harlem is [also] attracting more new city residents, the foreign born, and increasingly older people who are retiring. How long are residential condos staying on the market in Harlem these days, and how does that compare to the last few years? Unless there is a special circumstance, such as a short sale or foreclosure, residential condos are on and off the market in less than 90 days. There is a spate of new residential projects underway in Harlem. Which are you most excited about and which do you expect to be market game changers? The East River Plaza development’s plans to add residential units will propel East Harlem where it needs to go. The Sugar Cube on West 155th [an affordable housing project being built by Broadway Housing Communities and designed by architect David Adjaye] is especially welcome. That’s the northern border of Harlem, which was always the stepchild of West Harlem. The addition of sorely needed affordable residential housing, combined with art galleries, is a godsend for the area. Some people have pointed to the under-construction Harlem Whole Foods as a key to the changing neighborhood, but earlier this year it seemed that Harlem retail was stalling. What planned retail do you think could have the biggest impact?

The Whole Foods cannot open soon enough. One new, large business such as Whole Foods will bring in more foot traffic for other existing stores and attract new ones. What do you think the neighborhood still needs in terms of drawing residents from south of 96th Street to the area? Different parts of Harlem need different things. For example, West Harlem, particularly Hamilton Heights, could use its own version of restaurant row. Hamilton Heights also doesn’t have a retail corridor comparable to West 125th where, come 2015, there will be an H&M, a Marshall’s and a Burlington Coat Factory. What has been the impact on the residential market from the big project being built by Columbia University? The Columbia expansion packed a wallop in West Harlem. We started to notice it as far back as 2010. The prices of townhouses shot up on the streets off Broadway. New commercial leases also take the Columbia effect into account.

Robb Pair

president, Harlem Lofts Inc. Do you expect Harlem condo prices to continue rising, or is there concern that they may have peaked? Prices have not peaked in Harlem — unless the entire real estate market turns because of some catastrophic event or an economic downturn. What’s going on with rental rates in Harlem? By how much are they up or down compared to the recent past? www.TheRealDeal.com October 2014 121

Q&A Harlem saw Manhattan’s largest yearover-year increase in average rent as of June 30. The average studio is now $1,500 a month — up from $1,000 at the lows. Average one-bedrooms just crossed the $2,000 threshold for the first time since we started recording rental data — up from around $1,500 at the lows. Average three-bedrooms are now over $3,000 a month. What do you think the neighborhood still needs in terms of drawing residents from south of 96th Street? The neighborhood is here for anyone that understands real estate as an investment opportunity. Speaking as a 15-year Harlem resident, I’m fine if the Upper West side community stays put. I don’t support Harlem becoming an extension of the Upper West Side, that’s just boring in my opinion. There’s been a lot of focus on how foreign buyers are driving the residential market in New York. Are foreign buyers looking at Harlem? Foreign buyers are 70 percent of our client base. They have the money and are excited about what Harlem offers. What are the most surprising trends you see in the Harlem residential market today? Live bands in multiple locations seven nights a week, multiple sushi and Indian restaurants, cool sidewalk cafes and coffee shops and high-tech workspace incubators. Harlem is a destination now, and not just for the Red Apple Bus Tours.

Sarah Saltzberg

principal broker, Bohemia Realty Group What’s going on with the multi-family market in Harlem? By how much are prices up or down compared to the recent past? Multi-family properties are probably the most sought after type of property right now above 110th Street. I haven’t seen almost anything under $1 million in probably a year, even [for properties] in distress. The most attractive types of deals for developers, or even end-users, are typically two- to four-family homes with a certificate of occupancy that need a gut renovation. These can be renovated and turned around fairly quickly. By how much are rent prices in Harlem up or down compared to the recent past? Rental prices have continued to climb, which is part of the reason many people are looking to buy condos — it is cheaper in many instances. South Harlem and Washington Heights have both climbed significantly in the past two years. … Clients love the prewar feel with the perks of new development amenities. 122 October 2014 www.TheRealDeal.com

What planned retail in the area are you most excited about, when considering the real estate impact it could have? The Whole Foods will certainly be a game changer. That said, I’m most excited to see the development of small businesses. Several agents in my office, through our contacts with landlords, have opened several coffee shops throughout Harlem. One of the incredible things about retail above 110th Street is that many small business owners are invested personally in these areas and live nearby.

Fabienne Lecole

licensed associate broker, the Corcoran Group By how much is sales activity up or down compared to a year ago, two years ago, and during the last boom and the bust? Sales activity in Harlem is 20 percent higher than last year, 25 percent higher than two years ago and 35 percent higher than four years ago. What’s going on with the townhouse market? By how much are prices up or down compared to the recent past? The price of a townhouse in Central Harlem and West Harlem is up 35 percent compared to 2009. There is no inventory on prime blocks, very few renovated houses, and when one comes to market, it sells extremely fast. What is residential inventory like in Harlem in general? There’s very little quality inventory. It’s definitely down compared to last year and recent years in general. How long are condos staying on the market in Harlem, and how does that compare to the last few years? If well priced, 60 days at most, very often less than seven days. Are you seeing any impact on the residential market from the Columbia University expansion? How do you expect it to influence the surrounding area? It’s had a huge impact on the residential market, as many students and professors look to be close to the university. When you are in Central Harlem, you are a 10-minute walk from the actual college though Morningside Park.

Sandy Wilson

executive director of sales, Halstead Property Harlem Office By how much is sales activity up or down compared to the recent past? Sales are definitely up from the first two quarters of 2014, but lower than the peak years of 2006 and 2007. Of

course, that’s driven by the low inventory. The absorption rate in August 2014 was 3.3 percent as opposed to 4.6 percent in August 2013. What price ranges are seeing the most activity for residential sales, and how does that compare to the recent past? We are seeing the most activity between $700,000 and $900,000 and mostly for one- to two-bedroom apartments. Multi-family buildings in Harlem have been trading rapidly in the past few months, and providing strong returns for the investors. Do you expect more conversions of rent-regulated buildings? Not necessarily rent-regulated buildings, but what we are seeing are investors purchasing townhouses and converting them to condos or rentals. These investors are also increasingly foreign buyers who understand New York real estate will hold and increase in value. Where are those buyers coming from? From all over. Recently we have had foreign buyers from Italy, England, Israel, Germany and Argentina. There is a spate of residential projects underway throughout Harlem. Which upcoming projects are you watching? In Morningside Heights, 99 Morningside is a very exciting project. The plan is to have an 11-story building with 22 units. Also, at 92 Morningside, a 48-unit rental building is being considered. And of course, at the site of the old BP Station at 110th Street and Frederick Douglass, a 12-story condo building is planned. What planned retail in the area are you most excited about? The Columbia University Project on 125th Street is progressing at a very fast pace. The new hotel and rental building at the site of the old Victoria Movie Theatre and the condo development I mentioned, on 110th Street and Frederick Douglas Boulevard, just to name a few. What new cultural ventures do you think are making an impact in Harlem now? Harlem has always had a rich cultural scene. But [former Time Warner CEO] Richard Parsons has brought jazz back with the renovation of Minton’s Playhouse, and ... trendy restaurant Cecil.

Jeffrey Schleider

managing director, Miron Properties By how much is sales activity in Harlem up or down compared to the recent past? At the Gloria NYC, we moved 16 apartments in 10 days at $50 per square foot.

A year ago, the market wouldn’t even have borne those prices. Harlem doesn’t work in isolation. It’s all a function of what prime Manhattan real estate is trading for. Do you expect prices to continue rising in Harlem, or is there concern that they may have peaked? Market growth can’t hold forever. There’s going to be a correction. It’ll either flatline or drop. I can’t predict which. But the fundamentals are much stronger now than they were in the last boom. In the last boom, there was a lot of speculation. These neighborhoods, up the East Side and especially the West Side, have changed. Many long-time New Yorkers would be shocked to see the types of establishments that have opened up here. What can you tell us about the difference between East, Central and West Harlem when it comes to prices and activity? There is a part of East Harlem that’s basically an extension of the Upper East Side, where you’re seeing premium numbers on properties along Central Park, and even going up a little further. East Harlem proper is getting there, just a little slower. West Harlem, west of Broadway, has been nice for a very long time. But Central Harlem has hit its stride in a way that it never really has before. People have been moving into the neighborhood, and neighborhood services have finally hit. Red Rooster was a big part of that. In the previous boom, people were paying premium prices for a neighborhood that hadn’t gotten there. Now it’s gotten there. Who is moving into Harlem’s higher-end residential buildings these days? When Brooklyn is no longer the discount option, we’re gonna have a lot of people moving to Harlem. Even now, people paying the premiums are not people living in Harlem but people moving from elsewhere to Harlem. … We’re talking about a small sample size here, but demand has outpaced supply for new product. We’re working with developers who have had buildings there for 20 years; now it pays to renovate. Some people have pointed to Whole Foods as a key to the changing neighborhood. What planned area retail do you think could have a big impact? Equally important is the whole variety of indie restaurants and retailers that cater to the new audience. What are the biggest challenges to marketing residential properties in Harlem? I don’t have enough apartments. TRD www.TheRealDeal.com October 2014 123

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REPORT

Priciest listing in the U.S. A massive Broward County mansion modeled after the Palace of Versailles is believed to be the most expensive active residential listing in the nation. The 60,500-square-foot, 11-bedroom house in Hillsboro Beach is on the market for a staggering $139 million. Once completed, the 935 Hillsboro Mile home will have 17 bathrooms, a 492-foot private dock that can accommodate a 185-foot

mega-yacht and an underground garage with more than 30 parking spaces. The mansion could be fin-

26-foot entrance fountain and a $2 million marble staircase. An IMAX home theater with seating

935 Hillsboro Mile

edge pool with a 12-foot cascading waterfall. Joseph Leone and Denio Madera Design collaborated on the home’s design. Coldwell Banker Residential Real Estate has the listing.

Elliman’s Miami Push ished by the end of 2015. Other features include a 13foot, 22-carat gold-leaf gate, a

for 18 people is being built inside the house. The property will also have a 4,500-square-foot infinity

New York real estate giant Douglas Elliman is boosting its South Florida agent roster and ramping up its preconstruction luxury condo sales activity in the region.

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A decade into its Miami expansion, the brokerage hired about 300 new brokers in the past year, increasing its South Florida broker pool to 430. It now has eight offices in Miami-Dade, Broward and Palm Beach counties. The firm’s national network reached 5,000 brokers in July. Longtime Coldwell Banker broker Tom Bryan was recently tapped as managing broker for Elliman’s Miami operations. Some of the major preconstruction assignments the firm picked up include Faena House in Miami, which is now sold out, and Terra Group and the Related Group’s Park Grove in Coconut Grove. Elliman is also exclusively marketing Elliman’s Don PeeTom Bryan bles’ Bath Club Estates in Miami Beach. Peebles hopes to sell a triplex penthouse there for $50 million.

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A Maryland hotel investor plunked down $460 million for Hollywood’s Westin Diplomat Resort & Spa in one of the most expensive real estate deals in South Florida history. Thayer Lodging Group acquired the 1,000-room oceanfront resort and spent another $75.5 million on adjacent land and a golf course. The company plans to invest an additional $100 million on improvements to the existing resort, which is The Westin Diplomat Resort

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being rebranded the Diplomat Resort & Spa under the Hilton flag Curio. Hotel market insiders said Thayer’s purchase price is unprecedented for the Miami hotel sector. Theme-park-hub Orlando has had multiple resort sales exceeding $700 million. The seller was United Association, a large union of plumbers and pipe fitters. The union acquired the site in 1997 and replaced the original structure in 2000. By Eric Kalis

Commercial and

NATIONAL MARKET

Snapshots of real estate residential real estate news briefs news from from around the U.S. around the U.S.

REPORT

After years of losing residents and workers, Downtown Kansas City is drawing Millennials.

Paradise Valley, Ariz. Retired Major League Baseball pitcher Randy “The Big Unit” Johnson and his wife, Lisa, listed their home in Paradise Valley for $25 million. The three-story, 25,000-squarefoot home sits on five acres and includes a separate, 1,746-square-foot fitness facility. The property also includes a three-car display garage and an eight-car motor pool.

KANSAS CITY

oung people are flocking to Downtown Kansas City. Since 2000, the Missouri city’s Downtown population has increased by 50 percent, to 20,000. Developers added 6,130 apartments to the area between 2000 and 2012, and residential occupancy is above 95 percent. Several more multimillion-dollar mixed-use residential towers are in the works, both office conversions and new

SEATTLE Micro-apartments are a growing draw in cities like Seattle.

Seattle residents are pushing for stricter regulation of micro-apartments, a type of housing that is growing more popular nationwide. The City Council is considering a proposal that would set clearer limits on where such projects could be built and require a 220-squarefoot average size for most new units. Pro-development advocates warn the plan would undermine a real estate model that suits the city: The Seattle Times reported that researchers found that, by 2011, singles accounted for more than 40 percent of all households in the city, and there were more single-person households than studio or one-bedroom apartments. Developers, who have completed 22 micro-apartment projects since 2010 and have at least 46 in the works, until now have been building units of around 100 square feet. Proposal opponents say that the rules will lead developers to scrap projects for micro-apartments and build larger units with higher rents. Chinese developer Landsea Group is starting its U.S. efforts with a development in Southern California.

SIMI VALLEY, CALIFORNIA Chinese developer Landsea Group is planning to in128 October 2014 www.TheRealDeal.com

development. The question now is whether business will follow youth into the area, which lost 17,800 workers between 2000 and 2011. While office vacancy rates in the area hover around 23 percent, the New York Times reported that a growing number of creative-industry businesses are gravitating back to the Downtown area from competing submarkets, in part to tap Millennial workers.

vest $1 billion in the U.S. housing market this year. The Nanjing-based company will start with three projects: a 187-unit development of mostly single-family homes in Simi Valley, north of Los Angeles; a townhouse development in Dublin, California, a San Francisco suburb, and a condo building in Weehawken, New Jersey, across the Hudson River from Manhattan. Landsea builds around 12,000 houses per year in mainland China, and also develops in Hong Kong and Germany. It is one of the first Chinese developers to move into the single-family home market. Another, a subsidiary of Wuhan company Fuxing Huiyu Real Estate Co. has launched a few projects along the West Coast, including condos in Orange County, California, to establish a base in the U.S., following in the footsteps of other Chinese-owned companies that have a foothold in the L.A. area. Developers aim to draw city dwellers to offices along transit lines.

Hollywood Hills Mer yl Streep sold her 3,700-square-foot Hollywood Hills home to suspended New York Yankees third baseman Alex Rodriguez for $4.8 million. Streep purchased the four-bedroom, four-bath home, which features a two-story living room with a floor-to-ceiling stone wall and fireplace, early last year for $4.5 million.

Los Angeles Katie Holmes moved back to Hollywood with daughter Suri Cruise. The actress paid $3.75 million for a 6,200-squarefoot, six-bedroom, seven-bathroom home in a gated community. According to TMZ, a confidentiality agreement around the deal penalized anyone who violated it with a $1 million fee.

Minnesota PHILADELPHIA Four new office buildings could represent the revitalization of Conshohocken as a hub for office workers. Developers hope the old steel town, 15 miles northwest of central Philadelphia, will replace the similarly situated Lower Merion Township, which has run out of room. The proposed buildings, totaling 1.25 million square feet, would house 5,000 new workers in the town of 7,800. Commercial buildings have been gradually added in recent years, but the planned additions reflect a desire by companies to attract employees in their mid-20s to mid-30s who do not want a suburban lifestyle. All of the proposed developments are a short walk from two train stations about 35 minutes away from the center of Philadelphia. Compiled by Brendan O’Connor

Reigning WWE world heavyweight champion Brock Lesnar sold his 43-acre estate outside of Minneapolis for $750,000. The property contains a 3,247-square-foot, four-bedroom, three-and-a-halfbathroom home with a deck as well as two barns and a pond.

ON THE MARKET Blackstone set to sell 1095 Sixth for $2B Blackstone Group is gearing up to sell the Verizon building at 1095 Sixth Avenue, and the office tower may fetch one of the highest prices ever paid for a U.S. skyscraper. Blackstone tapped Eastdil Secured to market the 41-story, 1.2 million-square-foot property, Bloomberg News reported. The tower could fetch as much as $2.25 billion. Blackstone picked 1095 Sixth Avenue up the tower in 2007 as part of its $39 billion acquisition of Sam Zell’s Equity Office Properties Trust, which until that point was the largest office landlord in the U.S. The building, now known as 3 Bryant Park, counts MetLife among its tenants. Verizon Communications, which once occupied all 41 stories, is returning to part of the building in September.

Eight-garage portfolio could fetch $250M Real estate insiders say a package of eight family-owned parking garages in prime Manhattan and Brooklyn that recently hit the market could net as much as $250 million because of their redevelopment potential. The buildings are just a portion of the large portfolio owned by the Wolf family and managed by their company, Rapid Park. The largest site is in Lower Manhattan, at 25-27 Beekman Street, and has 84,604 square feet of development rights. It is adjacent to a development site for sale by another seller, creating the

Commercial properties recently placed on the market

potential for a buyer to grab 157,122 square feet of development rights. The other properties are in Lower Manhattan, Murray Hill, NoMad, Midtown West, the Upper West Side, Brooklyn Heights and Prospect Park. A Massey Knakal team of Chairman Robert Knakal, Jonathan Hageman and Elysa Berlin has the exclusive listing.

JPMorgan aims to unload UES tower JPMorgan is looking to sell a recently renovated, 223-unit Upper East Side rental tower that industry experts say could fetch north of $200 million. The bank’s investment management arm is searching for a buyer for the Wimbledon, a 28-story apartment building at 200 East 82nd Street it purchased in 2008 for $150.4 million. Darcy Stacom and Paul Liebowitz at commercial brokerage CBRE have the listing. The tower was constructed in 1980, and J.P. Morgan recent200 East 82nd Street ly invested $15 million to renovate the building’s corridors and apartments. Citibank has a 6,200-square-foot retail lease running through 2020.

Urban American lists Brooklyn, SI properties Urban American Management, one of the city’s leading private-equity-backed real estate investment firms during the mid-2000s boom, is listing for sale a mega Brooklyn-focused apartment portfolio likely to trade

for more than $200 million. The 14 buildings in Brooklyn and one garden apartment complex in Staten Island have 1,434 apartments total, with an average monthly rent of 2425 Nostrand Avenue just over $1,200 for each unit, documents reviewed by The Real Deal show. The package of buildings, once owned by the Lefrak dynasty, has an estimated net operating income of just over $8 million, on gross income of about $21 million, the papers reveal. Urban American tapped Eastern Consolidated’s CEO Peter Hauspurg, Executive Managing Director David Schechtman and Director Marion Jones, to market the portfolio, which includes 2425 Nostrand Avenue in Midwood and 2862 Hylan Boulevard in Staten Island.

13-story Bed-Stuy building for sale Gaia Real Estate is looking to sell the tallest privately owned property in Bedford-Stuyvesant. Ofer Cohen and Matt Cosentino of Brooklyn commercial brokerage TerraCRG are marketing the 27,000-square-foot building at 11 Spencer Court. The 13-story, 135-foot-tall apartment rental building is expected to fetch $13 million. Excluding public housing projects in Bed-Stuy, it is the neighborhood’s tallest. Spencer Court Holdings developed the property as a condominium building, then converted it to rentals. The property holds 23 apartments. Compiled by Linden Lim

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Deal Sheet summary

The Deal Sheet, on pages 134 to 146, covers transactions from 8/11/14 through 9/10/14. Please submit future deals to deals@therealdeal.com.

Overview Property sales

Financing

Leases (# of deals)

Leases (square feet)

Deals

Transactions

Office

593,156

Dollars

$2,176,170,000

Aggregate value

$1,240,900,000

Retail

111,185

Total

101

Total

704,341

Sales

By dollar volume (in millions)

Multi-family

Office Retail

Development site Hotel Industrial

Multi-family

Mixed-use

Retail Development site

0 7.2

Mixed-use

5 .1 07 $6

Industrial

$1.60 $16.65

.9 1 6 8

Hotel

Office

$24 6.22

$125.40

By type

Office leases Office leases by industry

Office leases sf by industry

Industry

Number of deals

Advertising & Marketing

Industry

Top tenant reps for office leasing by sf Leases square feet

Advertising & Marketing

47,300

Broker

Leases square feet

Savills Studley 102,975

Fashion* 8

Fashion* 56,811

Newmark Grubb Knight Frank

68,286

Financial 3

Financial 47,099

CBRE Group 43,865

Health & Beauty 1

Health & Beauty 5,500

JLL 26,286

Jewelry 3

Jewelry 27,341

Cassidy Turley 24,562

Legal 4

Legal 243,316

Metropolitan Realty Group

Media 1

Media 26,286

Vicus Partners 12,455

Other 15

Other 28,784

EVO Real Estate Group

11,205

Real Estate 1

Real Estate 10,222

Adams & Co.

7,319

Technology 10

Technology 100,497

Savitt Partners 7,058

13,586

Retail leases

Other

EVO Real Estate Group

7,750

Augenbaum Realty Corp.

6,175

Discount

NY Citi Group Realty

3,050

Rutenberg Realty 2,963 Adams & Co.

2,200

STL Realty 2,100

Drugstore

Health & Beauty 1 2

Other

Discount Drugstore

Fashion

Food & Beverage

13,830

Health & Beauty

Kassin Sabbagh Realty 21,570

RKF 3,680

Retail leases sf by industry 00

17,830

, 23

,89

Winick Realty 31,749

Retail leases by industry

,63

Leases square feet

Top tenant reps for retail leasing by sf Broker

In Line Realty 2,000

(*includes showroom space)

www.www.TheRealDeal.com October 2014 133

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 8/11/14 to 9/10/14. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

200 Park Ave

180,000

Paul Hastings LLP / n/a

n/a / n/a

The law firm signed a lease at the MetLife Building. The tenant is relocating from 75 East 55th Street and scaling down from its 240,000-square-foot space there.

1251 Sixth Ave

42,000

Davis Wright Tremaine / D. Goldstein, G. Marans, Savills Studley

Mitsui Fudosan / D. Falk, P. Shimkin, NGKF

The law firm signed a 10-year lease for the entire 21st floor. The tenant is relocating from 1633 Broadway.

99 Park Ave

31,615

Numerix / n/a

Collective / R. Bernstein, D. Thompson, H. Krausman, Cassidy Turley

The risk management software company signed a sublease on the fifth floor. The building is owned by Eastgate Realty.

1325 Sixth Ave

30,582

KLS Professional Advisors Group / J. Genovesi, J. Harte, Savills Studley

Paramount Group / Frank Doyle, JLL

The finance firm signed a 16-year lease. The tenant is relocating from a smaller, 19,500-square-foot space at 111 Fifth Avenue.

1325 Sixth Ave

29,700

Sam Edelman / L. Korman, B. Waterman, NGKF

Paramount Group / D. Kollar, D. Kleiner, D. Neye, F. Doyle, NGKF; H. Kahn, P. Brindley, Paramount Group

The shoe brand signed a lease on the 21st and 34th floors. The reported asking rent was $85 per square foot. The tenant is relocating from a 12,000-squarefoot space at 130 West 57th Street.

350 Fifth Ave (Empire State Building)

26,286

BrightRoll Inc. / D. van der Heyden, P. Ferraro, JLL

Empire State Realty Trust / F. Posniak, ESRT; W. Cohen, J. Tootell, S. Ursini, NGKF

The media company signed a new lease.

95 Morton St

25,000

VSA Partners / Brian Fennelly, NGKF

Brickman Properties / Represented in-house

The branding firm signed a 10-year lease on the seventh floor.

101 Sixth Ave

23,458

DigitalOcean Inc. / M. Kaufman, Kaufman Organization; Y. Foster, Yancy Group New York

Edward J. Minskoff Equities / P. Glickman, M. Konsker, J. Fanuzzi, P. Riguardi, JLL

The virtual server provider signed a 10-year lease for the entire 11th floor and part of the 10th floor.

115 Broadway

22,300

Gyro / Keith Ellis, Savills Studley

Capital Properties / A. Foster, M. Rizzo, S. Spillane, B. Gerla, CBRE

The advertising agency signed a lease on the 14th floor. The tenant is relocating from 31 West 27th Street.

919 Third Ave

19,136

Ballard Spahr LLP / R. Stillman, Z. Weil, CBRE

Jenner & Block LLP / J. Gorman, L. Miller, CBRE

The law firm signed a three-year, three-month sublease on the 37th floor.

485 Madison Ave

14,101

Janover LLC / H. Krausman, S. Braun, D. Thompson, Cassidy Turley

Jack Resnick & Sons / n/a

The accounting firm signed a new lease on the ninth floor.

330 Fifth Ave

13,586

Verragio Ltd. / D. Hassett, NGKF; J. Herman, Metropolitan Realty Group

Shulsky Properties / Alan Bonett, Adams & Co.

The engagement and wedding ring manufacturer signed a lease. The reported asking rent was $48 per square foot.

330 Seventh Ave

12,500

BetterCloud / A. Smolyansky, R. Shah, CBRE

Super Nova 330 LLC / M. Dreizen, A. Toro, NGKF

The tech company signed a long-term lease for the entire 14th floor. The tenant is relocating from 299 Broadway.

529 Fifth Ave

12,455

Sasha Primak / Andrew Stein, Vicus Partners

Leo Schachter Diamonds / Leah Rubin, Town

The jewelry manufacturer signed a 15-year lease for the full 15th-floor space.

1 World Trade Center

10,222

Cushman & Wakefield / Represented in-house

Durst Organization; Port Authority of New York & New Jersey / Represented in-house

The commercial real estate brokerage signed a 10-year lease on the 45th floor.

350 Fifth Ave (Empire State Building)

8,093

Krux Digital / Stephan Steiner, Savills Studley

Empire State Realty Trust / F. Posniak, ESRT; W. Cohen, J. Tootell, S. Ursini, NGKF

The tech firm signed an expansion lease.

10 West 33rd St

7,058

BeMine NYC / Savitt Partners

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

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

8 West 40th St

6,667

NetSuite Inc. / J. Schindler, K. Waldman, A. Schreier, M. Etlinger, Cassidy Turley

Jack Resnick & Sons / n/a

The business software company signed a new lease on the sixth floor.

212 East 57th St

5,500

Halevy Life / Julia Maksimova, Keller Williams NYC

Malachite Group / n/a

The training studio signed a lease.

49 West 45th St

5,100

Groupe Zannier / S. Anderson, B. Weinstabel, P. Walker, CBRE

Famurb Co. / Jordan Gosin, NGKF

The childrenâ&#x20AC;&#x2122;s fashion company signed a 10-year lease for the entire 10th floor. The tenant is relocating from 131 West 33rd Street.

215 West 40th St

5,000

Product Development International LLC / Barry Bernstein, EVO Real Estate

n/a / n/a

The fashion company signed a lease for the entire eighth floor.

31-00 47th Ave (Queens)

5,000

Lyft / n/a

Jamestown / n/a

The ride-sharing app signed a two-year lease on the fourth floor of the Falchi Building.

One Grand Central Pl

4,886

CIBT Inc. / Ken Rudeman, Studley

Empire State Realty Trust / F. Posniak, W. Cohen, J. Tootell, J. Christiano, NGKF

The retail company leased new office space.

7 Times Square Tower

4,226

TravelClick Inc. / B. Needleman, J. Gorman, CBRE

Boston Properties / C. Harle, A. Golod, P. Turchin, CBRE

The tech company signed a four-year expansion lease on the 35th floor.

561 Seventh Ave

3,944

Beyond the Rack / P. Newman, D. Handler, Handler Real Estate

Handler Real Estate / Represented in-house

The online retailer signed a lease for the entire third floor.

One Grand Central Pl

3,794

Japan National Tourism Organization / J. Miyake, M. Robertson, Cassidy Turley

Empire State Realty Trust / F. Posniak, W. Cohen, J. Tootell, J. Christiano, NGKF

The government entity leased new space.

1350 Broadway

3,694

DynTek Inc. / Andrew Ross, C&W

Empire State Realty Trust / K. Cody, ESRT; W. Cohen, N. Rubin, A. Weisz, NGKF

The tech firm signed a new lease.

242 West 38th St

3,400

Rainbow Style Inc. / n/a

n/a / D. Moskowitz, M. Syskrot, EVO Real Estate

The apparel firm signed a lease for the entire 10th floor.

152 Madison Ave

2,920

NYBX LLC / Alan Rosinsky, Metro Manhattan Office Space

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

The trading company signed a lease for the entire 21st floor.

10 Rockefeller Plaza

2,903

China Southern Airlines Company Limited / Y. Wang, C. Reetz, CBRE

Tishman Speyer / Robert Weller, Tishman Speyer

The airline signed a five-year lease on the 10th floor.

134 October 2014 www.TheRealDeal.com

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

501 Seventh Ave

2,608

Quinstreet Inc. / Eric Ferriello, Colliers International

Empire State Realty Trust / K. Cody, ESRT; H. Blair, S. Kearns, C&W

The professional services firm signed a new lease.

1400 Broadway

2,600

Jean Touch / Evan Lieberman, EVO Real Estate

AH Schreiber / J. Kilimnick, R. Kluge, CBRE

The fashion firm subleased space. The property is owned by Empire State Realty Trust.

16 West 36th St

2,568

DSJS Inc. / Barry Bernstein, EVO Real Estate

n/a / Barry Bernstein, EVO Real Estate

The apparel firm signed a lease renewal.

One Grand Central Pl

2,416

Cibelli Management LLC / Lauren Davidson, Transwestern

Empire State Realty Trust / F. Posniak, ESRT; W. Cohen, J. Tootell, J. Christiano, NGKF

The financial services firm signed a new lease.

110 West 40th St

2,269

CTC USA Corporation / Brett Maslin, Adams & Co.

One Ten West Fortieth Associates / Brett Maslin, Adams & Co.

The tenant signed a lease renewal. The reported asking rent was $48 per square foot.

40 Broad St

2,180

Lefkowicz & Gottfried LLP / I. Kourtis, V. Soloviov, NY Citi Group Realty

Constructomis LLC / Nathan Katz, CBRE

The law firm signed a 10-year lease.

1123 Broadway

1,891

Powermat Inc. / Brett Maslin, Adams & Co.

Kew Management / Represented inhouse

The tenant signed a new lease. The reported asking rent was $65 per square foot.

1401 Blondell Ave (The Bronx)

1,800

Moâ&#x20AC;&#x2122;s Electrical and General Construction / KZA Realty

Anthony Martello; Rino Monteforte / KZA Realty

The contractor signed a five-year lease.

420 Madison Ave

1,385

Jean Rousseau Inc. / Thibaud Vieuille, City Square Group

Lee Tai Enterprises USA Ltd. / Robert Hadi, ABS Partners

The French leather goods company signed a five-year lease for its first U.S. showroom.

17 State St

1,300

Group HN New York LLC / Thibaud Vieuille, City Square Group

RFR Realty / Ryan Silverman, RFR Realty

The IT consultancy signed a seven-year lease for its first U.S. office.

425 Madison Ave

1,300

Roxx Diamonds / Eric Piazza, DJK Commercial

Silk & Halpern / Stacy Kelly, CBC Alliance

The jewelry manufacturer signed a lease on the 16th floor.

110 West 40th St

1,194

D.A. on Seventh Inc. / Brett Maslin, Adams & Co.

One Ten West Fortieth Associates / Brett Maslin, Adams & Co.

The tenant signed a lease renewal. The reported asking rent was $48 per square foot.

34 West 33rd St

1,065

A Bot of Honey Inc. / Brett Maslin, Adams & Co.

Arcade Building Associates / Brett Maslin, Adams & Co.

The tenant signed a lease renewal. The reported asking rent was $48 per square foot.

286 Grand St

1,000

Bruno Pagacnik / n/a

n/a / Manny Syskrot, EVO Real Estate

The sculptor signed a lease.

22 West 48th St

900

BWT Professional Trading / Brett Maslin, Adams & Co.

22 Rock Plaza LLC / Brett Maslin, Adams & Co.

The tenant signed a new lease. The reported asking rent was $55 per square foot.

152 Madison Ave

537

Tianhai Lace USA / H. Epstein, B. Bernstein, EVO Real Estate

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

The textile manufacturer signed an expansion lease, adding to its existing 1,010 square feet in the building.

34 West 33rd St

517

Madison Man Supply Corporation / Murray Hill Properties

Arcade Building Associates / Brett Maslin, Adams & Co.

The tenant signed a new lease. The reported asking rent was $48 per square foot.

37 West 39th St

500

Laura Fink / Howard Epstein, EVO Real Estate

n/a / Howard Epstein, EVO Real Estate

The psychologist signed a lease.

Retail leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

380 Amsterdam Ave

7,360

Duane Reade / Jeff Winick, Winick Realty

Amstore Limited / Alan Grossman, ARG Realty Advisors

The drugstore signed a lease for a new location.

518 Kings Hwy (Brooklyn)

6,470

Duane Reade / Louis Eisinger, Winick Realty

Kings Highway Realty / n/a

The drugstore signed a lease for a new location.

676 Broadway

6,450

Kiki Riki / B. Bernstein, R. Garipian, S. Hoffman, EVO Real Estate

n/a / I. Schwartzberg, I. Bibi, Laura Pomerantz Real Estate

The clothing retailer signed a lease for its flagship store.

56 Reade St

5,600

Grazin Diner / n/a

n/a / A. Stern, C. Johnson, RKF

The restaurant signed a lease.

494 Greenwich St

5,337

Boris Bidjan Saberi / n/a

n/a / Gregory Kim, Veracity Real Estate

The apparel company leased retail space.

986 Southern Blvd (The Bronx)

4,000

Blazing Deals / Meyer Tawil, Kassin Sabbagh Realty

Garstaff Realty Mgmt / Meyer Tawil, Kassin Sabbagh Realty

The discount retailer signed a 10-year lease. The reported asking rent was $75 per square foot.

167 Avenue A

3,680

Ethos / R. Berkowitz, J. Butwin, Y. Marmarou, RKF

Kushner Companies / R. Berkowitz, A. Stern, R. Horvath, J. Butwin, RKF

The Mediterranean restaurant signed a lease.

1 Fordham Plaza (The Bronx)

3,425

Chipotle Mexican Grill / D. Boutross, K. Hochhauser, Winick Realty

One Fordham Plaza / Mike Mahoney, Ripco Real Estate

The Mexican chain signed a lease for a new location.

51 Amsterdam Ave

3,388

CrossFit SPOT / Kelly Gedinsky, Winick Realty

West 62nd Street / S. Baker, K. Gedinsky, Winick Realty

The fitness studio signed a lease.

153 West 27th St

3,050

Downtown Floor Supplies / Ioannis Kourtis, NY Citi Group Realty

Justin Properties LLC / n/a

The flooring company signed a 10-year retail lease.

716 Broadway

3,000

Foot Locker / n/a

n/a / Brendan Gotch, Massey Knakal

The footwear retailer signed a lease.

50-09 Second St (Queens)

2,963

Tiger J Taekwondo / Daniel Kim, Charles Rutenberg Realty

V Partners LLC / Hal Shapiro, Winick Realty

The fitness studio signed a retail lease.

185 Seventh Ave

2,500

Chipotle Mexican Grill / D. Boutross, K. Hochhauser, Winick Realty

Reyad Realty Corp. / D. Boutross, K. Hochhauser, Winick Realty

The Mexican chain signed a lease for a new location.

147 Reade St

2,500

New York City Language Inc. / H. Shapiro, C. Rapuano, Winick Realty

Greenwich Street / Josh Siegelman, Winick Realty

The clothing retailer signed a lease.

1111 First Ave

2,300

Bagel Express / Hal Shapiro, Winick Realty

VP1 LLC / Hal Shapiro, Winick Realty

The restaurant signed a lease.

2117-21 Avenue U (Brooklyn)

2,300

Popular Community Bank / Josh Augenbaum, Augenbaum Realty Corp.

n/a / n/a

The bank signed a retail lease.

458 Fifth Ave (Brooklyn)

2,200

Spirit Halloween Superstores LLC / n/a

819 Realty Group LLC / M.C. Oâ&#x20AC;&#x2122;Brien

The Halloween pop-up store signed a lease.

104 Franklin St

2,200

Egg by Susan Lazar / Brett Maslin, Adams & Co.

104 Franklin Street LLC / Guillermo Suarez, Masssey Knakal

The apparel retailer for babies signed a lease. The reported asking rent was $120 per square foot.

2582 Hylan Blvd (Staten Island)

2,100

Chipotle Mexican Grill / D. Boutross, K. Hochhauser, Winick Realty

BMN LLC / D. Boutross, K. Hochhauser, Winick Realty

The Mexican chain signed a lease for a new location.

17387 86th St (Brooklyn)

2,100

Sherwin Williams Corp. / John Oliveri, STL Realty

Jovi Realty Corp. / John Oliveri, STL Realty

The paint store signed a 10-year lease.

136 October 2014 www.TheRealDeal.com

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Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

36 West 34th St

2,020

Next Vanity Hair Salon / Albert Manopla, Kassin Sabbagh Realty

BLDG / Cory Zelnik, Zelnik & Co.

The salon signed a 10-year lease on the third floor. The reported asking rent was $50 per square foot.

946 Flatbush Ave (Brooklyn)

2,000

Princess Clothes / Josh Augenbaum, Augenbaum Realty Corp.

n/a / Josh Augenbaum, Augenbaum Realty Corp.

The apparel retailer signed a lease.

1212 Kings Hwy (Brooklyn)

2,000

GNC / In Line Realty

n/a / Josh Augenbaum, Augenbaum Realty Corp.

The nutritional products retailer signed a lease.

140 Eighth Ave

1,900

Just Salad / Abie Dwek, Kassin Sabbagh Realty

n/a / Rafe Evans, Walker Malloy & Co.

The salad shop signed a 10-year lease for its 16th location. The reported asking rent was $200 per square foot.

8625 Fourth Ave (Brooklyn)

1,875

Taco Bell / Allie Beyda, Augenbaum Realty Corp.

8625 Realty Corp. / George Pantelidis, Pan Brothers Associates

The fast-food chain signed a lease.

35 West 38th St

1,800

Delgado Travel Inc. / Albert Manopla, Kassin Sabbagh Realty

Flame Realty LLC / Albert Manopla, Kassin Sabbagh Realty

The travel agency signed a retail lease for its 36th location. The reported asking rent ws $125 per square foot.

16 West 18th St

1,706

Rent the Runway / Kelly Gedinsky, Winick Realty

Audio and Video LLC / Alan Napack, C&W

The fashion retailer signed a lease.

1200 Madison Ave

1,705

Bluemercury / n/a

n/a / B. Rosen, T. Jacoby, RKF

The luxury beauty retailer signed a lease.

14 East 34th St

1,600

Xi’an Famous Foods / n/a

n/a / Michael Azarian, Massey Knakal

The Chinese restaurant signed a lease.

1710 Broadway

1,500

NYC Gifts & Luggage / Bunny Escava, Kassin Sabbagh Realty

n/a / n/a

The gift shop signed a lease.

385 Canal St

1,500

Canal Iconic Magazines / n/a

n/a / Gregory Kim, Veracity Real Estate

The magazine shop signed a long-term lease.

14 West 45th St

1,300

Time for Spa / Albert Manopla, Kassin Sabbagh Realty

n/a / Annie Yao, Buchbinder & Warren

The spa signed a lease.

132 Mulberry St

1,300

Hat & T-Shirts Corp. / Robert Frischman, EVO Real Estate

n/a / Robert Frischman, EVO Real Estate

The souvenir shop signed a lease.

157 Seventh Ave

1,270

Fika / Andrew Hawkins, Transwestern

20th & Seventh Associates / S. Baker, R. Burack, Winick Realty

The restaurant signed a lease.

1776 Water Pl (The Bronx)

1,250

Tatiana’s Day Spa & Hair Salon / KZA Realty

Simone Development / KZA Realty

The salon signed a 10-year lease.

741 Second Ave

1,200

Dunkin’ Donuts / Jeffrey Znaty, Kassin Sabbagh Realty

n/a / Jeffrey Znaty, Kassin Sabbagh Realty

The coffee chain signed a 10-year lease for a new location.

1944 Coney Island Ave (Brooklyn)

1,000

First Class Advance / Richard Bailey, Kassin Sabbagh Realty

n/a / Kassin Sabbagh Realty

The financial services company leased second-floor retail space.

61 East 8th St

850

Vive La Crepe / A. Manopla, M. Tawil, Kassin Sabbagh Realty

Empire State Realty Trust / Louis Joachim, Rose Associates

The crepe shop signed a 10-year lease for its seventh location. The reported asking rent was $150 per square foot.

439 Lenox Ave

850

The Harlem Pizza Joint / Matt Mager, Besen Retail

ABJ Properties / Jon Kamali, Besen Retail

The pizza restaurant signed a 10-year lease.

141 Eighth Ave

826

Boom Sushi / A. Shmaruk, M. Sherman, The Manhattes Group

n/a / B. Birnbaum, M. Utreras, NGKF

The sushi restaurant signed a lease. The reported asking rent was $250 per square foot.

1584 Flatbush Ave (Brooklyn)

810

Vitamin Shoppe / Crown Acquisitions

n/a / Josh Augenbaum, Augenbaum Realty Corp.

The nutritional products retailer signed a lease.

82 Second Ave

800

Golden Crepes / A. Zarif, A. Manopla, Kassin Sabbagh Realty

Terrence Lowenberg / Icon Realty Management

The crepe shop signed a 10-year lease for its second location. The reported asking rent was $175 per square foot.

205 Allen St

800

Vivi Bubble Tea / Albert Manopla, Kassin Sabbagh Realty

Dariko NY / Doug Kleiman, Ripco Real Estate

The bubble tea shop signed a 10-year lease for a new location. The reported asking rent was $180 per square foot.

12 John St

800

Coco Fresh Tea / Bunny Escava, Kassin Sabbagh Realty

Transworld Equities / n/a

The tea shop signed a 10-year lease. The reported asking rent was $200 per square foot.

279 Mott St

800

Margaret O’Leary / S. Penzner, R. Milliken, Susan Penzner Real Estate

n/a / D. Levinson, S. Lindenmayer, Halstead Commercial

The knitwear boutique signed a five-year lease.

62 West 56th St

720

Beyond Sushi / Lindsay Charles, Ripco Real Estate

BLDG Management / Adam Langer, Zelnik & Co.

The vegan sushi restaurant signed a lease for its third New York location.

315 Seventh Ave

700

Ruby Reflexology / Albert Manopla, Kassin Sabbagh Realty

n/a / n/a

The spa signed a retail lease.

607 Ninth Ave

600

Vivi Bubble Tea / Albert Manopla, Kassin Sabbagh Realty

Ninth Avenue Realty LLC / S. Rappaport, M. Sarway, Sinvin Real Estate

The bubble tea shop signed a 10-year lease for a new location. The reported asking rent was $220 per square foot.

59 West 30th St

600

Vivi Bubble Tea / Albert Manopla, Kassin Sabbagh Realty

Justin Management / Albert Manopla, Kassin Sabbagh Realty

The tea shop signed a 10-year lease for a new location. The reported asking rent was $175 per square foot.

1142 Lexington Ave

600

Vive La Crepe / A. Manopla, M. Tawil, Kassin Sabbagh Realty

Lexington 79th Street Corporation / Burt Wallack, Wallack Management

The crepe shop signed a 10-year lease. The reported asking rent was $230 per square foot.

741 Second Ave

600

Highpoint Cleaners / Jeffrey Znaty, Kassin Sabbagh Realty

n/a / Jeffrey Znaty, Kassin Sabbagh Realty

The dry cleaners signed a 10-year lease.

495 Ninth Ave

500

Aminov Salon / Abraham Zarif, Kassin Sabbagh Realty

n/a / n/a

The hair salon signed a 10-year lease. The reported asking rent was $120 per square foot.

1044 Lexington Ave

480

Cabochon Jewelry / n/a

n/a / A. Schuster, J. Totolo, RKF

The jeweler signed a retail lease.

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

212-222 Broadway

31-story, 775,000 sf office bldg

RREEF / n/a

L&L Holding Company / n/a

The property sold for $502 million. L&L Holding Company will continue to own an unspecified minority stake in the building. Just last year, workspace provider WeWork signed a 16-year lease for 120,500 square feet at the property.

250 West 43rd St

600-room hotel

Joseph Chetrit / n/a

Heirs of Tran Dinh Truong / n/a

The Hotel Carter sold for $190 million.

645 First Ave

144 units in 57-story apt. bldg

n/a / n/a

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

The condo units within the Corinthian building sold for $147 million, or $975 per square foot.

136 West 42nd St

282-room hotel

DiamondRock Hospitality Group / n/a

n/a / n/a

The Hilton Garden Inn/Times Square Central sold for $127.2 million, or $451,000 per guest room.

77 Water St

26-story office bldg

n/a / n/a

Travelers Companies / n/a

A 49 percent stake in the property sold for $117.6 million.

138 October 2014 www.TheRealDeal.com

TIMELESS

101 PARK AVENUE

NEW YORK’S PREMIER BUSINESS ADDRESS WELCOMES

ADVANCE FINANCE GROUP 42,000 SF REPRESENTED BY JIM GROSS AND PETER GROSS OF DOUGLAS ELLIMAN COMMERCIAL LLC.

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JOHN CEFALY 212-841-5977 OWNER / BUILDER

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AUGUSTUS FIELD 212-841-5965

Buys continued Address

Size

Buyer / Representative

Seller / Representative

Notes

150 East 42nd St

7 comm. condo units

Mount Sinai Medical Center / J. Kuriloff, J. Serko, B. Zeller, M. Rotchford, D. Heller, C&W

Goelet family; Hiro Real Estate / Scott Gottlieb, CBRE

The commercial condo units at the base of the Mobil Building sold for $110.6 million.

Upper East Side portfolio

4 apt. bldgs, 216 units total

Trevi Retail / n/a

Stone Street Properties / Bob Knakal, Massey Knakal

The properties sold for $100 million. The buildings are located at 420 East 66th Street, 336 East 81st Street, 344 East 85th Street and 404 East 88th Street.

16-18 West 57th St

75,000 buildable sf development site

n/a / n/a

Extell Development / n/a

The property sold for $95 million.

17 John St

15-story apt. bldg

Prodigy Network / n/a

n/a / n/a

The property sold for $85.3 million. The sum included more than $25 million in crowdfunded equity.

353 and 355-357 Broadway

132,780 buildable sf development site

n/a / n/a

n/a / A. Cohen, A. Maxson, ABS Partners

The property sold for $73 million.

275 Park Ave (Brooklyn)

123-unit loft apt. bldg

HK Organization; Brickman / n/a

n/a / Stratus Capital Advisors

The Chocolate Factory loft building sold for $68 million.

334-344 West 36th St

6-story, 58,634 sf office bldg

McSam Hotel Group / Brian Ezratty, Eastern Consolidated

Post Graduate Center for Mental Health / B. Ezratty, C. Sinsheimer, Eastern Consolidated

The property sold for $50.75 million.

131-135 Prince St

3,000 sf retail space

Acadia Realty Trust / Robert Khodadadian, Skyline Properties

Louis Meisel / Robert Khodadadian, Skyline Properties

The retail portion of the building sold for $50 million.

27 Christopher St

14,540 sf comm. bldg

n/a / n/a

New York Foundling / n/a

The property sold for $45 million.

Brooklyn portfolio

5 retail bldgs

Moshe Piller / n/a

Jackson Group / n/a

The properties sold for $35.5 million. The buildings are located at 4310-24, 4404, 4406-12, 4414-24 and 450208 13th Avenue.

143-155 Roebling St (Brooklyn)

6-story, 141,389 sf comm. loft bldg

Redsky Capital LLC / G. Saffioti, B. Tapper, Eastern Consolidated

Metroeb Realty 1 LLC / Gabriel Saffioti, Eastern Consolidated

The property sold for $33.25 million.

885 10th Ave

37-unit apt. bldg

Benchmark Real Estate Group / n/a

n/a / n/a

The property sold for $32.3 million. The price represents a capitalization rate of 4 percent.

2856-2860 Steinway St (Queens)

3-story retail bldg

Werber Management / n/a

Garden Commercial Properties / B. Knakal, T. Donovan, T. Lin, Massey Knakal

The property sold for $32 million, or $627 per square foot. The retail spaces are currently leased to New York Sports Club, Chase Bank and Duane Reade.

Harlem portfolio

4 apt. bldgs, 82 units total

E & M Associates / Aaron Jungreis, Rosewood Realty

Treetop Development / Aaron Jungreis, Rosewood Realty

The properties sold for $29 million. The buildings are located at 1917 Seventh Avenue, 110 St. Nicholas Avenue, 120 West 116th Street and 110 West 116th Street.

1210-1230 Croes Ave (The Bronx)

20-story apt. bldg, 160 units total

1210 Croes LLC / Amit Doshi, Besen & Associates

Croes Nest Realty LP / Amit Doshi, Besen & Associates

The property sold for $21 million, or $108 per square foot. The price represents a gross rent multiple of 9.5.

78 Grand St

5-story apt. bldg, 4 units total

n/a / n/a

n/a / P. Smadbeck, R. Burton, Massey Knakal

The property sold for $15.6 million, or about $1,300 per square foot.

(718) 626-4400 | info@metpacproperties.com 140 October 2014 www.TheRealDeal.com

Buys continued Address

Size

Buyer / Representative

Seller / Representative

Notes

3600, 3604 and 3610 Broadway

3 apt. bldgs, 35 units total

n/a / Matthew Sparks, Eastern Consolidated

The properties sold for $15.5 million.

120 Union Ave (Brooklyn)

93,000 buildable sf development site

Adam America; Slate Property Group; Naveh Shuster Limited / n/a

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

The property sold for $15.5 million, or $220 per buildable square foot.

61-63 West 106th St

24-unit apt. bldg

n/a / George Niblock, Friedman-Roth Realty

n/a / Eric Lupo, Friedman-Roth Realty

The property sold for $15 million.

33-01 20th Ave (Queens)

22-acre parcel

Luyster Creek LLC / n/a

Con Edison of NY / n/a

The property sold for $15 million. The Galinn Fund provided financing.

15-17 West 116th St

38-unit apt. bldg

15 West 116 LLC / Pater Carillo, Eastern Consolidated

Malcolm Shabazz Court LLC / P. Carillo, A. Sasson, Eastern Consolidated

The property sold for $13.8 million.

Washington Heights portfolio

Three 6-story apt. bldgs, 64 units total

2001 Amsterdam W 159TH St LLC / Amit Doshi, Besen & Associates

Cozy Realty LLC, Mariposa Properties Inc. / Ishan Chhabra, Besen & Associates

The properties sold for $13.75 million, or $256 per square foot. The price represents a capitalization rate of 6 percent and a gross rent multiple of 11.6. The buildings are located at 1001 St. Nicholas Avenue, 1995-1997 Amsterdam Avenue and 2001-2003 Amsterdam Avenue.

581-583A, 589 Fulton St (Brooklyn)

Development site

Redsky Capital LLC / Winick Realty

Estate of Duflon / M.C. Oâ&#x20AC;&#x2122;Brien

The property sold for $13.5 million.

1424-1428 Lexington Ave

13,520 sf mixed-use bldg

Ashkenazy Acquisition LLC / Lipa Lieberman, Eastern Consolidated

First Atlantic Real Estate / Lipa Lieberman, Eastern Consolidated

The property sold for $12.6 million. The building includes an additional 13,881 square feet of unused development rights.

57-59 Jay St (Brooklyn)

20-unit apt. bldg

n/a / n/a

n/a / Y. Edelkopf, C. Kim, EPIC Commercial Realty

The property sold for $12 million.

Harlem portfolio

3 apt. bldgs and vacant lot

Treetop Development / L. Sternhell, P. Vanderpool, Cignature Realty Associates

2261-2273 ACP Residences LLC / L. Sternhell, P. Vanderpool, Cignature Realty Associates

The properties sold for $11.25 million, or $272 per square foot. The buildings are located at 2261, 2267-2269 and 2271-2273 Adam Clayton Powell Boulevard, and the vacant lot is located at 2265 Adam Clayton Powell Boulevard.

737 West End Ave

9-unit apt. bldg

n/a / n/a

n/a / Hall Oster, Massey Knakal

The property sold for $7.55 million, or $686 per square foot.

550-554 Fourth Ave (Brooklyn)

50,632 buildable sf development site

n/a / n/a

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

The property sold for $7.4 million.

133-143 Fort George Ave

6-story, 35,135 sf apt. bldg, 40 units total

Bsp 133 Fort George LLC / Aaron Jungreis, Rosewood Realty

133 Fort George LLC / Aaron Jungreis, Rosewood Realty

The walk-up sold for $6.15 million.

225 Pennsylvania Ave (Brooklyn)

87,000 buildable sf development site

n/a / n/a

n/a / Edward Gevinski, Massey Knakal

The property sold for $5 million, or $57 per buildable square foot.

47 Clinton St

5-unit apt. bldg

n/a / n/a

n/a / Michael DeCheser, Massey Knakal

The property sold for $5 million, or $519 per square foot.

25 Prince St

573 sf retail condo

n/a / Paul Popkin, The Popkin Group

n/a / R. Burton, H. Oster, Massey Knakal

The property sold for $4.3 million. The space is currently leased to Gant Rugger.

1446, 1448, 1450 and 1452 Myrtle Ave (Brooklyn)

4 mixed-use bldgs

Silvershore Properties / n/a

Thomas Cusumano NA / n/a

The properties sold for $4.05 million.

31-07/13 23rd Ave (Queens)

2-story retail bldg

n/a / n/a

n/a / Thomas Donovan, Massey Knakal

The property sold for $3.6 million.

1232 Southern Blvd (The Bronx)

4,300 sf bldg and 3 vacant lots

The Childrenâ&#x20AC;&#x2122;s Aid Society / KZA Realty

n/a / n/a

The property sold for $3.4 million.

214-11-13 35th Ave (Queens)

17,550 buildable sf development site

n/a / n/a

n/a / Stephen Preuss, Massey Knakal

The property sold for $3.15 million, or $180 per buildable square foot.

1365-69 St. Johns Pl (Brooklyn)

Two 4-story apt. bldgs, 16 units total

n/a / Daniel Shragaei, GFI Realty

n/a / S. Paneth, O. Babo, GFI Realty

The properties sold for $2.8 million. The price represents a gross rent multiple of 13.

217 West 115th St

5-story, 5,668 sf apt. bldg, 10 units total

n/a / Shallini Mehra, Besen & Associates

217 West 11th Ft LLC / Lev Mavashev, Besen & Associates

The property sold for $2.8 million, or $427 per square foot. The price represents a capitalization rate of 4.5 percent and a gross rent multiple of 16.

35-19 150th St (Queens)

3-story office bldg

n/a / n/a

n/a / Stephen Preuss, Massey Knakal

The property sold for $2.75 million, or $458 per square foot.

1227 Broadway (Brooklyn)

6-unit apt. bldg

n/a / D. Tropp, J. Berman, M. Spinelli, Ariel Property Advisors

The property sold for $2.7 million, or $382 per square foot.

8798 21st Ave (Brooklyn)

16-unit apt. bldg

n/a / George Niblock, Friedman-Roth Realty

n/a / Joseph Arnold Smith, FriedmanRoth Realty

The property sold for $2.58 million.

64 West 165th St (The Bronx)

5-story apt. bldg, 30 units total

Greenstone 26 LLC / Amit Doshi, Besen & Associates

1261 Merriam Avenue LLC / Matthew Garcia, Besen & Associates

The property sold for $2.54 million, or $118 per square foot. The price represents a capitalization rate of 8.5 percent and a gross rent multiple of 7.8.

157-159 Tompkins Ave (Brooklyn)

12,000 buildable sf development site

n/a / Shlomo Antebi, GFI Realty

The property sold for $1.87 million, or $156 per buildable square foot.

437 Throop Ave (Brooklyn)

8-unit apt. bldg

n/a / Shlomo Antebi, GFI Realty

The property sold for $1.7 million, or $212,500 per unit

54-55 46th St (Queens)

8,500 sf industrial bldg

n/a / n/a

n/a / Thomas Donovan, Massey Knakal

The property sold for $1.6 million, or $188 per square foot.

257 West 113th St

9-unit apt. bldg

257 West 113th Street LLC / Aaron Jungreis, Rosewood Realty

Wanderers In West LLC / Michael Kerwin, Rosewood Realty

The walk-up sold for $1.5 million.

700 Washington Ave

4-unit apt. bldg

n/a / n/a

n/a / Stephen Palmese, Massey Knakal

The property sold for $1.35 million, or $488 per square foot.

17-17 Himrod St (Queens)

6-unit apt. bldg

n/a / D. Tropp, J. Berman, M. Spinelli, Ariel Property Advisors

The property sold for $1.23 million. The price represents a gross rent multiple of 17.4.

189 Cooper St (Brooklyn)

8,800 buildable sf development site

n/a / D. Tropp, J. Berman, M. Spinelli, Ariel Property Advisors

The property sold for $1.15 million, or $130 per buildable square foot.

407 East 160th St (The Bronx)

Development site

n/a / n/a

n/a / David Simone, Massey Knakal

The property sold for $1 million, or $28 per buildable square foot.

1158 Fulton St (Brooklyn)

3-unit apt. bldg

n/a / n/a

n/a / Yona Edelkopf, EPIC Commercial Realty

The property sold for $1 million.

142 October 2014 www.TheRealDeal.com

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Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

150 East 42nd St

1.8 million sf office bldg

David Werner; Mark Karasick / Meridian Capital Group

Morgan Stanley / Meridian Capital Group

A $700 million CMBS loan was provided for the acquisition of the leasehold interest.

135 West 52nd St

Condo conversion

Chetrit Group; Clipper Equity / A. Birnbaum, E. Westfried, Meridian Capital Group

Deutsche Bank / A. Birnbaum, E. Westfried, Meridian Capital Group

A $228.5 million loan was provided for the condo conversion. Formerly the Flatotel, the property will have 109 residential condo units and 55,000 square feet of office condo space.

645 First Ave

144 units in 57-story apt. bldg

n/a / n/a

n/a / Scott Aiese, Massey Knakal Capital Services

Acquisition and construction financing was provided in the amount of $125 million for the condo units within the Corinthian building.

605 West 42nd St

1,174-unit apt. bldg

Moinian Group / n/a

SL Green / Robert Verrone, Iron Hound Management

A $50 million mezzanine loan was provided for the construction of the rental building. As part of the deal, SL Green will have the option to acquire a stake of up to 20 percent in the project.

45 and 49-51 Park Pl

Development site

Sharif El-Gamal / n/a

Madison Realty Capital / n/a

A $33 million loan was provided to finalize the $10.7 million fee interest acquisition of 49-51 Park Place and fund predevelopment costs for the 120,000-square-foot residential condo project at 45 Park Place.

30-34 West 47th St

55,000 sf office bldg

Elo Organization / A. Lieberman, R. Gervis, A. Haft, Meridian Capital Group

New York Community Bank / A. Lieberman, R. Gervis, A. Haft, Meridian Capital Group

A $31.1 million loan was arranged.

33-01 20th Ave (Queens)

22-acre parcel

Luyster Creek LLC / n/a

The Galinn Fund / David Linn, The Galinn Fund

A $20 million loan was provided for the property acquisition.

Queens portfolio

1,089 res. units

Park City 3 & 4 Apartments Inc. / n/a

NCB / n/a

An $18 million first mortgage was arranged for the package. The properties are located at 97-07, 97-37 and 98-05 63rd Road and 97-10, 97-40 and 98-20 62nd Drive in Rego Park.

3856 Bronx Blvd (The Bronx)

166-unit apt. bldg

Parkside Development Co. Inc. / n/a

NCB / n/a

A $6 million first mortgage and a $1 million line of credit were arranged for the building.

14 Horatio St

161-unit apt. bldg

14 Horatio Street Apartments Corp. / n/a

NCB / n/a

A $4.2 million first mortgage and a $500,000 line of credit were arranged for the building.

100 West 12th St

83-unit apt. bldg

Mark Twain Owners Corp. / n/a

NCB / n/a

A $3.6 million first mortgage was arranged for the building.

3755 Henry Hudson Pkwy (The Bronx)

95-unit apt. bldg

3755 Owners LTD / n/a

NCB / n/a

A $3 million line of credit was arranged for the building.

211 East 35th St

75-unit apt. bldg

Midtown Manor Apartments Ltd. / n/a

NCB / n/a

A $2.4 million first mortgage and a $500,000 line of credit were arranged for the building.

828 Fifth Ave

7-unit apt. bldg

828 Fifth Ave. 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.

2640 Marion Ave (The Bronx)

72-unit apt. bldg

2640 Marion Avenue Owners Inc. / n/a

NCB / n/a

A $2 million first mortgage and a $200,000 line of credit were arranged for the building.

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144 October 2014 www.TheRealDeal.com

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Financing continued Address

Size

Borrower / Representative

Lender / Representative

Notes

15 Clark St (Brooklyn)

26-unit apt. bldg

Clark Street Tenants Incorporated / n/a

NCB / n/a

A $1.6 million first mortgage and a $250,000 line of credit were arranged for the building.

40 West 22nd St

15-unit apt. bldg

40 West 22nd Street Tenants Cooperative Corp. / n/a

NCB / n/a

A $1.5 million first mortgage and a $250,000 line of credit were arranged for the building.

323 West 83rd St

24-unit apt. bldg

323 West 83rd Owners Corp. / n/a

NCB / n/a

A $1.5 million first mortgage and a $250,000 line of credit were arranged for the building.

131-133 West 28th St

24-unit apt. bldg

Garden Lofts Corporation / n/a

NCB / n/a

A $1.2 million first mortgage and a $500,000 line of credit were arranged for the building.

109-23 71st Rd (Queens)

52-unit apt. bldg

109-23 Owners Corp. / n/a

NCB / n/a

A $1.3 million first mortgage and a $250,000 line of credit were arranged for the building.

121 West 19th St

67-unit apt. bldg

The Lion’s Head Condominium / n/a

NCB / n/a

A $1 million term loan was arranged for the building.

Other Deals Boston Properties sells 45 percent interest in 601 Lexington Avenue property

601 Lexington Avenue

Waterbridge in $100M-plus contract on Williamsburg’s North 3rd Street

Norges Bank Investment Management, an arm of the central bank of Norway, reached an agreement last month to purchase a 45 percent interest in 601 Lexington Avenue, along with equal shares in two Boston properties, from real estate investment trust Boston Properties for $1.5 billion in cash. Norges Bank is also picking up an equal interest share in Boston’s Atlantic Wharf Office Building and 100 Federal Street as part of the deal. Following the agreement, Norges Bank and Boston Properties will form a joint venture for each of the three properties, with the latter retaining property and leasing management. (The deal was announced after the deadline for the Deal Sheet.)

Joel Schreiber’s Waterbridge Capital is in contract to lay out $100 million to buy multiple properties on North Third Street, including the buildings that house the popular beer garden Radegast Hall and brunch hotspot Egg, The Real Deal has learned. The investment firm will pay nearly $1,000 per Radegast Hall at 113 North 3rd Street square foot for the properties, its boldest bet yet on one of the city’s hippest neighborhoods. Waterbridge is buying 103-119 North 3rd Street as well as 188-190 Berry Street, according to sources familiar with the transaction. The deal gives Waterbridge about 110,000 total buildable square feet, including more than 50,000 square feet of residential space with 41 rental units that are ripe for repositioning, sources said. (The deal was announced after the deadline for the Deal Sheet.)

SL Green to pay $275M for upper floors lingering at Extell’s Gem Tower

Chinese developer Cheerland paid $128M for residential holdout on Park Ave. South

287 Park Avenue South

Real estate investment trust SL Green Realty has acquired the upper floors of Extell Development’s International Gem Tower. Those floors have failed to attract tenants since hitting the market. In a deal worth $275 million, SL Green will purchase 319,000 square feet of office space on floors 22 to 34 of the tower at 50 West 47th Street, which also has an address at 55 West 46th Street, according to a statement from the company. “We believe this transaction will once again allow us to showcase two of our greatest strengths: SL Green’s proven ability SL Green CEO Marc Holliday to lease office space and create value,” said SL Green president Andrew Mathias in the statement. (The deal was announced after the deadline for the Deal Sheet.)

Chinese development firm Cheerland Investments paid $128 million for the United Charities Building at 287 Park Avenue South. The 93,300-square-foot office property, one of the last Charity Row holdouts along a stretch of Park Avenue South that has gone residential, hit the market in March. Cheerland plans to convert the offices into high-end condominiums. The price per square foot is roughly $1,300, according to Newmark Grubb Knight Frank broker Geoffrey Newman, who represented the United Charities nonprofit selling the building. The nonprofit listed the property to pad their endowments and capital reserves, as previously reported. (The deal was announced after the deadline for the Deal Sheet.)

21st Century Fox could depart Midtown headquarters: reports

Brazilian investors look to bring new luxury hotel designed by starchitect to 57th St. corridor

Rupert Murdoch’s 21st Century Fox is reportedly on the hunt for a new headquarters. The search is in very early stages and could result in Fox staying put at 1211 Sixth Avenue, sources familiar with the situation told Bloomberg News. Along with Murdoch’s News Corp., Fox News and other Fox operations occupy roughly half of the 2 million-square-foot building and employ about 2,500 people there, according to the news service. Fox’s lease at the building expires in 2020. The building is owned by Beacon Capital and a partnership that includes Ivanhoe Cambridge and Callahan Capital Properties, according to Bloomberg. Beacon Capital sought to sell 1211 Sixth Avenue in 2011, but bids came in far short of the asking price.

A new luxury hotel is coming to billionaire’s row. A group of Brazilian investors that includes construction company JHSF Participacoes S.A. and the Fasano family — a major player in the hospitality and restaurant sectors in Brazil and Uruguay — is looking to build a hotel tower on the vacant lot at 16 West 57th Street, according to the New York Daily News. The Fasano-branded property would also include some condominium units. The Daily News reported that the investors, who recently bought the site for $95 million from Architect Extell Development, are in talks with starchitect Rafael Vinoly Rafael Vinoly for the building’s design.

To view more deals visit our website: www.TheRealDeal.com 146 October 2014 www.TheRealDeal.com

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Development updates SALES UPDATES

Upper East Side 515 East 72nd Street In today’s real estate market, you need a CPA Firm that knows the industry and the marketplace inside and out. That’s why WithumSmith+Brown has become one of the premier names among CPA

Stuyvesant Square

firms in the Real Estate, Construction, and Architecture & Engineering industries in the tri-state area. For 40 years, our professionals have provided proactive solutions, expert advice and customized services to help businesses like yours thrive. Contact any of our industry specialists, whose expertise in tax, accounting, audit and business advisory services will help put you and your company in a position of strength.

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All but two of the 326 units on floors 32 to 40 at the Tower Residences are sold. The building contains one of New York City’s largest private parks: a half-acre of green space, overlooked by a 56-foot heated pool. One one-bedroom apartment remains, at $1.74 million, and one three-bedroom remains, asking $4.425 million. Construction on the 5,419-square-foot penthouse is expected to be completed this fall: It will feature floor-to-ceiling windows and two terraces; a price has not yet been set. Corcoran Sunshine is handling sales for the building. Contact: www.515e72com.

Carnegie Hill 141 East 88th Street

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305 Second Avenue Rutherford Place has sold more than 60 percent of the 120 studio, one-, two- and three-bedroom condominiums that recently went on the market. Most units are duplex or triplex, with ceilings up to 17 feet. A number also feature private patios and terraces. Amenities in the doorman building include a landscaped roof-deck. Prices range from $1.35 million for a 1,034-squarefoot one-bedroom, one-bath to $2.795 million for a three-bedroom, two-bath. Cantor-Pecorella is handling sales and marketing. Contact: www.rutherfordplace.com.

Crown Heights

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three-bedroom, two-bathroom home, is still available at $2.575 million. The building contains a 5,800-square-foot courtyard and a 2,300-square-foot roof-deck. L&M Development is handling the marketing. Contact: www.TheAdeline.com.

Ten new residential units in the Upper East Side’s Philip House, a conversion of 100plus rental apartments, have been released to market. Five are penthouse apartments, ranging from 2,738 square feet, asking $8.45 million, to 4,710 square feet, asking $16 million. The largest includes a sculptural staircase and wraparound terrace. A ground-floor duplex, 3,253-square-foot, four-bedroom maisonette is also available, asking $7.25 million. The remaining apartments are two- and three-bedrooms, ranging from 1,350 square feet to 1,790 square feet, listed at $2.995 million to $3.75 million, respectively. The prewar, doorman building has a fitness room, a children’s playroom, and a landscaped rooftop. Stribling Marketing is handling sales. Contact: www.philiphousenyc.com.

1409 Pacific Avenue Ideal Properties Group has launched a two-unit boutique condo in Brooklyn’s Crown Heights. The building features a two-bedroom, two-bathroom duplex with a backyard and a four-bedroom, three-bathroom triplex with roof-deck. The duplex is priced at $749,000, and the triplex at $1.099 million. Both units come with stainless steel appliances and built-in speakers. Contact: www.idealpropertiesgroup.com. LEASING UPDATES

Prospect Park South 123 Parkside Avenue

Central Harlem 23 West 116th Street

The Adeline, a 12-story luxury condominium, is 80 percent sold eight months after its launch. The building is comprised of 83 one- to four-bedroom residences; one-, two-, three- and four-bedroom apartments are available from $830,000 to $2.75 million. One penthouse, a 1,534-square-foot, 148 October 2014 www.TheRealDeal.com

In less than three months, more than 50 percent of the seven-story luxury rental development 123 on the Park is leased. The former Caledonian Hospital Center was redeveloped by Clipper Equity and the Chetrit Group. Studios, one-, one-and-a-half and two-bedroom apartments are available from $2,285 to $3,970 per month. The building includes a fitness center, yoga studio, gaming lounge and children’s playroom. A furnished roof-deck overlooks Prospect Park. Sales are being handled by aptsandlofts .com. Contact: www.123onthepark.com. Compiled by Brendan O’Connor

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RESIDENTIAL DEALS Upper East Side $3.76 million 1280 Fifth Avenue, 18B

The Charles H. Greenthal Organization and Mark Greenberg Real Estate Co. LLC (“MGRE”) announced that the two companies amalgamated on August 1st. Greenthal, a full service real estate company serving New York City for over 50 years and MGRE, in operation since 1980, specialize in the management of cooperatives, condominiums, Home Owner Associations, residential rentals and commercial properties. The Greenthal-MGRE team manages in excess of 37,000 residential units and over 1,300,000 square feet of commercial space in over 250 properties throughout the five boroughs, Nassau and Westchester Counties. The aggregate value of these managed assets exceeds $68 billion. For further information contact: Jonathan West at 212 340-9300 or James Goldstick at 516 944-5000

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Three-bedroom, three-bathroom, 1,756square-foot unit in a condominium building, One Museum Mile. Apartment features Central Park views, hardwood floors, and an open kitchen. Building features 50-foot art-glass wall, landscaped roof-deck with swimming pool, residents’ lounge with fireplace and card room. Maintenance $2,382 per month; taxes $48 per month (abated). Asking price $3.65 million; 20 weeks on market. (Brokers: Victoria Rong Kennedy of Citi Habitats; Tom Postilio of CORE.) “The buyers were from Beijing. They knew what they wanted, but not what they needed. I didn’t even know what their budget was! Six months earlier, they’d bought a ranch in Washington, D.C., on the Potomac, for $2 million, so they wanted something with trees. But they have kids, and they wanted access to the schools on the Upper West Side or Upper East Side. This apartment has views of Central Park from every single room. Even the kitchen! And it’s facing south, southwest, so it’s looking directly into the park. You could get into a co-op for $25 million and that’s only going to get you a view from your reading room. We walked in, we walked out. Five minutes later, the deal was done.” Victoria Rong Kennedy, Citi Habitats

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150 October 2014 www.TheRealDeal.com

One-bedroom, one-bathroom, 711-squarefoot unit in a condominium building, the Impala. The building features a bike room and children’s playroom. Maintenance fees: $864 per month; taxes: $859 per month. 41 days on the market. (Brokers: Natalie Baghdadi, Bracha New York at Keller Williams; Tristan Harper and Shannon Dunne, Douglas Elliman NYC.)

“A client who I’d helped find a one-bedroom to rent referred her friend to me. Her friend was from Hong Kong and she was looking for a place to co-purchase in New York with her son, near his office. They came in with sort of an entourage — friends, family and family-friends, who all already live in New York — and we went on sort of an organized real-estate tour of the city. I showed them everything in their budget near his office. The seller and the buyer were $5,000 apart and neither wanted to budge — but eventually we got them to meet in the middle. There is a lot of money coming in from China right now, and it’s very high stress when the buyers come to visit. I have to be totally on my game and get the right apartment, because if I don’t, they’re gone.” Natalie Baghdadi, Bracha New York

Long Island City $1.16 million 4-74 48th Avenue #6A

Two-bedroom, two-bathroom, 1,200square-foot unit in cond-op building. Features a private terrace, views of Manhattan and the East River. Maintenance fees: $3,000 per month. Asking price: $1.1 million; 24 weeks on the market. (Brokers: Antonia Watson, Keller Williams NYC; Jani Jaatinen, Keller Williams NYC.) “This was really a very unique home. The terrace alone is one of a kind, almost 2,000-square-feet — so almost twice as big as the apartment itself. Inventory is very low in Long Island City right now to begin with, and we ended up in a bidding war with I think three different buyers, all paying all-cash. The buyers who closed were a family of four, moving from only a few blocks away. The kids’ grammar school is in the bottom of the building. That’s a very easy commute! A lot of the traffic to see the place was local, just a handful of overseas buyers. This isn’t uncommon; Long Island City is very community oriented — not a lot of foreign buyers just looking to park their cash.” Antonia Watson, Keller Williams NYC

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Commercial market

from page 34

of data from CoStar Group showed. The bigger of the two deals was inked by the white-shoe law firm Paul, Hastings, Janofsky & Walker, which took 180,523 square feet at Tishman Speyer’s 200 Park Avenue, the MetLife Building. Meanwhile, the advertising firm R/ GA Media Group leased 173,000 square feet at Brookfield Property Partners’ 450 West 33rd Street, which is slated for a $200 million renovation. There were fewer pricey deals — defined as $100 per square foot or more — according to JLL’s preliminary third quarter report. There were only seven such deals in the third quarter, compared with 17 each in the first and second quarters. The report noted, however, that the lower deal figure could increase as confidential deal terms leak out. “When I talk with other brokers, it seems like good space [in Midtown] is moving fairly quickly, but softening around the fringes,” said Elizabeth Juviler, a broker with the Midtown-based Rice & Associates, who focuses on deals between 3,000 square feet and 10,000 square feet. Even with Midtown’s lackluster quarter, rents were up and the availability rate declined. The average asking rent in Midtown was $75.74 per square foot last quarter, up 9.2 percent from the same period a year ago when it was $69.36 per foot, the Colliers figures showed. The availability rate, meanwhile, dropped by 1 point to 10.6 percent.

Midtown South Key market indicators looked good for Midtown South in the third quarter. One deal helping make that happen was the tech and financial firm Retail Capital, which inked a five-year lease

for roughly 4,200 square feet on the 10th floor of ABS Real Estate’s 915 Broadway at the corner of 21st Street. The asking rent in the deal was $65 per square foot, said ABS’s James Caseley, who along ABS colleagues Carol Sacks and Alex Kaskel represented the building. Caseley said that the Retail Capital deal has driven up the asking rent in the building. Rice & Associates’ Juviler represented the tenant. The space will be the Michigan-based Retail Capital’s first in New York. In addition, a large block of Midtown South space hit the market last month in the Meatpacking District at 860 Washington Street. It included 87,973 square feet of office space and 25,612 of retail. A Cushman & Wakefield team is listing it for the joint venture of Romanoff Equities and Property Group Partners, who are developing the 10-story building at the corner of West 13th Street. The asking rent was not disclosed. But the average asking rent in Midtown South was $58.19 per square foot in the third quarter, up 9.3 percent over the year, from $53.23 per foot. The availability rate in the market declined by 1.2 points to 8.5 percent, the Colliers figures showed.

Downtown Brookfield inked a deal last month with the Toronto-based Hudson’s Bay Company, which owns the department stores Saks Fifth Avenue and Lord & Taylor. The 400,000-squarefoot office deal is divided between 225 Liberty Street and 250 Vesey Street, both at Brookfield Place in Lower Manhattan. That deal brought the total leasing since late 2013

at the 8.5-million-square-foot Brookfield Place complex, following the expiration of a long-term lease with Bank of America Merrill Lynch, to a stunning 3.1 million square feet. Meanwhile, as mentioned above, 1 Chase Manhattan Plaza is also on the hunt for tenants. The strategy there is to land one or two major companies to anchor the 1.1 million square feet of available space, said JLL’s Wheeler, who added that the building is in a good position given the number of similar availabilities on the market. “When we look at Manhattan as a whole, we see a very finite list of quality large blocks,” he said. The other large blocks coming on to the market are about 300,000 square feet on floors nine through 15 at Brookfield’s 16-story 1 North End Avenue. The Chicago Mercantile Exchange is giving back that space, which will be available at the end of 2015. Brookfield purchased the building for $200 million from the exchange, which will lease back the lower floors for 15 years. “It keeps us in the big-block game,” Brookfield’s Cheikin said. He said there was no asking price yet, but would “trade at a premium,” to the other Brookfield Place spaces. Brookfield is also bringing 400,000 square feet at 1 Liberty Street to the market. That space is being vacated by the investment banking giant Goldman Sachs, which is now headquartered nearby at 200 West Street, and will be available in the first quarter of 2015. The average asking rent Downtown hit $51.70 per square foot last quarter, up 8.9 percent over the past year from $47.48 per foot. The availability rate declined by 3.7 points to 12.2 percent. TRD

Barnett from page 89 problems of income disparity and inequality by going after the rich door/poor door,” he said. Barnett also pointed out that once Extell decided to create a separate portion of the building for the affordable rental units, it was actually required under current zoning regulations to include a separate entrance. But his views aren’t sitting well with anti-poverty activists. Elise Goldin, a tenant organizer, said that Barnett’s use of the poor door was a violation of Jewish values. “Seeing this poor door used, especially by a religious Jewish person, is an abomination,” Goldin said. “It’s creating segregation, shame and barriers between us.” Barnett, who grew up in an Orthodox Jewish community on the Lower East Side and is the son of a prominent Talmud scholar, said that part of the reason that he has been so vocal on the poor door is that he wants people to understand why the separate entrances are being used. “We’re not in the business of discriminating against people, he said. “We never have and we never will be.” Not only are separate entrances mandated, they also help investors breathe easier, Barnett said. “I recognize that there’s legitimacy and logic on other sides of the opinion as well,” he said. He’d be willing to consider tweaks to the poor door at 40 Riverside, he said, if he was approached with a “proposal that made sense” and had the consent of his financial backers. “We’re not free agents here,” he said. “We have partners, and they have a voice as well.” Despite his outspokenness, a high-ranking City Official said that Barnett has “never been arrogant.” “He says what he thinks and he gives his reasons for doing it,” the official said. 152 October 2014 www.TheRealDeal.com

Playing politics In the mayoral race last year, Barnett donated just under $5,000 to Christine Quinn, who at one point was the frontrunner, and only $400 to Bill Thompson and de Blasio, campaign finance records show. Barnett said despite de Blasio’s “leftist credentials,” he was “practical and fair.” On the statewide front, Barnett’s support is singleminded. He donated more than $200,000 to Cuomo, a shoo-in for reelection, in this election cycle, according to an analysis by the nonprofit New York Public Interest Research Group. “We certainly believe in our constitutional right to have input into the election,” Barnett said, noting that he’s supported Cuomo since he first ran for Attorney General. He continued his support, he said, despite the fact that as AG, Cuomo ruled against Extell in a case involving buyers’ deposits at the Rushmore. Cuomo’s decision, Barnett said, “led to tens of millions of dollars in lost deposits, and I think he was wrong on that. Still, he ruled against us, so no one can say that this governor is doing us any special favors.” Yet recently, when the governor’s anti-corruption panel known as the Moreland Commission was preparing a report that prominently featured Extell, Cuomo’s office pushed the panel to remove references to the developer, according to the New York Times. Meanwhile, in January, just days before Cuomo approved a controversial 421-a tax extension bill that benefited One57, entities tied to Extell gave $100,000 to the governor, the New York Daily News reported. But Barnett said that the bill was expected to pass in June, well before Extell made those donations.

The Moreland Commission, which was investigating Extell’s donations along with those made by four other developers, was prematurely disbanded by Cuomo in March. But its case files were turned over to Preet Bharara, the U.S. Attorney for the Southern District of New York, who is still looking into the matter.

‘Davening’ for the market Over his 20-plus year career in New York real estate, which he began as a principal in Property Markets Group along with Kevin Maloney and Ziel Feldman, Barnett has shown a willingness to take on deals that others won’t touch or don’t know about, industry players said. And despite his spats with some rivals, many in the industry view Barnett with awe. “He’s a magician and one of the smartest guys that I’ve met in my three decades in NYC real estate,” Miller of 5Points Group said. “He’s the master assembler.” “We marvel at what he’s doing,” said Jim Wacht, president of commercial brokerage Lee & Associates, who isn’t involved with any Extell projects. Meanwhile, Douglas Elliman veteran Gilad Azaria said that Barnett’s projects showed a knack for “predicting the future.” “Before people even knew what $2,000 per square foot was, Gary was planning to sell units [at One57] for $10,000 per square foot,” Azaria said. “We’ve been lucky,” Barnett said of his successes. Now though, faced with soaring land costs, Extell is becoming more cautious, he said. Still, the company is at the mercy of the market, and Barnett is praying that its strength continues. “This Rosh Hashanah,” he said, “we will be davening.” TRD

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Greenfield

from page 68

In addition, Greenfield and the Real Estate Board of New York are largely in sync in criticizing the extensive landmarking of historic districts that occurred under former Mayor Bloomberg’s administration. He has said at Land Use hearings that such landmarking is at odds with de Blasio’s affordable-housing initiative. Not every project, however, has been met with a positive recommendation. The committee, along with Queens Councilman Ruben Wills, advised developer George Tserpes of Tserpes Holding LLC to withdraw his application seeking a zoning change to build a $60 million, 13-story hotel in a residential area in Queens’ South Ozone Park, because it would likely not be approved. Tserpes did so. Residents had protested the project, expressing fears that it could one day be converted into a homeless shelter. “Although the applicant testified that this project would only be a hotel, the applicant had no commitments from hotel operators to open in the space, spurring the community’s doubts,” Greenfield said. “We didn’t believe the developer.”

More projects that require subsidies or propose zoning overhauls are likely to arise, which may challenge his image. Take for instance Alma Realty’s 2.2 million-square-foot, 1,723-unit Astoria Cove project, which is under review by the city. The proposal has embodied the disconnect between a developer and the public — the borough president, community board and residents — over the allotment of affordable units. Although Alma upped the affordable-housing component to 20 percent from 17 percent, Katz advised the Council to reject the project, arguing that the number remains insufficient. Greenfield declined to comment on the project, and the developer did not respond to messages seeking comment. He said his basic philosophy is to ensure the creation of “responsible development” that caters to the needs of both the developer and the residents in that district. “I strive to be an honest broker between both parties,” Greenfield said. “In almost every case, you can reach the happy note.”

Although Greenfield is not Sephardic, he served as executive vice president of the Sephardic Community Federation and has ties to the local Sephardic community, many of whom are Syrian and involved in real estate. In his bid for City Council, he received donations from Aurora Capital’s Robert Cayre, Century 21 store owners the Gindi family and the Hidary family, which owns Hidrock Realty. A spokesperson for the Hidarys said the family contributed to Greenfield’s campaign because of his “commitment, hard work and devotion to his district in Brooklyn,” noting that the donations occurred prior to his entry into the real estate world. David Lombino, director of special projects for Two Trees Management, said he expects there will be several contentious rezonings in the next few years “as the city uses density as a means to create additional affordable housing.” “Councilmember Greenfield is positioned where he wants to be, in the middle of those conflicts, trying to find creative solutions,” Lombino said, “and, where appropriate, getting to that ‘yes’ vote.” TRD

Yet big deals are on the rise. In 2011, there were only three transactions above $30 million, TerraCRG found. This year, the firm is projecting 25 to 30 deals will close above that level. If there’s one problem in the market, said Hess, it’s that there is not enough product in Brooklyn to continue fueling those $30 million deals. For now, though, times are good. Commercial sales prices for core Brooklyn properties — including multi-family, mixed-use, office and retail — saw a 14-percent increase on a price-per square-foot basis in the first six months of 2014, versus the first half of last year, according to Massey Knakal Insiders say activity remained strong in the third quarter. Last month, The Real Deal reported that Joel Schreiber’s Waterbridge Capital had entered contract to buy a portfolio of properties on Williamsburg’s North 3rd Street for $100 million, at a per-square-foot price of nearly $1,000. Sam Boymelgreen also put his 126-unit Windsor Terrace rental property, the Kestrel, on the market with an asking price of

$90 million. Going into the fourth quarter, Cohen expects the pace to continue. But, he said, the possibility that the city will reform the 421-a tax abatement program or institute a policy of mandatory inclusionary housing next year creates considerable uncertainty in the market. “These are things that could potentially affect things longterm, but right now no one has enough clarity on how these things work,” said Cohen. The direction of interest rates is another factor developers and investors are watching. But Stephen Steiner of Stratus Capital Advisors, who marketed the Chocolate Factory loft, said even if interest rates rise, the effect will not be significant enough to derail the market’s momentum. “There is still so much money out there. The market will continue. I don’t think there are any clouds on the horizon,” said Steiner. TRD

that they often come with large open spaces — and many parking spots — that are typically not available in other boroughs. In fact, one of this year’s most notable transactions is the $28.5 million sale of a parking lot, the ninth largest trade in Queens this year. In July, GTJ REIT, a Long Island City-based real estate investment trust, bought the 85,000-square-foot site, which is leased by FedEx through 2027, at 28-20 Borden Avenue in Long Island City. The site last traded in 2011, when North Carolina-based SunCap Property Group, together with investor Charlie Zaharia, bought it for $8.1 million. For all the gangbuster activity, some are predicting it may soon slow down. Thomas Massone, a principal with Empire Leasing and Development with 45 years of experience, focusing mostly on Queens, who was involved in the 34th Street deal on behalf of Brickman, said that while prices are going up in the borough, he foresees “a

pause.” The Lloyd Goldman building, he said, was particularly attractive due to its large size, available parking and “great tenants.” “I think people are generally going to pull back,” Massone said, “because rents have not caught up with the (sales) prices.” Preuss said development in the borough is skyrocketing, as demand is outpacing supply. “Finally, you’re seeing it in Queens,” Preuss said. TRD

Brooklyn commercial from page 83 flated by large deals, like the 2012 sale of Kings Plaza Mall for $751 million. But now, the large number of deals is behind the blockbuster totals. “It’s definitely transactional volume driven, rather than large price deals driving that dollar volume through Brooklyn,” said Mercado. In the first half of 2014, Massey Knakal counted 1,086 commercial sales in Brooklyn, up 14 percent from the same period last year. Williamsburg led the pack in the purchase of development sites, with 31 sales through the first half of the year, according to Massey Knakal. Bedford-Stuyvesant was the borough’s second-most-active submarket for development, with 27 sites trading. Greenpoint came in third, with 21, with Crown Heights trailing just behind at 18. The average transaction price of deals studied by TerraCRG stood at about $3 million in the first half of 2014, compared with $2.5 million last year. The vast majority of deals in Kings County fell below $3 million, said Cohen.

Queens commercial from page 84 In another Long Island City trade, Brickman bought a massive three-story industrial building at 4725 34th Street for $60 million in March, just a year after it had traded for $40.7 million. Lloyd Goldman and BLDG Management were the sellers. It marked the third-largest deal in the borough this year. Also among the recent deals is the planned sale of One Court Square, the Citigroup building. Savanna, a real estate private equity firm, reached an agreement to buy a controlling interest in the 1.5-million-square foot office tower in Long Island City during the summer, but it did not make TRD’s list, because it does not appear appear as closed in city records. The 51-story skyscraper — the tallest building in the city outside of Manhattan — traded last in 2011, when it was sold by SL Green for $500 million. Part of the appeal of commercial sites in Queens is

CORRECTIONS A N D C L A R I F I C AT I O N S In the September magazine story “2014 Records so far,” the listing brokers for 221 West 138th Street, a landmarked limestone townhouse in the Harlem historic district of Striver’s Row that sold for $2.9 million, were misidentified. Halstead Property brokers Norman McHugh and Ivonne Velasques had the listing.

TRD

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Times Square

from page 47

thing,” he said. Rents have not been set for the space, which is scheduled to open by the end of 2016, Goldberger said, though he added that $2,500 per square foot for the ground floor in the current Times Square market is not out of the question. 7 1535 Broadway This Broadway property, which runs from West 45th to 46th streets, contains the Marriott Marquis Times Square, a massive 49-story, 1,960-room hotel. It’s also been the site of a flurry of significant activity. Last winter, Host Hotels and Resorts, the property’s operator, bought the land under the building from the staterun Empire State Development Corp. for $20 million, in a controversial transaction that critics derided as a sweetheart deal because of the low price. Vornado Realty Trust is revamping and expanding the retail portion of the building, which it controls, as it did with the retail on the lower floors across the street at 1540 Broadway. Last year, Sunglass Hut paid $2,000 a square foot for space in the latter building, Vornado said at the time. The discount clothing store Forever 21 is also there. In addition to its $140 million revamp of the retail at 1535 Broadway, CEO Stephen Roth‘s Vornado is installing a six-story, 300-foot-wide LED billboard on the tower. On a recent morning, construction crews were installing the screen. A Vornado spokeswoman did not return a call for comment. 8 130 West 42nd Street This 30-story, 250,000-square-foot office tower, once known as Bush Tower, traded last fall for $150 million.

American Properties, which controlled the site since the early 1980s, sold the ground lease to the joint venture of Tribeca Associates and Meadow Partners, a global asset manager. The new owners, who are calling the 1918 building by its address, are now revamping and expanding the lobby and making some other improvements. “The idea is to make it much more modern and befitting of its neighbors,” said Tribeca’s Ingerman, who said the owners are looking for hedge funds and tech firms for the office space. Asking rents are now at $75 per square foot, according to CoStar, compared with $60 a few years ago. The building also has a 19,000-square-foot retail space, but Ingerman declined to say what changes, if any, would occur there.

run north of $2,500 per foot. According to Newmark Grubb Knight Frank Retail, which is marketing three retail spaces at SL Green’s 1.75 millionsquare-foot office tower at nearby 1515 Broadway, along with the tower’s pair of LED signs, the area has extremely compelling numbers for retailers. There are 100,000 pedestrians every night from 7 p.m. to 1 a.m., the firm says; also, 17,200 hotel rooms are packed into the area.

9 1565 Broadway Two years ago, Sutton bought this famed four-story building for $30 million. Its former tenant was the Roxy Deli, known as much for its glittering neon sign as its pastrami sandwiches. Then, last winter, Sutton turned around and re-leased the 5,200-square-foot space to a Radio Shack franchise. It’s unclear what Sutton is charging the electronics chain, but that block typically commands upwards of $2,000 a square foot in retail rent. In any case, that Radio Shack rental is short-term, while Sutton decides on a more permanent tenant, a source close to the deal said. The 5,159-square-foot retail space is next door to the American Eagle-occupied 1551 Broadway, which Sutton owns outright after buying out partner SL Green. But the duo also co-owns 1552 Broadway, located across the street, as well as 1560 and 1604 Broadway. Asking rents in this stretch can

10 250 West 43rd Street Real estate mogul Joseph Chetrit signed a $190 million contract last month to buy the Hotel Carter, a 600-unit Emery Roth-designed high-rise that fell on hard times in the 1970s along with the neighborhood but has yet to share in the renaissance. The hotel was named three times by the travel website TripAdvisor as the dirtiest hotel in the U.S., though recent reviewers say it is merely “worn” and “could use updating.” Chetrit — who bought the Sony Building on Madison Avenue for $1.1 billion last year — is expected to renovate the property but to keep it as a hotel, a source told TRD. Cheetah’s, a strip club on the ground floor, will remain for a few years until its lease runs out, according to the source. The hotel’s name will also likely change, the source said. The 1930 property, which was sold by the heirs of Vietnamese shipping magnate Tran Dinh Truong, was the subject of an intense bidding war, according to news reports. Aby Rosen, Highgate Holdings and the CIM Group were all bidders, the source said. Occupancy rates in the neighborhood held above 80 percent even during the recession, brokers said. TRD

on those in Midtown. In 2014’s second quarter, Colliers data show the average Class A asking rent in Midtown was $76 a square foot, compared with $67.16 in Midtown South — a gap of less than $9. Meanwhile, Class B space, which accounts for the vast majority of Midtown South’s property, was actually more expensive in Midtown South than in Midtown: $57.31 on average, versus $55.05. Average asking rents in Midtown South for Class B space surpassed Midtown’s in the summer of 2013, according to Cassidy Turley. In addition, Midtown South’s most expensive deals this year were generally inked at rates higher than the asking rents, suggesting that tenants are willing to compete to secure space there.

For example, the starting asking rent at 51 Astor for the space Claren took was in the high $80s per square foot, but the company locked in a starting rent of $110 per square foot, according to Colliers. And brokers don’t anticipate any downward slide of Midtown South rents, in part because of a dearth of new office construction. Most of Manhattan’s new commercial construction has occurred in Midtown and Downtown, with the exception of 51 Astor and Thor Equities’ 55,000-square-foot 837 Washington Street in the Meatpacking District. As for tenant mix, they say that the submarket’s tech-heavy makeup will continue for a while. “They like to cluster,” Falk said. “They like to be in the same part of town.” TRD

Midtown South leases from page 48 Silicon Alley, the beginning Googled moved to Midtown South in 2005, when it leased space at 111 Eighth Avenue, and subsequently purchased that building for $1.9 billion in 2010. Both moves helped cement the submarket’s reputation as a tech hotspot. That reputation dates back to the mid-1990s, when the first wave of dot-com companies started leasing in Midtown South, and the corridor from roughly Soho to the Flatiron District on Fifth Avenue and Broadway came to be known as Silicon Alley. But back then, affordability was driving the area’s popularity. Now, with Google and other brand-name tech firms clustered there, Midtown South has become a first stop, rather than a Plan B for these firms — even if the rents are gaining

Elliman and Knight Frank from page 50 hires, luring Lauren Muss away from the Corcoran Group and Brett Miles from Town Residential. Muss said the new partnership was a major factor in her decision to make the jump. “Everyone knows the Knight Frank brand,” she explained. Several other local brokerages already have international affiliations. Sotheby’s International Real Estate and Brown Harris Stevens, the exclusive affiliate of Christie’s International Real Estate, are tied to their respective auction houses. In 2010, meanwhile, Stribling & Associates formed a marketing partnership with Savills, the London-based brokerage that goes toe-to-toe with Knight Frank. Stribling Vice Chairman Kirk Henckels said Elliman/ Knight Frank will be competing globally with Stribling/Savills. “I wouldn’t call it a threat, but I would call it a competition,” he said. “A friendly competition.” 156 October 2014 www.TheRealDeal.com

Success vs. failure What this new affiliation means for each firm’s share of the international-buyer pool is hard to pin down. Because of the federal Fair Housing Act, the firms say they do not keep tabs on buyers’ national origins, and in an increasingly global market, it is harder to specify who is an international buyer. “We don’t break it down that way,” Lorber said when asked what percentage of international buyers Elliman represents. The chairman said his company holds the bulk of the local market share over competitors Corcoran and Brown Harris Stevens, so it figures Elliman has the largest share of international buyers. BHS, for its part, claims it reps the most international buyers. BHS said that in 2012, the company repped either the

seller or buyer in 34 percent of condos over $10 million and 72 percent over $20 million — just the types of high-end properties international buyers are purchasing. Former Elliman broker Leonard Steinberg, now president of Urban Compass, worked at the company through the initial phases of the relationship with Knight Frank. “They tried several ways to make it work,” he said. “There were some success stories. Ultimately, what matters most to the consumer is the actual product.” Steinberg said he thinks some strategic partnerships can have value, while others fail. He cited Insignia Financial Group’s short-term ownership of Elliman in the early 2000s and the former co-branding with Prudential. “Some work, some didn’t work,” he said. “It remains to be seen how this plays out.” TRD www.TheRealDeal.com January 2012 00

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By Tom DiChristopher tate Sen. Brad Hoylman late last month introduced legislation calling for a tax on pieds-à-terre. The bill won’t become law soon: It likely won’t even be considered until it is reintroduced in January’s new session. But the specter of such a law has some real estate insiders and tax policy experts sounding dire warnings about the chilling impact it would have on the market. The bill, which followed a report by the Fiscal Policy Institute, would amend the Real Property Tax Law, allowing the city to tax non-primary residences at escalating rates, depending on the property’s value. The graduated levy would kick in on homes worth between $5 million and $6 million, which would be subject to a surcharge equal to half a percent of the value of the unit. The proposal spells out six brackets total that raise the rate depending on the value of the home. At the top tier, condos and co-ops valued at $25 million and above would be charged $370,000,

to renegotiate prices to offset any new tax burden. If would-be buyers back out of deals, prices could begin to fall. “I think the talk probably puts a lot of potential sales on hold, because people aren’t going to be able to predict what the tax impacts are,” said Citizens Budget Commission President Carol Kellermann. “Uncertainty is never a good thing,” she added. Kellermann said the proposal does not make the case that the city needs additional revenue, and instead appears calculated to correct what some see as unfairness in the housing market — namely, that part-time residents enjoy tax-funded benefits without paying for them. “Our city needs new lines of revenue to address critical infrastructure needs,” Hoylman countered. “Anyone who suggests otherwise obviously hasn’t been to one of the public housing developments in my senate district in Manhattan or across the five boroughs.” He also said the money could be used to address the city’s chronic shortage of

“I think it’s in the interest of New Yorkers ... to attract as many people who invest in real estate and go to restaurants and go shopping as possible. This is going to scare them away.” Hall Willkie, Brown Harris Stevens plus 4 percent on excess over $25 million. The left-leaning Fiscal Policy Institute estimated such a measure could generate revenue of $665 million, 83 percent of which would be from pieds-à-terre in the top bracket. “The pied-à-terre tax addresses the free rider problem of the super-rich nonresident,” said Hoylman, a Manhattan Democrat. “Currently, non-residents who purchase luxury apartments don’t pay their share towards city services and infrastructure maintenance, because they’re exempt from income taxes.” Real Estate Board of New York President Stephen Spinola said the threat of hefty new taxes on homes would have an immediate impact. “The problem is that when you propose this kind of economic hit on any segment of the market, you’re putting a significant chill into the market,” said Spinola. “What’s going to happen while there’s this uncertainty about whether or not this tax is going to be adopted?” He predicted non-residents may seek

affordable housing and the “crumbling infrastructure of our public housing, mass transit and city colleges.” The idea that pied-à-terre owners aren’t contributing to the local economy is flawed, said Hall Willkie, president of Brown Harris Stevens. That argument fails to factor in the outsized impact that wealthy part-time New Yorkers have while here. “I think it’s in the interest of New Yorkers and the New York tax base to attract as many people who invest in real estate and go to restaurants and go shopping as possible,” said Willkie. “This is going to scare them away.” Industry insiders are concerned about the effect the tax would have on international investors, who are increasingly purchasing second homes here. “I can’t imagine that given how incredibly profitable foreign investment has been in elevating the Manhattan market to a new historical high, that this would be regarded as a wise idea,” said John Burger, a top broker with Brown Harris Stevens. TRD www.TheRealDeal.com March 2010

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The 10 biggest NYC office blocks on the market World Trade towers, other new construction top list of properties with large vacant spaces

By Mark Maurer lthough leasing in the Manhattan office market is much stronger than last year, some of the largest buildings in the borough still have massive vacancies. The three largest blocks of office space on the market, according to an analysis of CoStar data, are located inside towers that are under construction, and the 10 biggest blocks are mostly concentrated in Lower Manhattan. No. 1 on the list is Silverstein Properties’ 80-story, 2.8 million-square-foot tower 3 World Trade Center, which has 1.97 million square feet available. Media investment management firm GroupM leased about 516,000 square feet across nine floors last year. The building is slated to open in 2018. Space at the Moinian Group’s 66-story mixed-use tower 3 Hudson Boulevard is on the market, but none of the whopping 1.87 million square feet has been spoken for, putting the building in second place. Avison Young is serving as the leasing agent. Third is One World Trade Center. The Durst Organization has yet to lease up 1.25 million square feet of the 3 million-squarefoot, 104-story skyscraper, although it did snag high-profile anchor tenant Condé Nast, which will move roughly 3,500 staffers to the nation’s tallest building. Meanwhile, 4 World Trade Center opened its doors last year. Silverstein’s 74-story, 2.8 million-square-foot tower has 901,838 square feet available, despite the recent signing of investment research firm Morningstar to 30,000 square feet. Of the 1.86 million square feet on 48 floors at 4 Times Square, formerly known as the Condé Nast building, Durst has 846,311 feet available. The publisher reportedly has started its move Downtown. The Paramount Group has 814,716 square feet on the market at Paramount Plaza at 1633 Broadway, which totals 2.6 million square feet. Record giant Warner Music Group inked a 16-year deal for the fourth floor and seventh through 11th floors at the 48-story building in October. The next largest block of available office space is at Sabey Data Center Properties’ Verizon Building at 375 Pearl Street. The 1.1 million-square-foot building has 771,484 million square feet vacant. Sabey said earlier this year it is renovating the top 15 floors of the 35-story tower. MetLife’s 1.1 million-square-foot building at 85 Broad Street has had significant vacancies for a while. Goldman Sachs moved out in 2009, and its former home was heavily damaged by Superstorm Sandy. A roughly 630,000-square-foot space is still listed in CoStar after more than four years. The 30-story property landed Oppenheimer Holdings for 269,221 square feet in 2011 and Nielsen Media for 116,258 square feet in 2012. Leasing, however, has long been

162 October 2014 www.TheRealDeal.com

4 World Trade Center opened last year but still has 901,838 square feet of space on the market.

3 World Trade Center tops the list of buildings with large blocks available, with 1.97 million square feet.

One World Trade Center has 1.25 million square feet still on the market, placing it third on the list.

The Moinian Group’s 3 Hudson Boulevard is No. 2 on the list of buildings with large available blocks.

1633 Broadway has over 800,000 square feet available, despite recently signing Warner Music Group.

The large space being vacated by Condé Nast at 4 Times Square has not yet been leased.

stagnant there. The ninth largest block of available office space is 195 Broadway, with 580,954 square feet up for grabs. JPMorgan Asset Management acquired the 29-story, 1.05 million-square-foot landmark building late last year. Advertising giant Omnicom Media Group and publisher HarperCollins are

among its most notable tenants. Finally, the Rockefeller Group has struggled to fully lease up the McGraw-Hill Building at 1221 Sixth Avenue, which is home to the financial information service whose name it bears. Of the total 2.65 million square feet, 504,475 square feet of office space is available, CoStar shows . TRD

The McGraw-Hill Building at 1221 Sixth Avenue has over 504,475 square feet of space available.

www.TheRealDeal.com January 2014 35

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ALM presents RealShare New York, a halfday conference on commercial real estate issues, including financing, investment, brokerage, development and property management. Confirmed speakers include Robert Astorino, Republican candidate for governor; Seth Pinsky, RXR; David Schechtman, Eastern Consolidated; Robert Knakal, Massey Knakal Realty Services; Ray Kelly, president of Risk Management Services for Cushman & Wakefield and former NYPD commissioner, more. 8 a.m. to 12 p.m. Roosevelt Hotel, 45 East 45th Street. Fee: $250. Information and registration: www.globest.com.

As part of Architecture and Design Month, the American Institute of Architects’ New York chapter and the Center for Architecture are offering tours of a different building in one of the five boroughs each day. On Oct. 9 the program will feature Kickstarter’s massive Greenpoint headquarters, designed by Ole Sondresen. 12 p.m. to 1 p.m. Meet at AIANY Tours, 58 Kent Street, Brooklyn. Tickets must be purchased in advance. Fee: $10. Information and registration: www.archtober.org.

CALENDAR 1 2 3 4 5 6 7 8 9 10 11 12

21–23

The Urban Land Institute presents its 2014 annual meeting with guest speakers Jamie Dimon, chairman and CEO of JPMorgan Chase & Co. and Dan Doctoroff, former Bloomberg CEO. The event features panel discussions on emerging trends in real estate, including financing and capital markets, green building practices and more. At the Javits Center, 655 West 34th Street. Fees range from $305 for students to $1,875 for the public. Fees rise after Oct. 3. Information and registration: fall.uli.org.

The Real Deal/Miami presents its annual South Florida Real Estate forum and showcase, featuring panel discussions on the growing foreign buyer pool in the region; the current preconstruction cycle and what’s next for condo design. Panelists include Jill Eber, The Jills; Alicia Cervera, Cervera Real Estate; Don Peebles, the Peebles Corp.; Nitin Motwani, Miami Worldcenter Group; Bernardo FortBrecia, Arquitectonica; Carlos Ott, Carlos Ott Architect; and Patricia Hanna, the Related Group. 12 p.m. to 6 p.m. The Moore Building, Miami Design District. Fee: $25. Information and registration: TheRealDeal.com/ SoFlaForum.

The Brooklyn Navy Yard Center at BLDG 92 presents a tour of the Ferra Designs metalworking factory. Visitors will travel from Ferra’s design offices to its factory floor. 10 a.m. Information and registration: www.bldg92.org.

14 15 16 17

The Real Estate Board of New York holds its 26th Annual Residential Deal of the Year Charity & Awards Gala to benefit the “Member in Need Fund.” The evening will honor industry professionals with the Henry Forster Lifetime Achievement award and the Rookie Salesperson of the Year award. 6:30 p.m. to 11:00 p.m. The Metropolitan Pavilion. Fee: $525. Information and registration: www.rebny.com.

11–12

Open House New York presents the 12th-annual Open House New York Weekend, two days of tours and talks at the city’s most interesting and historic architectural and design landmarks. Sites and tours will be announced in early October. Information and registration: www.ohny.org.

19 20 21

164 October 2014 www.TheRealDeal.com

The Building Owners and Managers Association, New York chapter, hosts its annual dinner dance at the Rainbow Room, 30 Rockefeller Plaza. 6 p.m. to 11 p.m. Fee: $475. Information and registration: www.bomany.org.

22 23

The National Association of Professional Women in Construction hosts its Salute to Women of Achievement. Honorees are: Michelle Bernstein, Alexander Wolf & Son project manager; Stephanie Cesario, Hunter Roberts Construction Group project executive; Zaria Demarchi, Port Authority of New York & New Jersey senior airport engineer; Marianne Egri, NYC School Construction Authority vice president; Nicole Hunter, HNTB Corp. project manager; Carolyn Kurth, senior manager at CohnReznick and president of PWC’s Connecticut chapter; Carolyn Pugaczewski, M. Adams & Associates president, and president of PWC’s New Jersey chapter; and Sylvia Smith, FXFOWLE senior partner. 11:30 a.m. to 2 p.m. Fee: $200 for members, $300 for nonmembers. Information and registration: www.pwcusa.org.

24 25 26

The New York Botanical Garden presents, “High Line and Beyond,” a lecture in the garden’s landscape designs portfolios series, featuring Lisa Switkin, principal at landscape architecture and urban design firm James Corner Field Operations. At the Midtown Center, 20 West 44th Street. 6:30 p.m. to 7:30 p.m. Fee: $22 members, $25 non-members.

27 28 29 30 31

The New York Association of Realty Managers presents its annual Real Estate Expo with a daylong program of seminars on various topics, plus presentations by 65 exhibitors. Hotel Pennsylvania, 401 7th Avenue. Free, pre-registration is advised. Information and registration: www.nyarm.org.

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COMINGS & GOINGS William Raveis NYC hires first big brokers

early four months after its launch, William Raveis New York City added its biggest names yet last last month. The firm tapped Halstead Property’s Julia Boland to launch its new development division and hired Corcoran Group veteran Fabienne Lecole to bulk up its growing roster of brokers. Boland spent the last seven years at Halstead, where she handled sales for projects such as L+M Development Partners’ Adeline at 23 West 116th Street and ADG Langsam’s One48 at 148 East 24th Street. Her team was named Halstead’s top new development marketing broker for 2012. Boland was also on The Real Deal’s 2014 list of top Fabienne Lecole 75 Manhattan agents, coming in at No. 57. Prior to Halstead, she was at Brown Harris Stevens for six years. “She is the consummate businesswoman,” William Raveis NYC’s Julia Boland co-managing director Paul Purcell said. Lecole, who hails from France, joined Corcoran in 2001 and earned numerous distinctions at the firm, including the 2014 President’s Council, which recognizes the firm’s top 2 percent of producers, and the 2009 and 2012 salesperson of the year awards for Corcoran’s Carnegie Hill office. Last year, she sold a Harlem townhouse at 2036 Fifth Avenue to television star Neil Patrick Harris. Also joining Lecole from Corcoran is Maria Wall, who began her career as a real estate agent in 2000. William Raveis NYC, which is the Northeast brokerage giant’s 100th office, now has 15 agents. Co-managing director Kathy Braddock said that, in line with the brokerage’s approach across the region, the New York office would focus on helping agents develop thriving “businesses within the business,” or teams that have long-term value and a distinctive brand that could eventually be sold. By Hiten Samtani

Town Residential to open London outpost

own Residential will open its first international location in London, reps for the firm told TRD. “London is the closest sister market to New York in terms of interest and excitement,” said Jeff Appel, Town president. “We felt that it was important to establish an outpost there.” Lindsey Owen, an agent at Town’s West Village office, is moving to the U.K. to head up the London office, which will be located at 67-68 Jermyn Street in Central London’s Westminster district. Appel indicated that in the near future, Town might look to acquire London-based broHoward Morel Leslie Hirsch kerages to solidify its presence there. The move comes around the same time that Douglas Elliman, Manhattan’s largest brokerage, is striking up a new partnership with big London-based brokerage Knight Frank (see page 50). Town is also intensifying its effort to reach Chinese investors, who’ve surpassed the Russians to become the biggest foreign buyers of New York real estate. Hannah Han, a Beijing native who worked for JLL in the Chinese capital and was most recently at Stribling & Associates’ Madison Avenue location, has joined Town’s Fifth Avenue office to help lead the expansion into China. In a statement, Town CEO Joseph Sitt said, “This is just the beginning of a significant international expansion that will further distinguish Town from its competitors.” Meanwhile, in another move on the international front, Howard Morrel and Leslie Hirsch took their team of international specialists to Engel & Völkers, the Germany-based brokerage that opened its first Manhattan office in May. The five-person team has worked primarily with foreign clients during its five years with Brown Harris Stevens, and will continue to do so at Engel & Völkers. BHS had acquired Morrel Realty, an independent brokerage founded by Morrel, in 2009. It was dissolved when the team joined BHS. By Tom DiChristopher and Hiten Samtani

Sapir Organization founder Tamir Sapir dies at 67

amir Sapir, a Soviet émigré and onetime cabbie who made his fortune bartering fertilizer and oil in the 1980s and then began investing in New York City real estate, died last month at age 67. The founder of the Sapir Organization had been in poor health for several years. His son Alex Sapir, appointed president and chairman of the family-owned firm in 2006, has long been its public face. Born in Tbilisi, Georgia, Sapir immigrated to Israel in 1973 at age 26. He migrated to Louisville, Kentucky, where he worked as a bus driver before settling in New York. He bought and then mortgaged a taxi medallion to get his businesses off the ground, starting with a wholesale electronics store on lower Fifth Avenue. In 1985, he was invited to join a delegation of U.S officials and corporate members in the U.S.-U.S.S.R. Trade and Economics Council, the main East-West trade organization of the Soviet era. He became a member of the council, which organized meeting between U.S. corporations and Soviet officials to improve trade. Sapir was Tamir Sapir one of the major foreign partners for the emerging oil industry in Russia. Sapir founded Zar Realty Management in 1993, buying distressed assets and upgrading them into lucrative commercial properties. Today, the Sapir Organization counts the 26-story Trump Soho condo-hotel at 246 Spring Street among its major projects, and purchased the Mondrian Soho Hotel, formerly part of the Morgans Hotel Group, for $205 million in June. It also owns 11 Madison Avenue and 260 Madison Avenue. By Julie Strickland 166 October 2014 www.TheRealDeal.com

Movers and shakers Rose Associates named Marc Ehrlich as its new chief financial officer. Prior to joining the New York-based firm 18 months ago as project manager focusing on the adaptive reuse of the landmark Lower Manhattan skyscraper at 70 Pine Street, Ehrlich was president and chief operating officer of the Las Vegasbased Panorama Group. Andrea

Mignone joined Rose

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Marc Ehrlich

generation efforts for new developments and initially focusing on 70 Pine. Mignone joins Rose from The Marketing Directors. Eastern Consolidated promoted Steven Zimmerman, the firm’s 2013 “Most Promising Broker of the Year,” to director from associate director. He Steven Zimmerman

has closed more than $100 million in transactions, in two years.

Erik Storz joined HFF as a director in its New York office focusing on debt and equity-placement transactions. He will also focus

on multi-housing properties. He previously worked at Berkadia Commercial Mortgage and the Staubach Company. Before he entered real estate 14 years ago, Storz played three seasons as a linebacker for the NFL’s Jacksonville Jaguars. Galleria Group hired Shawn Kim as a senior managing agent. Kim will lead a team at the firm specializing in rentals; he has closed more than 1,000 rental deals in his career. Michael Sottile joined Siderow Michael Sottile

came from learned nightlife and

Commercial Group to lead its new Hospitality & Hotels division. Sottile Picken Real Estate where he hospitality brokerage. He started in

residential real estate at Sotheby’s International Realty.

Also on the move Teddy Montee joined DJK Residential as a sales agent … Sandra Manley joined Realty Collective as training & development manager … and First Nationwide Title Agency hired Dawn Pereyo as director of title operations and Andrew J. Ruppert as senior title officer.

Announcements

Gordon Golub, chief residential real estate officer at Urban Compass, and his wife, Laura, welcomed a baby girl, Piper Penelope Golub ... Jill Noonan, managing editor of The Real Deal, and her husband, Bran, welcomed a baby girl, Josie Honey Noonan.

Follow @TRDNY on Twitter & Like us on Facebook.

A real fish tale: Mosler’s “My Montauk” hits shelves

WE H E A RD

The Cushman exec turns his photography and fishing passions into a new tome

▼

ushman & Wakefield’s Bruce Mosler has a reputation for reeling in the big fish when it comes to real estate clients. But he’s also reeled in his share of actual fish off Long Island. Now he’s turned his experience and time on the high seas into a photography book, “My Montauk.” Cushman’s chairman of global brokerage said his father taught him to fish as a boy, but he had no training as a shutterbug. Mosler picked up his camera about eight years ago. “I used my AmEx points to acquire a Canon camera,” he said. “Then I used my AmEx points to buy a telephoto lens. Some of my initial pictures were not publishable.” But he kept at it. It took the dealmaker about a year to put together the 80-page book, which Mosler published independently. It includes nearly 50 photographs that he snapped from his 40-foot fishing yacht, aptly dubbed “The Done Deal.” Mosler has a home in East Hampton, and for a decade he’s made the trek nearly every weekend out to Montauk

Proceeds from Mosler’s book sales will go to charity. (Inset) Bruce Mosler.

where he docks the yacht. “I was out there looking at the same venue over and over again, particularly that iconic lighthouse. I wanted to capture some of that … and to look at it at any given moment, even when not out on the boat,” he explained. The book, which includes anecdotes about fishing 80 miles offshore, was feted late last month at the Fifth Avenue apartment of cosmetics CEO and GOP fundraiser Geor-

Serhant’s silver screen business bump

Broker networks with the stars while on set for his recent movie

ould Nest Seekers International broker Ryan Serhant his character, “delightfully dimwitted.” In addition, Serhant, who stars in Bravo’s “Million Dolbe Hollywood’s next big leading man? That might be a bit of a stretch, but Serhant, who last lar Listing New York,” and briefly portrayed a deranged biomonth won praise for his role in inchemist on the soap opera “As the die filmmaker Noah Baumbach’s World Turns,” already has new onlatest film, “While We’re Young,”screen appearances lined up. In the next few weeks, he said, he’ll make said he would consider new acting announcements about two new TV roles — if they advance his real estate business. projects. He declined to provide If the reviews of his performance specifics, but said they’re both good for his brokerage business. in Baumbach’s film are any indication, the opportunities could flood Still, Serhant is not ready to start in. The Huffington Post crowed contacting casting agents, unless it’s that Serhant — who plays an ob- At the Toronto Film Festival, from left: Ryan Serhant, about a listing. He insists he has no Ben Stiller, filmmaker Noah Baumbach and Serhant’s tuse hedge funder opposite megaplans to leave real estate in pursuit of finance, Emilia Bechrakis stars like Ben Stiller, Naomi Watts film stardom. “People spend a long time trying to find a job that they and Amanda Seyfried — was the breakout star. And Film School Rejects, a popular movie and television blog, called like. I think I have just lucked out that I get to do something

A passion for fashion? Real estate players capitalize on Fashion Week to woo designers seeking retail space

ashion Week in New York City isn’t just for celebrities, glossy magazine editors and design house executives. The event is also a key networking opportunity for real estate players and retail brokers. “A lot of these designers have replaced Madison Avenue with Soho or the Meatpacking District,” said Faith Hope Consolo, chairman of Douglas Elliman’s retail division. Consolo said that roughly seven years ago, she signed Rag & Bone as a direct result of Fashion Week. And, she said, she’s got a new lease in the works with one of the designers she met at the shows last month. Attending the shows, Consolo explained, is an important way to learn about new designers who might want to move or lease retail space in the city. Consolo said this year she targeted some newer brands, including Lyla Rose and Lisa Perry. She observed that Neiman Marcus’s recent announcement that it’s opening its first New York City store at the Related Companies’ Hudson

168 October 2014 www.TheRealDeal.com

Yards development could prompt other fashion retailers and high-end designers to follow at that site, or at some of the city’s other new big developments such as Downtown’s Brookfield Place or the World Trade Center. The bi-annual event, which these days is held at Lincoln Center in the Mercedes Benz tent, also drew multiple investors looking to open fashion stores in the city, Consolo said. She said she spent much of her time speaking with them about the state of the market. And it wasn’t just brokers who showed up for the seeand-be-seen event. Julie Macklowe — wife of developer Billy Macklowe — could be found at a Zang Toi fashion show, the Malaysia-born designer for whom she was a muse in 2013. Fashion District property owners got in on the action, too. Among them was Savitt Partners, the owner of 530 Seventh. The building between 38th and 39th streets houses the fashion industry incubator Space 530, which was opened to fashion bloggers for the week. The space offered charging stations, snacks and other

gette Mosbacher. Guests included TRD publisher Amir Korangy, who wrote the foreword; developer Joe Moinian; Republican consultant Ed Rollins; and Stephen Siegel, chairman of global brokerage at CBRE. “He’s one of my closest friends and I never realized he was that serious a photographer,” Siegel said. Proceeds from the book, which can be purchased at mymontaukbook.org, will go to two charities: The Fisher House Foundation, which provides free housing to military families while a family member is receiving medical care, and the Intrepid Sea, Air & Space Museum. Both were started by Fisher Brothers founder Arnold Fisher, who Mosler came to know through his work as co-chairman of the Intrepid. Not surprisingly, Mosler draws some real-estate-related analogies in the book, noting that catching fish in the deep seas is much more challenging than doing so closer to shore. “It is a bit like, in my business, closing a big deal,” he writes. By Rich Bockmann

that I really, really love,” Serhant told The Real Deal. During his five days of filming last winter, Serhant shot scenes from 8 p.m. until 5 a.m., then showed apartments all day. Between takes, he took advantage of the fact that cast and crew members recognized him from “Million Dollar Listing,” handing out business cards on set and talking property investments with Stiller. And on the red carpet at the Toronto Film Festival, Serhant said he spent more time discussing that city’s real estate market than he did promoting the movie. He even tweeted about the scores of fans outside the premiere: “That’s 10,000 new clients — good thing I brought business cards.” Being on set, he said, gave him access to Hollywood stars and producers, and an opportunity to score much sought-after listings that few brokers ever get. And however much he enjoys the spotlight, Serhant knows that what he does is rooted in his role as a broker. “At the end of the day, if you take away the shows and all that stuff,” he said, “I make money when my clients are happy and they buy or sell property.” By Tom DiChristopher

At the Victor de Souza Runway Show, from left: Esther Muller, President of the Academy for Continuing Education; real estate investor Errol Rappaport; Faith Hope Consolo, chair of Douglas Elliman’s Retail Group; actress Darielle Gilad; and Joseph Aquino, executive vice president of Douglas Elliman’s Retail Group.

Fashion Week necessities — as well as a happy hour for everyone at the end of the week. “We’re trying to grow,” said Melissa MacFarland, the marketing manager at Space 530. She said the company’s Fashion Week efforts were aimed at increasing their client base for the 30 designed spaces used as showrooms or deluxe co-working space at the sprawling building. Of course, the fun and glamour of the week is just the beginning. No leases are signed at the shows themselves. “Fashion Week is a starter,” Consolo said, “not a finisher.” By Claire Moses

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3/12/14 10:55 AM

THE CLOSING WITH MICHAEL

SHVO Real estate impresario Michael Shvo, who embodied the excess of the last real estate boom, burst onto the development scene last spring with three high-profile projects in Manhattan. The move was something of a departure for the 42-year-old Israeli émigré, who famously ascended the ranks at Douglas Elliman (logging $300 million in sales as the firm’s top-producing broker in 2003 after only four years in the business), before notoriously parting ways with the brokerage to start the Shvo Group in 2004. As a brash and often brilliant marketer, he became known for celebrity-studded launch parties and 24-hour sales offices before a semi-retirement during the recession. In May 2013, Shvo re-emerged, snapping up the Getty gas station parcel at 239 10th Avenue in Chelsea for a record $800 per buildable square foot and installing a much-buzzed-about art installation called “Sheep Station,” featuring work by surrealist sculptor Francois-Xavier Lalanne. He’s also developing condos at 100 Varick Street in Soho and 125 Greenwich Street in the Financial District. NAME: MICHAEL SHVO BORN: 12/29/72 MARITAL STATUS: MARRIED FOUR YEARS

tion. Today you have to compete with the Internet. A lot of these guys doing the reality shows, they’ve asked me what I think. I always say, make sure that you monetize this exposure because this thing doesn’t last.

You once owned 30 apartments. Where do you live now? Throughout the years, I’ve owned and sold properties. Our home is at the Time Warner Center. We own a home in Water Mill, where we spend weekends in the summer.

Why haven’t you done a reality show? I am a private person. [TV] is all about the drama, and in life you try not to have drama.

HOMETOWN: BORN IN ARSUF, ISRAEL

What were you like as a kid? I was a dreamer. At a very early age, I came from Israel to New York and saw this great skyline. That’s when I had the notion that when I’m old enough, I’d actually come to New York and be part of this great city. What did your parents do? They were both organic chemists and taught at Yale and Stanford, clearly not on the business side, definitely not on the real estate side. So what sparked your passion for real estate? I was six years old when I moved to New York. I was coming from a city, [Arsuf, north of Tel Aviv,] where the tallest building was a few stories high. Seeing all these great buildings — the Empire State Building, the Chrysler Building — blew my mind. When you moved back to New York, in 1995, you managed a fleet of taxis. How did you go from there to top broker — and now a developer? I moved here with $3,000. At the time, I was living down on Mercer Street and the building’s rental agent said, ‘You know, you should be a broker.’ She introduced me to Yuval Greenblatt [now at Elliman]. I became a real estate broker, starting really from nothing. How has the business changed since you got into it? Brokers [15 years ago] were really sellers of informa170 October 2014 www.TheRealDeal.com

You met your wife, Seren Ceylan Shvo, in Istanbul in 2009. How exactly? I was there to introduce my best friend, who is a big developer in Istanbul, to a couple of big hotel brands. My wife was his girlfriend’s best friend. A few months later, she moved to the States. I guess she liked me enough to stay. How do you feel about being known as the “bad boy” of real estate? I can’t tell you why people think one thing or the other of me. When you change the status quo, there are people that like it and people that don’t like it. I would hope I have critics. If everyone thinks it’s OK, then there’s truly no value to the creation. You used to carry multiple phones. Do you still? I carry two iPhones. I use one to speak and the other is to type emails. During the recession, you kept a low profile. Was it intentional? What were you focused on? In December of ‘07, I was asked to give a lecture to the advisory board of Hilton Hotels about the status of the real estate market. My team was preparing this huge presentation for me, and they showed me a shot of a garbage bag with the Louis Vuitton monogram on it. I [thought], ‘Something is out of control here, this can’t continue.’ I decided to retire. Six months later, Lehman collapsed. I spent four years collecting art, met my wife, got married

and dabbled in a little bit of real estate. Tell me about your art. It is really divided into three major categories: In the city we have an extensive collection of pop art, so Andy Warhol, Tom Wesselmann, [Jean-Michel] Basquiat, [Alexander] Calder, great monumental pieces. In the Hamptons, we have a collection of American heritage color field painters, so Frank Stella, [Kenneth] Noland, [Tim] Davis, [Samuel] Morse. [And] we are one of the larger collectors in the world of [artist duo] Francois-Xavier and Claude Lalanne, with over 100 of their works. You’ve got three Manhattan projects planned right now. Does it feel risky to have them all going at once? The risky move is to try to hit the market at the right time. The way to minimize risk is to build product that doesn’t exist. What’s your relationship been like with Elliman Chair Howard Lorber since leaving the company? I heard he invested in 125 Greenwich. Howard and I have always had a great relationship. We see each other almost daily at Cipriani. What do you consider your proudest accomplishment? Finding my wife. What’s your greatest disappointment? That my father is not alive to see what I’m doing. What’s your ideal weekend? Going to listen to my favorite performer, Antonis Remos. He’s the greatest pop musician in Greece. His performances start at 1 a.m. and go until 7 a.m. What would you like people to say about you in 20 years? I think in 20 years, it would be great if people said, ‘I want to live in a Shvo building.’ By E.B. Solomont PHOTOGRAPH FOR THE REAL DEAL BY STUDIO SCRIVO www.TheRealDeal.com July 2006 00

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