The Real Deal September 2013

36

Behind Zillow’s StreetEasy buy

48

Coldwell gives NYC another go

64

Bistricer’s big bets

70

Real estate moguls with really big planes

130

Robert Lapidus: Mistaken for Jay-Z?

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Asian investors top list of biggest building buyers, as Europeans retreat.

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Highlights S E P T E M B E R

16

Praying for properties

18

Open houses on ‘crack’

20

Garden gets uprooted

2 0 1 3

Agents keep fingers crossed for more listings as fall buying season approaches.

20

A once-sleepy ritual takes on new significance as buyers get desperate.

MSG deals with the news that it only has 10 years left on its arena lease.

MSG is on notice.

22 What’s in a Name(r)?

Developer Michael Namer — responsible for projects like Village Green and Chelsea Green — talks about discovering graffiti art, buying hotels and investing in restaurants.

Alfa Development founder Michael Namer

28

to know Gordon 28 Getting Tribeca Associates exec Mark Gordon double books lunches to fit in all of his meetings.

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30 Who New book examines the life of the reclusive copper heiress and her collection of Fifth Avenue co-ops.

34

Mark Gordon is juggling several Manhattan construction projects.

34

Empire State Building: A buyer’s manual

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As bidders circle and an IPO looms, a close-up look at the icon’s ownership and money flow.

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Zillow + StreetEasy = NYC powerhouse Zillow’s $50 million acquisition could be the first step towards national MLS, experts say.

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and bogeys 40 Birdies Real estate power players hit the links for TRD’s third annual golf outing on Long Island.

on the runway 42 Retail High-end stores at NYC airports are boosting returns for retail owners and operators.

40 The winners from Bank of America Home Loans: David Axelrod, Matt Keller, Jim McPartland and Gerard Lynch

www.TheRealDeal.com March 2012 00

A V A IL A B L E

N EW

E X C L U S IV E L Y

BY

YO R K • PA R IS

Pl at i num Pr oper t i esEmpi r eLLCi sal i censedr ealest at ebr okerandpr oudmemberofREBNY.

Highlights continued 44

Real estate’s new ruling class Industry undergoes unprecedented changing of the guard with a wave of new 30- and 40-something CEOs stepping in.

64

48

Coldwell is back

52

Foreign exchange

57

The election guide 2013

Why Bellmarc thinks it can succeed with a suburban brand while others have failed.

New international investors ramp up Manhattan purchases, while once-active players retreat.

Who’s best for New York City real estate, and who’s REBNY backing?

Bistricer gets busy

16

The $1.1 billion Sony Building buy is not the only deal occupying the investor’s time.

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

68

24

Doing the twist

Commercial Market Report

Morris Adjmi’s torqued 837 Washington is bold, but fits within its context, critic James Gardner says.

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

32

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

80

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

A rendering of 837 Washington St.

87

The Deal Sheet Architect Ross Adam Cole with his four-seater Mooney

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

70

104

Frequent flyers

Development Updates

NY industry pros are logging more miles on private jets, scoping out properties and shuttling clients.

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

106

Residential Deals

Closing with Robert Lapidus 130 The The L&L Holdings president was a wiseass growing up and was once mistaken for Jay-Z.

10 October September 2012 2013 www.TheRealDeal.com www.TheRealDeal.com Real-Deal-TOCH-.05_toprint_outlined.indd 1

An insiders’ look at how home sales really happen.

128

We Heard A lighter look at industry buzz.

www.TheRealDeal.com March 2012 00 8/29/13 4:02 PM

COMMERCE/HOUSE

WESTVI L L AGET OWNHOUSE F AL L/2013 A V A IL A B L E

N EW

E X C L U S IV E L Y

BY

YO R K • PA R IS

Pl at i num Pr oper t i esEmpi r eLLCi sal i censedr ealest at ebr okerandpr oudmemberofREBNY.

The Real Deal N e w Yo r k R e a l E s tat e N e w s Publisher Amir Korangy Editor-IN-CHIEF Stuart W. Elliott Managing Editor Jill Noonan DEPUTY Managing EDITOR Candace Taylor Editorial development director Melanie Gray

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elcome to the post-Bloomberg era. Real estate has clearly boomed under Mayor Mike, but will the good times end when he leaves office at the end of the year?

The Real Deal is bringing together Bloomberg’s would-be successors at a Sept. 16 forum at Baruch College to find out what’s on their real estate agendas.

We also take an extensive look at where New York’s mayoral wannabes stand on real estate’s key issues inside this issue, starting on page 57.

The candidates vying to replace Bloomberg have taken a range of stances on development, real estate taxes and industry regulation.

For example, Democrat Bill De Blasio, the public advocate, says that “the relationship between the city and its developer community needs a ‘reset’.”

He’s been pretty strident in how he will reverse Bloomberg’s legacy. (That legacy includes rezoning of a third of the city and paving the way for a staggering 40,000 new buildings.)

“Towering, glitzy buildings marketed to the global elite is not the type of development New Yorkers are looking for,” De Blasio told TRD. “I look forward to working with the real estate community to spur the development, in all five boroughs, of real affordable housing.”

On the opposite end of the political spectrum, Republican Joe Lhota, former chairman of the Metropolitan Transportation Authority, told TRD, “It’s unfair to criticize Mayor Bloomberg, who has been concerned with how to deal with the growth of New York City. We are expecting an influx of another million New Yorkers and we must prepare our infrastructure and housing to accommodate that growth.”

Interestingly, City Council Speaker Christine Quinn — who falls somewhere between De Blasio and Lhota politically — would aim to build 40,000 new middle-

Need help deciding how to vote? Mayoral candidates will face off in a TRD-hosted debate on September 16. They also reveal their plans for NYC real estate in this issue. income housing units in addition to 40,000 currently planned new low-income units over the next decade. This, she says, is quadruple the current rate of construction, and by far the largest middle-class housing program since Mitchell-Lama.

So far, the city’s three main dailies — the New York Times, the New York Post and the Daily News — have all endorsed Quinn in the Democratic mayoral primary, and the Post and the Times have endorsed Lhota in the Republican primary. (Both primaries will be held on Sept. 10.) We present a roundup of what the pundits are saying and who they’re backing on page 61.

For more information on the forum, which will be held at Baruch’s Performing Arts Center at 5:30 p.m., go to TheRealDeal.com. Tickets are $25. The future of New York City real estate — and New York itself — is what’s on the table.

In other election coverage, we look at The Real Estate Board of New York’s aggressive spending. The REBNY-backed PAC Jobs for New York plans to spend up to $10 million on local City Council races. We examine what it means on page 60.

Election season is also prime time to discuss how the goals of the city and industry align. (The debate about “poor doors” — the separate entrances used by tenants of affordable apartments in market-rate condo buildings — seems to be one flashpoint in this discussion.) But what’s good for the city and the industry are not mutually exclusive. There is — or should be — a way to build a city for everyone, including the real estate industry. Given the importance of real estate for the city’s economy, that fact can’t be left out of the conversation.

Elsewhere in the issue, we’ve got a story on real estate’s new ruling class — the unprecedented new wave of 30- and 40-something CEOs taking over big industry firms. (This younger group includes one firm head who wears a hoodie to work.)

Don’t miss the story on page 44.

We also examine the biggest foreign buyers of real estate — ni hao China, auf Wiedersehen Germany — on page 52 and examine how Zillow’s $50 million purchase of StreetEasy could shake up the New York market (see page 36).

Lastly, with a sale or IPO imminent, we unravel the complicated ownership structure of the Empire State Building — and reveal many owners of the iconic building that have never been identified, in a story on page 34.

Enjoy the issue and see you at the debate.

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Stuart Elliott 14 September 2013 www.TheRealDeal.com

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Praying for properties Agents keep fingers crossed for more listings as the market moves into fall buying season

SLANT ROUTES

By Hayley Kaplan ugust is usually the slowest time of year for New York City real estate — a month when brokers and homeseekers alike leave town and head to the beach. The slump was even worse than normal this year, brokers said, thanks to the scarcity of new homes for sale.

“This [was] an August on steroids — an extreme version of our August drought of inventory,” said Jessica Cohen, a broker at Douglas Elliman.

Now that summer’s over, however, brokers are hoping for a bumper crop of new listings, as homeowners return from the Hamptons and turn their attention to selling their apartments.

“Owners who aren’t in a rush to sell are

A

said Max Kozower, founder of the boutique Manhattan brokerage Maxwell Jacobs.

“Most of our owners do not bring new listings to market in August, but wait until the fall.”

Naomi Muramatsu, the director of sales at Bond New York, said her firm, too, has far fewer listings now “compared to earlier in the summer.”

Of the few available properties left, many are “problem” listings — priced too high, or stale from sitting on the market too long, according to Betsy Hoffman, a broker at Brooklyn-based Brennan Real Estate.

“Listings that [aren’t] problem listings should be gone by now,” she said.

Some brokers buck that philosophy, however. Cohen, for example, said she tries

Last year, there were approximately 6,000 Manhattan homes on the market in mid-August. This year, there were only around 4,500.

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16 September 2013 www.TheRealDeal.com

taking the time to assess the overall summer market and prepping their homes for a — hopefully — busier fall,” said Brad Malow, an agent at Rutenberg Realty.

Manhattan historically sees a drop in inventory every August, followed by a bump in September, according to data from the appraisal firm Miller Samuel. Last year, for example, approximately 6,500 Manhattan homes were on the market at the beginning of August. That figure dropped to about 6,000 by the middle of the month, then climbed back past 6,500 in mid-September.

This year, however, there were only around 4,500 available Manhattan homes for sale in mid-August — “the lowest monthly total for any month that we’ve ever recorded,” said Miller Samuel’s Jonathan Miller, who’s been tracking that data since 2000.

Luckily for brokers, “I would expect to see … a Labor Day inventory bump,” Miller said. He didn’t venture a guess as to how many new listings there may be, however.

In the meantime, brokers bemoaned the lack of available properties, saying it feels like there’s simply nothing left to sell.

“Most of our listings from earlier this summer have already sold [or] rented,”

to encourage clients to put their homes on the market during the summer rather than waiting for Labor Day. “I don’t see any reason to wait,” she said.

In the summer, “because there’s so little inventory that comes out, [a listing has] the opportunity to get a lot of attention.”

Late last month, for example, Cohen listed a two-bedroom co-op at 6 West 77th Street for $1.88 million. And she and Elliman colleague Lisa Simonsen listed a townhouse at 7 East 84th Street for $30 million on July 7. Since then, Cohen said, traffic has been strong.

“It’s all about supply and demand,” she said.

Dolly Lenz Real Estate, the eponymous new firm founded by the former Elliman superstar, made a splash in mid-August by listing disgraced financier Bernard Madoff ’s former penthouse at 133 East 64th Street for $17.25 million. And Elliman’s Gail Bomze, Estelle Meister and Steven Cid put an 8,000-square-foot townhouse at 591 Park Avenue on the market for $21.8 million, according to Elliman’s website.

Unfortunately, showings don’t start until Sept. 9. TRD

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Open houses on “crack” A once-sleepy ritual takes on new significance as buyers get desperate

By Hayley Kaplan pen houses have always been an important part of residential sales in New York City, but they’ve recently taken on a new significance due to the severe shortage of inventory in the city, brokers said.

Often, desperate buyers are now packing into open houses, making on-the-spot offers and replacing a once staid experience with an atmosphere of frenzied

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competition. That means listing brokers often have only one shot to get the highest possible price for their listing. Buyers’ brokers, meanwhile, must navigate this ultra-competitive environment, with buyers eyeing each other suspiciously and even trying to prevent each other from making bids.

“It’s like open houses on crack,” said Betsy Hoffman, a broker at Brooklyn-based Brennan Real

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four separate open houses.

But that’s changed dramatically in the face of the city’s inventory shortage. There were 4,795 available Manhattan homes on the market in the second quarter, according to a report by Miller Samuel Real Estate Appraisers, down 31.3 percent from 6,981 in the same quarter of last year. During the same time period, the number of sales jumped 18.8 percent to 3,144, the most second-quarter

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sales in the past six years, the report said.

With listings moving so quickly, brokers said, open houses are often packed with potential buyers, many of whom have been looking for months and have been outbid on other homes.

Although open houses are generally calmer during the summer than in the spring and fall, they now regularly attract up to 40 potential buyers, said Jonathan Tager, an agent at the brokerage MNS. Before the inventory shortage, by contrast, Tager said he typically saw about five to 10 potential buyers per open house.

And listing brokers need to be prepared for these potential purchasers to make offers on the spot.

In fact, if a property is priced right, “you should have three or four offers” during an open house, said Tager, who recently sold a unit at Troutman Lofts, a condo at 241 Troutman Street in Bushwick, after an agent walked up to him at an open house with an offer over the asking price.

These situations can frequently turn into bidding wars, although negotiations usually start after the open house has ended, brokers said.

As a result of all this competition, the environment at open houses is now sometimes less than collegial.

Javier Lattanzio, the director of sales at the real estate firm Time Equities, said would-be purchasers are now much more guarded around other buyers.

“People will talk to their brokers in one corner, very quietly, not saying whether they like [the property] or not,” he said. “I used to have people walk in and say, ‘Oh, this is a great room.’ Now, people are not saying anything.

They try to keep it to themselves — and then you receive an offer from them.”

Sometimes the competition gets downright nasty. Hoffman said at a crowded open house at 2022 Beverly Road, a co-op building in Ditmas Park, she noticed another potential buyer trying to prevent her client from walking into certain rooms in the apartment.

“They didn’t want any competition,” Hoffman said.

In fact, many buyers don’t even want to wait for the open house to see a property — many bombard the listing broker with requests to get in earlier.

“In this market, you want to get in there before these open houses,” Continued on page 110

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By the Numbers

The Garden gets uprooted I

t’s been an eventful few weeks for Madison Square Garden, the legendary sports and entertainment venue. In late July, the City Council notified the Madison Square Garden Company — the owner of the Knicks and Rangers franchises — that it has until 2023 to vacate its 45-year-old location above Penn Station. Council members said that should provide enough time for the arena to relocate and for the city to implement plans for an expanded Penn Station. Then last month, MSG lost its bid to redevelop the Nassau Coliseum on Long Island. A team led by Forest City Ratner, which developed MSG rival the Barclays Center, was chosen instead. But all is not lost: MSG recently announced plans to redevelop its Forum arena in Inglewood, Calif.

Compiled by Evan Bleier

1879

Year that Madison Square Garden first opened at Madison Avenue and 26th Street, hosting concerts, sports and other events.

4

The number of locations MSG has had since then.

1971

The year the Garden hosted boxers Muhammad Ali and Joe Frazier in the so-called “Fight of the Century.”

$39.5 million

Amount that MSG grossed in concert ticket sales from November 2012 to May 2013.

$46.9 million

Amount that the Barclays Center grossed in concert ticket sales during the same period, displacing MSG as the highest-grossing music venue in the U.S.

$150,000 to $250,000

Additional money a band stands to earn for a sold-out show at Barclays versus one at the Garden.

47 to 1

The City Council’s vote to extend MSG’s land-use permit (essentially a lease) by 10 years. The company had requested it be extended in perpetuity.

$250 million

15

Amount MSG proposed to spend on a renovation of the Nassau Coliseum, which would have included a 150,000-square-foot zone for restaurants and sports bars. Forest City Ratner’s winning bid had a price tag of $229 million.

19

$980 million

Years that the Bloomberg administration had requested the land-use permit be extended.

Seasons since the Rangers or Knicks have won a national championship.

Total cost of an in-progress, three-year renovation at the Garden, which is slated for completion this fall.

Sources: CNN, the New York Times, Forbes, Bloomberg News, the Wall Street Journal, Sports Business Journal, Real Estate Weekly

tOwNhOuSE IN thE SKY

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20 September 2013 www.TheRealDeal.com

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M

ichael Namer, founder of Alfa Development, made his name with condo projects like 130 East 12th Street and Village Green at 311 East 11th Street. But six years ago, Namer made headlines for a very different reason: While working on the 12-unit condo conversion 151 Wooster Street, he found a wall covered in graffiti by famed street artists, including Jean-Michel Basquiat. Namer, who studied art in college, still has the Basquiat and ended up starting a gallery in the basement of the building. When Namer’s not admiring graffiti art, he’s working on projects such as the 11-story rental

N am e r

building 199 Mott Street, the 51-unit Chelsea Green condo, and 21-unit Village Green West at 245 West 14th Street. Last year, Alfa expanded into the hospitality business with the purchase of the 90-room Hotel Grand Union on 32nd Street. Namer’s office is located at 15 West 18th Street, an art nouveau building Alfa redeveloped. The building also houses the eatery Alison Eighteen, which Namer co-owns with restaurateur Alison Becker. Namer, a Cuba native, sat down with The Real Deal to talk about his three loves: art, capitalism and real estate. B y G uelda V oien

1

7 6 2

3

1

Neo-expressionist artist John Platt painted this portrait of

Their leader? A woman named Chris, who became Namer’s

Namer as a gift for the developer last year. Platt is represented

girlfriend and later his wife. “I must have done the right thing

by Namer’s 151 Gallery, which focuses on young, contemporary

eventually, because she married me,” he said. The couple has two

artists.

sons, both of whom work at Alfa.

2

5

The late New York artist Dominique Philbert drew this graffiti

4

Namer keeps bottles of wine in his office in case anyone wants

work, which reads “Mike,” for Namer about three years ago. Known

a glass after work. He also dines downstairs at Alison “too often,”

by the pseudonym ERO for “Ever Rocking On,” Philbert was briefly

which he said “has really messed up my girlish figure.”

represented by 151 before his death in 2011 of congestive heart failure.

6

Namer is an avid skier, though he does not own a home near his

favorite slopes — Utah’s Snowbird resort and Telluride in Colorado.

3

Alfa just completed the sell-out of Chelsea Green, a 51-unit

condo at 151 West 21st Street, and construction is slated for

Instead, he owns a house in Sag Harbor in the Hamptons. “I’d rather have a beach house,” he said.

completion this fall. Namer started building and converting homes in 1980, getting “addicted” after an easy initial success — he bought

7

a Westhampton property for $19,000, built a home there and

art at Queens College but decided a career in real estate would

rented it out the next summer for $25,000.

be more lucrative. His background as an immigrant — born in

5

Namer did these three oil paintings in his free time. He studied

communist Cuba, he was airlifted from the island at age eight and

4

At Namer’s first-ever co-op conversion, 46 East 83rd Street,

angry tenants complained when a pipe burst during construction.

22 September 2013 www.TheRealDeal.com

placed in foster care — has given him a strong belief in the “right to make money,” he said.

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‘Homeland’ adds office security

Federal agency helps boost Manhattan office market

By Adam Pincus n what might signal a strong start to the fall leasing season, the U.S. Department of Homeland Security is eyeing a renewal at the 2.3-million-square-foot Starrett-Lehigh Building in Chelsea. The renewal would be one of the largest leasing deals of the year, and would further under-

I

score tenants’ attraction to large floorplate loft buildings.

“Tenants are still looking for buildings with character,” said William Elder, executive vice president at RXR Realty, which owns the 19-story building.

Overall, the Manhattan office leasing market was mixed last month, with the availability rate

— measuring space vacant now or available in roughly the next 12 months — dropping by 0.3 points to 11.8 percent from July, according to figures from commercial firm Colliers International. But at the same time, the average office asking rent fell by 19 cents last month, to $56.66 per foot from $56.85 per foot in July, the com-

pany reported in preliminary statistics.

The Department of Homeland Security — along with its investigative division, Immigration and Customs Enforcement — currently occupies 199,327 square feet at the Starrett-Lehigh Building through a lease that expires at the end of this year.

“The federal government is still reviewing [its] space requirement beyond that date … and will extend the current lease as necessary,” noted Renee Miscione, a spokesperson for the U.S. General Services Administration, which handles real estate for federal agencies.

Manhattan office stats AVAILABILITY RATE

AVG. ASKING RENT

Manhattan Aug ’13 11.8% $56.66 Jul ’13 12.1% $56.85 Midtown Aug ’13 12.0% $67.05 Jul ’13 12.2% $66.88 Midtown South Aug ’13 9.2% $51.54 Jul ’13 9.2% $52.02 Downtown Aug ’13 15.1% $46.98 Jul ’13 15.9% $46.89 Source: Colliers International

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Miscione said DHS pays nearly $11.4 million per year in rent for the seventh floor of the building, which is located at 601 West 26th Street between 11th and 12th avenues. That comes to just over $57 per square foot.

That rate is consistent with RXR’s asking rent for the building, which a company source said is in the “$50s and $60s” per square foot.

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The popular executive suite industry — which leases office space and provides business services to entrepreneurs and professionals — continues to shake up the Midtown office leasing market. The market leader Regus has more than 30 locations in Manhattan, and the industry competes with traditional tenants to lock up space.

Juda Srour, president of executive suite firm Jay Suites, said he has to pay a premium over competing tenants — such as law firms — in part because landlords do not like the extra foot traffic that results from the high number of different companies in the building. But, he said, renting to the company also provides the landlord with advantages.

“We do our own build-out.

The landlords find that very attractive,” said Srour, who added that the firm is close to signing a lease for a fifth office location in Midtown (it also has a location in Lower Manhattan).

A competing executive suite firm, Executive Offices New York City, headed by David Shavolian, signed a 15-year deal last month for about 35,000 square feet of office space on floors seven and 12 at 469 Seventh Avenue, at 36th Street. The move will relocate the Continued on page 116

CS2138 NYC CRE ad-7.625x9.75.indd 1

24 September 2013 www.TheRealDeal.com

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In their words...

“I just oversee and make sure they don’t do anything totally stupid.”

▼

Jeffrey Gural, on letting his younger relatives take control at the family company, Newmark Holdings. (Wall Street Journal)

“[It was like] pushing Jell-O up a hill with a fork.” Warburg Realty’s Steven “We liked having them as [tenants] and wanted to keep them.” Time Equities’ Francis Greenburger on giving government agencies rent breaks to keep them at 633 Third Avenue (Wall Street Journal).

“Every time you turned around, someone was tearing down a building. If you want quiet, you need to be in a place that is deeply established architecturally.” Artist Ross Bleckner, explaining why he left his longtime home in Tribeca and moved to the West Village.

(The New York Times)

Goldschmidt, head of the technology committee for the Real Estate Board of New York, on getting REBNY’s revamped listings system up and running.

“My brokers are appalled by what happens on these shows.”

“They made me think that I was dating him.

I like Michael as a person. I was definitely open to the possibility of dating him. I wasn’t sure if he really liked me or [if it was the producers] setting him up for television.” Douglas Elliman broker Jessica Cohen, when asked by The Real Deal whether she dated Michael Lorber during a stint on Bravo’s “Million Dollar Listing New York.”

“We look at everything.”

SL Green Realty Corp. CEO Marc Holliday, when asked during a quarterly earnings call if he would consider a bid to buy the Empire State Building.

Pamela Liebman, CEO of the Corcoran Group, expressing her disdain for reality TV shows featuring real estate brokers. (Wall Street Journal)

“They dance with each other, not like Ginger Rogers and Fred Astaire, but like Shawn [Jay-Z] and Beyoncé.”SHoP Architects’ Vishaan Chakrabarti, on his design for two First Avenue residential towers being developed by Michael Stern’s JDS Development.

(The New York Times) 26 September 2013 www.TheRealDeal.com

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

“If you need a graphic designer, there’s one down the hall. If you need a lawyer, there’s one upstairs.” Brownstoner.com founder and newly minted developer Jonathan Butler, on his hopes for building an eclectic community of creatives at his 1000 Dean Street project in Crown Heights.

(New York Observer)

“If you get lucky, the market makes you look smarter than you are.”

Developer Steven Witkoff, on the speedy sellout of his 10 Madison Square West condo conversion. (Wall Street Journal)

“It got me thinking: if there are that many bees in Midtown, maybe it makes sense to put up some hives.” The Durst Organization’s Richard Kohlbrecher, on the company’s decision to begin beekeeping on the roof of One Bryant Park. (The New York Times) www.TheRealDeal.com August 2006 00

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DAY IN THE LIFE OF:

Mark Gordon

The Tribeca Associates managing partner talks double-booking lunches and retreating to the suburbs

Tribeca Associates’ Mark Gordon is juggling several Manhattan construction projects and is in crunch time on another big property purchase.

5:15 a.m. I usually wake up around 5:15

which is in construction, and the Bacca-

3:00 p.m. I spend a lot of time building

and then spend some time in the gym. I

rat [Hotel and Residences at 20 West 53rd

relationships with capital partners. This

live in Westchester. I lived in the city for

Street], which is in construction [and be-

afternoon I’ll be meeting with a lend-

20 years — always on the Upper East Side.

ing built in partnership with Starwood

er to solidify our financing for the office

When my daughter [Hallie, 9] was on the

Capital Group]. I’ve also been spending a

way, [my wife, Amy, and I] retreated to the

lot of time on an office building acquisition

suburbs. That results in spending a lot of

[in the Times Square area].

building acquisition. I’m not in the office Tribeca Associates is developing the Baccarat on 53rd Street with Starwood Capital Group.

is now part of Cushman & Wakefield], I

9:30 a.m. I usually have between three 6:30 a.m. By 6:30 or 6:45 I’m heading

and six meetings a day. We have a week-

to the city. I drive down every day. I have

ly meeting [at the Baccarat]. We sit for

Howard Stern to keep me company in

generally about three hours in the sales

the phone. It’s become part of my daily routine.

8:00 a.m. My first stop [in the city] is my

covered the entire country, so I was on a plane every week. So it’s nice that this is all confined to one island, as opposed to running around the country.

center. We meet on the Marriott project monthly with our partners to go over construction issues there. The office building acquisition has been a daily — if not hour-

Actor Hugh Jackman owns Gordon’s go-to coffee shop, Laughing Man Coffee & Tea.

6:30 p.m. I have work-related dinners with friends, maybe two nights a week.

ly — task. It’s always crunch time when

Having been in this business for almost 25

you’re about to close on a deal.

years, many of the people we do business

first cup of coffee of the day at Laughing

with have become close friends, so I’m

Man [Coffee & Tea in Tribeca, which is

Noon I probably eat lunch out three to

owned by actor Hugh Jackman]. I meet

four times a week. It’s a convenient time to

with my partners [Bill Brodsky and El-

catch up with capital partners or various

liott Ingerman] every morning at 8. We

people that are helping us with deals. I’ve

talk about things that happened the prior

got my Midtown spots and my Downtown

day and strategize about what needs to get

spots. In Midtown, I’m a big fan of Koi

done that day. All eight of us at the company

in the Bryant Park Hotel, Bice for Ital-

also meet on Monday mornings to review

ian and Milos for fish. Downtown there’s

every project and talk about the goals for

Koi in Trump Soho, Sarabeth’s Kitchen

that week. It’s very much an open environ-

and Plein Sud at our hotel [the Smyth]. If

ment. This is an office with no walls — oth-

I’m overbooked, I’ll do two lunches: Same

er than the conference room. Our three on-

restaurant so I don’t have to travel. Yester-

going projects are: The Smyth [Hotel and

day, I had a 12:00 lunch and a 1:30 lunch.

Residences at 85 West Broadway], which is

Both were important and I couldn’t can-

up and running; the Marriott [Residences

cel either. I didn’t eat twice; I ate a salad

Inn World Trade Center at 170 Broadway],

for the first lunch and lunch for the second one.

28 September 2013 www.TheRealDeal.com

one market. In my prior job [as managing partner at Sonnenblick-Goldman, which

time in my car.

the morning. At night, I’m generally on

all that often. Fortunately, we only cover

able to combine personal and business.

[When I’m not in the city] I’m home with Koi in the Bryant Park Hotel is a favorite spot for business lunches.

the wife and kids. The kids [Hallie and Benjamin, 11] are away for the summer, so I spend a little more time in the city.

8:15 p.m. I’m a big Yankees fan. The Yankees are having a tough time with all of The Yankees provide evening entertainment.

their injuries, but I try to catch a Yankees game, or part of it, whenever possible. I’m not really into too many shows right now.

“Homeland” isn’t on.

11:00 p.m. I usually go to sleep between Gordon listens to Howard Stern every morning on his drive from Westchester.

11:00 and 12:00. It’s a lot of running around. By Hayley Kaplan PHOTOGRAPH OF MARK GORDON FOR THE REAL DEAL BY Chance yeh

Equal Housing Opportunity.

Equal Housing Opportunity.

©2013DouglasEllimanRealEstate.Allmaterialpresentedhereinisintendedforinformationpurposesonly.While,thisinformationisbelievedtobecorrect,itisrepresentedsubjecttoerrors,omissions,changesorwithdrawalwithoutnotice.Allproperty information,including,butnotlimitedtosquarefootage,roomcount,numberofbedroomsandtheschooldistrictinpropertylistingsaredeemedreliable,butshouldbeverifiedbyyourownattorney,architectorzoningexpert. EqualHousingOpportunity.

© 2013. Douglas Elliman Real Estate.

©2013DouglasEllimanRealEstate.Allmaterialpresentedhereinisintendedforinformationpurposesonly.While,thisinformationisbelievedtobecorrect,itisrepresentedsubjecttoerrors,omissions,changesorwithdrawalwithoutnotice.Allproperty information,including,butnotlimitedtosquarefootage,roomcount,numberofbedroomsandtheschooldistrictinpropertylistingsaredeemedreliable,butshouldbeverifiedbyyourownattorney,architectorzoningexpert. EqualHousingOpportunity.

© 2013. Douglas Elliman Real Estate.

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Who was Huguette?

By Leigh Kamping-Carder An ambitious and clearly Empty Mansions o some who knew written account of Huguette’s Bill Dedman and the late copper heirlife, “Empty Mansions” offers Paul Clark Newell, Jr. ess Huguette Clark, meticulous details on her fiBallantine Books she was an oddball recluse nances, appraisals of her perwho wasted her last decades sonality from her closest conin a hospital room, while her fidantes, laughably specific despread at 907 Fifth Avenue scriptions of her opulent homes — a trio of co-ops spanning and even — courtesy of phone 42 rooms — sat as an empty, calls she exchanged with Clark haunted museum of antique Newell — scraps of conversation dolls. Distant family memin her own voice. bers, meanwhile, saw her as an incapacAnd yet, “Empty Mansions” fails to solve itated dupe at the mercy of bloodsuck- the puzzle of Huguette Clark. Disappointing money managers and caregivers. ingly, the motivations of the cloistered scion Those caregivers, however, con- remain as elusive as ever. sidered her the quick-witted benefacTo Dedman and Clark Newell’s credit, they tress who willingly cut them checks avoid the trap of other historical writers who for tens of thousands of dollars. reconstruct the thoughts of their long-dead Not surprisingly, her 2011 death at age subjects. When they have people to interview 104 sparked a court battle over her $308 — a bevy of living Clark descendants or Humillion estate. guette’s nurse, Hadassah Peri, who received But who was Huguette, really? That’s the almost $32 million from her elderly charge question Pulitzer Prize–winning journalist — the pages jump with life. Unfortunately, Bill Dedman and Paul Clark Newell, Jr., the first half of the book, which focuses on the one of Huguette’s cousins, seek to answer early years of Huguette’s father, W.A. Clark in “Empty Mansions: The Mysterious Life — a frontiersman who made his fortune in of Huguette Clark and the Spending of a banking and copper — is dry.

Indeed, “Empty Mansions” is at its best Great American Fortune,” which will be published this month. when investigating the nooks and crannies of

T

A new book examines the life of the reclusive copper heiress and her collection of Fifth Avenue co-ops

Huguette’s personality, and weighing whether she was a victim or not. (The authors seem to come down in favor of her aides, noting that almost none of her extended family members visited her.)

In many ways, “Empty Mansions” portrays Clark as a normal person, despite frequent speculation that she must have been mentally ill. For one, she was extremely generous — possessed of “a fairy tale checkbook, one that was refilled whenever it ran out of magic beans,” the authors note. “The wom-

From left: Huguette’s sister, Andree; her father, W.A. Clark; and Huguette.

an was an eccentric of the first order,” her doctor, Henry Singman, told the authors. “[But] I didn’t think her behavior was that of one suffering from a psychiatric illness.”

Born in Paris in 1906, Huguette was the youngest daughter of W.A. and his second wife, Anna LaChapelle, a decades-younger woman whom he married in a secret (and possibly fabricated) ceremony that only came to light years later. W.A. disappeared from the history books, but Dedman and Clark Newell do an admirable job of exhuming his life story. A man whose fortune rivaled those of Vanderbilt and Carnegie, Clark got turfed from his U.S. Senate seat on bribery charges, and then won the office back after Montana’s lieutenant governor appointed him as his own replacement. He also purchased and subdivided the land that became Las Vegas.

As a youngster, Huguette crawled the halls of 962 Fifth Avenue, a $10 million mansion her father spent 14 years building, but which was later destroyed to make way for apartments. As those who have followed her story know, she was married only briefly, to the son of her father’s accountant, and never seemed to recover from the sudden death of her sister in 1918.

Continued on page 110

ABBOTTENTERPRISES

30 September 2013 www.TheRealDeal.com

www.TheRealDeal.com March 2012 00

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REGULATING REAL ESTATE

Big tax reform proposals to be unveiled this fall

Is home mortgage interest deduction at stake?

By Kenneth Harney hile Congress was off on its annual summer recess, you might have assumed that nothing was happening on Capitol Hill that could effect the taxes Americans pay on their homes. Quite the reverse.

Staff members of the House and Senate tax-writing committees were busy putting together legislative drafts that may determine the fate of real estate’s most prized tax benefits — first and second home-mortgage interest deductions, property tax write-offs, capital gains exclusions and others.

Both committees’ chairmen have promised major tax reform proposals this fall. They’ve been evaluating deductions, credits and loopholes in terms of revenue costs and economic benefits, including the $70 billion-plus yearly expense of the mortgage interest writeoff. The process that’s under way represents the most serious effort to simplify and reorganize federal tax law since the Tax Reform Act of 1986.

On the Senate side, Finance Committee Chairman Max Baucus, D-Mont., asked colleagues in both parties to submit recommendations on which tax preferences should be preserved, starting from a “blank slate” where all current benefits are eliminated. To provide senators political cover and deniability, the committee put all recommendations under a 50-year top-secret classification, and restricted access to them to just 10 staff members. On the House side, Ways and Means Committee Chairman Dave Camp, R-Mich., instructed staff to move ahead with drafts during the recess, allowing the committee to consider a final tax reform bill in October. That would tee up the legislation for a possible full House floor vote.

So what’s really on the chopping block? Is there a possibility that as part of a comprehensive tax reform bill, preferences for homeownership could be reduced or phased out? Here’s a quick overview: The House bill under construction seeks to reduce individual and corporate marginal tax rates across the board. Camp has said he wants to clear out deductions, exclusions and other long-time tax code subsidies enough to lower individual taxes to a top marginal rate of 25 percent, down from the current 39.6 percent. He also wants to eliminate the alternative minimum tax and slash corporate tax rates.

The problem, though, is that lowering tax rates to these levels would cost trillions of dollars in lost rev-

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enues over the coming decade and would only be partially paid for by eliminating or cutting the vast majority of current tax preferences, including for homeowners. Lowering the top marginal rate for individuals to 28 percent — instead of the proposed 25 percent — would help, some analysts say, but still might not close the lost-revenue gap.

Another complication: Major tax benefits that have been in existence for decades, such as the mortgage interest and property tax deductions, are so welded into the system that eliminating them, or sharply reducing them, would send shock waves throughout the national economy. The Tax Foundation, a Washington-based think tank that describes itself as nonpartisan, released a study at the end of July projecting that an elimination of the mortgage interest write-off would cut the gross domestic product by $254 billion based on incomes in 2012, and would result in the loss of 659,000 jobs. In a separate study, the Tax Foundation projected that elimination of homeowner property tax deductions would lower GDP by $94 billion and trigger the loss of 216,000 jobs.

Findings such as these lead housing proponents to believe that neither the House nor the Senate bill can afford to make drastic reductions to long-standing homeowner tax benefits. Jerry Howard, CEO of the National Association of Home Builders, said the study “helps drive home ... the value and importance of housing incentives” to the economy. Other industry analysts aren’t so sure. Not only did the Ways and Means Committee hear a panel of prominent economists slam the housing write-offs as inefficient and heavily tilted to benefit higher-income taxpayers, they note, but Camp’s own make-or-break income tax cut targets could take precedence over retaining current deductions. On top of that, Democrats in the Senate want to raise revenues through tax reform, not cut them.

If that’s the case, something’s got to give. And that might require lower write-offs for housing — unpalatable politically as they may be a year before congressional elections. Whether tax reform legislation that does that could actually pass either house, however — in a year where Republicans and Democrats can’t even pass a budget to fund the government — is much in doubt.

Kenneth Harney is a syndicated columnist.

GOVERNMENT BRIEFS Obama supports plan to “wind down” Fannie and Freddie President Barack Obama last month endorsed a plan to shrink the government’s role in the housing market by “winding down” the mortgage-finance companies Fannie Mae and Freddie Mac, the New York Times reported. Fannie and Freddie, which have long benefited from an implicit federal guarantee, were taken over by the government when they failed nearly five years ago. Obama said he supports bipartisan legislation from the Senate banking committee that would “end Fannie and President Barack Obama Freddie as we know them,” shifting more risk to private investors. “Private lending should be the backbone of the housing market,” Obama said. Despite the presidential push, Congress is unlikely to approve a bill before 2015, the Times said.

Prevailing Wage Law struck down after Bloomberg’s lawsuit A law that required landlords receiving at least $1 million in city aid to pay workers a prevailing wage was struck down last month by New York Supreme Court Justice Geoffrey Wright, Bloomberg News reported. The Prevailing Wage Law was adopted by the city council in May 2012 and took effect in November despite a lawsuit from Mayor Michael Bloomberg, who cited increased costs for employers and threats to job-creating projects. The judge ruled in Bloomberg’s favor, saying the law is preempted by the state’s minimum wage law.

The council said it disagrees with Wright’s decision and will seek to overturn the ruling.

Midtown East rezoning brings over 100 speakers to hearing Some 113 speakers crowded the podium last month at a packed public hearing on Mayor Michael Bloomberg’s proposed Midtown East rezoning, Curbed.com reported. The plan, which is supported by Manhattan Borough President Scott Stringer and is now before the City Planning Commission, would allow developers to build larger office and residential towers in the area. Speakers at the hearing included Deputy Mayor for Economic Development Robert Steel, CBRE power-broker Mary Ann Tighe and Peter Ward, the president of the New York Hotel Trades Council. Proponents of the rezoning said it would revitalize outdated commercial buildings and create new construction jobs, while oppo- Scott Stringer nents raised concerns about subway overcrowding and landmarks preservation. The planning commission will finalize its vote by this month and the proposal will likely be decided by the city council by the end of 2013. Compiled by Sanna Chu

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32 September 2013 www.TheRealDeal.com

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trophy towers

Empire State Building: a buyer’s manual

As bidders circle and IPO looms, a close-up look at the icon’s ownership and money flow

By Adam Pincus he iconic Empire State Building is on the brink of a major ownership shake-up. Its lead owner and manager, Malkin Holdings, has made headlines recently for its efforts to package the 2.9-millionsquare-foot tower into a real estate investment trust with 18 buildings and other properties. While Malkin is pushing to go public through an IPO, some of real estate’s biggest heavyweights are circling with bids topping $2.3 billion — and one of them could derail Malkin’s plan by making an offer to buy the tower that’s too good to pass up. So far, at least six companies have put in bids, including developer Joseph Sitt’s Thor Equities and Rubin Schron’s Cammeby’s Interna-

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tional. And insiders say others — including Jeff Sutton, David Bistricer and Joseph Chetrit — plan to throw their hats in the ring. But the building’s complicated roster of owners — including the eager-to-cash-out Helmsley estate, which has the biggest financial stake in the building — along with how money is flowing in and out of the tower remains murky.

This month, using U.S. Securities and Exchange Commission documents, TRD untangled both of those complicated issues along with other key financial factors that any new owner would need to scrutinize before signing on the dotted line. In addition, using private documents provided by a source, TRD broke down the top stakeholders (many of whom have never before been publicly identified), among the thousands of individual investors in the building.

Top income-generating tenants Host Services of New York The company operates a roughly 6,200-square-foot souvenir shop on the 80th floor, a few floors below the tower’s famed observation deck. The lease, which runs through 2020, clocks in at a stunning $823.82 per square foot and is believed to be the priciest per-square-foot rent for an aboveground-floor space in the entire city.

LinkedIn The social networking site signed a seven-year lease for nearly 32,000 square feet on the 25th floor in 2011. The lease brings in $1.2 million a year, or $39 per foot, and runs through 2018.

Coty The global perfume manufacturing firm went public through a $1 billion IPO in July, and is headquartered in a roughly 195,000-square-foot space on the tower’s 14th-19th floors. The lease brings in an annual base rent of about $8.9 million — or an average price of $45.57 per square foot — and runs through 2030.

Federal Deposit Insurance Corporation The independent government agency inked a 10-year deal in 2009, for floors 11 through 13. The lease generates a base rent of $5.5 million, at an average price-per-square-foot of $45.04.

Li & Fung A global fashion and manufacturing firm headquartered in Hong Kong, the company holds the largest (and most valuable) lease in the building.

In 2011, the company inked a nearly 500,000-square-foot lease, including floors three through nine. The lease, which rakes in $19.3 million a year (or $39 a square foot) for the building, runs through 2028 with a 10-year renewal option. However, in July the firm announced it would either return about 182,000 square feet to the landlord or sublease it.

Walgreen Co. The national drug store chain rejiggered its lease in 2011, and ended up with a nearly 24,000-square-foot, ground- and second-floor retail space.

The lease, which runs through 2027, generates $1.8 million a year, or $75.50 per foot.

34 September 2013 www.TheRealDeal.com

Broadcasting Antenna Radio, TV and other broadcasters paid the building $17.1 million last year to license and lease space for a 22-story antenna atop the Art Deco tower. The antenna carries their signals across a five-state area.

The Observatory The building’s famed observatory is the tower’s single biggest source of annual revenue. Last year alone, it generated $92.2 million, driven by more than 4.1 million visitors who paid an average of $20.21 each to get a glimpse of the city from the 86th and 102nd floors.

Skanska USA Buildings The international construction firm inked a deal for its New York office in 2008. The firm occupies the entire 25,000 square feet on the 32nd floor, generating $1.2 million a year, or $48.67 per foot, in rental income. The lease expires in 2024.

Manhattan Professional Group The tax advisory firm — also known as the Tax Club — has a nearly 26,000-square-foot lease that runs though 2026 on the 60th floor. The company pays the building’s coffers $1.18 million a year, or $46.08 a foot.

But it’s the target of an ongoing civil lawsuit brought by the U.S. Federal Trade Commission. It’s denied the charges, but it’s unclear how the suit will impact the company’s lease.

Taylor Global The sports-and-lifestyle public relations firm signed a lease in 2007 that runs through July 2018, paying $1.12 million per year. The firm occupies nearly 26,000 square feet on the 38th floor at a cost of about $43.47 per square foot.

Bank of America The banking giant has a 14,234-square-foot storefront on the 34th Street side of the building, with a lease running through April 2015, with a five-year renewal option. The lender brings in $1.15 million a year in rent, or about $80.97 per square foot. But that’s far below most asking rents on that stretch of 34th Street. Indeed, on that side of the street, rentals top $300, brokers said.

trophy towers

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A

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he approximately $229 million that the building genert the end of 2012, there were 2,889 investors o understand the Empire State Building’s ated last year in revenue (see previous page) was colwith individual shares who owned a piece of complicated ownership lected by the ESBC, which controls and manages the ESBA, the tower’s landlord that leases the structure, a buyer must first understand what the building, and is responsible for paying all operatbuilding to ESBC. Since the shares were issued in the happened when the tower was last sold. In 1961, ing expenses and taxes. It is run by Anthony Malkin’s early 1960s, the investors have received a total of legendary real estate owner Lawrence Wien arranged Malkin Holdings. But Malkin has to work with ES$477 million — or $144,620 per original $10,000 to buy control of the building for $39 million, by securshare. Last year, of the $24.2 million in overage BC’s majority owner, the Estate of Leona M. Helmsing a $6 million mortgage and raising $33 million by sellley. Under the terms of the ESBC’s lease with its rent that the landlord collected, $10.1 million ing 3,300 shares at $10,000 a piece to individual investors. landlord — the ESBA — it pays an annual base was set aside for debt service and other fees, leavThose investors formed the Empire State Building Associrent that’s typically $5.9 million. On top of that, as ing $14.1 million. Of that, $846,000 was paid to ates, an entity that still exists today. In addition to those thousands of individuals, there are a few investors with part of the agreement Wien hammered out in 1961 Malkin Holdings and $13.3 million was distriblarge stakes in the building, through another entity called through an innovative tax structure, the ESBC also uted among the nearly 3,000 investors. the Empire State Building Company. That com- pany gives the association 50 percent of the building’s net controls the property through a master lease that operating income above $1 million, called overage runs until 2076. The serious buyers sniffing rent. It keeps the other 50 percent — which last year around the building today are looking to eiamounted to $19.9 million — and distributes much of ther buy both or one of these companies that among its partners. For the purposes of the IPO, the as a way to wrest control of ESBC was appraised at $1.2 billion of the building’s total $2.5 the tower. billion value.

Empire State Building Company

Empire State Building Associates

(manages the building)

(landlord of the building)*

Malkin family: 6.2 percent

Helmsley estate: 63.75 percent

The extended Malkin family, including the Morse and Nelson families as well as Anthony Malkin himself, make up the largest chunk of ESBA, with a 6.2 percent stake. Based on the $1.3 billion appraised value for ESBA, that stake is worth about $80.8 million. But it’s divided among more than a dozen trusts and family members.

Lawrence Wien and Harry Helmsley were business partners and friends. As a result, the Helmsley estate owns 63.75 percent of the ESBC, which gives it ownership of the largest single chunk of the building’s NOI. The estate has notified the Malkins that it’s going to cash out, even if the building is not included in the planned IPO. Based on the $1.2 billion appraised value, the Helmsley stake is worth $832.9 million.

Blumenthal family: 2.5 percent In 1982, Cynthia Malkin, Anthony’s sister, married Richard Blumenthal, an attorney who’s now a U.S. senator from Connecticut. The Blumenthal family stake is worth an estimated $33.3 million.

Malkin family: 23.75 percent

BUILDING Peter Malkin married Wien’s daughter, Isabel.

EXPENSES Now, three Malkin-controlled entities hold a comIN 2012 bined 23.75 percent stake of the ESBC, which is worth about $290.6 million. Anthony Malkin, Tenants’ and building alterations, Peter’s son and Wien’s grandson, leads Malkin repairs and Holdings today. maintenance:

$39 million

Joan Konner: 5 percent Veteran journalist Joan Konner owns a 5 percent stake worth about $61.2 million.

Konner, a former dean of the Columbia University Graduate School of Journalism, is also the daughter of the late textile manufacturer and real estate investor Martin Weiner.

Konner declined to comment.

Payroll and related costs:

$37.9 million Taxes:

$26.3 million

$20 million

The partnership headed by Sanfurd Bluestein owns 5 percent, also valued at $61.2 million. Bluestein, who did not respond to a request for comment, is Weiner’s son-in-law. His wife Iris, Konner’s sister, died several months after her father in 1969.

Bluestein Family Foundation, M&T Weiner Foundation: 2.5 percent Both Bluestein and Konner have family foundations that each own 1.25 percent stakes. Those stakes are worth an estimated $15.3 million each.

The Massachusetts-based university owns a stake valued at about $29.8 million. Although he did not attend Brandeis, Wien was a major contributor to the school, and solicited other investors to donate their shares to the school.

Konner’s heirs: 1.52 percent Konner’s daughter Rosemary and a granddaughter — as well as a trust in the name of a daughter who died — have a combined stake of $19.8 million.

Gilliland family: .95 percent The Gilliland family, which has been invested in real estate in Memphis for more than 100 years, owns a stake in the ESBA valued at $12.5 million.

Richard and Claire Morse: .76 percent Observatory expenses:

Bluestein Family Partnership: 5 percent

Brandeis University: 2.3 percent

Richard Morse and his wife, Claire, own a stake valued at about $9.9 million. Richard is the brother of Lester Morse Jr., Wien’s son-in-law.

Warner Funds: .76 percent Utilities, professional fees:

$42.2 million Base rent:

John Steel and Lewis Steel (pictured with wife Kitty), the step-grandchildren to Warner Brothers movie studio co-founder Albert Warner, each lead a nonprofit that combined hold a stake that is worth about $9.9 million.

$10.2 million Lawrence A. Wien Scholarship Fund, ($5.9 million in Columbia University: .47 percent annual rent plus Wien was a major donor to Columbia, where he received undergraduate and law degrees. The fund owns a stake estimated to be mortgage payments) worth about $6 million.

Administrative:

$4 million

Where did the money go?

From the $229 million collected in revenue last year, the ESBC paid out about $180 million in expenses, according to documents filed with SEC. Above is a breakdown of where the money went.

Joan Konner: .46 percent Konner is another of the few investors to own stakes in both entities. Her ESBA stake is worth just over $6 million. *Only some of the Empire State Building Associates’ biggest owners are listed here. There are thousands of ESBA owners, the vast majority of which are families and individuals with ownership stakes worth a fraction of a percent. The ESBA and ESBC, which manages the building through its master lease, split the net operating income of the building (see story).

www.TheRealDeal.com September 2013 35

Zillow turns to StreetEasy to conquer NYC The acquisition could be the first step toward national MLS, experts say

By Lauren Elkies Schram illow, the giant national real estate database, made headlines last month when it announced it would pay $50 million in cash for the Manhattan listings website StreetEasy.

The acquisition represents a move by Seattle-based Zillow to grab market share in New York City, where it’s failed to make inroads despite its broad national reach.

“Zillow had left something to

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be desired, and StreetEasy clearly remedied that,” Zillow CEO Spencer Rascoff told The Real Deal. He and StreetEasy CEO Michael Smith said they had been in talks for years. “We finally got … to a place for both of us to do this,” Smith said.

But industry pros said the merger could have even broader implications for the New York real estate industry.

Manhattan real estate listings have long been largely inaccessible

to outsiders because the city lacks a comprehensive Multiple Listing Service — a database that shares information about all the homes on the market. Instead, many New York City firms rely on a more limited listings feed from the industry’s most powerful trade organization, the Real Estate Board of New York.

In general, MLS platforms tend to be stronger in single-family home markets than in densely populated urban areas, or “vertical

housing markets,” said Jonathan Miller, president and CEO of Manhattan appraisal and consulting firm Miller Samuel.

“National aggregators and multiple listing services … have been particularly weak in presenting data for what I call the vertical housing market,” Miller said.

When StreetEasy launched in 2006, it filled that void in Manhattan by “scraping” the Internet for real estate listings and posting them, allowing users to access

nearly all of the city’s listings for free. Real estate industry executives here initially balked when StreetEasy published information, such as price changes and number of days on the market, which had never before been publicly available. Now, however, most of StreetEasy’s listings are provided directly by industry feeds and brokerages, and for several years the site has operated as a sort of de facto MLS for Manhattan.

Now that Zillow owns StreetEasy, it will likely replicate the StreetEasy model in other cities — a move that could increase transparency in the real estate industry on an even broader basis.

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Zillow CEO Spencer Rascoff and StreetEasy CEO Michael Smith rang the NASDAQ Stock Market opening bell last month, shortly after the announcement that Zillow would acquire StreetEasy.

“I see this as a template,” Miller said, “starting with the biggest vertical market in the country, and being able to apply this to other downtowns with a heavy concentration of condos, co-ops and rentals.”

And eventually, the Zillow conglomerate could one day become something of a national MLS, said Zhann Jochinke, COO of Keller Williams NYC. If Zillow adds some of the features currently provided by MLS’s and trade organizations, such as a platform for commission sharing, it could pose some serious competition to REBNY and similar organizations across the country, he said.

“Watching Zillow over the years, they’ve started to act … a lot more broker-friendly,” Jochinke said. In fact, Zillow has even ventured into the political arena; last month President Barack Obama answered questions from U.S. homeowners, renters and prospective buyers in a live-streamed event hosted by Zillow.

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Birdies, bogeys and TRD Real estate power players hit the links for third annual golf outing

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he last few weeks in August are a notoriously slow time for New York City real estate. So what better way to spend the time than by hitting the links?

That’s what some 150 real estate power players did on a Monday last month — at The Real Deal’s third annual golf outing at the Baiting Hollow Golf Club

on Long Island’s North Fork.

Brokers, lawyers, bankers and developers on both the commercial and residential sides donned their khakis and collared shirts for the event. Attendees included MNS CEO Andrew Barrocas, the Corcoran Group’s Tamir Shemesh, Douglas Elliman’s Ariel Cohen, Eric Anton of Brookfield Financial, Adam Gordon of Sterling National

From left: Douglas Elliman’s Tony Piscopio, Mike Flores of Zillow, Frank Castelli of Elliman and Richard Acton-Maher of Zillow

Bank, James Famularo of New York Commercial Real Estate Services, and Anthony Lolli of Rapid Realty.

From the pro shop to the driving range, players agreed that the market is strong: “Somewhat frantic,” is how Anton put it.

The players gathered for lunch and networking, then teed off. After a few raindrops, three teams came out on top. Bank

Matt Hidalgo and Hunter Semels of Wells Fargo, Randy Brown of JFB Print Solutions and Nick Chavin of Miller Advertising

of America Home Loans’ team — which included David Axelrod, Gerard Lynch, Matt Keller and Jim McPartland — walked away with the win. Second place went to Elliman’s Jon Evans, Tom Drew and Michael Constantine. And rounding out the top three was the Rapid Realty team of Gabriel Chapman, Simon Day and Tyler Evenson.

Carlos Angelucci of Rapid Realty, Brian McGinley of the Jed Foundation and Anthony Lolli of Rapid Realty

The winners: David Axelrod, Matt Keller, Jim McPartland and Gerard Lynch

Juan Reyes of Seyfarth Shaw (center) and Eric Anton of Brookfield Financial (right) with guest

Tamir Shemesh of the Corcoran Group and Tom Brady of Town Residential

Danny Kim and Rafael Sanchez of Popular Community Bank

Josh and Andrew Goldfarb of Goldfarb Properties, and Sarah Collins and Deb Conway of StreetEasy

Brett Joseph of TUI Lifestyle, Andrew Barrocas and Ryan McCann of MNS, and Robert Caliguri of Chase

40 September 2013 www.TheRealDeal.com

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Commercial

Retail on the runway

High-end stores at NYC airports are boosting returns for owners and operators Airport retail takes off

Annual gross retail sales and retail space are climbing at area airports

91,842

158,313

221,865

LaGuardia

$111.9 million

$195.2 million

Newark

$319.5 million

JFK

$ Gross retail sales

Total retail (sq. ft.)

Top retailers

Source note: Gross sales and square footage from Airport Revenue News. Both are for 2012.

By Tom Acitelli

T

he increasingly high-end retail options — think Coach luggage and Juicy Couture tees — at the city’s three major airports have turned store spaces into something of a cash cow for owners and operators.

At John F. Kennedy International Airport’s Terminal 4, where Delta Airlines finished a 360,000-square-foot expansion in May, new retailers include men’s clothiers Thomas Pink and Michael Kors as well as handbag kingpin Coach, not to mention the trendy burger joint Shake Shack and barbecue pioneer Blue Smoke.

“The build-outs for the stores are at a higher level than [they have] been in the past,” said Edward Midgley, vice president for concession management at JKIAT, which manages Terminal 4. “And it’s primarily being driven by the branded store operators.”

It’s all aimed at getting a slice of an often-captive — and growing — consumer audience: airline travelers.

According to the Port Authority, which manages the airports, passenger volume grew an average of 3.3 percent to 109.4 million in 2012, nearly besting 2007’s pre-recession record of 110 million, and quadruple the 0.8 percent national jump.

Ellery Plowman, an airport-retail consultant and former leasing vice president at

42 September 2013 www.TheRealDeal.com

Westfield Concession Management, which operates retail in parts of Newark, said passenger volume could rise another 5 percent per year for the next few years.

The presence of these pricier stores has led to the greatest gross sales for retailers in New York airports since 2009.

For example, at JFK, which had the highest-grossing retail dollar volume of the three area airports, retail sales clocked in at $319.5

handbags in airports,” said Laura Samuels, a spokesperson for the Hudson Group, which operates retail spaces at all three airports.

“Now you can’t swing a dead cat without hitting Michael Kors, Coach, Juicy Couture, you name it.”

Much of this change is due to changes in air travelers. A wider cross-section of travelers, including Europeans hungry to take advantage of the stronger pound and euro,

The presence of these pricier stores has led to the greatest gross sales for retailers in New York airports since 2009. million in 2012, according to data from Airport Revenue News, a trade magazine that tracks statistics on airport retail. That’s a nearly 13 percent jump over the $282.8 million that the airport saw in 2009.

At LaGuardia Airport, meanwhile, gross sales were $111.9 million in 2012, up 10 percent from $101.7 million in 2009, and a remarkable 25 percent from 2010. And at Newark Liberty International Airport, gross sales were $195.2 million in 2012, up 4.3 percent from $187.1 million in 2009.

“If you were flying back in 2005, you probably did not come across too many designer

are flying, for business and personal reasons, spurring operators and retailers to provide a wider variety of shops.

“Fifteen to 18 years ago, the business traveler, 18 percent of them were women — now it’s 56 [percent],” Plowman said.

The latest improvements come as developer Joseph Sitt lobbies for his Global Gateway Alliance, a group he launched in January to improve logistics, such as arrival and departure times, at area airports.

Sitt did not respond to requests for comment, but his goal is reportedly to ease conditions for travelers to get into the city and

shop, which, in turn, would benefit his retail investments.

A bigger footprint When it comes to leasing out their space, airports don’t operate like other landlords.

Instead of setting rental prices by square foot, the entities that control airport retail — which include the Port Authority, the airlines and management firms like Hudson that act on behalf of owners — set a base rent monthly and then increase it once retailers hit specified sales figures. Sources declined to give those base rents.

As a result of that system, the recent upswing in gross sales translates into higher rents, making the retail more lucrative for the airlines, the Port Authority and the management companies, sources said. One analyst told The Real Deal that a general rule of thumb for airport-retail pricing is to add $10 to the average per-square-foot asking rent of ground-floor retail in a particular city.

Recent numbers provided by MarketPlace Development, which operates LaGuardia’s Central Terminal (Terminal B) on behalf of the Port Authority, show how sales have been rising per square foot. Gross sales per square foot in the terminal, which includes the Metropolitan Museum of Art Store and chef Todd English’s Figs Restaurant, averaged about Continued on page 110

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Profile

Real estate’s new ruling class

Industry undergoes unprecedented changing of the guard with a wave of new 30- and 40-something CEOs stepping in

T

By C. J. Hughes hey’re young, they’re tech-savvy, and some even wear sweatshirts and trendy retro-style sneakers to the office.

No, we’re not talking about the newest batch of Silicon Alley CEOs. Meet real estate’s new ruling class: The 30- and 40-something executives who have recently taken over operations at New York City development firms, hotel companies, investment banks and real estate brokerages.

While many of these heavy hitters — including the Related Company’s Jeff Blau, Forest City Ratner’s MaryAnne Gilmartin, Silverstein Properties’ Marty Burger and Tishman Speyer’s Rob Speyer — have been in the industry for years, a slew of their venerable predecessors have recently retired, opening up the top jobs at their respective firms in an unprecedented, industry-wide changing of the guard.

These new leaders are collectively overhauling some long-followed industry norms, and reinvigorating a market sector known for embracing the status quo.

“This is not really an industry known for being innovative,” said Gilmartin, 49, who became CEO of Forest City Ratner in April.

And even though most have been groomed by their predecessors for leadership positions, this new generation brings a fresh perspective that is impacting not only their own companies, but the New York real estate industry as a whole, sources said. For example: These younger moguls are more likely to have MBAs than their predecessors, to invest in neighborhoods that their companies have previously ignored, to go after global financing and to keep their companies at the forefront of technology.

“They’re all coming up at once,” said Mitchell Moss, a professor of urban planning at New York University. “They have energy, they have know-how, and they want to have an impact.

They don’t just want to sit back and collect rent receipts like some people before them.”

Family tree Real estate is well-known for its family ties, so it’s not surprising that several members of this next generation of company leaders are taking over for their parents.

At Queens-based Muss Development, for example, 42-yearold Jason Muss is gradually taking over for his 71-year-old dad, Josh. The younger Muss, a company principal, is expanding beyond Queens — where the company recently launched the last phase of Oceana, a 15-building gated Brighton Beach condo complex on the waterfront — and into Manhattan 44 September 2013 www.TheRealDeal.com

development. One of those Manhattan properties is 181 East 119th Street, a new 90-unit luxury rental building in Harlem.

And at Rockrose, Justin Elghanayan became president last year, taking over for his father, Henry. The move signaled a new phase for that firm, which split its properties in 2009,

While many of these heavy hitters have been in the industry for years, a slew of their venerable predecessors have recently retired, opening up the top jobs at their firms.

A rendering of Silverstein Properties’ Four Seasons project in Lower Manhattan

when Henry’s brothers — Thomas and Frederick — broke off and formed a new development company, TF Cornerstone.

Similarly, Rob Speyer joined his father Jerry’s firm, Tishman Speyer, in 1995. He was promoted to co-CEO in 2008 and last summer Speyer was chosen to be chairman of the industry’s most powerful trade organization, the Real Estate Board of New York. Speyer is REBNY’s youngest-ever chairman, replacing powerhouse Mary Ann Tighe, the CBRE Group’s Tri-State chief executive.

Assuming command of dynasties with entrenched roots in New York comes with a lot of advantages. For starters, many of these companies have established reservoirs of goodwill built up over the years, not to mention amassed wealth, relationships with banks, and access to lawyers who know their way around the zoning process.

Jed Walentas, 39, who has taken over most of the day-to-day running of Two Trees Management Company from his father, David, noted that it also provides a certain level of freedom.

“My father grew up with nothing and I grew up with a lot, so there maybe is less pressure for me to make a lot of money,” he said. “But I think when you are well-enough capitalized, and you have the intellectual curiosity, you can explore other kinds of stuff, non-proven ideas.”

A case in point, he said, is Two Trees’ plans for the former Domino Sugar factory site on the East River in Williamsburg, a stalled project that the firm bought last year for $185 million. (The purchase also expanded the company into another section of Brooklyn from its longtime Dumbo base, the once-industrial neighborhood it helped transform into a vibrant mixed-use community.)

Also, instead of feeling pressure to squeeze in the maximum number of apartments at the 11-acre mix-used Domino complex, Two Trees is including more parkland, retail and offices, and fewer apartments than the plan from the original developer team, which included the Community Preservation Corporation and the Katan Group.

Until the Two Trees proposal is approved and construction is underway, Walentas is allowing the development site to be used by the neighborhood for an urban farm, yoga studio and bicycle course, according to published reports.

In addition, architect Rafael Viñoly’s original design has been radically rethought since Two Trees bought the Domino site. The company hired SHoP Architects, which came up with a bold new look that includes two taller towers with cutaway, doughnut-type openings in their centers.

“If we weren’t in the position we’re in, we would never

Profile

A rendering of the Domino Sugar factory that Two Trees is redeveloping in Williamsburg

have made that decision,” said Walentas, noting that he had the luxury of time when it came to his decision to redesign the project.

Meanwhile, Walentas has broken tradition with his dad in developing the 72-room Wythe Hotel in Williamsburg. The project represents a rare foray into hospitality for Two Trees.

Having a young CEO can create distinct advantages when marketing properties geared towards younger residents, said Justin Elghanayan. His firm is now leasing Linc LIC, a 42-story, 709-unit rental tower in Long Island City, where one-bedrooms average $2,700 a month.

The building has 25,000 square feet of interior amenity space, which includes squash courts and a screening room, plus three roof decks totaling 25,000 square feet, Elghanayan said. Those amenities were specifically included to attract young renters, he said.

Many millennial tenants are picky when it comes to restaurants, Elghanayan said. That’s why Elghanayan has taken pains in choosing the right restaurant for a Rockrose-owned site across from Linc. He said that restaurant, which is supposed to open this summer, will be Wells Steakhouse, an offshoot of M. Wells, the popular Long Island City diner that closed in 2011, but has since reopened as a cafeteria inside MoMA’s PS1 in the same neighborhood.

“Henry is more in touch with the general winds of culture, like where is going to be a good neighborhood,” Elghanayan said of his father, who, still runs the company but has turned over more responsibility to Justin. “I am more interested in the particulars of what restaurants to put in.” He noted, however, that both approaches are needed to achieve success.

And Justin is choosing deal locations as well.

He’s recently pushed Rockrose further into Washington, D.C. The firm has picked up five office buildings there in the past few years, and is about to close on 2000 L Street NW, an eight-story, 401,000-square-foot office building currently owned by Brookfield Office Properties.

In addition, under his stewardship, the company is ramping up plans for a massive mixed-use hotel and residential development in Manhattan’s Hudson Yards area on 11th Avenue between West 38th and 39th streets, which could include 520 apartments, he said.

In order to sell apartments, these young guns are drawing on different skills than their predecessors did, according to Elizabeth Ann Stribling-Kivlan, 34, who last January took over as president of residential brokerage Stribling & Associates from her mother, company founder Elizabeth Stribling.

For example, Stribling-Kivlan is now making social media a bigger priority with features like the recent “7 under $700,000,” which was posted to the company’s Facebook page.

Of course, there’s downside to family-run businesses. Lawrence Longua, a former professor at New York University and longtime real estate banker, said that a risk with dynasties is that untested kids can come up too quickly.

Some say a lack of experience may have played a role in

Rob Speyer’s push for his company to buy Stuyvesant Town in 2006 for a record-setting $5.4 billion. He reportedly took the reins on that deal instead of his father.

Tishman Speyer, which paired with other investors in the deal, was unable to cover its debt service because it couldn’t charge high enough rents at the middle-income complex.

When Tishman tried to crack down on what it claimed were illegal rentals, tenants pushed back aggressively. Tishman Speyer, which did not return a call for comment, eventually lost the building.

“Was it Rob Speyer’s fault 100 percent? No,” Longua said.

“But it astounded me that a family whose individuals are so rooted in New York real estate would not be more sensitive to the politics of Stuy Town.”

Not just blood These days an increasing number of company leaders are outsiders and are not being tossed the baton from a family member, sources say.

Silverstein Properties, for example, tapped former Related executive Marty Burger in 2011 as a co-chief executive. In December, Burger will take over as CEO from the 82-year-old company founder, Larry Silverstein.

Silverstein’s children, Roger and Lisa, “didn’t want to run the business,” explained Burger, 48.

The way Burger and Silverstein currently share responsibilities may suggest a new direction for the firm once its namesake retires. Silverstein spends almost all his time on the firm’s signature project: the three towers rising at the firm’s World Trade Center site, which have been in the works for more than a decade.

Burger, meanwhile, focuses on the rest of the company’s residential and hotel projects, which are expected to move more into the limelight once the time-consuming World Trade Center wraps up: Tower Four will open this fall, and One World Trade will debut next year.

Burger said some criteria will stay in place. For starters, the company will remain selective, taking on only big, impactful and pricey projects, he said. He pointed out that six of its current projects in New York have price tags of $800 million or more.

One that might fit the bill is a soon-to-be-announced project on West End Avenue, which will break ground next spring, Burger said. He declined to discuss the deal, but said the project will be mixed-use with a heavy residential component.

Hyper educated While in the old days some builders didn’t even make it through college, the latest generation of CEOs often come armed with MBAs. For example, mega developer Sheldon Solow, 84, dropped out of New York University. Others have a single bachelor’s degree under their belts. And when that previous generation did continue their studies, it often was a law degree. Silverstein,

Jeff Blau, the Related Companies Title: CEO Age: 45 Claim to fame: Before taking over for Steve Ross, Blau was the point person on the decade-long development of Hudson Yards; he’s now opening new offices in Shanghai, Abu Dhabi and Brazil.

Elizabeth Ann Stribling-Kivlan, left, and Elizabeth Stribling

Elizabeth Ann Stribling-Kivlan, Stribling & Associates Title: President Age: 34 Claim to fame: Took over for her mother Elizabeth Stribling in January; opened a new office in Brooklyn and is renovating the Chelsea location; leading a Webbynominated website redesign.

MaryAnne Gilmartin, Forest City Ratner Title: President and CEO Age: 49 Claim to fame: Bruce Ratner’s replacement has spearheaded the development of modular housing at Atlantic Yards and is tackling mixed-use projects like Cornell NYC Tech on Roosevelt Island and the Nassau Coliseum on Long Island.

Larry SIlverstein, left, and Marty Burger

Marty Burger, Silverstein Properties Title: Co-CEO (to take over as CEO in December) Age: 48 Claim to fame: Larry Silverstein’s right-hand man is known for creating the firm’s asset management group and leading development on two new Four Seasons projects.

Jonathan Gray, the Blackstone Group Title: Global Head of Real Estate Age: 43 Claim to fame: On the short list to take over leadership of Blackstone when CEO Stephen Schwarzman steps down.

www.TheRealDeal.com September 2013 45

Profile

Forest City Ratner’s modular apartment tower, B2, at its Atlantic Yards site

for example, got a JD from Brooklyn Law School.

But as real estate has become a more sophisticated investment area, opening up new streams of funding, it’s attracted more professionals with backgrounds in finance.

Burger did his undergrad at the University of Pennsylvania’s Wharton School of Business and worked for elite financial firms like Goldman Sachs and the Blackstone Group.

Forty-five-year-old Jeff Blau, of Related, meanwhile, also went to Wharton, where he earned a MBA. Fellow Wharton grad Jonathan Gray, 43, the global head of real estate at the Blackstone Group, has catapulted to the top rungs of the firm in recent years and is a newly minted billionaire to boot.

In 2011, Gray was promoted from co-head of the real estate division to its sole chief. And sources say he’s frequently one of a handful of people on the short list to take over the entire firm when CEO Stephen Schwarzman steps down. However, company sources say that is not likely to happen anytime soon.

Having leaders with a financial background has helped focus real estate companies on getting capital from more sources. For example, both Burger and Blau have launched asset management divisions within their firms, which give them broader access to critical debt and equity markets overseas.

The new division scored Silverstein a loan from Grupo Financiero Inbursa to build a new 434-room Four Seasons in Orlando, the largest in the world. Indeed, Mexican billionaire Carlos Slim’s bank will provide $190 million in debt financing for the $360 million project.

Similarly, the asset management division secured a $660 million loan from the Children’s Investment Fund Management of London to resume construction at the Four Seasons on Park Place in Manhattan.

Blau — who took over as CEO for Stephen Ross last year — created Related’s asset-management arm in 2008, which established a funding network that includes Goldman Sachs, Olayan Group, from Saudi Arabia, and Mubadala, from the United Arab Emirates.

And though Ross, who founded his company in 1972, is considered more of a well-connected schmoozer, Blau, in the style of his generation, has honed his financial chops.

Blau also has his sights set internationally as a place to develop. Related has recently opened offices in Shanghai, Abu Dhabi and Brazil, with a possible London outpost to join the mix soon, said Blau, who acknowledged that this 46 September 2013 www.TheRealDeal.com

global focus is one of his priorities and a new direction for the firm.

Henry Elghanayan, left, and Justin Elghanayan

Technology obsessed While almost all major real estate companies already have established websites and social media operations, these new CEOs and presidents are more apt to spend money upgrading their company’s technological resources, from streamlined billing systems to high-powered building-wide wireless networks.

Indeed, when Burger arrived two years ago, Silverstein’s IT department, which wires new developments, had only two employees; now it has eight. A new accounting system that allows tenants to pay their rent electronically has also been created.

“I sort of forced that to happen sooner than it probably would have,” Burger said.

Blau said he has pushed for technology upgrades at the firm for years. For example, he persuaded Ross, who is about three decades older, to use technology to streamline the leasing process at Related’s many rental buildings. Related now also accepts credit cards for rent payments and has a free transfer policy between its properties, to save tenants money if they move within the company portfolio. Also, some apartment buildings have resident-only websites.

“This is not Stephen’s demographic in these buildings, so it’s not like he was suggesting this,” Blau said. “This came more from me.”

Hints of what’s to come may be seen in the other business lines Blau has focused on, like growing the Equinox gym, which Related bought in 2005 for $505 million.

Staying at the forefront of technology and trends extends to construction techniques, too. Forest City Ratner, for instance, made headlines when it announced that it would use prefab modules to build its first residential tower at the Atlantic Yards site in Brooklyn. Located next to Barclays Center, the 935-module high-rise will have 350 apartments, half targeted at middle- or lower-income housing.

The modules, which are fabricated at the nearby Brooklyn Navy Yard, increase efficiency (and lower costs), but also represent that things can change in a somewhat hidebound industry, said Gilmartin, who pushed the company to test the modular design.

Gilmartin, who took over as CEO from company founder Bruce Ratner, said more projects using this technique will be forthcoming under her leadership.

Using prefab construction “could bring opportunity to high-rise developers here and in any gateway city where high land prices and unpredictable construction costs stifle the growth of a market, especially affordable housing,” she wrote in an email.

Gilmartin is also eager to capitalize on the success of the Barclays Center. Last month, Forest City was picked to take on a $229 million renovation of the Nassau Veterans Memorial Coliseum on Long Island.

Gilmartin noted how much the industry has changed since she joined Forest City in 1994. As the obsession with real estate has swelled, the industry has taken on a patina of cool, she said.

“In the beginning, being a developer felt like the equivalent of being a used-car salesman,” she said. “But now, it’s like everybody wants to do it.”

Collared shirts, optional If there is one overarching change that the next generation is making in the industry, it’s rapid dissolution of longstanding New York City neighborhood lines. In recent years, rezonings, mega-mixed-use development projects, and industrial conversions have transformed blighted areas into vibrant neighborhoods, particularly in Brooklyn, where young people now flock in droves.

Justin Elghanayan, Rockrose Title: President Age: 35 Claim to fame: Heads Rockrose in conjunction with his father, Henry. Now ramping up acquisitions in Washington, D.C.; taking on Hudson Yards redevelopment projects; completing host of Long Island City projects in the emerging Court Square area.

Rob Speyer, Tishman Speyer Title: President and coCEO Age: 44 Claim to fame: Son of Jerry Speyer and youngest-ever chairman of the Real Estate Board of New York.

Best known for leading the infamous $5.4 billion Stuy Town purchase (which ended up in default); now initiating Tishman Speyer’s new global direction with major office developments in Germany, England and Brazil.

Jason Muss, Muss Development Title: Principal Age: 42 Claim to fame: Head of Queens-based family firm, which is now moving into Manhattan with projects like 181 East 119th Street, a luxury rental at Third Avenue in Spanish Harlem.

Jed Walentas, Two Trees Management Company Title: Principal Age: 39 Claim to fame: The son of Two Trees founder David Walentas is now branching out from the firm’s longtime Dumbo base with the Domino Sugar Factory in Williamsburg, and moving into the hospitality sector with nearby Wythe Hotel.

Fred Peters, 61, president of the residential brokerage Warburg Realty, said younger real estate pros “don’t see neighborhoods as we saw them. They see living anywhere as an option.”

In something of a role reversal, Elizabeth Stribling moved to a $6 million-plus apartment at One Brooklyn Bridge in 2009. And, in May, Stribling opened an office in a former furniture store on Atlantic Avenue in Boerum Hill, after focusing primarily on the Upper East and West Sides for much of its existence.

And in Manhattan these days, “if you said, ‘People don’t go above 96th Street,’ it would be laughable,” said Adam Mermelstein, 34, a principal at Treetop Development. His firm has targeted Harlem, where it recently bought 17-27 West 125th Street, a 50-unit prewar rental for $13.6 million, and Rego Park, Queens, where it purchased the 417-unit apartment Continued on page 114 PHOTOGRAPH OF ELGHANAYANS FOR THE REAL DEAL BY MAX DWORKIN

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Pr o f i l e

Coldwell Banker’s back Why the national brand thinks it can succeed with Bellmarc where CBHK failed (From left) Anthony DeGrotta, president of Coldwell Banker AC Lawrence; Neil Binder, president of Coldwell Banker the Bellmarc Group; and Larry Friedman, president of Coldwell Banker Bellmarc.

A

By Hayley Kaplan fter 34 years of private ownership, Manhattan residential brokerage the Bellmarc Group this summer announced that it would become a franchise of the massive Coldwell Banker.

While the brand has locations across the U.S. and in 51 countries, Manhattan had been without a Coldwell Banker franchise since 2009, when Coldwell Banker Hunt Kennedy shuttered in the midst of the real estate downturn.

Now Bellmarc is betting on Coldwell Banker’s broad reach to help it shed its mid-market identity and grab more of the lucrative high-end Manhattan market from formidable competitors like the Corcoran Group, Douglas Elliman and Brown Harris Stevens. To make that happen, it’s banking on Coldwell Banker’s international network to lure high-end clients searching for Manhattan homes.

Bellmarc co-founder Neil Binder said his goal is to “make the very best company that exists in New York and to do it as quickly as we can.”

48 September 2013 www.TheRealDeal.com

During the recession, “we got creamed, just like everybody else. Things became much more daunting, and we had to weather the storm.”

Neil Binder, Coldwell Banker the Bellmarc Group To that end, newly rebranded Coldwell Banker the Bellmarc Group is already aggressively expanding. After acquiring the rental firm AC Lawrence, the company now has some 650 agents and new offices in Midtown and Morningside Heights. The firm is also looking to acquire other Manhattan brokerages, and will soon launch a Coldwell Banker Previews luxury division.

But some industry insiders are skeptical of Bellmarc’s ambitious plans. As the closure of CBHK illustrated, national brands have historically met with mixed results in Manhattan. That’s something Eric Barron knows well; he’s the CEO of Keller Williams NYC, a national franchise which also recently launched in Manhattan. But while Keller Williams has a unique profit-sharing business model that sets it apart from other bro-

kerages, Barron said Bellmarc may struggle to compete.

“Coldwell Banker is a great brand; a great company,” he said. “I just think that it is going to be near impossible for a franchise to bring a traditional business model — which I feel is already broken to begin with — and then expect to compete with people who already have a head start.”

Other industry insiders say anything short of a radical reimagining of the brand won’t be enough for Bellmarc, which they say has been in a rut for several years.

“Bellmarc and Coldwell Banker … really have to do something different,” said Paul Purcell, the co-founder of Rutenberg Realty and former president of Douglas Elliman. “The same Bellmarc with a Coldwell Banker attached to it

will not change their business.”

Getting ‘creamed’ Bellmarc has weathered many ups and downs since its founding in 1979.

Binder, the Queens-born son of a dentist, started the brokerage with a partner, Marc Broxmeyer. At the time, Binder was an accountant for a group of real estate syndicators in Manhattan, while Broxmeyer had worked at his family’s property management firm, which oversaw some 2,000 apartment buildings before getting put out of business in the 1970s recession.

After the company went under, Broxmeyer finished up college and then went into business with Binder.

The pair initially wanted to invest in bricks-and-mortar real estate, so they teamed up to buy an apartment building in Bell Harbor, Queens (which later

www.TheRealDeal.com 2011 25 PHOTOGRAPH FOR THE REALJanuary DEAL BY CHANCE-YEH

Pr o f i l e inspired Bellmarc’s name). Because the economy in 1979 was so bad, though, Broxmeyer came up with the idea of starting a brokerage — out of “desperation and fear” that they would fail in real estate investment, Binder said. The brokerage would offer training programs to make the firm stand out from others — a

That act of desperation ended up becoming the business model that stuck.

By the early 1990s, Bellmarc had some 500 agents and 12 offices in Manhattan, Brooklyn and Queens. Bellmarc’s holdings at the time also included a company called Studio Specialists, which focused on selling studios and other small apart-

Darla Delayne, the new director of referrals and relocation at Bellmarc. Right, David Michonski, the former CEO of Coldwell Banker Hunt Kennedy.

JoAnne Kennedy, co-founder of the now-defunct Coldwell Banker Hunt Kennedy.

Right, Budge Huskey, the president and CEO of Coldwell Banker.

Bellmarc’s Alan Nickman and Stephen O’Neal are listing this seven-bedroom home in the Riverdale section of the Bronx for $2.9 million. unique idea at the time, he noted. The two opened a tiny office in Manhattan at 80 East 11th Street.

“We both saw the other as having a good foundation for the real estate business,” Binder said. “We acquired our first building together, but the timing was not [right]. Everything was very much against New York City. As an act of desperation, we went into brokerage.”

28 March 2012 www.TheRealDeal.com

ments. Along the way, Binder wrote several books about real estate. His newest one, “The Ultimate Guide to Buying and Selling Co-ops and Condos in New York City,” will be released this month.

Bellmarc focused on residential sales, and from the beginning steered more toward middle-market rather than luxury properties, Binder said. That focus continues to this day: In March, The Real

Deal’s ranking of Manhattan’s biggest residential brokerages showed that Bellmarc had a median listing price of $474,000.

By contrast, Elliman had an average listing price of $1.1 million and Corcoran was at $1.3 million. (Bellmarc does have some high-end listings: For example, Bellmarc agents Alan Nickman and Stephen O’Neal are listing a three-bedroom co-op at 221 West 82nd Street for $2.38 million and a seven-bedroom home at 5000 Goodridge Avenue in Riverdale for $2.9 million, while broker Liz Apgar is marketing a unit at 165 East 72nd Street for just under $3 million.)

When another recession came along in the 1990s, Binder and Broxmeyer tweaked their business model once again, closing six offices and consolidated the company while returning to their original idea of investing in properties. They began buying residential buildings around the city.

“We were afraid that if we had all our eggs in brokerage, we would be at risk,” Binder explained. “So we decided to bring in our operation, and focus on buying real estate and maintaining what we had.”

That kept the company afloat until 2008’s financial crisis, when yet another recession hit the city. In early 2009, Bellmarc closed its corporate headquarters at 352 Park Avenue South to save overhead costs, leaving the firm with five offices and fewer than 300 agents.

During the late-2000s recession, “we got creamed, just like everybody else,” Binder said. “Things became much more daunting, and we had to weather the storm.”

This time, though, Binder didn’t have a business partner to help navigate the difficult times: At around the same time, Broxmeyer retired due to illness.

“I was very lonely,” Binder said. “I didn’t have my business brother. We were in the middle of the recession, and there were all kinds of things going on that were challenging to every real estate firm, and I was … very unhappy.”

Binder started looking into options for another partner, either by acquiring a rental firm or by having Broxmeyer sell his stake to a larger company. At one point, Connecticut-based William Raveis Real Estate was in talks to buy Broxmeyer’s stake in Bellmarc Realty, but the deal collapsed in 2011. Raveis did not respond to requests for comment, and Binder declined to comment specifically on why the Raveis deal fizzled, other than to say he initially went about searching for a partner the wrong way.

Also in 2011, Binder put his townhouse at 250 East 68th Street on the market for $9.5 million, selling it a year later for $6.5 million.

Eventually, though, Binder found the new business partner he was looking for. In November, Bellmarc acquired the six-year-old rental firm AC Lawrence,

which has also focused on lower- and mid-priced apartments. The firm, which had just under 100 agents, was led by Citi Habitats alums Anthony DeGrotta and Larry Friedman.

At that point, Binder said, he was also in talks with Coldwell Banker, which he noted had been looking for “some kind of relationship” with him for over 20 years.

Until recently, however, he said, the arrangement “never felt like it was right.”

Once the acquisition of AC Lawrence was sealed, though, the stars seemed to align.

After CBHK collapsed in 2009, Coldwell Banker took a step back from actively pursuing partnerships in the New York market, Budge Huskey, the president and CEO of Coldwell Banker told TRD. The firm began thinking about reentering the Manhattan market just over a year ago.

Meanwhile, Bellmarc’s acquisition of AC Lawrence made Coldwell Banker even more interested in a franchise opportunity, Binder said, because “it broadened my position in the market.”

Elayne Reimer, a former CBHK broker who is now at Halstead Property, said that’s consistent with Coldwell Banker’s pattern of taking on “viable companies that obviously need some extra backing.”

“Hopefully, [Coldwell Banker Bellmarc] will make it,” she added.

In June, Bellmarc outlined its twopronged strategy for doing just that. The new firm, Coldwell Banker the Bellmarc Group, is comprised of a sales division, Coldwell Banker Bellmarc, and a rental division, Coldwell Banker AC Lawrence.

Coldwell Banker Previews, the brand’s luxury real estate arm, will soon launch as the third division.

DeGrotta is president of Coldwell Banker AC Lawrence, Friedman is president of Coldwell Banker Bellmarc and Binder is president of Coldwell Banker the Bellmarc Group. The three still own the company, but pay a franchise fee to Coldwell Banker.

They’ve since set about opening new offices, in addition to the company’s seven existing locations. A new Coldwell Banker AC Lawrence office, with room for up to 100 agents, opened last month at 155 East 56th Street in Midtown East. There’s also an office in the works at 2679 Broadway in Morningside Heights. The firm is in the process of gut-renovating the space, which will hold about 75 agents from both Bellmarc and AC Lawrence.

Binder declined to say specifically how many new agents he plans to hire, but did say the company now has around 650 agents, up from 511 in March, when TRD did its ranking of Manhattan’s biggest residential brokerages.

Binder’s even talking about acquiring more brokerages in Manhattan, but remained mum on the details.

“There are a number of firms that have Continued on page 114

www.TheRealDeal.com September 2013 49

TH I S M O N T H I N

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1994: $2.3B Queens mega-project gets underway

G

overnor Mario Cuomo and Mayor Rudolph Giuliani attended the groundbreaking ceremony for a massive public-private residential development in Queens along the East River 19 years ago this month.

The event, which began construction on Hunters Point Community Park, was the official kickoff for the first phase of a plan that called for creating 6,385 apartments on the 74-acre site on reclaimed industrial land south of the Queensboro Bridge.

The groundbreaking was a show of serious progress for a mega-project discussed as early as 1984. Indeed, the momentum was viewed as crucial to securing government financing for private developers who would handle the residential component.

A joint venture of developers called M.O. Associates (standing for Manhattan Overlook) that included the ZeckMayor Giuliani (left) and Governor Cuomo endorf Company and Victor Elmaleh’s World-Wide Holdings, as well as an affiliate of the investment bank Dreyfus, built the first apartment tower at the site. The 522-unit cooperative building, which was called Citylights, opened in 1996.

1935: Firm behind Empire State Building goes bankrupt

T

he renowned Starrett Corporation — the firm that built the Empire State Building in less than a year during the start of the Great Depression and invested in properties nationwide — filed for bankruptcy 78 years ago this month.

In addition to the Empire State Building, the company, founded by Paul Starrett in 1922, built several large office buildings in the early 1930s such as 40 Wall Street in Lower Manhattan and the Starrett Lehigh Terminal Building in West Chelsea. But with the economic decline, the company ran into financial trouble.

In its bankruptcy filing, the firm said the gross rental in- The Empire State Building was come for the office buildings it owned fell from $4.4 million constructed by the Starrett Corporation. in 1932 to $3.7 million in 1935.

Despite reorganizing in bankruptcy, it did not turn an annual profit until 1946, according to the International Directory of Company Histories.

The company went on to build massive residential development projects such as Parkchester in the Bronx between 1939 and 1942, Stuyvesant Town on Manhattan’s East Side in 1947 and Starrett City in Brooklyn, which opened in 1974. Today it owns and manages apartment buildings in the New York City metro area.

1908: Players back name for Queensboro Bridge

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eal estate players lobbied to change the name of the soon-to-open Blackwell’s Island Bridge to the Queensboro Bridge, 105 years ago this month.

Manhattan and Queens property owners sent a petition seeking the change to the city’s Board of Aldermen, noting that the name Blackwell’s conjured up images of the infamous prison that operated on the island.

Landlords also pointed out that typically New York’s bridges carried the name of one of the ends of the span such as the Brooklyn and Williamsburg bridges.

The proposal was far from a sure The under-construction Queensboro Bridge thing though. One alderman said he did not believe a good case had been made to alter the bridge’s name, the New York Times reported. And a handful of the city’s Irish organizations opposed the name Queensboro, arguing that it was too English.

However, by the end of the month, the Board of Aldermen had approved the change.

Six months later, on March 30, 1909, the bridge was opened to traffic. More than a century later, in 2011, the bridge’s name was changed again to the Ed Koch Queensboro Bridge. Compiled by Adam Pincus

Commercial

Foreign exchange

New groups of international investors ramp up Manhattan real estate purchases

By Katherine Clarke n recent months, New York City has surged ahead of its biggest global rivals, London and Tokyo, with more dollar volume in real estate investment than any other city in the world.

It’s not surprising that much of the capital rushing into New York is coming from foreign investors and often from sovereign wealth funds: state-controlled investment bodies responsible for allocating countries’ cash reserves. Gary Barnett’s new Manhattan condo One57, for example, is backed by investors from Abu Dhabi, and the Chinese investment firm SOHO China recently bought a $1.4 billion stake in the General Motors Building. In total, foreign investors poured $1.96 billion into Manhattan real estate in the first half of 2013, according to data firm Real Capital Analytics.

And it may soon get even easier for foreign investors to buy a piece of the Big Apple: the proposed Real Estate Investment and Jobs Act of 2013, which is currently being pushed by several members of Congress including Queens’ Congressman Joseph Crowley, would allow a more lenient tax policy for foreign entities investing in the U.S. But while foreign entities have been investing in New York City real estate for years, they’ve changed their strategy significantly since the economic crisis. Industry experts say there’s been a serious shift in the major sources of international capital, as well as a change in investors’ strategies for parking money in New York City.

For instance, players from Asia — both private individuals and institutional funds — have increased their investment in Manhattan property, from under $200 million in 2010 to $1.36 billion in 2012, according to RCA’s data.

During that same period, investors from Australia and certain areas of Europe, particularly Germany, loosened their grip on the Manhattan market.

International investors have also recently started making more direct investments in Manhattan real estate — purchasing a stake in a building, or providing equity or debt financing to a local developer, rather than investing in a real estate investment trust or a large fund like the Blackstone Group.

While direct investments have some drawbacks, they allow foreign companies to make more decisions about which assets to buy and sell.

“We just came out of a period where people saw that not every investment paid off well,” said Howard Michaels, CEO of the Manhattan real estate banking firm the Carlton Group. Now “we’re seeing more direct investment because the investors want to have more control over their decisions, as opposed to bring part of a fund.”

I

Ramping up activity It’s well-known that the Chinese economy has grown aggressively in recent years, fueled by globalization and the country’s vast and cheap labor force. In 2010, China became the world’s second largest economy after the United States.

But recently, a number of factors have prompted Chinese investors to invest abroad. Perhaps most notably, the Chinese government in 2011 famously instituted a “one apartment policy,” making it difficult for homebuyers to purchase more than one property in any major city in the country. While the policy has helped curb a pricing bubble in the country, it’s made it less attractive for Chinese devel52 September 2013 www.TheRealDeal.com

Last year, the Canada Pension Plan Investment Board bought a 45 percent stake in the Midtown office building 10 East 53rd Street.

1180 Sixth Avenue

Moise Safra

Chinese businesswoman Zhang Xin, the CEO of development company SOHO China

opers to build residential projects at home.

New condos in China “used to fly off the shelf,” said James Nelson of Massey Knakal Realty Services, but the new policy “has certainly cooled that market.”

As a result, “there’s a tremendous amount of wealth that’s trying to make it to the U.S,” said Nelson, who recently completed a six-city tour of China.

Chief among these wealthy investors is business magnate Zhang Xin, the CEO of development company SOHO China, who has spent more money on Manhattan real estate than any international investor in the last three years,

according to data from RCA. In 2011, Xin reportedly paid $600 million for a 49 percent stake in Park Avenue Plaza, an office tower at 55 East 52nd Street. And in June of this year, Xin’s family partnered with Brazilian banking mogul Moise Safra to buy a 40 percent stake in America’s most valuable office tower, the General Motors Building, for $700 million.

Other Chinese investors bullish on New York include HNA Group, a Chinese airline company, which bought the Manhattan office building 1180 Sixth Avenue for $265 million in 2011. HNA has also been active outside of New York City, acquiring close to $5 billion worth of real estate globally in the last three years, according to RCA. Even the Chinese government is getting in on the action through the sovereign wealth fund China Investment Corp.

In 2011, CIC partnered with AREA Real Estate Finance to buy a preferred equity stake in the Midtown office tower 650 Madison Avenue for an undisclosed sum. (Crown Acquisitions is currently in contract to buy that building for $1.3 billion.)

Asian investors are by no means limited to those from China. The National Pension Service of South Korea, which owns stakes in 230 Park Avenue and 300 Park Avenue, has spent nearly $950 million on Manhattan real estate over the last three years, according to RCA’s findings.

Other groups of investors who are active in New York City real estate include those from Canada, Norway and the Middle East. Caisse de Depot, a manager of public pension funds in Quebec, has spent more than $1.25 billion in direct investments in Manhattan real estate over the last three years, primarily through its real estate subsidiary Ivanhoé Cambridge, according to RCA. In November 2012, Ivanhoé partnered with the California-based Swig Company to buy the Times Square office tower 1411 Broadway. Ivanhoé has also reportedly inked a deal to buy a stake in another Midtown office building, 1211 Sixth Avenue.

The small Middle Eastern country of Kuwait has also been notably active. Indeed, its sovereign wealth fund, the Kuwait Investment Authority, has spent almost $500 million on Manhattan real estate over the past three years. The fund is part of a consortium of investors behind Hudson Yards, the $15 billion office project on Manhattan’s west side spearheaded by the Related Companies.

Some active Middle Eastern investors prefer to keep a lower profile. For example, the Abu Dhabi–based fund Aabar Investment is reportedly a significant backer of Extell Development’s über-luxury condo tower One57, now being completed at 157 West 57th Street.

“Abu Dhabi generally doesn’t like to be known,” said Christopher Wilson, a managing partner at commercial brokerage Brookfield Financial. “They will hide in the background of deals.”

The big retreat As Chinese investors have become more interested in the U.S. property market, other investors have retreated.

“Before the downturn, there was a very strong interest in cities like New York from investors in Australia and Europe,” said John Wilcox II of commercial brokerage Marcus & Millichap.

Between 2005 and 2007, Australians led the way in terms of U.S. investments by foreign groups, Wilcox said.

Australian investors reportedly acquired $6.8 billion worth

Commercial

Biggest international investors, 2010-2013 1

Name: Zhang Xin Country: China Manhattan acquisitions: $1.9 billion Number of Properties: 2

6

Name: HSBC Holdings Country: England Manhattan acquisitions: $850 million Number of Properties: 3

11

Name: OMERS Country: Canada Manhattan acquisitions: $600 million Number of Properties: 5

2

Name: M. Safra & Co Country: Brazil Manhattan acquisitions: $1.35 billion Number of Properties: 1

7

Name: Safra Group Country: Brazil Manhattan acquisitions: $850 million Number of Properties: 5

12

Name: Epic UK Ltd Country: England Manhattan acquisitions: $550 million Number of Properties: 8

3

Name: Caisse de Depot Country: Canada Manhattan acquisitions: $1.25 billion Number of Properties: 3

Name: Jamestown Properties Country: Germany Manhattan acquisitions: $800 million Number of Properties: 6

13

Name: Kuwait Investment Authority Country: Kuwait Manhattan acquisitions: $500 million Number of Properties: 1

4

Name: National Pension Service Country: South Korea Manhattan acquisitions: $950 million Number of Properties: 3

9

Name: Brookfield Asset Mgmt Country: Canada Manhattan acquisitions: $700 million Number of Properties: 2

14

Name: UBS Country: Switzerland Manhattan acquisitions: $450 million Number of Properties: 3

5

Name: PSP Investments Country: Canada Manhattan acquisitions: $900 million Number of Properties: 1

10

Name: Sahara India Pariwar Country: India Manhattan acquisitions: $650 million Number of Properties: 2

15

Name: AXA Group Country: France Manhattan acquisitions: $400 million Number of Properties: 1

8

Source: Real Capital Analytics. Data is rounded to the nearest $50 million.

of commercial real estate throughout the U.S. between August of 2005 and August of 2006, much of it focused on national retail and office portfolios, and their investments accounted for 37 percent of all foreign money plowed into U.S. real estate during that period. Australian companies are required to pay the equivalent of 9 percent of employee salaries into retirement accounts each year. With an enormous surplus of cash during the boom, these funds “really went over the top” investing in U.S. real estate, Wilcox said.

That has changed since the 2008 financial crisis. “As people lost jobs and incomes were reduced,” Wilcox said, “they [began] investing at home to help drive economic growth.”

According to RCA, there hasn’t been a major New York City real estate deal made by an Australian investor since 2011, when the government-backed investment fund Australian Future Fund Board of Guardians purchased a 49.99 percent stake in the Midtown office tower 685 Third Avenue for $100.3 million from TIAA-CREF. Like the Aussies, German investors have also pulled back, sources said. German lenders and equity providers aggressively courted New York City deals in the years

leading up to and immediately following the financial crisis. In 2007, for example, an unnamed German company partnered with Scott Rechler’s former firm Reckson Associates to bid on 1211 Sixth Avenue. (They lost the deal.) And in 2009, German lenders DekaBank and Helaba led a group of banks in the refinancing of SL

Foreign investors poured $1.96 billion into Manhattan real estate in the first half of 2013.

Green’s 100 Park Avenue.

But investment from German companies is now less common. In 2012, German investors placed just $817.34 million in direct investment in Manhattan, down from $1.88 billion in 2007, according to RCA. The real estate firm Jamestown, which is funded by a German syndicate, for example, has invested around $800 million in

Manhattan real estate over the past three years, a small fraction of the $5.8 billion is invested globally during the same period.

Sources said the slowdown is primarily the result of the European Union’s prolonged recession in the wake of the global financial crisis.

“In 2006, when we recapitalized the General Motors Building for [developer] Harry Macklowe, we raised $300 million in equity from Germany,” Carlton’s Michaels said.

“It used to be that German investors and lenders were super-aggressive. While there is still an interest from Germany, investors from the Middle East and Asia are much more aggressive.”

But not all European investors are shying away from New York. Norway, for example, is not a part of the European Union, and its sovereign wealth fund, the Norwegian Government Pension Fund Global, has been chasing New York deals as part of a recent push into the U.S. This spring, Norges Bank Investment Management, the fund’s manager, snapped up two Manhattan office properties — 470 Park Avenue South and 475 Fifth Avenue — for $660 million in Continued on page 110

www.TheRealDeal.com September 2013 53

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Mayoral candidates get candid A side-by-side look at where NYC’s mayoral wannabes stand on real estate’s key issues

P

By Hiten Samtani erhaps no mayor in recent history has taken such delight in shaping New York as Michael Bloomberg. Indeed, he rezoned over a third of the city, while developers added a staggering 40,000 new buildings since he took office, according to an analysis of census data by the New York Times. But whether developers — and the real estate industry as a whole — can count on having an ally in City Hall once Bloomberg’s 12-year reign ends in January remains to be seen.

As the race to replace him moves into the homestretch — this month voters will go to the polls to cast ballots in the long-anticipated Democratic and Republican mayoral primaries — The Real Deal talked to some of the leading candidates on both sides of the political aisle. (Bill Thompson is the only major candidate who did not participate).

Below is a side-by-side look at where the candidates stand on key real estate issues, including rezonings, air rights and tax breaks.

                                                                 Mayor Bloomberg often gets criticized by community activists for being too pro-development. Do you think that’s a fair characterization? And what type of relationship would you like to have with the real estate and development community?

Bill de Blasio Democrat: (Public Advocate) I fundamentally believe that the relationship between the city and its developer community needs a reset.

Towering, glitzy buildings marketed to the global elite is not the type of development New Yorkers are looking for. I look forward to working with the real estate community to spur the development, in all five boroughs, of real affordable housing, mixed-­i ncome neighborhoods, sustainable and vibrant density, and

new spaces for small and new businesses to grow and thrive.

Joe Lhota Republican: (Former Chairman of Metropolitan Transportation Authority, Deputy Mayor in Giuliani Administration) I think it’s unfair to criticize Mayor Bloomberg, who has been concerned with how to deal with the growth of New York City. His critics don’t take into account that the city is dynamic, not static. We need to change to meet this growth. We are expecting an influx of another million New Yorkers and we must prepare our infrastructure and housing to accommodate that growth.

John Liu Democrat: (City Comptroller) NYC was started on a real estate transaction. We need the real estate industry to build the city; we might get a million more people in 20 years! But we also want responsible development. I think the vast majority of developers are responsible, but they have been given a free ride by the current administration. The role of government is to ensure that capitalism doesn’t get out of control, especially when abetted by changes in government policy.

Christine Quinn Democrat: (City Council Speaker) The mayor has done a good job encouraging development, but I believe we can do more to create jobs and encourage locally beneficial development. As Speaker I

www.TheRealDeal.com March 2012 www.TheRealDeal.com September 2013 00 57

NYC ELECTION GUIDE have fought for living wages and benefits for workers in rezoning projects and other places where companies receive a public benefit. I would direct my Economic Development Corporation to make living wages a priority in every possible project. I believe that it’s appropriate to enforce these standards when public resources are being utilized, since tax dollars should not be used to subsidize low-wage salaries that perpetuate the growing income inequality.

dle- and low-income New Yorkers to expand the city’s affordable housing stock and cultivate mixed-income neighborhoods. I will also propose rezonings and changes to land-use rules in industrial zones to protect proper industrial uses, rather than allow those spaces to be used for storage areas, gas stations, or hotels, while loosening some restrictions to meet the demand for live/work spaces and mixed-use neighborhoods.

John Catsimatidis

“One major problem with the current system is Albany making decisions that really should be done in the city. It is time for Albany to delegate more of its authority to the city on tax expenditure.”

Republican: (CEO of Gristedes Foods and Red Apple Group, developer) I am pro-development. I believe we should create the incentives to have people invest in New York City. But look what’s going on with our corporate community. The Fortune 200 has $2.5 trillion invested offshore. They’re creating more jobs overseas than in the U.S. That is wrong.

I can’t solve the world’s problems, but I can solve New York’s.

CHRISTINE QUINN, DEMOCRAT.

Anthony Weiner Democrat: (Former Congressman) I’m pro-development, but I would be more creative in leveraging middle-class housing. I would also not fall in love with misguided ‘glamour’ developments like football stadiums on the West Side.

During his three terms, Mayor Bloomberg took on major rezonings throughout the city. If elected, would you do the same? If so, what areas would you like to see rezoned next?

Quinn: The next mayor is also going to have to create new zoning regulations to respond to the realities of climate change. The Administration is working on climate-resilient zoning tools now, and the regulations will have to evolve as we learn more. [Also], the No. 1 reform to the zoning process should be adding certainty to the ULURP [Uniform Land Use Review Procedure] certification process. The pre-certification process can be frustrating to many applicants. There is no clock governing any of the actions that need to be taken. By including a neutral step in the process that would include a certain level of review of the submitted application and a written response, the applicant could have greater assurance that the project could move forward.

De Blasio: I have called for rezoning — and an increase in the number of places to live — in areas of the city well served by transit, and where residential demand is highest. It’s an economic and environmental imperative.

But in exchange for this new zoning capacity, developers should be required to build affordable units for mid-

“I fundamentally believe that the relationship between the city and its developer community needs a reset. Towering, glitzy buildings marketed to the global elite is not the type of development New Yorkers are looking for.”

BILL DE BLASIO, DEMOCRAT.

58 September 2013 www.TheRealDeal.com

Lhota: I will continue rezoning, but we’ve saturated the market. We should naturally slow it down until we start seeing results from the rezonings we’ve recently accomplished.

Liu: Large parts of the city could be up-zoned for greater development. This includes significant areas outside Manhattan, beginning with my hometown of Flushing.

But I would apply mandatory inclusionary zoning, so that we can fund affordable housing. Mayor Bloomberg has barely used inclusionary housing. I’m very much in favor of people making a handsome profit, but they shouldn’t get to keep all the gains.

Catsimatidis: I believe in creating incentives for developers to create jobs and to create new residences. I believe in transit-oriented development, which means taller buildings around our subway stations. I believe in giving developers zoning for taller buildings, so we can make it economical for them to build middle- and low-income housing. I’d look at areas in Brooklyn and Queens … to see where development is needed.

Weiner: Neighborhood-by-neighborhood zonings have neglected the citywide need for opportunities for light manufacturing, affordable office space and middle-class housing. I’d expand the use of M1-6D [the categories of zoning for manufacturing and commercial use in high-density districts].

of affordable housing. This way, the city won’t lose any revenue.

De Blasio: In order to make New York City accessible for more people, I have called for increased as-of-right residential development with mandatory inclusionary zoning for middle- and low-income New Yorkers. We need to change the tax treatment of vacant land, expand the use of tradable development rights, and allow for the legalization of accessory dwelling units and ‘granny’ flats — housing additions for the elderly. I have also called for investing a small portion of city pension dollars — $125 million annually — to support the development and preservation of affordable units.

Quinn: As mayor, I will use a combination of new financing and savings within the city’s capital budget to build 40,000 new middle-income units in addition to 40,000 currently planned new low-income housing units over the next decade. This is quadruple the current rate of construction, and by far the largest middle-class housing program since Mitchell-Lama. I will also work to get Albany to pass a Permanent Affordability Act, giving us a new financing tool that will allow us to keep units affordable indefinitely, and will get legislation passed that will allow the city to incentivize building owners to convert existing units into affordable housing.

Weiner: Finding an affordable place to live has become a major roadblock to building a life in New York City. I have a plan to introduce ‘Mitchell-Lama for the 21st Century,’ which will offer developers incentives to develop middle-class rental housing by providing modest but long-term profits. Additionally, we need to replace the tax-supported “80/20” system with a “60/20/20” formula, which would reserve 20 percent of new construction for low-income residents and 20 percent for middle-income residents. [The remaining 60 percent would be for market-rate units.]

“I’m pro-development, but I would be more creative in leveraging middle-class housing. I would also not fall in love with misguided ‘glamour’ developments like football stadiums on the West Side.”

ANTHONY WEINER, DEMOCRAT.

What do you think is the best way to address New York City’s affordable housing shortage?

Liu: There’s only so much money the city has in terms of capital. There’s not really any way to use city dollars to fund new affordable housing projects, only to rehabilitate and preserve what housing we do have. I’d use mandatory inclusionary zoning to help fund new affordable projects.

Lhota: We need to create an incentive program using our tax structure that requires developers to create 2030 percent of their units as low-and moderate-income housing. One of the things I will do as mayor is seek out surplus property from the state and the MTA, as well as abandoned post offices to give to the city for the purpose

Catsimatidis: There’s a lot of discretionary funding in the budget. I will use it to address the housing needs of our people.

In January, the state legislature passed a housing bill that included a tax abatement for ultra-luxury buildings such as Gary Barnett’s One57 and Larry Silverstein’s 30 Park Place. What are your thoughts on this? What changes would you like to see to the 421a program?

Catsimatidis: I believe there’s a current investigation in Albany about the matter. I believe in incentives, but they should be more widespread to attract more investors.

The outer boroughs should get more money than Man-

N Y C E l ec t i o n G u i d e hattan, because Manhattan is a natural sell to foreign buyers. I’m the only candidate that has common sense. If the mayor stomps his feet down, shit happens.

“I’m the only one that has common sense. If the mayor stomps his feet down, shit happens.”

John Catsimatidis, Republican.

De Blasio: I have called for a fundamental reform of our city’s economic development tax abatements, including the 421a program. We need to restrict the granting of tax incentives to only those projects which would not have happened absent a tax break — or which, because of the tax break, provide important public benefits, such as real affordable housing. I do not believe the tax benefits for One57 or 30 Park Place meet these criteria.

Quinn: 421a has historically been used to encourage housing development in neighborhoods less likely to see new construction. These buildings are clearly not in such neighborhoods, and their inclusion is frankly outrageous.

They should be removed immediately. As mayor, I’ll make removal of these properties from 421a part of my housing agenda, along with clear and unyielding requirements that all subsidized units must be treated the same as all other units. One major problem with the current system is Albany making decisions that really should be done in the city. It is time for Albany to delegate more of its authority to the city on tax expenditure. 421a already includes caps on benefits for high-value units that limit benefits to buildings such as those in the omnibus tax bill, but these caps appear way too high. Developers are not charities, and therefore should not have been profiting from their lobbying activities.

Lhota: I will advocate for the extension of 421a benefits, [but] we should be using our taxing powers to focus solely on creating low- and moderate-income housing.

Weiner: I would restore flexibility to the use of affordability certificates and permit them to be used offsite in exchange for a higher number of affordable units.

Liu: That is outrageous. We have so many needs for affordable housing, and they are going to the people who need it the least. I’d put together a panel right away to discuss 421a and see if [these abuses] could be resolved; otherwise I’d scrap it altogether.

What’s your position on Bloomberg’s plan to lease NYCHA land to private developers for market-rate and luxury housing?

De Blasio: NYCHA land is not for luxury condos. As mayor, I would not support any plan on NYCHA land that doesn’t also include substantial amounts of affordable housing. Money generated should be directed back towards the development to support repairs and maintenance.

Quinn: I don’t believe we should use limited, publicly owned land to create market-rate housing. I will instead work with NYCHA residents to make sure they have a real voice in decisions about this property, and ultimately look for opportunities to build new, permanently affordable housing.

Catsimatidis: I believe in using excess land to build. We could use the first floors of the NYCHA housing projects to create commercial rental positions — such as supermarkets, drugstores, and shoe repair shops — to provide essential services for NYCHA residents.

Liu: I think the numbers don’t work. They’re essentially selling all that land, in some of the most prime areas, to simply generate a revenue stream of $30 million to $50 million? Who are they kidding? It just sounds like another break for luxury developers. There’s a credibility gap here. For 12 years the Bloomberg administration did nothing for NYCHA residents. Why are they suddenly proposing this?

Lhota: I agree with the concept of this plan, but it needs to be true surplus property. I do not support taking land that may be used for other uses, such as a playground, for this purpose.

frastructure improvements and a rational plan to pay for it … before we proceed.

Quinn: As Speaker, I have a policy of not commenting on land-use proposals before the local Council Member has taken a stand on the issue. That said, I support making Midtown business-friendly and believe we can do so without endangering the historic buildings in the area.

Liu: I think it’s problematic. Significant amounts of rezoning are being granted with no assurance of public investment. I’m happy to see this District Improvement Bonus [a public works funding mechanism for transit and infrastructure improvements] where they are allowing developers to essentially purchase FAR [floor-area ratio]. Problem is, the $250 per-square-foot price [for

“Mayor Bloomberg has barely used inclusionary housing. I’m very much in favor of people making a handsome profit, but they shouldn’t get to keep all the gains.”

JOHN LIU, DEMOCRAT.

Weiner: I oppose it. I would be open to commercial options that provide better services and jobs to residents, or the use of NYCHA land for Section 202 housing for seniors.

What are your thoughts on Bloomberg’s proposal to rezone Midtown East? As mayor, would you champion it?

Lhota: I support the proposal and will champion it as the next mayor.

air rights] is only going to be applied for rights in excess of those allowed by the rezoning. I think the contribution to the infrastructure fund should be required for all air rights that stem from the rezoning.

Catsimatidis: Some of those buildings deserve landmarking, such as Grand Central, and they should get it.

Other than that, if we can take older buildings and build more energy-efficient ones, that’s a good thing. I will do it selectively, negotiating in good faith with the community. But maybe I won’t do as many buildings. The air rights should be sold at market value — whatever that is.

Weiner: I have an open mind, but want it to be a deliberate process.

“It’s unfair to criticize Mayor Bloomberg, who has been concerned with how to deal with the growth of New York City. … We are expecting an influx of another million New Yorkers and we must prepare our infrastructure and housing to accommodate that growth.”

JOE LHOTA, REPUBLICAN.

De Blasio: I support the tech campus projects on Roosevelt Island, and the others in Downtown Brooklyn and in Morningside Heights. We should explore opportunities for additional higher-education partnerships in other areas across the five boroughs. Such partnerships work well when they create public goods like parks, new affordable housing, schools and training programs. But too often these partnerships are just an excuse to turn over public assets to private ownership, or funnel public dollars towards projects that would happen anyway. That can’t happen anymore.

De Blasio: It would help meet a pent-up demand for high-­quality Class A office space around Grand Central Terminal and, hopefully, have a catalyzing effect on the diversification of New York’s economy by expanding the stock of available office space for a wider array of firms.

However … the current plan does not adequately address the infrastructure necessary to accommodate the additional office density. … There must be a clear plan for in-

The mayor’s third term has been marked by major public-private partnerships, such as the Cornell University Roosevelt Island campus and the Related/Oxford Hudson Yards project with the MTA. What is your stance on public-private partnerships?

Liu: I support partnerships, but what has manifested in recent years is that the public gives and the private gets.

It’s a one-way street. Look at what happened with Atlantic Yards. Hundreds of families relocated with the promise of huge amounts of affordable housing and local jobs. A decade later, we have a beautiful stadium and some popcorn-vending jobs. Where are the apartments?

Where are the local jobs? We need a much more stringent system of accountability, starting with the Economic Development Corp.

Continued on page 116

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N Y C E l ec t i o n G u i d e

REBNY’s races I

By Hiten Samtani n May, the Real Estate Board of New York, the industry’s powerful lobbying group, announced that it was leading the creation of a political action committee that would spend up to $10 million to influence City Council races around the five boroughs.

The PAC, called Jobs for New York, represented the trade group’s first foray into independent expenditure in city races — money spent on a campaign without any involvement of the candidate. With voters going to the polls this month to cast their ballots in the primary races, it will soon become clear just how influential the PAC’s dollars are. But sources say if REBNY’s candidates prevail, the group could have influence over a slew of council members, who often have tremendous sway when it comes to development projects in their districts.

“Jobs for New York is an attempt to support the council members who are pro-development, pro-good jobs and pro-business,” REBNY president Steven Spinola told The Real Deal last month. “We hope that it will result in a council that is appreciative of the need for economic growth.”

Overall, the PAC had raked in $6.35 million as of Aug. 5, with large donations coming from heavy real estate hitters such as Brookfield Office Properties, the Durst Organization and Jack Resnick & Sons, according to New York State Board of Elections records.

At that same time, it had spent $4.4 million, with about $4.2 million of that going to the influential Midtown-based lobbying and consulting firm Parkside Group.

But the PAC is just the latest initiative by REBNY to influence the political process.

Since 2005, REBNY and the 37 companies represented on its powerful Board of Governors have contributed $43.9 million to state and local candidates, committees, and PACs, according to a July report from Common Cause New York, a nonprofit that tracks connections between money and politics. And the money spigot has opened even wider in recent years, with $17.1 million given since 2011 alone.

The real estate industry gave the state Senate GOP $4.53 million in the last election cycle, roughly the same amount as the next 14 industries combined, according to Citizen Action New York, a membership-based social advocacy group.

Susan Lerner, director of Common Cause, attributed REBNY’s increased spending to the 2010 Supreme Court ruling on Citizens United, which lifted restrictions on political expenditures by corporations, associations and unions.

“The Citizens United decision was an invitation to special interests and wealthy individuals to spend unlimited amounts of money,” Lerner said. “Real estate, as it is

60 September 2013 www.TheRealDeal.com

wont to do, has jumped in with both feet and sacks of money.”

REBNY has traditionally focused its lobbying efforts — and dollars — on candidates for state office rather than in New York City, for two main reasons, Lerner said: First, the city’s relatively stringent campaign finance laws have historically made it harder for special interest groups to gain as much influence here; and second, although many key issues — such as 421a tax abatements — affect only New York City, they are decided at the state level.

But this election season — with Citizens United opening the

floodgates and with 21 of the 51 council seats up for grabs — the REBNY-backed PAC is going all-in on council races. Another REBNY-backed PAC, Taxpayers for an Affordable New York, has sprinkled some dollars into the race for borough president, an office which has influence over the Uniform Land Use Review Procedure, or ULURP, which is crucial to many new development projects.

John Mollenkopf, director of the Center for Urban Research at the City University of New York, said REBNY is banking on the “investment theory” of political campaigning.

“I’m not sure they’re doing it to have an immediate demonstrated impact,” Mollenkopf said. “But if you put money into people who are elected, they feel obligated to help you even if there’s no quid pro quo.”

And while the PAC has largely stayed out of the mayoral race, many of REBNY’s key members, including entities affiliated with

Industry-backed PAC spends millions to influence election

Silverstein Properties and Vornado Realty Trust, have donated directly to mayoral candidates.

Gaining goodwill Jobs for New York has thrown its heaviest support behind frontrunner council candidates, including incumbent Democrat Sara Gonzalez, who is representing the rapidly-developing neighborhoods of Red Hook and Sunset Park, and Democrat Vanessa Gibson, who is running for a seat that includes the South and West Bronx.

As of the middle of last month, the PAC spent $167,341 during this campaign cycle

date’s message.

In some districts, mail from REBNY’s PAC is outnumbering mail directly from the candidate by four to one, according to Lerner, who expressed alarm about that fact.

“The vast amount of information about the REBNY-backed candidate is not coming from the candidate, but from REBNY,” she said. “We’re concerned that it obscures the actual voice of the candidate.”

If these candidates win, REBNY will likely gain considerable goodwill amongst those who make key development decisions, sources say.

“The real issue here is trying to put enough fear into candidates,” said Hank Sheinkopf, a longtime political consultant who has worked for the Building Trades Employers’ Association (the construction workers union), and for Eliot Spitzer in his successful 1998 bid for attorney general. “REBNY is attempting to prove it can tell council people what to do, and when to do what to do.”

To combat that influence, City Council Member Brad Lander proposed limiting REBNY’s influence on political campaigns by urging the council to close the so-called “LLC loophole” in state campaign finance law, Crain’s New York reported.

Spinola said despite the fact that Jobs for New York spends money on behalf of chosen candidates, REBNY itself does not officially make political endorsements. “Clearly I get calls [from REBNY members] about where a candidate’s position is on such and such, and get asked: ‘Should we be helpful?’ Spinola said. “I always give an honest appraisal of the candidate’s positions, or tell members to take a closer look at certain positions.”

When asked whether he fundraises for candidates, Spinola stressed that neither he nor REBNY bundle (the act of pooling donations from several individuals or companies) for candidates.

“I do not do bundling,” he said. “I’ve done so in the past, but many years ago.”

Hedging bets on behalf of Gonzalez, about double the $83,589 her campaign has spent so far. It also spent $122,726 on behalf of Gibson, who has spent just $64,556 out of her own campaign war chest, as TRD reported.

Virtually all the money was spent on printed campaign literature, city campaign records show.

On the local level, “direct mail is the most efficient way to get the message across,” said Mollenkopf. “Even Democrats likely to vote tend to have only a hazy knowledge of who’s running,” and mail helps articulate a candi-

So far in the mayoral race, REBNY has taken a less aggressive approach, likely holding off until after the primary when the field of candidates is narrowed and its PAC can have more influence.

Jaron Benjamin, the executive director of the Metropolitan Council on Housing, a New York City tenants’ rights organization, said its harder to make a dent in the mayoral race because there’s so much more money being spent: “In a City Council race you … blow the other candidate out of the water.”

Sheinkopf said that within REBNY’s ranks, “there is certainly an anxiety about what the

www.TheRealDeal.com March 2012 00

N Y C E l ec t i o n G u i d e future will look like after Michael Bloomberg.”

The Bloomberg administration and REBNY have historically seen eye-to-eye, and Bloomberg has been widely praised by its members.

Spinola, who has been at REBNY’s helm for 27 years, said most of the candidates have shown a “recognition of the need for investments around the five boroughs.”

He said REBNY was also paying attention to issues like crime, the budget, and “whether or not taxes [on properties] would be implemented in a fairer way.” He argued that taxes for owners of income-producing properties should be decreased.

“You cannot assume that people are going to put up buildings and pay 25 to 30 bucks per square foot [in taxes] on Day One when you could go to New Jersey and build for a total cost of 30 bucks per square foot,” he said, in making his case for lower taxes.

Real estate taxes generate about $18 billion a year for the city, Spinola said. He acknowledged that the industry would have to pull its weight, but said “the current process is broken.”

Industry insiders and observers have

praised Spinola and REBNY for their effective lobbying. Massey Knakal Realty Services chairman Robert Knakal noted in a 2011 op-ed that Spinola has an “uncanny ability to shepherd industry leaders, with often pronounced egos and disparate perspectives, to emerge with a unified voice.”

for them” which gives them tax breaks at their high-profile condos.

Indeed, according to the New York Daily News, Extell upped its donations to Governor Andrew Cuomo during the period that the governor was weighing the bill. The governor ultimately signed the bill into law. Spinola

“The real issue here is trying to put enough fear into candidates. REBNY is attempting to prove it can tell council people what to do, and when to do what to do.”

Hank Sheinkopf, political consultant In particular, Knakal praised Spinola’s “dexterity with respect to city and state legislative leaders.”

The Met Council’s Benjamin cited the controversy surrounding the 421a tax exemption as a prime example of REBNY’s influence.

The exemption “basically doesn’t exist anymore,” Benjamin said. But, he added, several top developers — including Extell Development and Silverstein Properties — “wound up getting a bill getting specifically written

declined to comment on the issue.

An Extell spokesperson told the newspaper that the donations were made because Cuomo is a “terrific governor” and insisted that there has “never been any quid pro quo with our political donations.”

Cuomo aides declined to comment, but have previously insisted that there is no payfor-play in donations. Silverstein and other developers that received the exemption have not commented.

While a darling of the real estate industry, Bloomberg, a billionaire, was widely considered immune to special interest groups because he self-financed his own campaigns and was not indebted to anyone.

This time around, the industry seems to be hedging its bets by spreading money around to multiple mayoral candidates, said Citizen Action’s Jesse Laymon.

For example, in March, SL Green Realty chairman Stephen Green and seven of his executives wrote checks totaling just under $19,000 to City Council Speaker Christine Quinn’s campaign for mayor. The same day, they donated $9,400 to former City Comptroller William Thompson’s campaign, according to an analysis of campaign finance reports by the New York Daily News. And Jay Kriegel, a senior adviser at the Related Companies, spread more than $80,000 in donations among the campaigns of Quinn, Thompson and Public Advocate Bill de Blasio, the Daily News also reported.

“That’s often what you see with the No. 1 donor [group],” Laymon said. “They try to buy influence with whoever wins.” TRD

City newspapers pick their horses

A round-up of what NYC’s editorial boards are saying about the candidates in the upcoming elections

T

he real estate industry — and business world in general — have a lot riding on this month’s mayoral primary, not to mention the other citywide political races that will be decided when voters go to the polls. But they’re not the only ones weighing in on the candidates. Endorsements from the city’s big newspapers are now rolling in, too. And they, too, are stressing that the stakes are high.

As the New York Post put it: “Under Rudy Giuliani and Mike Bloomberg, this city was transformed from a grimy, crime-ravaged urban wasteland into a safe, vibrant metropolis that continues to attract new residents and businesses. … But the voters must not

be fooled — we can end up like Detroit faster than you can say David Dinkins.”

So far, the city’s three main dailies — the New York Times, the New York Post and the Daily News — have all endorsed City Council Speaker Christine Quinn in the Democratic mayoral primary. And the Post and the Times have endorsed former MTA Chairman Joe Lhota in the Republican primary. All three papers have also picked the not-so-flashy Manhattan Borough President Scott Stringer over real estate scion Eliot Spitzer, who resigned as governor in the wake of a prostitution scandal, in the surprisingly contentious race for city comptroller.

Here’s what the boards had to say about the roster of candidates on the ballot. a cleaner, well-run, thriving place, but we won’t take [Catsimatidis]

seriously until he can [clean up] Gristedes.”

“Ms. Quinn has no specific plan to require the richest New Yorkers to pay more in taxes in service of important civic goals (she says she will raise taxes as a last resort), but

neither has [Quinn] made a long list of unrealistic promises.”

“Mr. Lhota is more than the sum of his years as Mr. Giuliani’s top deputy, and he is the best qualified of the three men seeking the Republican nomination for mayor.”

“Mr. Catsimatidis, an affable man, … likes to call his fund-raisers “friend-raisers,” and it doesn’t sound ludicrous. He also promises to make this city of eight million people

“Lhota stands head and shoulders above the field. He has valuable knowhow and experience, in both the public and private sectors.” “[S]elf-made billionaire John Catsimatidis … [has] focused attention on the plight of city businesses. … But there is a difference between running a business

and running a government, and all of Catsimatidis’ policy proposals have fallen flat, or just been downright goofy.” .

62 September 2013 www.TheRealDeal.com

““Scott Stringer has done an outstanding job as Manhattan borough president and would make a fine New York City comptroller. He is not a flashy candidate and he has no measurable notoriety. But in this turbulent election season, we don’t need another celebrity office seeker.”

“Eliot Spitzer has intellect and cunning, but he lacks the qualities critical for this job.

Mr. Spitzer entered the race at the last minute, seemingly for no reason except to thrust himself back into the limelight and to offer his services again as sheriff of Wall Street. But that is a problem: it’s the same character, in a different play, on the wrong stage.”

“After very nearly toppling Bloomberg four years ago, Thompson brought to this year’s race seasoning, a capacity to make considered judgments, a steady temperament and a proven talent for connecting with New Yorkers of all stripes.

Yet [Thompson’s] case has been less compelling than Quinn’s more specific agenda of do-able plans.”

“De Blasio’s oratory is far more powerful than the small-bore economic inequality fixes that he has advanced.”

www.TheRealDeal.com September 2013 61

N Y C E l ec t i o n G u i d e

Spitzer: Real estate & redemption

By Hiten Samtani t’s a New York City truism that politics and real estate are cozy bedfellows. But Eliot Spitzer’s bonds are stronger than most. The former governor — who resigned in the wake of a prostitution scandal and this month is going head-tohead with fellow Democrat Scott Stringer for the job of city comptroller — is the scion of a prominent real estate family.

I

In the name of the father

As he attempts to win redemption in politics, The Real Deal examined Spitzer’s ties to the real estate industry, looking at his family’s roughly $1 billion property portfolio, his real estate track record while in public office, and how a potential win would impact key industry issues from development projects to taxes.

Squaring off against Scott

Bernard Spitzer

Eliot’s father, Bernard, amassed a sprawling portfolio of white-glove Manhattan buildings. His company, Spitzer Enterprises, owns residential properties like 985 Fifth Avenue, 800 Fifth Avenue, and the flagship 817-unit Corinthian on East 38th Street.

Scott Stringer

Spitzer’s opponent comes from far more humble beginnings. A Washington Heights native, Stringer graduated from the John Jay College of Criminal Justice and worked as a legislative assistant in the state assembly. Elected Manhattan Borough President in 2006, Stringer has a mixed real estate record. He backed the mega Second Avenue Subway project, but opposed Jamestown Properties’ proposal to expand Chelsea Market. In March, he called for a 10-year limit on Madison Square Garden’s lease.

And last month, after the city tweaked its Midtown East rezoning proposal to include upfront funding for transit improvements, Stringer backed that plan.

Legal eagle

At first, Eliot’s career had little to do with real estate. After graduating from Harvard Law School, he made a name for himself in the Manhattan District Attorney’s Office. But while serving as the state’s Attorney General from 1999 to 2006, he often had to recuse himself from reviewing co-op and condo offering plans due to potential conflicts of interest connected to his family’s holdings, the Wall Street Journal reported. While Spitzer did have other brushes with real estate as attorney general, he famously focused on white collar crime in the financial industry.

Eliot Spitzer

Comptroller in command

The city comptroller traditionally acts as the city’s chief financial officer, keeping tabs on government spending, but Spitzer has said that he envisions the office moving beyond that role. If elected, Spitzer would also oversee $140 billion in assets held by the city’s five pension funds. He told Bloomberg News that he would use the funds’ shareholder power to act as a corporate governance and social impact watchdog on Wall Street. And influence on Wall Street could translate into a greater say in the city’s real estate practices, as the two industries are deeply intertwined. The comptroller position “is ripe for greater and more exciting use of the office’s jurisdiction,” Spitzer told the Times.

Eliot takes control

Now that Bernard is 89 and in ill health, the younger Spitzer is reportedly steering the family business. Real estate and media obligations — including stints at CNN and Current TV — have taken up the bulk of Spitzer’s time since he left the governor’s office, a Spitzer campaign spokesperson told TRD. In February, Spitzer spearheaded the family’s $25.5 million acquisition of the retail condo at 350 West Broadway in Soho, and has since been on the lookout for opportunities to buy New York City development sites. Spitzer “clearly has taken over the portfolio,” Eastern Consolidated head Peter Hauspurg told the website Capital New York.

Power to the people

Despite his industry lineage, Spitzer has sometimes taken public positions against development projects while in office. For example, he helped block developer David Bistricer’s 2007 bid to buy the gargantuan Starrett City affordable housing complex in Brooklyn for $1.3 billion. Spitzer told the Times that a sale could lead to an even greater drought in the city’s affordable housing stock. The sale never went through, and in 2009, Starrett City was refinanced, a move that will keep it affordable for the next 30 years.

Valuable holdings

Thanks to Spitzer’s real estate ties, his political downfall barely made a dent in his wallet. He and his wife, Silda Wall Spitzer, raked in $2.56 million from their real estate holdings in 2012, up from $2.24 million in 2011 and $1.4 million in 2006, according to the New York Times, which reviewed their latest tax returns. The bulk of this income comes from 681-689 Madison Avenue, in which Spitzer personally owns a 63 percent stake, the New Yorker reported. Spitzer declined to comment on his earnings.

Luxury living

350 West Broadway 985 Fifth Avenue

62 September 2013 www.TheRealDeal.com

Spitzer officially lives at 985 Fifth Avenue, a luxury rental owned by the family firm. But in recent months, Spitzer has increasingly been staying at 800 Fifth Avenue, another company-owned building where his parents also reside, according to the New York Post. A spokesperson told TRD that he stays often at 800 Fifth Avenue in order to “spend more time with his ailing parents.”

www.TheRealDeal.com March 2012 00

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Pr o f i l e

Bistricer gets busy I

By Adam Pincus n 2007, little-known Brooklyn-based developer David Bistricer became a prime punching bag for federal, state and local officials.

Casting a wary eye at the over-leveraged apartment complex Stuyvesant Town, a slew of elected officials sought to block Bistricer’s bid to buy Starrett City, the massive rent-regulated Brooklyn apartment project, for what was then considered the astronomical price of $1.3 billion, or $221,000 per unit.

The aggressive campaign against Bistricer — in which his opponents repeatedly cited a 1990s state order banning him from selling co-ops and condos — gave the public its first impressions of the previously under-the-radar landlord. The effort succeeded, and the sale was blocked.

But just as his reputation was taking a public beating, Bistricer — who heads his fam-

Since then, with Chetrit and on his own, Bistricer has been on a tear, buying up at least eight properties for a total of $1.7 billion. That includes the $1.1 billion Sony Building, as well as complicated residential conversions like Cabrini Medical Center in Gramercy.

And in July, sources said Bistricer —

The $1.1 billion Sony Building

buy is not the only deal occupying the investor’s time

conservative. Hence, I am not over the skis. Each investment stands on its own, usually with 70 percent debt [to equity] or no debt.”

He added that he plans to keep forging ahead. “We are looking at deals, but they have to make sense,” he said.

Bistricer’s fans and critics alike say he

Three generations

The Sony Building, left, which Bistricer bought with the Chetrit Group, and plans to convert to a hotel and condos.

Bistricer has been on a tear since 2007, buying eight big properties in New York City.

ily business, Clipper Equity — had an astounding piece of good fortune.

While jockeying to buy a Brooklyn hospital building in Prospect Park South, Bistricer met another major (and also low-profile) New York developer, Joseph Chetrit, who ended up becoming a crucial partner in his New York deal-making.

64 September 2013 www.TheRealDeal.com

served as the broker on several properties Bistricer has purchased, including the Bossert Hotel in Downtown Brooklyn. “The Sony Building — they are doing a whole redevelopment. Cabrini Medical Center, a whole redevelopment. The Bossert Hotel was basically a vacant hotel [which] they bought and they are restoring. So there is always some value-added play.”

who also runs two other real estate investment firms, Berkshire Capital and Morgan Capital — was among the gaggle of developers circling the Empire State Building, all of whom offered prices north of $2 billion for the iconic 102-story tower (see related story on page 34).

Meanwhile, Bistricer is hunting for more deals, even as some industry players say he’s already taken on too much at once.

One rival, who did not want to be quoted being critical of a competing developer, said Bistricer is “over his skis.”

In response to that, Bistricer told The Real Deal: “When I ski, it’s very

has a good eye for sussing out tricky deals where he can make an impressive return — often by converting office properties and other buildings into apartments.

Such conversions are often more difficult and riskier than ground-up new construction, said Neal Weinstein, a commercial real estate attorney and partner at the law firm Ingram Yuzek Gainen Carroll & Bertolotti.

“If you look at any deal [Bistricer] bought, there was some value-added component — it was not just a straight cap-rate [purchase],” added Rosewood Realty Group’s Aaron Jungreis, who has

Today, Bistricer and his wife, Ester, live in the Borough Park section of Brooklyn, where they raised their five children, who are now in their 20s and 30s. The couple is active in the Orthodox Jewish Yeshiva community, donating more than $70,000 to nonprofit groups in 2012, including Yeshiva Simchas Chaim, a school in Sheepshead Bay, federal charity records show.

Underscoring his low-key style, Bistricer heads his family’s business from an office in a Borough Park residential rental building, which the clan has owned for decades.

The business started with Bistricer’s parents, Moric (who also goes by Morris) and Elsa. During World War II, Moric hid from the Nazis in Budapest, and Elsa was sent to the infamous concentration camp Bergen-Belsen in Germany, according to David’s son Jacob, who goes by “J.J.” They emigrated from Brussels in 1951, bringing two-year-old David with them.

Once in New York, the couple began buying and selling buildings, starting with properties on West End and Fifth avenues. By the late 1970s, Bistricer had joined the firm, and with his parents, owned at least a dozen apartment buildings in Brooklyn with hundreds of units, an analysis of property records by TRD found. The family business now spans three generations: Moric, now in his 90s, is still active in the company, while J.J. joined the firm in the mid-2000s.

In 1987, Bistricer and his parents partnered with real estate investor Jacob Schwimmer, paying $11 million for 101 Wadsworth Avenue, two towers with 480 apartments near the George Washington Bridge.

At about the same time, Bistricer told TRD, the family made a major investment in a then-private company called Coleman Cable, which manufactures electrical wire. Coleman, which is based in the suburbs of Chicago, went public in 2007.

Today, the family owns more than 5.5 million shares, or approximately 30 percent of the company. As of last month, their stake was valued at about $100 million.

Not all of their investments turned out quite so well, though.

www.TheRealDeal.com January 2011 25

Pr o f i l e In the ’80s, the Bistricers were among the many developers converting New York City rental buildings into co-ops.

But some of the work they did on those conversions landed them in hot water: In 1994, then-New York Attorney General Oliver Koppell charged in a lawsuit that Moric, Elsa and David had failed to properly inform buyers about financial aspects of the sale of co-op units at the Fort Tryon Apartments in Washington Heights, and

the AG’s office and the Bistricers. In a 2009 consent order obtained by TRD, the state lifted almost all restrictions on the Bistricers, allowing them to freely sell co-ops and condos. (The document also noted that the AG’s office had not received any complaints regarding financial improprieties in connection with the family.)

Bistricer disputed the AG’s version of events, however, saying: “At no time was I ever prohibited from selling

buildings, property records show that they purchased little or no real estate in New York City for nearly 15 years leading up to and during that AG litigation.

Bistricer said his firm has been “active for many years without hiatus,” but declined to provide examples of any deals during this period.

Regardless, the family jumped back into major acquisitions in 2002, with the purchase of two Downtown Brooklyn of-

David Bistricer’s big buys Property name

Purchase Year

Development plan

Purchase price

Sony Building, 550 Madison Ave.

2013

Condos and hotel

$1.1 billion

Flatotel, 135 West 52nd St.

2013

Condos

$180 million

Cabrini Medical Center, 209-225 East 19th St.

2013

Condos

$152.5 million

Bossert Hotel, 98 Montague St.

2012

Hotel (rehab)

$81 million

Hotel Chelsea, 222 West 23rd St.

2011

Hotel (rehab)*

$77.8 million

77 Commercial St. (Greenpoint, Brooklyn)

2012

Ground-up condos

$25 million

Brooklyn Hospical Center, 123 Parkside Ave.

2007

Rentals and condos

$15.6 million

Source: Purchases were made with the Chetrit Group. Information from TRD review of property records, news stories and industry sources. *Hotel Chelsea was reportedly sold last

Bistricer’s frequent partner, Joe Chetrit. Center, Bistricer and Chetrit reportedly sold the Hotel Chelsea last month. Right, Governor Andrew Cuomo lobbied to block Bistricer from buying Starrett City when he was state Attorney General.

Starrett City, which Bistricer was blocked from buying in 2007. Right, sources say Bistricer was ahead of the curve in his residential conversion at BellTel Lofts in Downtown Brooklyn.

at several projects in Brooklyn.

The developers defended themselves.

“Our attorney failed to disclose a refinancing that benefited all condo owners,” Bistricer told TRD via email.

Still, a state judge ruled in 1998 that the family had erred, and prohibited them from selling co-ops and condos.

Starting in 2001, the restrictions began to be loosened after a series of court-approved consent orders between

28 March 2012 www.TheRealDeal.com

co-ops or condos.”

“In the political effort to deny the Starrett City application … the AG said things that were not correct,” Bistricer wrote in an email to TRD. “The agreement that we made voluntarily is that we would seek permission prior to filing an offering plan — which we did on several occasions, and in each case, the AG accepted our plans.”

Still, while the family continued to operate a large portfolio of apartment

fice buildings, 141 and 250 Livingston Street, for a combined $40 million.

Then in 2005, the Bistricers took their investment in Downtown Brooklyn a step further with a pioneering gamble to bring residential units to the area. They paid $74 million for the former New York Telephone Company building, a 27-story Art Deco office building at 365 Bridge Street. In 2006, they formed Clipper Equity, which set about converting it into

the 219-unit BellTel Lofts condominium.

Bistricer quickly followed the BellTel deal with the purchase of 59 rent-regulated apartment buildings in East Flatbush called the Vanderveer Estates. Using family money — which he and J.J. said bankrolls all of their deals — he bought the rundown buildings for $138.2 million from Emmes Asset Management and a California pension fund. The idea was to fix them and attract higher-paying tenants.

But the Vanderveer led to more bad publicity.

The property had more than 10,000 housing code violations when Bistricer bought it, according to commercial broker Tim King, who represented the seller in the Vanderveer deal. In 2010, the development, by then renamed Flatbush Gardens, landed Bistricer on a list of Worst Landlords put out by Public Advocate — and current mayoral candidate — Bill de Blasio. Bistricer has substantially reduced the number of housing code violations, but some 1,500 remain, sources said.

J.J. said the company has spent about $16 million rehabilitating elevators and making other upgrades at Flatbush Gardens.

“A lot of time and effort went into” improving conditions there, his father said.

“I think it is a remarkable achievement.”

Kenneth Fisher, a partner at the law firm Cozen O’Connor and former City Council Member, put it this way: “He got a bad rap over Vanderveer because it was a deeply troubled project long before he got involved.”

Bistricer ran into a different type of trouble at BellTel. Sales there began in 2007, just as the economy was stalling.

The developer rotated through several marketing teams before gaining traction with buyers. But today the project is 95 percent sold, according to Susan de França, CEO of Douglas Elliman Development Marketing, which is currently handling sales there. (The units that have sold in the last 180 days fetched an average of $761 per foot, far higher than the $550- to $650-per-square-foot asking price in 2010, according to the real estate listings website StreetEasy.)

King said Bistricer was ahead of the curve with BellTel, buying it in 2005, when the area was still primarily office buildings rather than housing.

“In hindsight, he was very prescient,” King said. “There was not nearly as much residential interest in the area as there is today.”

Public debut Bistricer’s big public debut with Starrett City could not have gone much worse.

The federal government had backed loans at the complex and would need to sign off on a deal to sell it. But Governor Andrew Cuomo, who was then the state’s AG, suggested that the government block Continued on page 108

www.TheRealDeal.com September 2013 65

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Architecture Review

|

Ja m e s G a r d n e r

Doing the twist

T

he resurrection of the High Line and its rebirth as a park have effected a wondrous change on an area of the city that was already in the throes of frantic transformation.

With excellent buildings such as Stephen Jacobs’ silvery Gansevoort Hotel as well as the Standard Hotel, designed by Ennead Architects, the area from Chelsea to the Meatpacking District has become one of the most vibrant architectural nurseries in Manhattan. And that’s even before the 2015 arrival of the Renzo Piano–designed new Whitney Museum of American Art. Into this mix comes 837 Washington Street, a new six-story, 55,000-squarefoot office and retail space that promises to be one of the best buildings in the area.

Developed by Thor Equities and Taconic Investment Partners, it was designed by Morris Adjmi Architects.

Morris Adjmi is a New Orleans native, but came of age in the Milan studio of the esteemed late Italian architect Aldo Rossi, who is famous for the Teatro Carlo Felice in Genoa and the Quartier Schützenstrasse in Berlin. By joining Rossi’s firm in 1981, Adjmi was exposed to some of the sanest and most sensible applications of the postmodern idiom that dominated architecture everywhere at the time. Rossi’s main contribution to New York City, the Scholastic Building at 557 Broadway in Soho, is really the work of Adjmi. With its tubular articulation and the introduction of whites and reds into its surface, the Scholastic Building is one of the more creditable examples of postmodernism in Manhattan.

In the three decades since then, Adjmi has evolved, divesting himself of most of the historicist elements of that early work, even as he continues to show a consistent respect and sensitivity for the past. His newest work, 837 Washington, is one of his boldest. Located on the southeast corner of 13th Street between Ninth and 10th avenues, the structure stands out from the other new buildings in the area by virtue of its irregular and slightly torqued rhomboid massing. While still under construction and not scheduled for completion until next year, 837 Washington has been topped out. The most distinguishable element of its design, the twisting steel structure, is already in place.

When 837 Washington is completed, it will be decked out in a dazzling curtain wall of tall, mullioned windows that will give pedestrians on the High Line a clear view inside the building, exposing all the interior doings of the retail and commercial spaces in the interest of luring passersby inside.

68 September 2013 www.TheRealDeal.com

The premise of the building’s marketing is that there will be one tenant per floor; the “exoskeleton,” as the developer is calling it, has been conceived along engineering principles that partially recall those of a suspension bridge, making it unnecessary to divide the interior with load-bearing walls or columns, thus yielding wide-open spaces. The five stories of exoskeleton are superimposed upon a pre-existing building, two stories

Morris Adjmi’s torqued 837 Washington is bold and new, but fits within its context

The metal structure, though entirely unadorned, is clearly well-constructed and immediately awakens rich associations of the Industrial Revolution of the 19th and early 20th centuries. Specifically, the exterior awakens associations with the Crystal Palace, the vast exhibition hall that used to occupy what is now Bryant Park, as well as with the Brooklyn

his 250 Bowery, with a modular sequence of four square, unadorned windows set into a concrete core, brings a welcome sense of order and decorum to an otherwise dreary stretch of Manhattan. Another Adjmi project that has not received the respect

A rendering of 837 Washington Street. Inset, left: The commercial and retail building is nearly completed, with its distinctive twisted structure in place. Inset, right: Architect Morris Adjmi.

At 837 Washington, Adjmi has created his most original work to date. tall in the front and one story tall in the back. This basic (and entirely utilitarian) structure, once used in the meatpacking trade, has been lovingly preserved and spruced up, from its two tones of brick to the sort of cantilevered metal canopy that is one of the signatures of this part of Manhattan. Its roof, according to the developers, will be transformed into a restaurant space directly opposite the Standard Grill, and with an enviable view of the High Line itself.

Above and behind the original structure rises the exoskeleton, which manages to fit very sensitively within its context.

Bridge and the High Line.

The twisted dimensions of 837 Washington Street are surely inspired in part by the dominant deconstructivist style, which is especially popular in this part of town. But Adjmi has managed to square that style with a spirit of order — almost classicism — that makes it stand out from other buildings. Although it is torqued, the sharpness of 837 Washington’s design expunges all sense of that willful arbitrariness that so often characterizes deconstructivism.

This orderliness has by now become a hallmark of Adjmi’s style. For example,

it deserves is NYU’s Wilf Hall, which may look to the unwary like a group of four old row houses, so respectfully and modestly does it fit into the preexisting architectural context. In fact, these four buildings exhibit an unerring taste in the way the windows are arrayed across the façade.

Even though the punched windows are surrounded by red brick, they fully realize the spirit of modernism at its best.

At 837 Washington, Adjmi has created his most original work to date. It is compelling and harmonious at the same time, proving how well Adjmi has learned the lessons of Rossi. TRD

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Real estate’s frequent (and private) fliers

Industry pros take to the skies with clients

Architect Ross Adam Cole with his four-seater Mooney

By Jane Timm ew York’s real estate moguls are flying high — and not just because of the fast-moving market.

Once prohibitively expensive, private jets are now an increasingly popular option among real estate bigwigs, industry sources said, as a growing number of executives buy and rent their own planes.

Industry insiders said flying private is not only a crucial time-saver, but an invaluable way to bond with clients.

Brown Harris Stevens’ Hamptons broker Christopher Burnside, for example, has his pilot’s license and owns share in a small Cessna. He said he uses it for transportation, taking aerial shots of his list-

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Flying solo Of course, some wealthy real estate magnates own or even fly their own plane. Boston Properties’ Mort Zuckerman reportedly owns a $60 million Gulfstream G550.

Donald Trump’s jet of choice is his Boeing 757, which reportedly cost $100 million and fits 43 people. It’s said to have a private bedroom (with lots of closet space) for the Trump family.

For many of these moguls, private planes aren’t just an over-the-top luxury. While

In some cases, flying groups of executives privately may actually be cheaper than buying commercial tickets for each of them. ings, and entertaining clients.

“Some people play tennis, other people play golf. I fly,” he said. “If you take somebody up in your plane and you have that kind of relationship, they’re not going to go somewhere else and buy a house.”

Insurance

Still, Zaher said, the numbers make sense: in some cases, flying groups of executives privately can actually be cheaper than buying commercial tickets for each of them.

Private planes were once strictly the province of the very rich and famous. But the growing popularity of jet brokerage companies, which commission private jets for customers on an hourly basis, has made flying private accessible to more people.

That includes real estate professionals. In June, for example, developer Cape Advisors chartered a seaplane to fly journalists from Manhattan to the Hamptons for a tour of its Watchcase Factory condo development in Sag Harbor.

Richard Zaher, the founder of Virginia-based Paramount Business Jets, estimated that the number of real estate brokers, developers and owners using his company has risen 20 to 30 percent in the last year.

Of course, private jet travel doesn’t come cheap: it costs roughly $2,500 an hour to rent a six-passenger Learjet 35, or $4,200 an hour for a Gulfstream IV that comfortably seats 14.

owning a jet is expensive — operating a plane costs hundreds of dollars an hour when the plane is in the air — flying enthusiasts say the increased mobility a plane provides is worth the cost.

Adam Ross Cole, founder of Manhattan-based BAM Architecture Studio, got his pilot’s license on his 16th birthday, months before he secured a driver’s license. But flying isn’t just a hobby — he said his firm’s four-seater Mooney plane allows him to visit project sites, and the firm’s North Carolina office, more frequently than he would if he were limited to driving or commercial flying.

“We have to go where the project sites are, and the project sites are all over the place,” the architect said. “Right now, we have work from Florida to Boston. To get there, I use my airplane.”

He also uses the plane to entertain clients. “I can take clients out to Martha’s Vineyard for an afternoon, instead of a restaurant in Midtown,” he said. “That helps keep the relationship fresh and fun.”

Cole added that the plane allows the firm to save money on hotel and other travel fees, something that helps justify the expense. Cole declined to say what he paid for Continued on page 116

www.TheRealDeal.com March 2010

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Now taking resumes for our new 4400 sq. ft. floor at 1776 Broadway. Private offices with direct Central Park views available. View photos on our blog: bondnymagazine.com All information regarding real property, for sale, purchase, rental and/or financing is from sources deemed reliable. No warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rentals or other conditions, prior sale, lease or financing or withdrawal without notice. Note: All dimensions and square footage are approximate for the most exact dimensions and square footage please hire your own architect or engineer.

Commercial

The industrial revolution A look at the most coveted NYC industrial sites for conversion — from former peanut factories to printing presses

W

By Guelda Voien

hile converting grimy industrial sites into pricey condos and rentals is not new to New York, it’s taken on a new urgency as manufacturing in the city continues to fall by the wayside and developers contend with one of the worst housing shortages in decades. Examples abound, from former printing factories (the West Village’s Printing House) to former soap factories (Dumbo’s Kirkman Lofts).

In Brooklyn, sales of industrially zoned properties jumped 61 percent to 58 sales in the second quarter, up from 36 sales in the same period of last year, according to Brooklyn-based commercial brokerage TerraCRG. The dollar volume of the trades was also up — 22 percent to $108 million.

The conversion of the Domino Sugar factory into luxury rental apartments, which is currently underway, is one of the most notable of these projects. The strategy used there has created a model other investors now hope to replicate: find a large, underutilized industrial space, secure a city zoning variance, and get shovels in the ground before interest rates go up.

Of course, that’s easier said than done.

As in other areas of commercial real estate, when large properties with now-defunct factories and warehouses come up for sale, they’re often shopped quietly, rather than listed on the open market “In today’s world, if it’s a large site, it’s not going to get to market,” said Kal Dolgin, president of Brooklyn-based commercial brokerage Kalmon Dolgin.

This month, The Real Deal looked at some of the remaining — and coveted — industrial sites and areas in the city.

Far West Side Manhattan’s Far West Side — once dotted with warehouses and home to thriving shipping and meatpacking industries — has been forever altered by the High Line, the elevated park that’s serving as bait for tourists, and the site of a raft of new hotels, restaurants and luxury apartments.

Developers and brokers are keeping an eye out for opportunities in the area — and it shouldn’t be too long. Brokers say owners of smaller buildings recognize that the nearby Hudson Yards development has created an unprecedented opportunity to cash out.

Iliad Development nabbed 509 West 38th Street — an industrial 14,813-square-foot former film-scoring studio with an additional 22,188 square feet in air rights — for 72 September 2013 www.TheRealDeal.com

$21 million in 2011. The developer will start construction on 200 rental apartments later this year.

For the best redevelopment opportunities, “you want M-1 and M-2 [manufacturing zoning] in the 40s and 50s, between Ninth [Avenue] and the West Side Highway,” said Eastern Consolidated’s David Schechtman.

Williamsburg/ Greenpoint Despite the rash of development in Williamsburg in the wake of the Bloomberg administration’s 2005 rezoning, sources say there are still industrial conversion opportunities to be found there.

For example, a site currently home to Certified Lumber Corporation in the southern portion of the neighborhood is listed with Eastern Consolidated chairman Peter Hauspurg and broker Gabriel Saffioti with an asking price of around $150 million. The 800,000-square-foot-plus development site does have several restrictions, however. A zoning variance allows for three residential towers, but 30,000 square feet along the East River must be reserved for a park, and 30,000 blocked out for retail.

In addition, the variance only applies to buildings that set aside at least 30 percent of residential units for affordable housing, Saffioti said.

The sellers, the Rosenberg family, have owned the site at 462-490 Kent Avenue since 1980, and plan to relocate their lumber business. Brokers are already predicting that the site will be snapped up by a big-time developer.

John Reinertsen, senior vice president with CBRE Group,

More investors are following a model mastered at the Domino Sugar Factory: find a large, underutilized industrial space; secure a city zoning variance, and get shovels in the ground before interest rates go up. predicted that Two Trees, which is redeveloping the Domino Sugar site, will ultimately prevail. He said the Dumbo-based firm is very interested in Williamsburg, where it recently purchased the Wythe Hotel.

The other Williamsburg site that developers are eyeing is the former Pfizer plant at 630 Flushing Avenue, which shuttered in 2008. The plant was used to manufacture drugs like

Viagra before Acumen Capital bought it from the pharmaceutical giant in 2011 for $26 million. Since then, the eight-story, 660,000-square-foot behemoth has leased space to local manufacturers like Kombucha Brooklyn and Steve’s Ice Cream.

Reinertsen said that developers are interested in the building — which is not formally on the market — for a residential Developers are eyeing the former Pfizer plant at 630 Flushing Avenue.

conversion. (A zoning variance is still needed for residential development, though a hotel or office use is allowable under current zoning.)

However, lobbying from the local Hasidic community against the development could create a major obstacle, Reinertsen said. According to published reports, two Hasidic sects fought about the residential zoning variance at the Rosenberg site, successfully delaying approval for years.

Still, Terra founder Ofer Cohen said industrial sites are going for about $150 per square foot in Brooklyn.

That would mean the site could fetch just under $100 million.

Sunnyside, Queens Queens’ Sunnyside — home to numerous glass manufacturers — has two key features that make it attractive to developers: proximity to Manhattan via the E train, and loads of barely used industrial spaces, said Justin Elghanayan, president of Rockrose Development.

Sunnyside is “a logical extension” of Rockrose’s many Long Island City projects, such as 43-25 Hunter Street and Linc LIC, both of which recently topped out just one subway stop from Sunnyside, Elghanayan said.

He predicted that developers’ interest will spread eastward.

“There is a big chunk [of Sunnyside] that has these nice, juicy Continued on page 112

www.TheRealDeal.com March 2012 00

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Q&A

Brooklyn or bust

A look at why national retailers now view the borough as a must, after years of sitting on the sidelines

By Melissa Dehncke-McGill and Jill Noonan ational retailers are waking up to what residential brokers and developers have known for several years: Brooklyn can no longer be ignored. The borough has seen an explosion of critically acclaimed restaurants in the last few years, as well as locally made products from pickles (McClure’s) to chocolate (Mast Brothers). Many national retailers have been slower to commit to the borough, but that has begun to change over the past year.

In this month’s Q&A, The Real Deal talked to retail brokers and landlords about the most recent uptick in interest from national stores. That interest, they said, is being driven by players like Swedish clothing brand H&M, which just opened a store on Fulton Mall in Downtown Brooklyn; J.Crew, which is moving into Court Street in Cobble Hill, and the popular grocery store Whole Foods, which is finally nearing its Gowanus debut. Sephora and others are also opening in the borough.

N

Jared Epstein

principal, Aurora Capital Associates There’s a lot of Brooklyn retail activity right now.

H&M just opened in Fulton Mall, the borough’s first J.Crew is coming to Court Street in Cobble Hill. What level of retail interest are you seeing in Brooklyn now, and how does that compare to the last few years?

Brooklyn is finally getting the attention from retailers it deserves. As the fourth largest city in the U.S. with approximately 2.5 million residents, many wonder why it has taken so long. Like all for-profit companies, retailers seek out growth opportunities … and [some] retailers have maxed out their growth potential in every viable Manhattan neighborhood.

The local/artisanal movement has received a lot of attention, but it seems like there is now a national wave of retailers breaking into Brooklyn for the first time. Which players do you expect to break into the borough next?

I believe over the next few years we will see major expansion on the strongest thoroughfares in Brooklyn by mainstream retailers including Victoria’s Secret, Express, DSW, Urban Outfitters and T.J. Maxx. J.Crew’s first store on Court Street will be a success and [will lead to] several additional J.Crew stores throughout Brooklyn. It’s my understanding that Apple may be behind the redevelopment of the Salvation Army store at Bedford Avenue and North 7th Street. Whether this will be the first Apple location in Brooklyn doesn’t matter — what does [matter] is that Apple will be coming. Coach, Tiffany and other brands will likely follow.

Which areas of Brooklyn are strongest for retailers right now and why?

Downtown Brooklyn, [because of ] its strong density of office workers. Fulton Street continues to evolve into one of the greatest retail streets in the country. Atlantic Avenue has experienced a massive spike in interest due to the success of the Barclays Center and the redevelopment of Atlantic Terminal. Williamsburg’s residential community, which has been growing since the waterfront was rezoned in 2005, has spurred the demand for retail.

Park Slope continues to be a great location for small retail shops. And Red Hook will see more interest from big-box tenants.

What are you seeing in terms of retail rents in Brooklyn right now and how does that compare to the last few years?

Bedford Avenue in Williamsburg was roughly $50 a square foot [three years ago], but is now $150 to $250. Atlantic Avenue was roughly $40 a square foot [five years ago] and is now $125 to $175.

How competitive is it to buy retail property in Brooklyn these days?

Once one developer proves that a neighborhood is ripe with opportunity and yield, others quickly follow and pounce on any viable opportunity. This very quickly drives up land and property values.

Brooklyn and its best neighborhoods are no longer a secret. Values have soared.

Kenneth Schuckman CEO, Schuckman Realty What level of retail interest are you seeing in Brooklyn?

Brooklyn is hot. Up until this recent retail expansion, Brooklyn shoppers had limited options.

National retailers are watching the trends

“National retailers have a tendency to follow each other like schools of fish,” said broker Kenneth Schuckman of Schuckman Realty. In the past, he noted, major retailers in Brooklyn flocked to malls like Caesar Bay in the borough’s Bath Beach section, and Atlantic Terminal. But now, he said, they are forging into neighborhoods once occupied primarily by local players.

In addition to stronger “co-tenancy” options — having other national chains to park their stores next to — retailers are being lured by new residential and commercial developments, including the new Barclays Center. But while that project and others are bringing more retail space to the market, there are still challenges in finding stores large enough to accommodate national chains. And not all Brooklyn neighborhoods are seeing the same amount of interest from national tenants.

For more on how national chains are impacting Brooklyn’s retail rents, local property owners and the borough’s burgeoning artisanal movement, we turn to our panel of experts. and the changing demographics and are waking up to the fact that this area can no longer be overlooked. With Brooklyn having one of the lowest supplies of retail square footage, space is at the highest demand we have seen. With thousands of housing units planned and being developed, the demand will only increase.

Which areas of Brooklyn are strongest for retailers right now and why?

National retailers have a tendency to follow each other like schools of fish. In the past, chains followed traditional, safe models [by being located] in Brooklyn shopping projects like Kings Plaza, Caesars Bay, Atlantic Center and Gateway. They typically stayed away from local neighborhoods since the buying patterns of those consumers were not understood.

Neighborhood shopping areas like Fulton Mall were dominated by local tenants, who were making fortunes filling the void that national tenants were not satisfying.

That is no longer the reality. Neighborhoods that were “too local” for national chains, like Cobble Hill, Boerum Hill and Fort Greene, can now barely accommodate the demand for retail space.

What are you seeing in terms of retail rents in Brooklyn and how does that compare to the last few years?

Since the beginning of the recession until today, rents have skyrocketed. A perfect example is Atlantic Avenue at Fourth Avenue across from the Barclays arena. [Our firm] spearheaded the assignment for the corner in 2010. We were able to overcome a major hurdle of finding a bank able to pay over $100 per foot; we successfully secured Bank of America, which is currently open. Three years later, with the Barclays arena open, rates per square foot have now risen to over $200 in the same market. Our experience on Court Street in Cobble Hill was very similar. We are now

seeing rent rates in a number of areas that rival Manhattan occupancy.

What challenges are retailers facing in Brooklyn?

One of the biggest, if any, is finding locations for tenants of 10,000 square feet and up. Also, unless there is easily-accessible mass transit, retailers must depend on density and the driving consumer.

Which parts of Brooklyn are you expecting to see the most retail growth in the next five years?

With Whole Foods intending to open before Thanksgiving this year, I believe there will be significant growth in the Gowanus area. Lowes Home Improvement and Pathmark have been located there for quite some time, and the neighborhood has been seen as an opportunity for big-box development. [Our firm] recently put together a project with national tenants where leases are subject to Whole Foods opening their doors for business.

Joseph Colista

first vice president of retail leasing, Massey Knakal Realty Services What level of retail interest are you seeing in Brooklyn these days?

Interest in Brooklyn is at an all-time high.

Brooklyn has been, for many years, a hotspot for entrepreneurial and creative retail. But the past year has seen a massive increase in interest from large, national credit, and high-end tenants.

Which national retailers — or types of retailers — have most recently shown interest in the borough?

Apparel and specialty food. … Specialty www.TheRealDeal.com September 2013 75

Q&A food is, in particular, a natural fit because Brooklyn has been at the forefront of a national movement towards locally sourced and produced food.

What are you seeing in terms of persquare-foot retail rents in Brooklyn?

Rents are up across the board. Traditional Brooklyn retail corridors that intersect with Atlantic Avenue and Flatbush from the East River to Grand Army Plaza are seeing rents well above $100 a square foot, with some recent leases signed north of $200.

What is the biggest challenge in getting retailers to come in to Brooklyn?

A big challenge for many retailers looking to expand into Brooklyn — particularly in brownstone neighborhoods — is the size of available spaces. It’s tough for larger, national tenants to find space to house their operations in neighborhoods in which the inventory is dominated by 20-foot-wide buildings that offer little more than 1,000 square feet of space.

Which parts of Brooklyn are you expecting to see the most retail growth in the next five years?

I expect continued national growth in Williamsburg, Downtown and the north ends of Cobble Hill and Park Slope.

[Also, I expect] the movement of creative, Brooklyn-based retailers into Bedford-Stuyvesant, Bushwick and Gowanus.

Of all of those, I think Gowanus is a good bet to experience the most transformative growth within the next five years.

Noel Caban

head of Long Island division, Winick Realty Group What’s going on with Brooklyn retail?

There is renewed retail interest in key Brooklyn markets — mainly in the more affluent ones like Downtown Brooklyn, Fulton Street, the Barclays arena market and Dumbo.

But in my opinion, not all of Brooklyn is experiencing that growth. In the markets that are growing, what makes the difference is that new inventory has been created in the last few years. Existing city buildings have been converted to retail spaces, old gas stations have been sold and rezoned, and some old mainline retailers have gone out, providing opportunities for more national tenants.

Where are national retailers showing the most interest?

The national retailers are not going in where the artisanal movements are taking place. They are two very separate movements. By and large, artisanal stores, like 76 September 2013 www.TheRealDeal.com

restaurants and clothing boutiques, are going to markets where the rents are a little softer. For example Smith Street, Court Street, the fringes of Park Slope, Williamsburg, Bushwick, Clinton Hill and Fort Greene. You see only a select handful of nationals in those markets.

Which areas of Brooklyn are strongest for retailers right now and why?

The strongest areas for retailers are where the development [is taking place]. Most of that is in Downtown Brooklyn and the ancillary markets. You’re seeing residential projects that stalled in 2008 now pick up momentum in markets people really didn’t live in before. A good example is the new towers on Flatbush Avenue Extension, Livingston and Willoughby streets. We’re currently working on a project at 388 Bridge that’s one of the largest residential developments in Downtown Brooklyn, with close to 51,000 square feet of retail.

Which areas are weakest when it comes to attracting retailers right now?

I don’t believe there are weak areas in Brooklyn, [but] I do believe there are concepts that will not work in certain markets. For example, everybody knows Roberta’s. It’s probably one of the most popular artisanal restaurants and it’s located in Bushwick. If you drive around Bushwick looking for national tenants, you may not find them. That said, Roberta’s is packed every night, along with every other artisanal restaurant in that market.

Does that make Bushwick a weak market or a strong market?

What are you seeing in terms of persquare-foot retail rents in Brooklyn?

Where the national retailers have a foothold, like Downtown Brooklyn, retail rents have climbed. For example, where Trader Joe’s opened, on the corner of Atlantic Avenue, rents have soared. [A few] years ago, I did a deal with Barneys New York around the corner from where Trader Joe’s is now. I don’t think that same deal could have been completed in today’s retail climate. It would be too expensive.

What’s the biggest challenge in getting retailers to consider Brooklyn?

The biggest challenge is co-tenancy. A decade ago, when I would go to ICSC [the retail conference] and talk about the boroughs, the first question I would get is, “Who are the co-tenants in that market?” and that would make it a more difficult sell. Now that a few trailblazing retailers have broken that barrier, so to speak, it is much easier to sell the Brooklyn mystique.

Virginia Pittarelli

principal, Crown Retail Services What level of retail interest are you seeing in Brooklyn these days?

Brooklyn is one of the most under-stored areas in the country. The level of retail in-

terest has increased substantially over the past few years, especially by the national brands.

Fulton Street has become akin to 34th Street in Manhattan, with a well-established and very successful Macy’s and an influx of national tenants like H&M, Raymour & Flanigan, Express, Target, Armani Exchange, T.J. Maxx and Nordstrom Rack.

Which areas of Brooklyn are strongest for retailers right now and why?

One of the strongest is Downtown Brooklyn and, in particular, the Fulton Street corridor. … The other important change is the new growth of available retail product to fill the needs of these major national chains, like City Point, 490 Fulton Street and 505 Fulton Street. Williamsburg is another area receiving a great deal of attention, with a new Whole Foods entering the market as well as Urban Outfitters. Many of the fashion retailers are looking to enter there. Areas like Park Slope, Bay Ridge and Bensonhurst remain strong for neighborhood shopping. [Also], I see some of the big-box or power centers like Caesar’s Bay and Gateway Plaza getting an awful lot of attention. Caesar’s Bay is a fantastic center.

It’s not glamorous, but it’s strong.

Barry Fishbach

executive vice president, RKF Which national retailers have most recently shown interest in Brooklyn?

It’s a variety of some bigger box stores as well as some strong apparel tenants. It’s not only the nationals: it’s entrepreneurs opening up boutiques. It’s chefs who worked at restaurants in Manhattan who want to open their own restaurant.

A few years ago, there were still a lot of Manhattan retailers reluctant to invest in Brooklyn. Is that still the case?

I think a lot have already recognized the strength of Brooklyn. A lot of retailers have opened up or are opening their first Brooklyn store: Lululemon on Smith Street, J.Crew on Court. [The clothing store] Splendid is coming to Court, Panera Bread opened up Downtown. A couple of years ago I [worked on the deal for] the Shake Shack on Fulton Street.

Who has the upper hand on the Brooklyn retail scene, landlords or retailers?

It’s pretty even. There is an influx of new tenants. Tenants are considering neighborhoods they never would have considered five to 10 years ago. So there is a transition. There are a lot of landlords in new

emerging neighborhoods that are receptive to negotiating with national tenants.

The landlord is benefiting not only from getting a better tenant financially, but also because their rents have increased significantly. This creates activity in the sales market as well, because there are many owners who are motivated to sell because of new values of their properties.

What’s going on with vacancy rates in Brooklyn retail today?

Many spaces are getting leased even before the current tenant’s lease expires.

How competitive is it to buy retail property in Brooklyn these days?

It’s very competitive because there aren’t that many retail properties for sale. When there are, there are always multiple offers.

Timothy King

managing partner, CPEX Real Estate What level of retail interest are you seeing in Brooklyn these days?

The current retail interest and activity in Brooklyn is the strongest I have seen in my four decades in commercial real estate. National tenants of all types are scouring Brooklyn for opportunities.

Taxpayers [buildings that exist simply to cover tax payments], strip centers, and other retailer-intense properties are in huge demand. It is possibility the tightest market I have ever seen.

Which areas of Brooklyn are strongest for retailers right now?

The strongest areas include the neighborhood surrounding the Barclays Center, Williamsburg and Dumbo. A few years ago, only visionaries would consider the area near the arena.

What are you seeing in terms of retail rents and vacancy rates in Brooklyn?

Rent levels vary widely but are increasing at an unprecedented pace. Vacancy rates are at historical lows.

How has business changed for you as a retail broker in Brooklyn in the last year?

The biggest change is the increase in business and finding space to meet the increased demand.

What’s going on with retail commissions in the Brooklyn market right now?

The biggest change is getting small momand-pop owners comfortable with the concept of having to pay a commission-and-ahalf [giving a full commission to the tenant broker and half that to the landlord broker]. Tenant representative brokers getting a full fee is still a foreign concept that many owners struggle with. TRD

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SOUTH FLORIDA

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

REPORT

Miami Beach condo sets non-oceanfront record: $12.4M Luxury tower Apogee South Beach set a price record for a nonoceanfront unit in Miami-Dade County: $12.4 million, or $2,985 per square foot.

The 4,154-square-foot apartment shattered the old mark of $10.5 million, or $2,448 per square foot, set late last year — also at the Apogee, a Related Group property.

Apogee South Beach

Carlo Gambino of Douglas Elliman represented the seller and Jill Eber of Coldwell Banker represented the buyer; Gambino declined to disclose the identities of the buyer and the seller.

The record is just the latest

in a string for South Florida; in March, for example, developer Ian Schrager sold a pair of adjacent triplex penthouses in his Residences at the Miami Beach Edition for $34 million, the priciest pre-construction deal ever for Miami.

SoFla makes history with Zaha Hadid tower Miami is getting the first residential tower in the western hemisphere designed by Iraqi starchi-

tect Zaha Hadid. Developers Gregg Covin and Louis Birdman cleared the final hurdle for their $300 million project when they Zaha Hadid tower received unanimous approval from the city’s urban design review board.

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The Related Group is walking away from its $1 billion plan to remake Miami’s Watson Island because of what it foresees as a long, nasty approval process.

Related CEO Jorge Perez made his decision only two months after signing on to the project, a mega-yacht complex that has been stalled for a dozen years.

Perez proposed supersizing the complex — a marina, two luxury hotel, homes, shops and a convention center — and spent millions of dollars on the new blueprint.

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address is 1000 Biscayne Boulevard, across from the future Museum Park in the heart of Downtown — exemplifies the sternly futuristic style of the Pritzker Prize–winning Hadid.

The skyscraper will stand at 706 feet; its 60 floors will have duplex townhomes, half-floor residences, full-floor penthouses and a duplex penthouse.

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Chic retail center gets $301M in largest loan deal since recession A high-end shopping mall proposed for Miami’s Design District has snagged $301.5 million in financing, South Florida’s largest private loan package since the recession.

Dacra, the real estate development company led by Craig Robins, arranged two mortgages — one for $251.5 million from HSBC Bank, and another for $50 million from BREDS II Loan Holdings, a subsidiary of Blackstone Mortgage Trust, the South Florida Business Journal reported.

The 1.1 million-square-foot center has already inked leases with Louis Vuitton, Cartier, Christian Dior and Prada.

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

NATIONAL MARKET REPORT

Greenway Plaza in Houston

Texas In a sign of the fast-growing Texas commercial real estate market, a portfolio of office buildings is expected to trade hands this month for

Orange County Kobe Bryant

$1.1 billion, Bloomberg Businessweek reported. Cousins Properties, an Atlanta-based real estate investment trust, signed a deal to buy Greenway Plaza, a 4.4 million-square-foot 10-building office complex in Houston, and 777 Main Street, a 980,000-square-foot office tower in Fort Worth. Both properties are currently owned by a joint venture operated by Crescent Real Estate Holdings. According to Businessweek, Houston in particular has lured investors with properties offering lower prices and higher returns than buildings in other U.S. cities. Office sales in Houston rose 32 percent to $3.89 billion in 2012, the highest in five years, according to Real Capital Analytics. Meanwhile, the private equity firm Blackstone Group LP last month agreed to buy majority stakes in about 80 apartment complexes from General Electric in a deal that values the portfolio at $2.7 billion, the Wall Street Journal reported. The apartment buildings, with roughly 30,000 units, are in Dallas and other parts of Texas and the Southeast.

Los Angeles Lakers star Kobe Bryant has listed his home in Newport Coast, Calif., for just under $8.6 million, Curbed.com reported. Bryant reportedly purchased the 8,500-squarefoot four-bedroom home in 2001.

Among its features: a pool and spa, an 850-square-foot gym, a hair salon, an outdoor kitchen and a library equipped with a shark tank.

Los Angeles Ellen DeGeneres’ Thousand Oaks ranch

New Orleans The construction of a $2 billion medical complex in New Orleans’ Mid-City is fueling a real estate renaissance in the surrounding area, the Times-Picayune reported. Two side-by-side hospitals under construction by Louisiana State University and the U.S. Department of Veterans Affairs, slated for completion by 2016, are prompting more commercial development and residential A rendering of LSU’s under-construction University Medical Center sales along Tulane Avenue, a once-vibrant area that is now blighted. The Patio Motel, which has been vacant since Hurricane Katrina, was sold last year, and the new owners plan to invest nearly $3 million to renovate the hotel and turn it into a Quality Inn. Baton Rouge–based Wampold Companies recently announced that it would spend $20 million converting the vacant 17-story Elks Place office tower into 100 luxury apartments, with 8,000 square feet of retail. And last year, Campus Federal Credit Union purchased a parcel of land adjacent to the medical complex site for $1.5 million, or $43 per square foot, setting a new benchmark for land sales in Mid-City. Residential real estate has also picked up in the area, the Times-Picayune said. The Domain Companies recently spent $130 million to build four residential buildings and a shopping center in the area. The buildings’ 530 units are 100 percent occupied.

Chicago Illinois home sales in July hit their highest levels since 2006, as an inventory shortage pushed up prices, the Chicago Tribune reported last month. In July, the median home price in the Chicago metropolitan area rose 18 percent to $201,075 and 11,897 homes were sold, up 36 percent from 8,744 in July of last year. Within the city of Chicago, the median sale price was $250,000, a 25 percent increase from July 2012’s $200,000. It was the best July performance for median prices in the city since 2008. Higher prices are being driven by a limited availability of homes, the Tribune reported — the number of homes listChicago ed for sale in the Chicago area was down 35 percent from a year ago.

Also buoying prices is the effect of fewer dis80 September 2013 www.TheRealDeal.com

tressed sales. In July, distressed sales accounted for just under 30 percent of all transactions, the Tribune said, down from almost 50 percent earlier this year.

Northern New Jersey With banks starting to lend and prices stabilizing, the number of big-ticket commercial property sales in northern New Jersey this year has outpaced 2012, reaching some $450 million in dollar volume, the Bergen Record reported. In the first half of 2013, there were 14 transactions of $10 million or more in Bergen and Passaic counties. That’s up from 10 such transactions totaling $356 million in the first six months of 2012. The increase comes despite the fact that the number of overall commercial deals in Bergen and Passaic dropped to 317 in the first half of the year, down from 384 in the same period of 2012. North Jersey’s priciest deal of the year so far has been the sale of the Prospect Towers apartment building in Hackensack, which traded for $99.2 million.

“Sellers’ expectations are now more aligned with the realities of what the market will bear,” Bob Martie, Colliers InternaBergen County tional executive vice president for New Jersey, told the Record. While the area’s industrial and multi-family sectors are strong, the North Jersey office market, with its outdated corporate parks, remains challenged.

Celebrity couple Ellen DeGeneres and Portia de Rossi listed their 26acre equestrian estate in Thousand Oaks, Calif. for nearly $11 million in late July, the Los Angeles Times reported, then upped the price two weeks later to just under $13 million.

The couple bought the ranch, which features eight cabins, two barns, stables and a tennis court, in 2009 for $8.5 million. Earlier this year, DeGeneres and De Rossi bought a 13-acre estate in Santa Barbara County for $26.5 million.

Scottsdale Wayne Gretzky

Rhode Island The Rhode Island real estate market is recovering, the Providence Journal reported. In the second quarter, the state’s median home price rose 10 percent year-over-year to $209,900. In the first six months of 2013, 3,968 houses The “Rocky Farm” estate in Newport, were sold in the state, which is on the market for $4.7 million. up from 3,636 in the same period of last year. Some 22 percent of those were classified as distressed, down from 30 percent last year. Rhode Island’s median house price reached its peak of $282,500 in 2006, but dropped to $190,000 in 2012. The state’s real estate market has been gaining strength since January, the paper said. One high-profile listing on the market now is the 3.4-acre “Rocky Farm” estate on the waterfront in Newport, which is currently listed for $4.7 million.

Hockey legend Wayne Gretzky has sold his Scottsdale, Ariz., home for $2.88 million — $520,000 less than the asking price, according to Redfin. Gretzky, who listed the house in June, paid $1.4 million for the estate in 2003.

Compiled by Evan Bleier

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ON THE MARKET UES rental with condo potential for sale The longtime owners of a prewar rental building in Carnegie Hill have put their 13-story, 65-unit structure on the market. Insiders say the building will likely sell for more than $120 million or more than $1,400 per square foot — a price driven by the high demand for luxury condo sites.

The building, which is located at 12 East 88th Street, between Fifth and Madison avenues, has 85,839 square feet of residential space and 1,800 square feet of office space, real estate data website PropertyShark shows. Jones Lang LaSalle’s Jon Caplan, Richard Baxter, Scott Latham and Yoron Cohen are marketing the building.

Kaufman Arcade building on the market The Kaufman Organization’s Kaufman Arcade building in Midtown South is on the market for the first time in over 60 years, the New York Post reported last month. The 198,000-squarefoot property at 141 West 35th Street could command north of $90 million, sources told the Post. Kaufman tapped Eastern Consolidated’s Brian Ezratty 141 West 35th Street and David Schechtman to market the mid-block building that runs from West 35th to 36th streets between Broadway and Seventh Avenue.

“People are clamoring for this kind of product at the outskirts of the Hudson Yards,” Schechtman told the Post. The

Commercial properties recently placed on the market

retail space at the building is partially leased by the tackle shop Capitol Fishing Tackle Co.

Chinatown commercial building on the block A six-story office and retail building at 164-168 Canal Street is on the market for $63 million. Financial tenants Citibank and New York Life occupy about 70 percent of the 49,950-square-foot property, located at the corner of Canal and Elizabeth streets. Approximately 3,200 164-168 Canal Street square feet of air rights are available for a potential penthouse addition. With the exception of the leases for Citibank, New York Life and a few small tenants, all of the leases in the building are set to expire this year. The building has a gross annual income of $4.2 million. Massey Knakal’s Nick Petkoff and Maurice Suede are handling the sale.

Gutted Midtown West office building for sale A gutted office building at 315 West 35th Street hit the market earlier this summer for $36 million. The property, on Mid315 West 35th Street town’s West Side, was in the midst of a residential conversion before the economic downturn, and is a ready-made condominium redevel-

opment project for a buyer with the right finances, listing broker John Krueger of Marcus & Millichap told The Real Deal. Architectural plans for 57 condos were drawn up by the current owner, who planned to add a rooftop penthouse to the 14-story office building once it was converted to condos. A new owner could also redevelop it as a hotel.

Bronx multi-family portfolio asking $22M

670 Garden Street

A package of eight apartment buildings located in the Bronx is on the market with an asking price of $22 million.

The properties include 670 Garden Street, 650 East 182nd Street, 2236 Hughes Avenue, 1963 Daly Avenue, 2243 Hughes Avenue, 643 East 182nd Street, 691 East 188th Street and 270 Longstreet Avenue. Seven of the buildings are located in the borough’s Belmont neighborhood, and the eighth, 270 Longstreet Avenue, is located in the Country Club section. The 202 apartments in the portfolio, which includes seven stores, have an average rent of $1,119 per month. Richard Torres of Besen & Associates is handling the assignment.

Compiled by Linden Lim

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82 September 2013 www.TheRealDeal.com

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Deal Sheet summary

The Deal Sheet, on pages 88 to 102, covers transactions from 7/11/13 through 8/10/13.

Please submit future deals to deals@therealdeal.com.

Sales

Overview

By type

Property sales Deals Dollars

50 $769,820,000

Financing Buildings Aggregate value

Development

7

Development

Hotel

0

Hotel

Industrial

0

Industrial

0

Mixed-use

7

Mixed-use

46.20

284.75 0

Multi-family

288.59

9

Office

6

Office

105.83

10

Retail

5

Retail

44.45

Multi-family

Transactions

By dollar volume (in millions)

25

$386,400,000

Leases Office

62

Retail

44

Total

106

Leases square feet Office

953,417

Retail

187,958

Total

1,141,375

Office leases Office leases by industry Industry

Leases

Office leases sf by industry

Top tenant reps for office leasing by sf

Industry

Tenant representative

Square feet leased

Square feet leased

Advertising & Marketing

1

Advertising & Marketing

19,083

CBRE Group

254,870

Construction

3

Construction

29,928

Newmark Grubb Knight Frank

147,886

Education

2

Education

46,060

Cushman & Wakefield

49,867

Energy

1

Adams & Co.

36,538

Mohr Partners

29,386

4,826

Energy

16

Fashion*

Financial

7

Financial

183,627

Jones Lang LaSalle

23,591

Government

2

Government

144,000

Studley

20,432

Human Resources

2

Human Resources

Prime Manhattan Realty

12,582

Legal

4

Legal

59,097

Norman Bobrow & Co.

11,911

Media

1

Media

72,080

Vicus Partners

5,720

NGO

3

NGO

20,436

East Egg Realty

5,605

Other

5

Other

19,721

NYCRS

3,021

Real Estate

3

Real Estate

56,082

Sinvin Real Estate

2,950

Research

1

Research

64,361

Capstone Realty

2,250

Retail

1

Retail

1,450

Hanley Advisors

2,230

Manhattan Commercial Realty

1,450

Fashion*

10

Science & Technology

Science & Technology

68,128

5,159

159,379

Retail leases Top tenant reps for leasing by sf

Retail leases by industry

Broker

Discount

2

Discount

19,500

7

Fashion

14,600 46,616

Square feet leased

Retail leases sf by industry

Retail Zone

67,600

Fashion

Newmark Grubb Knight Frank

32,350

Food & Beverage

17

Food & Beverage

Ripco Real Estate

19,500

Health & Beauty

6

Health & Beauty

70,778

Kalmon Dolgin Affiliates

6,875

Medical

5

Medical

21,350

SCG Retail

5,079

Other

7

Other

Retail Strategies

5,000

Suzuki Capital

5,000

RKF

4,078

Lee & Associates

3,095

Fandel Retail Group

3,000

Lansco Corp.

3,000

PD Properties

2,300

Thor High Street Advisors

2,200

(*includes showroom space)

15,114

www.www.TheRealDeal.com September 2013 87

Deal Sheet

Commercial deals in New York City Deals are listed from largest to smallest in square feet leased or bought.

The Deal Sheet covers transactions from 7/11/13 to 8/10/13. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

633 Third Ave

104,000

Empire State Development Corp. / n/a

Time Equities / n/a

The government agency signed a 10-year lease renewal for five floors, the Wall Street Journal reported.

4 Brookfield Place

100,000

Scotiabank / n/a

Brookfield Properties / n/a

The Canada-based bank signed a lease to relocate from 1 Liberty Plaza, Crain’s reported.

304 Park Ave South

72,080

IMG Worldwide / M. Laginestra, R. Laginestra, C. Mansfield, CBRE

SL Green / Represented in-house

The global sports, fashion and media company signed a 15-year lease renewal and expanded.

One Grand Central Place

64,361

Gerson Lerhman Group / G. Kamenetsky, R. Meyers, CBRE

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

The research firm signed a lease for the entire third floor and part of the fourth floor.

32 Sixth Ave

45,000

Telx / A. Bokman, R. Meyers, CBRE

Rudin Management / Represented in-house

The software company signed a 20-year lease for the entire 10th floor.

110 William St

42,000

Pacific College of Oriental Medicine / M. Weiss, R. Eisenberg, N. Berger, Newmark Grubb Knight Frank

Swig Equities / Represented in-house

The school signed a new, 15-year lease.

633 Third Ave

40,000

Gov. Andrew Cuomo / n/a

Time Equities / n/a

Gov. Andrew Cuomo’s office signed a 10-year lease renewal for two floors, the Wall Street Journal reported.

101 Park Ave

39,000

Morgan Stanley / M. Laginestra, S. Eisenkraft, M. Geoghegan, CBRE

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

The investment bank signed a long-term lease renewal on the 23rd and 24th floors.

104 West 40th St

29,982

Regus / n/a

David Tawfik / P. Amrich, N. King, M. Movshovich, CBRE

The office space provider signed a 10-year lease for the entire fourth and fifth floors.

17 State St

29,386

Nelson Levine De Luca & Hamilton / Lewis Cowan, Mohr Partners

RFR Realty / Represented in-house

The law firm signed a long-term lease for the entire 29th and 30th floors.

22 West 21st St

25,000

YouTube / n/a

n/a / n/a

The video-sharing Internet company signed a lease to open a collaborative video production studio, DNAinfo reported.

One Penn Plaza

24,100

Symantec Corporation / R. Lowe, D. Berke, C&W

Vornado / Represented in-house

The computer security software company signed a lease for part of the 54th floor, the New York Observer reported.

810 Seventh Ave

22,437

Dragados USA Inc. / Marc Miller, Murray Hill Properties

SL Green / T. Stacom, B. Zeller, M. Nahamias, W. Morris, P. Alden, C&W

The subsidiary of a Spanish construction firm signed a new, 15-year lease for the entire ninth floor.

229 West 43rd St

20,432

10gen / Greg Taubin, Studley

Blackstone Group LP / Brian Waterman, Newmark Grubb Knight Frank

The tech company signed an expansion lease on the fifth floor. The tenant now occupies about 50,000 square feet at the building.

101 Park Ave

20,000

Convene / R. Laginestra, M. Whellen, J. Freede, CBRE

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

The operator of conference center facilities signed a new lease.

54 West 21st St

19,083

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

n/a / D. Breiman, S. Marvin, Olmstead Properties

The digital strategic agency signed a seven-year expansion lease for the top two floors, the New York Post reported. The tenant is relocating from 120 Fifth Avenue. The reported asking rent for the new space was $64 per square foot.

810 Seventh Ave

17,320

Omega Advisors / Neil Goldmacher, Newmark Grubb Knight Frank

SL Green / T. Stacom, B. Zeller, M. Nahamias, W. Morris, P. Alden, C&W

The investment advisory firm signed a new, seven-year lease for the entire 33rd floor.

218 West 40th St

16,900

Free People / Allen Gurevich, Newmark Grubb Knight Frank

Phillips-Van Heusen / Matt Astrachan, Jones Lang LaSalle

The clothing retailer signed a direct lease renewal for 13,100 square feet and inked a 13,800-square-foot sublease for office space.

80 Pine St

13,500

Cahill Gordon & Reindel LLP / Moshe Sukenik, Newmark Grubb Knight Frank

Rudin Management / Represented in-house

The law firm signed a new expansion lease for the entire 26th floor.

One Grand Central Place

12,720

Hafetz Necheles & Rocco LLP / W. Cohen, R. Kass, Newmark Grubb Knight Frank

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

The law firm signed a lease.

42 West 39th St

12,582

Everlast Worldwide Inc. / Prime Manhattan Realty

42-52 West 39 Street LLC / David Levy, Adams & Co.

The swimwear manufacturer signed a new lease. The reported asking rent was $39 per square foot.

2 Penn Plaza

12,200

Jacobs Engineering Group / Michael Burlant, C&W

Marks Paneth & Shron LLP / Ted Rotante, Colliers International

The engineering firm signed a sublease on the fourth floor.

1040 Sixth Ave

12,007

Dice Holdings Inc. / W. Cohen, R. Kass, A. Weisz, Newmark Grubb Knight Frank

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

The Internet company signed a 12-year lease renewal and expansion for the entire eighth floor.

120 Broadway

11,911

World Trade Centers Association / Shawn Harooni, Norman Bobrow & co.

Silverstein Properties / Represented in-house

The nonprofit signed a 10-year lease on the 33rd floor. The reported asking rent was around $42 per square foot.

386 Park Ave South

11,607

Impact Republic LLC / A. Chudnoff, A. Haber, Jones Lang LaSalle

William Macklowe Co. / P. Amrich, N. King, R. Zimbalist, CBRE

The investment management firm signed a 10-year lease for the entire 18th floor.

510 Madison Ave

11,500

Canada Pension Plan Investment Board / P. Amrich, N. King, CBRE

Boston Properties / P. Amrich, C. Harle, CBRE

The global investment management organization signed a 10-year lease on the 15th floor, Crain’s reported. The asking rent was $100 per square foot, according to the publication.

34 West 33rd St

9,832

Kids With Character LLC / David Levy, Adams & Co.

Arcade Building Associates / David Levy, Adams & Co.

The children’s wear company signed a lease renewal. The reported asking rent was $39 per square foot.

419 Park Ave South

9,050

Shapeways / Steven Blair Strati, C&W

Walter & Samuels / Represented inhouse

The printing firm signed a 10-year lease renewal and expanded to the entire ninth floor, the New York Observer reported.

625 Broadway

8,000

eMusic / Michael Higgins, Jones Lang LaSalle

n/a / R. Fields, J. Fields, Synergy Real Estate

The Internet company signed a sublease for the entire second floor.

270 Madison Ave

6,100

Marcus & Millichap / n/a

n/a / n/a

The commercial real estate firm signed an expansion lease.

80 Broad St

5,720

Young Survival Coalition / Andrew Stein, Vicus Partners

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

The nonprofit signed a new, 11-year lease for part of the 17th floor.

30 West 22nd St

5,605

GIG-IT / Leslie French, East Egg Realty

Sierra Realty / Gabe Isaacs, Lee & Associates

The tech company signed a lease for the entire third floor. The reported asking rent was $39 per square foot.

88 September 2013 www.TheRealDeal.com

www.TheRealDeal.net December 200

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September - Real Deal - $48.8MM - 729 Seventh Ave - A. Lieberman.indd 1

8/20/13 10:03 AM

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

230 Park Ave

5,400

Leona M. and Harry B. Helmsley Charitable Trust / n/a

Monday Properties / J. Berger, Monday Properties; F. Doyle, J. Fanuzzi, P. Glickman, D. Kliener, Jones Lang LaSalle

The trust signed a lease on the fifth floor, the New York Observer reported.

102 West 38th St

4,826

Solaire Generation / Jeffrey Buslik, Adams & Co.

38 & 6 Associates LLC / James Buslik, Adams & Co.

The solar energy solutions company signed a new, seven-year lease. The reported asking rent was $35 per square foot.

10 West 33rd St

4,732

Ray Enterprises of Chesapeake Walk / David Levy, Adams & Co.

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

The fashion accessories company signed a new lease and expansion.

1350 Broadway

4,517

Arkadin Inc. / Andrew Ross, C&W

W&H Properties / W. Cohen, R. Kass, N. Rubin, A. Weisz, Newmark Grubb Knight Frank

The technology firm signed a lease.

80 Broad St

4,060

K3 Learning / H. Kessler, A. Landa, Newmark Grubb Knight Frank

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

The private education organization signed a seven-year lease for part of the 17th floor.

231 West 39th St

4,038

L’Atelier Group / James Buslik, Jeffrey Buslik, Adams & Co.

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

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

584 Broadway

3,984

Adopted / Michael Higgins, Jones Lang LaSalle

n/a / Steve Marvin, Olmstead Properties

The fashion accessories firm signed a five-year lease on the sixth floor.

80 Broad St

3,900

The Fulcrum Group / Phil Kanfer, Newmark Grubb Knight Frank

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

The energy, facility and construction service company signed a new, sevenyear lease for part of the 16th floor.

One Grand Central Place

3,591

Balfour Beatty Infrastructure Partners / P. Giunta, C. Berg, Newmark Grubb Knight Frank

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

The infrastructure contracting firm signed a lease.

561 Seventh Ave

3,491

Thomas S. Fleishall & Associates PC / n/a

Handler Real Estate / Represented in-house

The law firm signed a long-term lease on the entire 19th floor.

231 West 39th St

2,980

La Di Da Inc. / James Buslik, Jeffrey Buslik, Adams & Co.

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

The apparel company signed an expansion lease. The reported asking rent was $35 per square foot.

1061 Madison Ave

2,950

Joseph / C. Owles, Sinvin Real Estate; Robin Zendell (independent broker)

n/a / W. Abramson, M. Olden, Buchbinder & Warren

The fashion company signed a lease for 1,750 square feet on the ground floor and 1,200 square feet on the mezzanine level.

1350 Broadway

2,929

Harris Allied LLC / A. Smolyansky, K. Caggiano, CBRE

W&H Properties / W. Cohen, R. Kass, N. Rubin, A. Weisz, Newmark Grubb Knight Frank

The executive search firm signed a lease.

1359 Broadway

2,805

Bob Woodruff Foundation / B. Silver, J. Jacobs, Newmark Grubb Knight Frank

W&H Properties / W. Cohen, R. Kass, N. Rubin, A. Weisz, Newmark Grubb Knight Frank

The nonprofit signed a lease.

1350 Broadway

2,518

TuneIn / Helen Tvedt, Tungsten 10:45:52 AM Properties

W&H Properties / W. Cohen, R. Kass, N. Rubin, A. Weisz, Newmark Grubb Knight Frank

The technology firm signed a lease.

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MiaMi’s Most valuable views iNtRODuCiNG thE OPERA tOwER LEASEBACK PROGRAM Owners now have the option to lease back their condominium to the developer for three years commencing at closing. As part of the leaseback program, the developer will assume all hOA and maintenance fees and will pay the owner annual rent equal to 6% of the purchase price.

DEVELOPER FiNANCiNG AND CASh DiSCOuNtS iNCENtiVE PROGRAMS ARE ALSO AVAiLABLE.

RISING 56 STORIES ABOVE THE BAY, STudIO, ONE-BEdROOm ANd TwO-BEdROOm cONdOmINIumS STARTING AT $257,900 NoVe Kitchen Sidewalk Café • New Models • Oversized Pool & Spas Dramatically Designed Lobby • State-of-the-Art Fitness Center • Fully-Equipped Residents’ Lounge 24/7 Security & Concierge Service • On-Site Garage with Valet Service AmericanAirlines Arena • Museum Park • Arsht Center for the Performing Arts Sales center open daily at 1750 N. Bayshore Drive, Suite 101, Miami, FL 786.361.0512 • operatower.com • FORtuNE DEVELOPMENt SALES All features, dimensions, drawings, conceptual renderings, plans and specifications are subject to change without notice, and Developer expressly reserves the right to make modifications. All prices are subject to change without notice. ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING REPRESENTATIONS OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS MAKE REFERENCE TO THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER OR LESSEE. All borrowers are subject to credit approval. For leaseback, Seller may be substituted with affiliated entity. Terms and conditions of seller financing and leaseback are subject to change without notice. Other restrictions and limitations may apply. WE ARE PLEDGED TO THE LETTER AND SPIRIT OF THE U.S. POLICY FOR THE ACHIEVEMENT OF EQUAL HOUSING OPPORTUNITY THROUGHOUT THE NATION. WE ENCOURAGE AND SUPPORT AN AFFIRMATIVE ADVERTISING AND MARKETING PROGRAM IN WHICH THERE ARE NO BARRIERS TO OBTAINING HOUSING BECAUSE OF RACE, COLOR, RELIGION, SEX HANDICAP, FAMILIAL STATUS OR NATIONAL ORIGIN.

OPERA-117 RealDeal_Fullpg_July2013.indd 1

7/3/13 4:44 PM

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

230 Park Ave

2,400

Bank of the Ozarks / n/a

Monday Properties / J. Berger, Monday Properties; F. Doyle, J. Fanuzzi, P. Glickman, D. Kliener, Jones Lang LaSalle

The bank signed a lease on the ninth floor.

153 West 27th St

2,250

Brilliant Graphics / Brian Wilson, Capstone Realty

n/a / Sam Stein, Justin Management

The tenant signed a lease for part of the ninth floor.

80 Broad St

2,230

Occam Global / Hugh McDonald, Hanley Advisors

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

The executive recruitment firm signed a new, five-year lease for part of the seventh floor.

231 West 39th St

2,135

Rudsak / James Buslik, Jeffrey Buslik, Adams & Co.

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

The apparel company signed an expansion lease. The reported asking rent was $40 per square foot.

10 West 33rd St

2,024

Arons’ Manufacturing Corporation / David Levy, Adams & Co.

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

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

500 Eighth Ave

1,850

Crystal Digital Graphics / Louis Posner, NYCRS

n/a / James Gladstone, Walter Samuels

The digital printing company signed a five-year lease.

230 Park Ave

1,800

Comerica / n/a

Monday Properties / J. Berger, Monday Properties; F. Doyle, J. Fanuzzi, P. Glickman, D. Kliener, Jones Lang LaSalle

The financial services firm signed a lease on the sixth floor, the New York Observer reported.

231 West 39th St

1,478

Mira Design Corp. / James Buslik, Jeffrey Buslik, Adams & Co.

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

The women’s apparel and accessories firm signed a five-year lease renewal.

The reported asking rent was $35 per square foot.

453 West 17th St

1,450

Lobster Place Inc. / M. Kabiri, W. Stein, Manhattan Commercial Realty

n/a / Adam Kriegstien, Manhattes Group

The seafood market signed a five-year lease for administrative offices.

231 West 39th St

1,269

Pacific Textiles & Sourcing / James Buslik, Jeffrey Buslik, Adams & Co.

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

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

71 West 47th St

1,171

Elegant Creations Corp. / Louis Posner, NYCRS

n/a / Billie Jean Jamel, Abramson Brothers

The jeweler signed a five-year office lease.

10 West 33rd St

1,001

Skyler Group LLC / David Levy, Adams & Co.

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

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

231 West 39th St

893

Rubin Associates / James Buslik, Jeffrey Buslik, Adams & Co.

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

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

231 West 39th St

883

Georgie Apparel / James Buslik, Jeffrey Buslik, Adams & Co.

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

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

10 West 33rd St

447

Deb and Dave Accessories LLC / David Levy, Adams & Co.

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

The fashion accessories company signed a new lease. The reported asking rent was $40 per square foot.

Landlord / Representative

Notes

Retail leases Address

Size

Tenant / Representative

78-02 Roosevelt Ave (Queens)

17,000

Blink Fitness / Ezra Saff, Retail Zone

n/a / n/a

The fitness chain signed a lease for a new location.

3560 White Plains Rd (The Bronx)

17,000

Blink Fitness / Ezra Saff, Retail Zone

n/a / n/a

The fitness chain signed a lease for a new location.

1002 Gates Ave (Brooklyn)

16,000

Blink Fitness / Ezra Saff, Retail Zone

n/a / n/a

The fitness chain signed a lease for a new location.

3780 Nostrand Ave (Brooklyn)

16,000

Blink Fitness / Ezra Saff, Retail Zone

LeFrak Organization / Mike Stone, C&W

The fitness chain signed a lease for a new location.

43-10 Crescent St (Queens)

14,500

Food Cellar / Represented in-house

Rockrose Development / Represented in-house

The supermarket signed a lease on the ground floor of the Linc LIC residential tower, Crain’s reported.

925 Hunts Point Ave (The Bronx)

10,000

Deal$ by Dollar Tree / M. Mahony, E. Bukai, R. Senior, Ripco Real Estate

n/a / M. Mahony, E. Bukai, R. Senior, Ripco Real Estate

The discount chain signed a lease for a new location.

1560 Fulton Ave (Brooklyn)

9,500

Deal$ by Dollar Tree / E. Bukai, M. Mahony, R. Senior, Ripco Real Estate

UDC Gateway LLC / Sol Dweck, Wharton Real Estate

The discount chain signed a lease for a new location.

230 Fifth Ave

9,200

The Smith / H. Richer, J. Krivine, Newmark Grubb Knight Frank

230 Fifth Avenue Associates LLC / n/a

The restaurant signed a lease for its fourth Manhattan location.

8712 Fourth Ave (Brooklyn)

8,000

CityMD / B. Birnbaum, J. Roseman, M. Utreras, H. Dweck, Newmark Grubb Knight Frank

n/a / n/a

The urgent care services provider signed a lease for a new location.

153 Morgan Ave (Brooklyn)

6,875

Our Wicked Lady LLC / V. Lopez, J. Wadler, Kalmon Dolgin Affiliates

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

The live music venue signed a long-term lease.

142 West 34th St

5,000

Footlocker / Mark Finkelstein, Retail Strategies

n/a / J. Pruger, K. Ota, Newmark Grubb Knight Frank

The footwear retailer signed a lease.

561 Third Ave

4,750

CityMD / B. Birnbaum, J. Roseman, M. Utreras, Newmark Grubb Knight Frank

n/a / n/a

The urgent care services provider signed a lease for a new location.

1132 Third Ave

4,078

Reebok Fit Hub / J. Ezra, Y. Amraon, RKF

n/a / Michael Kadosh, CBRE

The health and fitness retailer signed a 10-year lease on the ground floor. The reported asking rent was $250 per square foot.

14 West 14th St

4,000

CityMD / B. Birnbaum, J. Roseman, M. Utreras, Newmark Grubb Knight Frank

n/a / J. Pruger, K. Cohen, Newmark Grubb Knight Frank

The urgent care services provider signed a lease for another location.

2398 Broadway

3,200

CityMD / B. Birnbaum, J. Roseman, M. Utreras, Newmark Grubb Knight Frank

BLDG Management / Represented in-house

The urgent care services provider signed a lease for another location.

476 Amsterdam Ave

3,095

Upper West Rest. Corp. / H. Goldfarb, S. Lindenfeld, Lee & Associates

AIMCO / H. Goldfarb, S. Lindenfeld, Lee & Associates

The restaurant signed a 12-year lease.

152 Spring St

3,000

Kate Spade Saturday / K. Bellantoni, V. Fandel, Fandel Retail Group

Waterbridge Capital / R. Futterman, B. Rosen, RKF

The fashion company signed a lease.

92 September 2013 www.TheRealDeal.com

www

Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

214 East 52nd St

3,000

Fabio Restaurant / Ryan Bergman, Lansco Corp.

High Line Holdings / Joseph Shany, Shany Landmarks

The restaurant signed a 12-year lease with a five-year option.

243 East 14th St

2,600

The Winslow / Colby Swartz, Suzuki Capital

n/a / Abe Bichoupan, NYCRS

The bar signed a lease.

678 Hudson St

2,500

Papyrus/NIQUEA.D / Jacqueline Klinger, SCG Retail

Lloyd Goldman / n/a

The stationery and fashion accessories retailers signed a lease for a combination store.

736 Broadway

2,300

Treehaus / Tony Park, PD Properties

UD 736 Broadway / Tony Park, PD Properties

The restaurant signed a lease.

816 Madison Ave

2,200

Kent & Curwen / Thor High Street Advisors

Vornado / n/a

The British fashion retailer signed a lease.

245 West 51st St

2,100

Nippori Inc. / n/a

245 West 51st Street Realty LLC / Ryan Bergman, Lansco Corp.

The tenant signed a 10-year retail lease.

280 Broadway

2,000

Coffee Bean & Tea Leaf / J. Roseman, M. Frankel, B. Birnbaum, Newmark Grubb Knight Frank

Abro Management / Represented inhouse

The California-based coffee chain signed a lease.

261 Fifth Ave

1,704

Saint Petersburg Global Trade House / T. Jung, R. Smith, Winick Realty

Feil Organization / Represented inhouse

The Russian book, music, video, toy and souvenir retailer signed a lease for its first Manhattan location. The company has three stores in Brooklyn.

303 East 53rd St

1,600

Flute Champagne Bar / E. Samasiuk, N. Niculescu, Metropolitan Property Group

n/a / C. Swartz, T. Li, Suzuki Capital

The bar signed a lease.

3781 Junction Blvd (Queens)

1,600

Corona Vision / Ezra Saff, Retail Zone

Solil Management / n/a

The eyewear retailer signed a lease for its fourth location.

101 West 87th St

1,431

n/a / n/a

n/a / D. Chkheidze, P. Massey, Massey Knakal

A private school leased retail space.

66 East 80th St

1,400

Acubetter Acupuncture / M. Kabiri, W. Stein, Manhattan Commercial Realty

n/a / Gary Dana, Douglas Elliman

The acupuncturist signed a five-year lease with a three-year option.

555 West 42nd St

1,242

Green Nature Coffee House / n/a

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

The coffee shop signed a lease.

1700 Broadway

1,200

Coffee Bean & Tea Leaf / J. Roseman, M. Frankel, B. Birnbaum, Newmark Grubb Knight Frank

Ruben Companies / Represented inhouse

The California-based coffee chain signed a lease.

49 Carmine St

1,200

The Grey Dog / n/a

n/a / Brendan Gotch, Massey Knakal

The restaurant signed a lease.

1335 Third Ave

1,000

NIQUEA.D / Jacqueline Klinger, SCG Retail

Mautner-Glick Corporation / n/a

The fashion accessories concept signed a retail lease.

305 East 53rd St

1,000

n/a / Thomas Li, Suzuki Capital

n/a / Colby Swartz, Suzuki Capital

The tenant signed a retail lease.

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94 September 2013 www.TheRealDeal.com

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Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

12 John St

1,000

GoGo Curry / S. Ozawa, C. Swartz, Suzuki Capital

n/a / n/a

The eatery signed a lease.

487 Fifth Ave (Brooklyn)

900

Acme Wine & Spirits / Michael Esposito, NY Retail Group

75 5th LLC / Michael Esposito, NY Retail Group

The wine shop signed a lease.

250 West 57th St

879

Starbucks / David Firestein, Shopping Center Group

W&H Properties / J. Podell, I. Lerner, C&W

The coffee chain signed a lease for a new location.

2531 Frederick Douglass Blvd

800

Harlem Coral / Holley Drakeford, Giscombe Realty

n/a / Holley Drakeford, Giscombe Realty

The restaurant signed a five-year lease.

130 Thompson St

700

Rouge NYC / J. Cohn, J. Klinger, SCG Retail

Standard Realty / Robert Carbonara, First Allied Properties

The beauty salon signed a lease.

78 Fifth Ave (Brooklyn)

700

Pierre Lotti / Michael Esposito, NY Retail Group

78 5th LLC / Michael Esposito, NY Retail Group

The restaurant signed a 10-year lease.

168 Ludlow St

500

The Rising States / Steven Jacobson, Hopkinson Associates

168 Ludlow LLC / n/a

The women’s apparel retailer signed a lease.

1324 Lexington Ave

404

n/a / n/a

n/a / Jill Lovatt, Massey Knakal

A laundry and dry cleaning service signed a lease.

836 Washington Ave (Brooklyn)

400

Kooj Collection / n/a

n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate

The swimwear retailer signed a lease.

144 West 19th St

400

GoGo Curry / S. Ozawa, C. Swartz, Suzuki Capital

Devito Associates / n/a

The eatery signed a lease.

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

101 Murray St

Development site

Fisher Brothers; Witkoff Group / n/a

St. John’s University / H. Hwang, N. Rockett, K. Wiedenmann, S. Kohn, M. Rotchford, C&W

The school campus building sold for $223 million. The site allows for the development of a residential building totaling 310,028 square feet as of right.

Queens portfolio

19 apt. bldgs, 561 units total

BRG / n/a

Area Property Partners / n/a

The package of multi-family buildings sold for $68 million. The properties are located at 35-41 95th Street, 42-23 Ithaca Street and 40-94 Denman Street.

415 West Broadway

6-story office bldg

ASB Real Estate Investments; Willet Companies / n/a

Willet Companies / n/a

The property sold for $41 million.

Queens portfolio

14 apt. bldgs, 248 units total

Benedict Realty Group / Aaron Jungreis, Rosewood Realty

n/a / Aaron Jungreis, Rosewood Realty

The properties sold for $30.2 million. The buildings are located in Jackson Heights, at 35-20 97th Street, 35-12 99th Street, 35-06 97th Street, 35-18 95th Street, 35-44 95th Street, 35-41 94th Street, 35-38 95th Street, 35-38 94th Street, 35-31 94th Street, 35-24 95th Street, 35-34 95th Street, 37-29 104th Street, 35-41 97th Street and 35-20 108th Street.

448 11th Ave

Development site

David Marx / n/a

Lehman Brothers Holdings / Andrew Scandalios, HFF

The property sold for about $30 million, Crain’s reported.

65-69 North 6th St (Brooklyn)

28-unit apt. bldg

n/a / n/a

Silverstone Property Group; Adam America Real Estate Group / n/a

The property sold for $28.75 million.

5 West 91st St

6-story apt. bldg, 48 units total

Rich International / Glenn Raff, Besen & Associates

Gaia Real Estate Investments / A. Doshi, G. Raff, D. Bess, Besen & Associates

The property sold for $27.5 million, or $562 per square foot. The price represents a capitalization rate of 2.8 percent and a gross rent multiple of 19.7.

57, 59-63 and 65-67 Orchard St

3 comm. bldgs

Waterbridge Capital; Jangana family / n/a

n/a / Michael DeCheser, Massey Knakal

The buildings sold for $27 million.

195 and 231 Steuben St (Staten Island)

Two 7-story apt. bldgs, 198 units total

Arker Companies / Heidi Burkhart, Dane Professional Consulting Group

DelShah Capital / Represented in-house

The properties sold for $27 million.

1121, 1133, 1141-45, 1155, 1171-75 Morris Ave (The Bronx)

Five 5-story apt. bldgs, 304 units total

n/a / Samuel Kooris, Rosewood Realty

n/a / Aaron Jungreis, Rosewood Realty

The portfolio sold for $25.05 million. The price represents a gross rent multiple of 7.3.

347 Bowery

3-story comm. bldg

Glauco Lolli-Ghetti / n/a

Louzon Hotel Group / n/a

The property sold for $19 million, the Lo-Down reported. The seller acquired the building in 2011 for $7.6 million.

833-847 Flatbush Ave (Brooklyn)

Two 2-story retail bldgs

Emmes Asset Management Co. / n/a

n/a / n/a

The $17.5 million fee interest in the contiguous properties sold.

One Bogardus Pl

7-story apt. bldg, 103 units total

n/a / Aaron Jungreis, Rosewood Realty

n/a / n/a

The elevator building sold for $16.41 million. The price represents a gross rent multiple of 11.

250 Bowery

11,000 sf retail condo

250 Bowery Star LLC / J. Fishman, B. Segall, J. Butwin, RKF

250 VE LLC / J. Fishman, B. Segall, J. Butwin, RKF

The retail condo sold for $15.75 million.

76-82 St. Marks Ave (Brooklyn)

23,900 sf mixed-use bldg

n/a / A. Hess, O. Cohen, G. Bailey, TerraCRG

n/a / A. Hess, O. Cohen, G. Bailey, TerraCRG

The property sold for $15 million, or $627 per square foot. The price represents a capitalization rate of 3.6 percent and a gross rent multiple of 22.

275 Fourth Ave (Brooklyn)

60,200 buildable sf development site

Silverstone Property Group; Adam America Real Estate / n/a

n/a / O. Cohen, M. DiBella, A. Hess, D. Marks, P. Matheos, M. Hernandez, TerraCRG

The development site sold for $14.8 million.

14 East 55th St

5-story comm. townhouse

Dame Vivienne Westwood / N. Sroka, V. Santoro, A. Grossberg, Douglas Elliman

n/a / n/a

The townhouse sold for $13.5 million, the New York Post reported. The space will be used for retail, showroom and corporate headquarter space.

3111 Brighton 7th St (Brooklyn)

6-story, 72,360 sf apt. bldg, 72 units total

3111 Realty / Michael Guttman, Rosewood Realty

SMJ Associates II LLC / Aaron Jungreis, Rosewood Realty

The elevator building sold for $10.5 million. The price represents a gross rent multiple of 12.8.

325 Bowery

4-story, 6,800 sf mixed-use bldg

Atlas Capital Group / R. Futterman, B. Segall, RKF

325 Bowery Development LLC / R. Futterman, B. Segall, RKF

The property sold for $9.25 million.

50 Orange St (Brooklyn)

5-story apt. bldg, 20 units total

Orange Acquisition LLC / Devin Cohen, Rosewood Realty

50 Orange Street Residences LLC / Michael Guttman, Rosewood Realty

The elevator building sold for $9 million. The price represents a gross rent multiple of 15.

727 Sixth Ave

4-story, 6,000 sf mixed-use bldg

HeartVein NYC / Robert Dankner, Prime Manhattan Residential

n/a / n/a

The property sold for $8.15 million. The site has 10,500 buildable square feet for future residential or commercial development.

76-86 Lefferts Pl (Brooklyn)

39,264 buildable sf development site

n/a / n/a

n/a / Stephen Palmese, Massey Knakal

The property sold for $7.85 million.

96 September 2013 www.TheRealDeal.com The

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Buys continued Address

Size

Buyer/ Representative

14 Maujer St (Brooklyn)

4-story apt. bldg, 16 units total

Maujer Acquisition LLC / Devin Cohen, Rosewood Realty

14 Maujer Realty LLC / Michael Guttman, Rosewood Realty

The walk-up building sold for $6.65 million. The price represents a gross rent multiple of 12.5.

412-422 and 423-429 West 126th St

2 development sites

n/a / S. Hornstock, J. Strizzi, A. Cohen, A. Maxson, ABS Partners

n/a / S. Hornstock, J. Strizzi, A. Cohen, A. Maxson, ABS Partners

The properties sold for $6.6 million.

594 Dean St (Brooklyn)

37,500 sf mixed-use bldg

Singh / Robert Klein, Kalmon Dolgin Affiliates

Ulano Corporation / N. Dolgin, G. Dolgin, Kalmon Dolgin Affiliates

The property sold for $6 million.

301 East 64th St

4 retail units

Regency East Corporation / Martin Ezratty, Eastern Consolidated

Onyx Corp. / Martin Ezratty, Eastern Consolidated

The 13-year master lease on the ground-floor retail units sold for $5.5 million.

423 and 439 Lenox Ave, 134 and 140-142 West 133rd St

4 apt. bldgs, 47 units total

ABJ Properties / V. Sozio, S. Shkury, M. Tortorici, J. Deutch, Ariel Property Advisors

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

The properties sold for $5.25 million.

203 West 144th St

6-story mixed-use bldg

n/a / n/a

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

The property sold for $5 million, or about $231 per square foot.

32-34 Fifth Ave (Brooklyn)

5-unit apt. bldg

n/a / n/a

n/a / Adam Hess, TerraCRG

The property sold for $5 million.

228 East 10th St

5-story, 8,400 sf apt. bldg

DSA Management Co. / n/a

n/a / n/a

The property sold for $4.4 million.

394-398 Myrtle Ave (Brooklyn)

1-story comm. bldg

n/a / Kobi Zamir, GFI Realty

n/a / Kobi Zamir, GFI Realty

The property sold for $3.45 million.

239 Prospect Pl (Brooklyn)

4-story apt. bldg

n/a / Shlomo Antebi, GFI Realty

n/a / Shlomo Antebi, GFI Realty

The walk-up building sold for $3.1 million. The price represents a gross rent multiple of 11.3.

2035 Second Ave

5-story retail bldg

Congal Realty / Yaron Zohar, Zohar Properties

Zohar Properties / Y. Zohar, Zohar Properties; S. Putko, Orenda Estate

The property sold in a 1031 exchange for $3 million.

1820 Madison Ave

6,449 sf retail condo

APNA Realty / M. Gorman, J. Gettler, J. Kaufman, New Street Realty

Lancaster Madison Associates LLC / M. Gorman, J. Gettler, J. Kaufman, New Street Realty

The ground-floor commercial condo sold for $2.7 million.

43-05 Forley St and 32-38 48th St (Queens)

2 apt. bldgs, 26 units total

Silvershore Properties / n/a

n/a / n/a

The properties sold for a combined $2.65 million in two separate transactions.

415 Lincoln Ave (Brooklyn)

4-story apt. bldg, 30 units total

Malek Management / Lev Mavashev, Besen & Associates

Wavecrest Management / Amit Doshi, Besen & Associates

The walk-up building sold for $2.45 million.

1819 Beverly Rd (Brooklyn)

19-unit apt. bldg

Castellan RE Partners / n/a

E & G (NY) Realty LLC / Adam Hess, TerraCRG

The property sold for $2.33 million.

868 Faile St (The Bronx)

21-unit apt. bldg

n/a / S. Hirschfield, S. Shkury, J. Gold, V. Sozio, Ariel Property Advisors

n/a / S. Hirschfield, S. Shkury, J. Gold, V. Sozio, Ariel Property Advisors

The property sold for $1.98 million.

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Buys continued Address

Size

Buyer/ Representative

Seller / Representative

Notes

626 Lincoln Pl (Brooklyn)

4-story apt. bldg

n/a / Shlomo Antebi, GFI Realty

n/a / Roni Abudi, GFI Realty

The property sold for $1.96 million. The price represents a gross rent multiple of 9.

222 Carroll St (Brooklyn)

2,298 sf apt. bldg

n/a / M.C. O’Brien

n/a / Premiere Properties

The property sold for $1.9 million.

555 Grand St

3-story apt. bldg

n/a / n/a

n/a / M. Lively, B. Maddigan, Massey Knakal

The property sold for $1.9 million, or about $400 per square foot.

61-04/10 Laurel Hill Blvd (Queens)

2-story, 11,000 sf office bldg

n/a / n/a

n/a / Thomas Donovan, Massey Knakal

The property sold for $1.88 million, or about $169 per square foot.

361 Miller Ave (Brooklyn)

4-story apt. bldg, 20 units total

Paradise Management / Lev Mavashev, Besen & Associates

Madison Realty Capital / Lev Mavashev, Besen & Associates

The walk-up building sold for $1.85 million.

368 Baltic St (Brooklyn)

4-story, 7,000 sf apt. bldg

DSA Management Co. / n/a

n/a / n/a

The property sold for $1.85 million.

693 Madison St (Brooklyn)

8-unit apt. bldg

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

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

The property sold for $1.73 million.

2236 Third Ave

3-story mixed-use bldg

n/a / n/a

n/a / Lev Kimyagarov, Massey Knakal

The property sold for $1.5 million, or $317 per square foot.

6469 Broadway (Broadway)

52,575 buildable sf development site

n/a / n/a

n/a / Karl Brumback, Massey Knakal

The property sold for $1.4 million, or $27 per buildable square foot.

597 Greene Ave (Brooklyn)

4-story mixed-use bldg

n/a / S. Burk, A. Sigourney, L. Tamara, CPEX Real Estate

n/a / S. Burk, A. Sigourney, L. Tamara, CPEX Real Estate

The property sold for $1.3 million, or $250 per square foot. The price represents a capitalization rate of 5.3 percent and a gross rent multiple of 13.4.

336 East 117th St

5-story apt. bldg, 10 units total

n/a / K. Zamir, R. Abudi, GFI Realty

n/a / Kobi Zamir, GFI Realty

The property sold for $1.18 million.

1164 Greene Ave (Brooklyn)

Development site

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

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

The property sold for $1.1 million.

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

109-113 West 57th St

Comm. bldg

JDS Development Group / n/a

Meridian Capital Group / n/a

A $230 million loan was provided for the acquisition of the property. The one-year, interest-only loan features a fixed rate and two six-month extension options. As part of the deal, JDS Development Group, together with partner Property Markets Group, also recapitalized and consolidated its existing development site at 105-107 West 57th Street.

112-126 East 128th St and 107-129 East 126th St

2 apt. bldgs, 412 units total

Tahl Propp Equities / Centerline Capital Group

n/a / n/a

A total of $91.9 million in financing was provided for the properties.

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Financing continued Address

Size

Borrower / Representative

Lender / Representative

Notes

Financial District portfolio

Development site

Lightstone Group / n/a

Banco Inbursa SA / n/a

A $43 million construction loan was provided for a luxury residential development, the Wall Street Journal reported. The properties are located at 112, 114, 116, 118 and 120 Fulton Street and include air rights to 41 and 43 John Street, 80, 86 and 88 Nassau Street, 15 Dutch Street and 122 Fulton Street.

301 East 64th St

143-unit apt. bldg

Regency East Apartment Corp. / n/a

NCB / n/a

A $7.4 million line of credit and a $1 million third mortgage were arranged for the building.

175 West 73rd St

146-unit apt. bldg

West 73rd Tenants Corp. / n/a

NCB / n/a

A $4.8 million first mortgage and a $1 million line of credit were arranged for the property.

3065 Sedgwick Ave (The Bronx)

73-unit apt. bldg

3065 Sedgwick Owners Corporation / n/a

NCB / n/a

A $2.3 million first mortgage and a $500,000 line of credit were arranged for the building.

60 Cooper St

60-unit apt. bldg

60 Cooper Street Corporation / n/a

NCB / n/a

A $1.3 million line of credit and a $700,000 third mortgage were arranged for the building.

541 Broadway/112 Mercer St

8-unti apt. bldg

NOH Realty Corp. / n/a

NCB / n/a

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

3515 Henry Hudson Pkwy (The Bronx)

77-unit apt. bldg

3515 Owners Corp. / n/a

NCB / n/a

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

Other Deals SL Green pays $386M for Stonehenge’s Olivia SL Green Realty has agreed to purchase the Olivia, a 333-unit apartment tower at 315 West 33rd Street, from Stonehenge Partners for $386 million, Crain’s reported last month. Stonehenge, led by Ofer Yardeni and Joel Seiden, completed the 492,987-square-foot, 36-story building last year. Its 270,000 square feet of commercial space currently houses a movie theater, two office suites, retail stores and a parking garage. “We see this acquisition as a great opportunity to expand our multi-family investment platform at a time when the New York City residential market is strong,” SL Green President Andrew Mathias said in the statement. (The deal was announced after the deadline for the Deal Sheet.)

Baker Botts re-ups 104K sf lease at 30 Rock Global corporate law firm Baker Botts is holding on tight to its 104,000 square feet at Tishman Speyer’s 30 Rockefeller Center, the New York Post reported. The firm’s 10-year lease will continue to cover the 43rd, 44th and 45th floors. Rents for the space started at $80 per square foot. The firm paid $140 per square foot in 2008 for an expansion into part of a floor, the Post said, citing CompStak. Tishman Speyer represented the building in-house, while John Nugent and Andrew Sussman of CBRE represented Baker Botts, the newspaper said. (The deal was announced after the deadline for the Deal Sheet.)

Spanish hotel chain starts work on West 46th Street project

Shake Shack plants a flag in Dumbo with Two Trees lease

Extell angling to convert Park Avenue Christian Church annex

Danny Meyer’s Shake Shack will open a new location a stone’s throw from Brooklyn Bridge Park at 1 Old Fulton Street in Dumbo in mid-2014, Crain’s reported last month. The popular burger chain will set up shop in a 3,200-square-foot Two Trees Management property that was formerly a bar and restaurant. Two Trees asked $125 per square foot for the space, Crain’s reported. The broker representing the tenant was not indicated. (The deal was announced after the deadline for the Deal Sheet.)

Extell Development is in contract to acquire the annex site of Park Avenue Christian Church, with plans to convert this section of the Upper East Side building into residential units, The Real Deal reported last month. Only the annex site at 1010 Park Avenue on the corner of East 85th Street, and not the church itself, will be converted, despite a previous report that the religious building was part of a planned conversion. No changes will be made to the former, a source familiar with the project told The Real Deal. (The deal was announced after the deadline for the Deal Sheet.)

Fulton Halsey buys Slave Theater in Bed-Stuy for $2.1M The historic Slave Theater in Bedford-Stuyvesant sold for $2.1 million to the Fulton Halsey Development Group, a developer who may be planning to convert it to luxury condos, the New York Daily News reported last month.

The Rev. Samuel Boykin, who is managing the estate of the shuttered building’s former owner Judge John Phillips, told the News the historic building definitely will not remain a theater. After Phillips died in 2008, his relatives put the building up for sale to pay off more than $1.5 million in taxes and other debts, the paper said. (The deal was announced after the deadline for the Deal Sheet.)

Deadline nears for Solow’s $4B plan to build on vacant lot

Gem developer plots new venture for Midtown hotel corridor Gemini Real Estate Asset Management, the developer of the Gem and Jade hotels Downtown, has filed plans to build a 19-story Fashion District hotel at 36 West 38th Street, according to Department of Buildings records.

Gemini, a commercial investor and developer, filed the plans, which call for a 43,342-square-foot property with 114 rooms, at the end of July, the data show. The site, between Fifth and Sixth avenues, is directly across the street from another prospective hotel site at 25-27 West 38th Street, which is slated to be developed by Morris Moinian’s Fortuna Realty Group.

Northwood pays $150M for FiDi office tower

RIU Hotels & Resorts, the Mallorca-based hotelier that purchased a development site at the corner of West 46th Street and Eighth Avenue a year ago, has begun work on the multi-parcel site, Crain’s reported last month. The company paid over $100 million for the location at 301 West 42nd Street, which includes an adjacent lot on Eighth Avenue that remains vacant, as well as one to the west.

The finished product is to be a 600-room, approximately 300,000-square-foot tower, according to previous reports cited by Crain’s.

The clock is ticking for billionaire developer Sheldon Solow and his long-dormant, six-acre lot between East 38th and East 41st streets on First Avenue. He could lose his permits and public approvals for a $4 billion project if he does not build a foundation for the office building or one of several apartment towers by November, the New York Times reported last month. His development team regrouped in May to discuss starting work, but they have not met again since, unnamed executives told the Times. The parcel is the larger of two plots totaling nine acres overlooking the East River that Solow bought in 2005 from Con Edison for $630 million.

Vornado pays $278M for 655 Fifth Avenue stake

Splendid joins J. Crew, Barneys in Cobble Hill

Adler’s fashion-friendly 550 Seventh adds engineering firm

Vornado Realty Trust is set to acquire a majority interest in 655 Fifth Avenue, a 57,500-square-foot retail and office property at the northeast corner of 52nd Street, the real estate investment trust said last month. Vornado will nab approximately 92.5 percent of the property for $278 million, with the other 7.5 percent staying in the hands of Madison Capital, according to the release. The deal is expected to close in the fourth quarter, according to the release. High-end designer Ferragamo has leased space at the building, including 50 feet of frontage on Fifth Avenue, for its flagship store through 2028. (The deal was announced after the deadline for the Deal Sheet.)

Splendid, the Los Angeles–based clothing chain, has inked a long-term lease on Court Street in Cobble Hill, becoming the latest in a string of national retailers to sign on to the neighborhood, The Real Deal has learned. The clothier will be setting up shop with 1,100 square feet in the ground floor of 142 Court Street, at the corner of Pacific Avenue, in the next several months, with a plan to be up and running in time for the holiday shopping season. Evan Schuckman of Schuckman Realty, who is representing both the tenant and building owner, declined to disclose the length of the lease, describing it only as “long term.” (The deal was announced after the deadline for the Deal Sheet.)

Engineering firm Simpson, Gumpertz & Heger signed a seven-year, 11,695-square-foot lease for its new headquarters at the Adler Group’s 550 Seventh Avenue last month, according to the Kaufman Organization, which manages the building. The firm, which specializes in rehabilitating building enclosures, is taking at least one full floor at the 23-story, 250,000-square-foot Garment District building. The asking rent for the space was $48 per square foot. Michael Heaner and Grant Greenspan of Kaufman represented Adler, while Jamie Katcher of Cushman & Wakefield represented the engineering firm. (The deal was announced after the deadline for the Deal Sheet.) TRD

80 2009 www.TheRealDeal.com 102July September 2013 www.TheRealDeal.com

Northwood Investors, the owner of the New York Palace Hotel, has paid $150 million for an office building at 100 Broadway in the Financial District, the New York Post reported last month. The 24-story, 380,000-square-foot tower was built in 1897 and sold for a shade under $400 per square foot. The seller was a joint venture headed up by Meadow Partners and Madison Capital. Asking rents at the building are in the high $30s, and the occupancy rate is just under 90 percent, according to the newspaper. The deal was brokered by Brookfield Financial’s Chris Wilson. (The deal was announced after the deadline for the Deal Sheet.)

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Development updates CONSTRUCTION UPDATE

Midtown

Baccarat Hotel & Residences New York 20 West 53rd Street The 50-story hotel and condominium project has topped out. Developed by Tribeca Associates, the building contains 61 homes: one- to four-bedroom units ranging from 934 to 4,545 square feet, and Baccarat a 7,381-square-foot, five-bedroom duplex penthouse. Prices range from $3.5 to $60 million. Building amenities include an outdoor terrace, indoor pool and fitness center. Contact: www. baccaratresidencesny.com.

LEASING UPDATES

Dumbo

30 Washington 30 Washington Street Two Trees Management Company’s 94-unit rental building is now 81 percent leased.

Monthly rents for the project’s one-bedrooms start at $3,325, and two-bedrooms start at $4,200. Units are sized from 550 to 1,000 square feet. Amenities include a gym, children’s playroom and roof deck. Contact: www.30wash.com.

Long Island City

Williamsburg

4545 Center Boulevard

53 Broadway

The 41-story, 820-unit rental building, developed by TF Cornerstone, is now more than 50 percent leased. Prices start at $2,155 for studios, $2,800 for one-bedrooms, $3,875 for two-bedrooms and $5,390 for three-bedrooms. Amenities include two tennis courts, a volleyball court, dog run, sundeck, children’s playroom, bicycle storage, indoor parking and a 24-hour concierge and valet. Contact: www.4545centerblvd.com.

Leasing has started at the 72-unit rental project, developed by Adam America Real Estate. Monthly rents start at $2,215 for studios and $4,246 for two-bedrooms.

Amenities include a residents’ lounge, game room, fitness center and sundeck.

Aptsandlofts.com is the agent. Contact: www.53broadway.com.

Upper West Side The Larstrand 227 West 77th Street

The Larstrand

Leasing has started at the 20-story, 143unit rental building developed by Friedland Properties. Monthly rents for the studio, one-, two- and three-bedroom apartments range from $3,100 to $16,500. Building amenities include a rooftop lounge, 24hour concierge service, fitness center, yoga studio, screening room and children’s playroom. Rose Associates is the agent. Contact: www.thelarstrandnyc.com.

508 West 24th Street

shared courtyard with gas grill. Stribling is the agent. Contact: 508w24.com.

Park Slope

SALES UPDATES

Park Union 910 Union Street

364 Union Street

The seven-story, 15-unit condominium by American Development Group is now 100 percent sold. The one-, two- and three-bedroom units range in size from 735 to 1,505 square feet and in price from $799,000 to $2.15 million. Halstead Property is the agent. Contact: www.parkunionps.com.

Carroll Gardens Sales have launched at the five-unit boutique condo conversion developed by East River Partners. The building has four three-bedroom, 1,370-square-foot units and a 2,200-square-foot duplex with private garden. Prices range from $1.53 million to $2.09 million. Halstead Property is the agent. Contact: www.364union.com.

Chelsea 508 West 24th Street The 10-story, 15-unit boutique condominium, developed by Tamarkin Co., is 40 percent sold. The building’s two- and three-bedroom units range in size from 2,000 to 3,300 square feet, and in price from $3 to $12 million. Amenities include a doorman, video security system, fitness room, private storage, bicycle storage and

Tribeca The Leonard 101 Leonard Street The 12-story, 66-unit condo conversion by Bizzi & Partners is now 80 percent sold. The one-, two- and three-bedroom residences range in size from 835 square feet to 1,963 square feet, while three- and four-bedroom penthouses start at 2,666 square feet. Prices start at $1.425 million. Douglas Elliman is the agent. Contact: www.theleonardtribeca. com. Compiled by Andrea Cetra

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Two-bedroom, two-bath, 1,339-squarefoot unit in a new construction condo, the Veneto; apartment has laundry and eatin kitchen; building has concierge, children’s playroom, private storage and onsite garage; common charges $1,246 per month; taxes $313 per month; asking price $2.2 million; three weeks on the market.

(Brokers: Eric Hantman, Prime Real Estate New York City; David Cooper, Douglas Elliman) “I met the sellers years back — we have mutual friends. They were selling the unit because they were moving to the suburbs. Originally it was being sold as part of a combination with two other units, but an offer came in for this specific unit individually. It is a beautiful corner unit and was kept in immaculate condition. The buyer was attracted by the condition of the apartment, and added touches such as electronic blinds and built-in speakers. It was a cash deal.” Eric Hantman, Prime

Lenox Hill $1.5 million 333 East 69th Street, Apt. TH10

Two-bedroom, one-and-a-half bath, 1,300-square-foot duplex in a postwar coop building, the Premier; unit has central air, marble baths and terrace; building has 24-hour doorman, concierge, roof deck, storage facilities and live-in super; maintenance $2,941 per month; asking price $1.5 million; four weeks on the market. (Brokers: Gillian Friedman; Sotheby’s International Realty; Kay Moon, Bond New York) “My buyers [were] browsing the market for six months. They were looking to purchase a home in Manhattan and retire. The wife wanted something unique and

different, perhaps with some outdoor space.

She saw over 100 properties and didn’t find anything she liked! But they became very serious once they found a buyer for their house in Long Island. I took them out twice and they made an offer on a property, but they lost [the deal] because their offer was just a little too late. As soon as this listing came on the market I knew it was going to be their new home. They loved it and I encouraged them to make an offer at full asking price. It was accepted, but the seller’s broker insisted that they [agree to no mortgage contingency.] The buyers considered it, but ultimately decided they couldn’t accept the terms. After some back and forth, the seller finally agreed to our terms and it became clear that the request had been made on behalf of the listing broker’s firm, not the sellers themselves. My buyers were so happy when it finally closed.

They were ready to celebrate the summer in the city.” Kay Moon, Bond

Upper East Side $8.1 million 255 East 74th Street, Apt. 28A Five-bedroom, four-and-a-half bath,

3,495-square-foot unit in a new construction condo; Casa 74; apartment has Central Park views, floor-to-ceiling windows, eat-in kitchen and soaking tub; building has doorman, concierge, children’s playroom and outdoor garden; common charges $4,012 per month; taxes $624 per month; asking price $8.9 million, 29 weeks on the market. (Brokers: Victoria Schtainer, Douglas Elliman; Asher Alcobi and Meirav Gavrielov, Peter Ashe Real Estate) “I had been working with the buyers off and on for years. They had been looking for a three-bedroom, and then when the family grew, they needed a four-bedroom. They originally wanted to be on Park, Madison or Fifth Avenue, but they eventually broadened the search. [This apartment] was a little bit out of the area that they had in mind, but once I convinced them to see it, they liked the layout and the views. It had been available for a few months when we put an offer in, but sellers always think their apartment is the best in the world, so it was difficult to convince them they had to come down to the market price. They [also] had seller’s remorse — they were just reluctant to release the place because they loved it so much. But persistence pays. [We just had] to keep following up.” Asher Alcobi, Peter Ashe

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from page 65

the sale because Bistricer had a “troubling history.” Others quickly piled on, a fact that Bistricer attributes largely to troubles at another large housing complex: Stuyvesant Town, where Tishman Speyer’s plan to convert rent-regulated units to market-rate units famously backfired.

“The Starrett City sale came on the heels of Stuyvesant Town [and] politicians were concerned about another large complex converting to free-market rents,” Bistricer said.

When asked if the family was glad federal officials blocked the deal, in light of the fact that Tishman eventually lost Stuyvesant Town, J.J. said they don’t dwell on it.

“We are the type of investors [who] don’t look backward,” he said. “There is no point in speculating.”

Indeed, despite being pummeled in the press over Starrett City, Bistricer kept quietly negotiating other deals.

In 2007, after the Starrett City deal fell apart, Bistricer had the inside track at the Brooklyn Hospital Center site at 123 Parkside Avenue, which was being sold through a bankruptcy auction. He was chosen by the court to make an initial “stalking horse bid” of $15 million for the property, and ultimately partnered with Chetrit on the winning $15.6 million bid. Chetrit did not respond to a request for comment.

“Two smart real estate [investors] decided, ‘Why not join forces?’” J.J. said.

NGKF Capital’s David Noonan, who was involved in brokering the Brooklyn Hospital auction as well as two of Bistricer’s other deals, said the investor moves quickly.

Bistricer “is a guy who can walk into a building and decide he is going to buy it and can execute a contract in a

matter of days,” Noonan said.

Living on the edge Following a three-year quiet spell during the recession, Bistricer has gotten aggressive.

In Bistricer’s first post-recession deal, in September 2010, he partnered with Manhattan-based Rieder Holdings. The partners paid $72 million for the 197-unit apartment building 752 West End Avenue on the Upper West Side, which they initially began converting to condominiums. Instead, though, they changed course, and flipped the building in June for $120 million. “We got a very good price,” Bistricer said. “That was the only time we actually did that — sell in the middle of the sales process.”

But Bistricer’s main partner these days is the extremely press-shy Chetrit Group, which he’s partnered with on seven of his last eight deals.

Despite all of the business they’ve done together, Bistricer said there is “not such a formal structure” between the two companies.” He would not elaborate on their division of responsibilities, but J.J. said: “We think alike. We come from a similar background — a family business — we invest our own money, we are not syndicators. We work on deals together and we enjoy it.”

The acquisitions they’ve made are mostly commercial buildings ripe for conversion to residential condos (see accompanying chart on page 65).

That includes 123 Parkside, where Bistricer and Chetrit last year filed new building plans for a design by architect

Karl Fisher, city records show. The city’s Department of Buildings approved the plans in April, and the developers last month filed for the demolition of one of the buildings.

J.J. said the firm plans to begin marketing the first phase of the project, 119 rental apartments, later this year.

The two also teamed up to redevelop the Hotel Chelsea in 2011. But after battling with tenants there, they reportedly sold it to the boutique hotel brand King & Grove last month.

Chetrit and Bistricer’s most high-profile deal, of course, is the Sony Building, which they bought for $1.1 billion in March and plan to convert to a hotel and condos, with retail at the base.

Real estate professionals say office-to-condo conversions are difficult because the interior of the building must conform to an entirely different layout. And the Sony Building, which is a massive 850,000 square feet, is as tricky as they come.

And in a deal that recalls BellTel’s pioneering spirit, Bistricer and Chetrit are also developing a mega residential project in a remote section of Greenpoint. The duo paid $25 million for a site at 77 Commercial Street, where they are planning to build a 300,000-square-foot apartment tower. They’re also reportedly considering buying the parcel next door.

King predicted that Bistricer will get the same results in Greenpoint that he did in Downtown Brooklyn. “The stuff that is at the edge today,” he said, “will be in the thick of it in three years.” TRD

Closing the curtains on high-profile projects

Much to brokers’ dismay, developers keep listings information close to the vest at top new condos

By Adam Pincus ay you’re a Manhattan developer, and you are trying to convince savvy apartment shoppers to buy in your building — at prices per square foot that are up to five times the average. A degree of secrecy, some say, is the best strategy.

Indeed, the developers of the city’s two most audacious residential skyscrapers — 432 Park Avenue and One57 — are keeping the curtains drawn by using their own in-house brokers and keeping their listings out of the public eye.

Neither CIM Group and Macklowe Properties — the sponsors of 432 Park — nor Extell Development — which is building One57 — has released listings on databases, such as the Real Estate Board of New York’s Residential Listing Service (RLS), On-Line Residential, or consumer-facing sites like StreetEasy. And neither has hired third-party brokerages to market their buildings.

While this lack of transparency is not necessarily evidence of a trend, it underscores the surprising weakness of residential brokerages within the structure of REBNY compared to property owners.

REBNY’s bylaws require brokers — including those hired by developers to sell entire buildings — to list their units on the RLS, typically within 24 hours. The rule was made to encourage co-brokering and foster transparency. But REBNY’s rules do not require owners who market their own properties to do the same.

“Developers, like any individual sellers or owners of property, are not bound by RLS or UCB [REBNY’s Universal Co-Brokerage Agreement] rules and are free to choose how they market, sell or rent their properties and how they circulate information to brokers and the public,” REBNY said in a statement.

S

Air of mystery While there are exceptions, virtually all developers that han108 September 2013 www.TheRealDeal.com

432 Park Avenue

dle their own sales list their units publicly. After all, it’s risky to not promote a product.

But at high-profile projects like 432 Park and One57, it may make sense to maintain an air of mystery. In addition, handling marketing in-house is likely boosting developers’ bottom line.

“The commissions are very significant and we wanted to keep it,” Extell’s Gary Barnett told TRD earlier this year, referring to One57. “And we wanted a little better control of the team.”

Extell, Macklowe and CIM declined to comment for this story.

In a new development condo, the sponsor typically budgets 4 to 6 percent of the total sell-out price for broker commissions. At those two projects, each expecting to sell out for more than $3 billion, developers would expect to pay commissions of between $120 million and $180 million.

While $100 million here and there may seem like rounding errors in such mega-buildings, it’s a big chunk of the potential profit, normally pegged at about 25 to 30 percent of the revenue. Bringing sales in-house could save about 15 percent of the gross profit (or in these cases, $45 million to $90 million).

But by not publishing the listings, developers are weakening the value of the buyer’s broker. That’s partly because many buyers are foreign and don’t know local brokers, and partly because brokers have no inside information on sales and prices.

In some cases at less publicized projects than these, developers are at the mercy of brokers, who can direct clients to and away from projects, sources said.

“If you turn the brokerage community against your project, you are screwed. You want as many brokers as possible,” said Cary Tamarkin, founder of development firm Tamarkin Company.

An inside job Bringing sales in-house is hardly reinventing the wheel. After hiring Sunshine Group, now known as the Corcoran Sunshine Marketing Group, to manage sales at three projects starting in the 1990s, Related launched its own sales division.

Extell has hired Corcoran Sunshine to handle sales in many of its projects.

So when it hired several Corcoran Sunshine brokers to work in-house instead at One57, it came as a surprise. Although Corcoran is not marketing Barnett’s project, it was involved in strategy, said Pamela Liebman, the brokerage’s CEO. And she’s hoping some of the former Corcoran agents will return to the fold.

“Gary is really the largest developer in New York City,” she said. “He has the right to choose to market in the way he sees fit. We certainly would not do that for every developer.”

Similarly, Macklowe has hired Corcoran Sunshine in the past. But in 2011, he formed Macklowe Properties Sales to market projects like 737 Park Avenue, 150 East 72nd Street and 432 Park Avenue himself.

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Open houses

from page 18

said Lisa Strobing, a broker at Coldwell Banker Bellmarc.

“The buyer is so nervous about getting [the property], they don’t want to wait three days.”

But many sellers’ brokers have become strict about private showings. Tager said he strategically avoids showing his listings before the first open house, which helps build demand and can drive up prices.

“I’ll get calls all week [before the first open house] saying, ‘Oh, I can’t make it Sunday’ or ‘I want to see it before,’ ” he said. “I’ll say no, because I want the mystique.”

That tactic can rub some brokers the wrong way, however. Lattanzio said that he once asked a listing broker if his client could see a property just 15 minutes before an open house was scheduled to begin, and the agent refused.

“I was really surprised,” Lattanzio recalled. “I don’t think that’s good customer service.”

Maximizing exposure In the face of these new circumstances, brokers said they have to be more strategic about planning and scheduling open houses.

Tager said his strategy is to list a property on Monday and schedule the first open house for Sunday, which helps guarantee a good turnout. Getting the biggest possible crowd at the first open house is important, he said, because it maximizes the property’s exposure and helps generate the highest possible offers. And in today’s fast-moving market, there might not be another open house before the property goes into contract.

In fact, if a listing broker schedules a second open house, it can raise questions about the listing’s price and desirability.

“Sometimes people associate open houses with [a list-

ing] hanging on the vine,” said Frances Katzen, a broker at Douglas Elliman. She said she now makes sure not to do more than two open houses per month at each of her listings “so it doesn’t look like a desperate sale.”

And with buyers making decisions so quickly, it’s more important than ever that an apartment look impeccable before the open house starts, said Katzen.

“A buyer makes a selection in 30 seconds,” she said. “It’s like dating.”

But listing brokers have it easier in some ways. Now that open houses are so crowded, many brokers have shortened the length of the standard two-hour open house down to just an hour and a half. And when it comes to prepping for open houses, spreading the word is easy.

“I used to send out email blasts and really pump it,” Tager said. “Now I just throw it up on the website.” TRD

Le Beau Chateau, where she never set foot. (Hedge fund manager Boaz Weinstein ultimately paid $25.5 million for the 12th floor of 907 Fifth Avenue, while most of the eighth-floor units sold to private equity manager Frederik Iseman. Part of the eighth floor is currently on the market for $6.5 million.)

There’s no question that Huguette was unusual. After Anna died in the 1960s, the younger Clark withdrew from society. In the early 1990s, when she was already living in a hospital room, she recreated her mother’s bedroom in her own apartment, spending $7 million in today’s cur-

rency to replicate the heavy oak furniture and Louis XV mantelpiece. She could have had the furniture moved, the authors explain, “but then, well, the furniture would no longer be in [Anna’s apartment].”

“During that time,” they continue, “Huguette never walked into either bedroom, never spent a night there again, seeing the results of the renovation only in photographs brought to her hospital room.”

And why did she close those hospital blinds on her palatial co-ops and country estates? The answer, frustratingly, is yet another one Clark has taken to her grave. TRD

en bids were submitted to handle the approximately $2.4 billion project, which is expected to grow the terminal from 835,000 square feet to 1.3 million. The authority selected four finalists in July, including high-profile companies like Tishman Construction, which is partnered with Morgan Stanley, Wells Fargo and Citigroup, among others. The authority has not set a deadline for the redevelopment, but expects it to be finished by 2021.

New airport retail space is often snapped up as soon as it becomes available.

“It’s very, very competitive — much, much more than the street,” said Plowman.

As a result of this competition, airport retail in New York

has weathered the market better than other city shopping districts.

The city’s overall retail vacancy spiked to more than 12 percent in 2009, according to Douglas Elliman. The current rate stands at around 5 percent, according to Integra Realty Resources. Meanwhile, vacancy rates at the airports have run close to or at zero for the last four years, operators and owners said.

In LaGuardia’s Terminal B, for instance, the only two open spaces have leases signed, according to Lillian Tan, general manager of MarketPlace. Over the past few years, Tan said, “we have had almost zero vacancy.”

And even with several five- and seven-year leases expiring this year, she added, “we don’t anticipate a problem filling the space.” TRD

Last year, for example, the Canada Pension Plan Investment Board reportedly bought a 45 percent stake in the 390,000-square-foot Midtown office building 10 East 53rd Street from SL Green. The pension fund also has a 45 percent interest in 1211 Sixth Avenue, which it acquired from SL Green in 2010. Ivanhoé Cambridge’s stake in 1411 Broadway is also a 49 percent share.

The partial ownership interest model is also attractive, sources said, because partnering with a local player with knowledge of the New York City market can increase a project’s chances of success.

Another way for foreign entities to invest in New York real estate is to become lenders. Last month, for example, Mexico-based Banco Inbursa SA provided a $280 million construction loan to the Lightstone Group for its planned mixed-use project at 114 Fulton Street in Lower Manhattan.

And the Bank of China has also been active: so far this year,

it loaned $600 million to the Chetrit Group for its $1.1 billion purchase of the Sony Building at 550 Madison Avenue, and $498 million to an affiliate of Milstein Properties to refinance and improve its 1.1 million-square-foot office tower at 335 Madison Avenue.

Michaels said lending can often be the easiest and fastest way for a foreign investor to avoid high taxes and risk.

“It takes time to develop a partnership relationship,” he said. “It takes less time to develop a debt relationship.”

Still, American tax policy remains “a hurdle” for international investors, Brookfield’s Wilson said, noting that the proposed Real Estate Investment and Jobs Act would reform the law, reducing the taxes paid by foreign entities buying real estate here.

“If Congress were to change the rules, then I would expect to see a lot more concentration on the U.S.,” he said. “A door would open.” TRD

Huguette Clark from page 30 Shortly after W.A. died in 1925, Huguette and her mother moved into a 5,000-square-foot apartment at 907 Fifth Avenue that cost $12,000 a year to rent, or $150,000 in today’s dollars. Anna paid a piddling $63,000 (or $540,000 today) to purchase the unit when the building went co-op in the 1950s.

Eventually, Huguette would also own two units on the eighth floor, as well as the family’s 10,000-square-foot California estate, Bellosguardo (she preserved it, down to the 1933 Cadillac limousine parked in the garage) and a 14,000-square-foot Connecticut mansion called

Airport retail from page 42 $1,250 in 2009 and 2010. In 2012, the average was $1,435.

Moreover, in 2012, about 27 percent of Terminal B tenants averaged more than $5,000 a square foot in sales. MarketPlace noted that those figures are “considerably higher than malls.”

And the amount of this retail is growing. LaGuardia had 91,842 square feet at the end of last year, up from 77,542 the year before. The airport’s Terminals C and D, which are dominated by Delta, have undergone renovations, including a 600foot connector opened in December 2012, with retail kiosks.

JFK, meanwhile, saw its retail space jump to 221,865 square feet in 2012 from 219,938 four years before. And, Newark’s space increased to 158,313 square feet from 146,383.

In addition, the Port Authority is evaluating bids to redevelop and operate LaGuardia’s Terminal B. Nearly a doz-

Recession-proof

Sovereign wealth from page 53 a joint venture with the pension fund TIAA-CREF, in a deal that also included properties in Boston and Washington D.C.

A new strategy

In the past, international entities generally avoided making direct investments in U.S. real estate, due in part to the Foreign Investment in Real Property Tax Act of 1980, which requires foreign corporations selling U.S. real estate to pay taxes of up to 35 percent on the profits. As a result, most foreign investors opted to invest through mega-funds or REITS, which allows them to pay lower tax rates.

But some international investors got burned by investments made through large funds during the downturn, sources said, and now prefer to keep more control of their assets. Plus, if they buy a minority stake in a building — 49 percent or less — they can avoid higher tax rates, which are triggered only when a foreign entity has the controlling stake in a U.S. property.

110 September 2013 www.TheRealDeal.com

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Zillow

from page 36

Questionable Zestimates Zillow is a widely recognized brand throughout the United States — the website had 61.3 million unique users in July, the company said. But Zillow has failed to catch on among users in Manhattan.

While StreetEasy is widely used by both real estate brokers and home-seekers in the Big Apple, “no one uses Zillow” in New York City, said Andrea Sedwick, an agent at Manhattan-based NestSeekers International.

Zillow’s CEO openly acknowledged the company’s lack of penetration into the New York market.

“StreetEasy has won New York,” Rascoff said. “There’s no question that StreetEasy beats Zillow.”

Brokers said that’s largely because Zillow’s popular “Zestimates” — which use an algorithm to estimate property values — are often wildly inaccurate for New York City homes.

Zillow has data for 110 million U.S. homes, and Zestimates (both for sales and rentals) on 100 million, the company said. Of those, 1.6 million homes are in New York City, said Katie Curnutte, director of communications for Zillow. Zestimates factor in comparable sales of nearby homes, as well as features like location, lot size, square footage, number of bedrooms, tax assessments and transaction history.

But the algorithm doesn’t take into consideration the nuances of the Manhattan market, such as views, ceiling heights, renovations and elevators, said Town Residential’s Nicole Oge. “It’s great in theory, and it’s clearly working outside New York City,” Oge said. But here, “there are too many variations.”

Or, as Jochinke put it: “Their ‘Zestimate’ is laughable for Manhattan.”

Dragos Mario Popovici, a sales manager at the Manhattan brokerage Miron Properties, said his firm is marketing a two-bedroom duplex at 125 West 21st Street that’s listed for $3.5 million, and that “we are confident will sell for asking or slightly above.” But the “Zestimator” has it valued at $2.6 million.

“Based on that price, the unit would be a giveaway in today’s market,” Popovici said.

Elliman powerbroker Leonard Steinberg agreed, citing the Zestimate of $1.8 million for Apartment 4D at condominium 40 Bond in Noho. The unit is not currently on the market, but if it were to sell, it would go for “conservatively, north of $3.5 million,” Steinberg said.

Meanwhile, Apartment 6 at 43 Great Jones Street has a Zestimate of $406,502, which Steinberg called “hilarious,” adding: “2,300 square feet in Noho? More like $2.5 million to $2.65 million. That’s a disaster of misinformation.”

In some cases, Zestimates are so far off the mark for New York that they’ve caused confusion among homeseekers from out of town, brokers said.

Jeffrey Schleider, managing director at Miron, said he’s had out-of-towners contact him about apartments after seeing “a Zestimate that was significantly below the asking price.”

Of the 347,900 Manhattan homes with Zestimates, Zillow claims that 54.8 percent are within 10 percent of the eventual sales price. And the company noted that its Zestimates are not appraisals and should only be used “as a starting point to determine a home’s value” along with other data and with a consulting agent.

Still, until now it was nearly impossible for Zillow to compete with StreetEasy and other homegrown companies specifically tailored to apartment-living.

“It’s very hard to dominate like StreetEasy has” in New York, Miller said, because other companies “are not set up for vertical housing markets.”

Clearly, that fact has not escaped Zillow’s notice.

StreetEasy will remain a distinct company but will be integrated into Zillow’s national online residential database, the companies said. Spokespeople said plans are underway for the integration of the two sites, though they did not comment specifically on whether StreetEasy’s data will be used to make New York Zestimates more accurate.

But the company did say it plans to expand StreetEasy’s office at 13 Crosby Street and move the Zillow team in. Zillow has had one Manhattan office, at 315 Madison Avenue, where it employs mainly sales staffers, for six years.

Zillow — which went public in July 2011 and makes the bulk of its profits from agents who pay to be featured on the website — has seen its stock price shoot up from about $36 a share last August to more than $94 a share last month, though its stock dipped slightly on the heels of the StreetEasy announcement. The company also announced a $412 million share sale.

In the long term, the acquisition will likely have a positive effect on Zillow’s stock price, Keller Williams’ Jochinke said.

“There is great opportunity to increase revenues,” he wrote in an email. “Zillow should essentially be able to drive their current Manhattan/New York City traffic to StreetEasy, and more eyeballs equal the ability to generate higher referrals to advertisers.” TRD

In 2003 and 2005, the city rezoned Fourth Avenue for residential development, though the change was criticized by many for failing to require developers to include ground-floor retail. In 2011, the city created a special commercial zone to help rectify that, but a more widespread residential rezoning for Gowanus is still being debated.

Marks noted, however, that there are properties available to the south, in Sunset Park, where a kitchen supply center at 75 19th Street sold for $19 million last month. The site is not an obvious conversion site, Marks said, but given the lack of inventory, “who knows?” he said.

smaller tech and creative tenants there.

“A lot of this commercially zoned stuff will be converted into offices, similar to what happened in Dumbo,” he noted.

Industrial from page 72 warehouses,” Elghanayan said, although he added that Rockrose’s portfolio is “too concentrated” in Queens, so the firm won’t be buying there anytime soon.

Larger industrial sites in the area include 3934 43rd Street, a plot currently occupied by a welding machine and supplies manufacturer, and 3915-3935 Skillman Avenue, currently an industrial garage. Neither appears listed for sale currently, but they have the highest assessed prices for industrial sites in the area, according to real estate data provider PropertyShark.

Gowanus The divider between Park Slope and Carroll Gardens, Gowanus is dominated by former (and current) industrial sites. The Superfund status of the Gowanus Canal, which runs through the neighborhood, has long held the neighborhood back. But that’s now changing.

The development of a Whole Foods grocery store — a clear marker of gentrification — is rising on the five-acre site that was once used by the Coignet Stone Company as a concrete factory.

Other industrial sites in prime strips of Gowanus are 58 Second Avenue, currently an importer’s warehouse, and 124 9th Street, a brick warehouse that appears vacant. Neither is formally on the market.

And Lightstone’s planned mixed-use development with 700 rental apartments, at 363-365 Bond Street between Carroll and 2nd streets, next to the canal, was approved by the City Council in March despite significant pushback from the local community.

At the moment, a very limited number of industrial sites are available in the neighborhood, said Dan Marks, a vice president at Terra.

“Owners are either waiting for the rezoning conversation to start again,” or hope to continue operating commercial enterprises in their manufacturing-zoned projects, Marks said.

112 September 2013 www.TheRealDeal.com

Brooklyn Navy Yard The area surrounding the Brooklyn Navy Yard — which is located north of Clinton Hill, between the Brooklyn Queens Expressway and the water — is in the midst of a transformation.

The former shipyard and its neighborhood are included in Mayor Michael Bloomberg’s “Tech Triangle” initiative, a city-funded push to provide affordable office space for startup tech firms.

Steiner Studios — which already owns the massive studio space within the Navy Yard — is continuing to invest in the area.

The firm recently purchased an additional 150,000 square feet of space for production companies and soundstages at nearby 25 Washington Avenue. “[The area] is a natural choice [for development] because it’s between Dumbo and Williamsburg,” said Reinertsen.

Available industrial sites in the area include 73 Washington Avenue, an 11,250-square-foot industrial “flex space” listed with Terra for $2.7 million. The unoccupied parcel is situated among produce wholesalers, storage facilities and parking garages. One thing the area has going for it is relative affordability — for both vacant land and former industrial buildings.

Cohen said some developers are creating office space for

South Bronx The Bronx is replete with industrial sites — some of which, such as the Stella D’oro bakery, have been redeveloped with great success.

The 162,000-square-foot factory that once brought smells of cookies and breadsticks to residents of Kingsbridge was redeveloped in 2011 as a shopping center, and is now 90 percent leased, said Joe Farkas, president of Metropolitan Realty Associates, the company that redeveloped the site.

In the coming years, the same neighborhood will be home to the revamped Kingsbridge Armory, where the city is planning a hockey rink and other sports facilities as part of a $275 million conversion.

Nearby, 3441 Kingsbridge Avenue, an 11,200-squarefoot former peanut factory, recently sold for $1.1 million, to an LLC, according to city records. Broker Michael Rao, of New York Commercial Realty Group, said the buyer intended to repurpose the space for offices, although according to LoopNet, the zoning would also allow residential. Brokers also point to opportunities in the Mott Haven area, along Third Avenue near the Major Deegan and Bruckner expressways.

CBRE’s Reinertsen is listing a 133,000-square-foot site at 101 Lincoln Avenue for $35 million. The parcel, currently the headquarters of Oz Moving, a moving company, looks over the Harlem River to Manhattan and has 800,000 square feet of buildable space, he said.

Sources also said that rezoning is easier in the borough, which is indisputably in need of development.

“The Bronx has been incredibly accommodating,” Farkas said. TRD

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Ruling class

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building Saxon Hall for $85 million.

“The younger generation is looking not to invest in the stable real estate like on the Upper West Side, where the returns are next to nothing, and which are completely tapped out in many cases,” he said. “We are looking for the up-andcoming areas.”

Meanwhile, this so-called Generation Facebook has ushered in the era of the casually dressed CEO. Like the social networking site executive, Mark Zuckerberg, Walentas is known for wearing hooded sweatshirts to work, in an industry that used to favor suits.

Walentas said he began wearing hoodies partly because he was spending so much time at construction sites. But there may be marketing upsides to his wardrobe, which he doesn’t change even when he meets with bankers.

“The combination of our principals being pretty casual and being in Dumbo … it kind of became what people knew us for,” he wrote in an email. “It was not at all planned. It just seemed appropriate.”

Stribling-Kivlan said she’s continued her mother’s practice

of wearing a suit coat every day, but often pairs it with slacks, as opposed to her mom, who was known for her Chanel suits.

“We look very different and dress very differently,” Stribling-Kivlan said.

“If you are showing a loft space in Bushwick, [the client] might be more comfortable if you have jeans on,” she said, adding that “the world has become much more casual.”

Old-guard wisdom With a critical mass of respected industry veterans simultaneously retiring, the industry risks losing institutional knowledge. Luckily the previous generation of industry veterans are not exactly lounging around on tropical islands.

For example, Related’s Ross, 73, who is staying on as chairman, will “work in his office until his dying day,” said Blau, though he’s less involved in daily management issues. Ross’s current role is as “a great visionary,” Blau said.

Similarly, Henry Elghanayan, who plays an active role at Rockrose, has no immediate plans to step down for good, sources say.

Scott Alper, 38, the principal of the Witkoff Group — which recently sold out 150 Charles Street, a 91-unit West Village condo — is in no rush to take over for company founder Steve Witkoff, even as he takes on more responsibility behind the scenes.

Alper, who was promoted to partner in 2005, has also been active in other major deals as of late, like the residential conversion of 10 Hanover Square, which was sold for $261 million, and his current undertaking, adding condos to the top of the Woolworth Building.

“All I did when I started was number-crunching,” he said.

“Now, I spend a lot of time on the design and development side,” he said.

Alper, who has worked alongside Witkoff since 1996, declined to elaborate on his behind-the-scenes role.

But Adam Spies, 38, a broker with Eastdil Secured who has worked on deals with him, told Crain’s this summer that he is formidable.

“He is methodical and detail-oriented,” said Spies. “He is the glue behind Witkoff.” TRD

Coldwell Banker from page 49 been in active negotiations with us, and we hope to complete these negotiations at the earliest possible time,” Binder said.

Hostile to outsiders But Coldwell Banker Bellmarc faces formidable obstacles.

The Manhattan real estate market has traditionally not taken well to outside brands, noted Rutenberg’s Purcell.

The New York market “marches to its own drum,” he said, in part because of several unusual features: unlike most other areas of the country, Manhattan doesn’t have a comprehensive Multiple Listings Service. And the majority of the homes here are co-ops, which can reject buyers without giving a reason.

On top of those nuances, New Yorkers take a certain pride in shunning chains like Olive Garden and Red Lobster, leaving them to the tourists, Purcell said. Manhattan “doesn’t care about national stores and chains and franchises,” he said.

That’s proved true for real estate brands as well.

Coldwell Banker Hunt Kennedy — which was founded in 1988 but became a Coldwell Banker franchise in 1996 — shuttered with millions of dollars in debt, sending its 214 agents to other firms across the city. And it wasn’t the only New York franchise to dissolve during the recession.

Century 21 New York Metro closed in November 2010, only four years after it was founded.

CBHK founders David Michonski and JoAnne Kennedy were both unavailable to comment on the reasons their firm went under. In a 2009 interview with TRD shortly before the firm closed its doors, Kennedy said that many New Yorkers “associate the Coldwell Banker logo with the suburbs.”

But Huskey, as well as various sources, said CBHK expanded too fast on the eve of the recession. Acquiring Charles H. Greenthal and several other companies, CBHK grew from 25 agents in 1996 to 250 in five offices less than a decade later.

“It has been principally a story of over-committing, overexpansion and overreach when you’re in a market that’s beginning to decline when going into the recession,” Huskey said.

Despite that cautionary tale, Bellmarc and AC Lawrence principals haven’t given up on big brands. In fact, when Century 21 New York Metro dissolved, AC Lawrence hired many of its agents, and took over the firm’s old office space

114 September 2013 www.TheRealDeal.com

at 228 East 45th Street.

Binder attributed CBHK’s failure to management and the recession rather than the brand name.

“It was not that the Coldwell Banker name was a problem or that it didn’t serve them well,” Binder said. “It’s that … their timing was bad.”

Coldwell Banker’s name and national presence will set Bellmarc apart from other firms in the city, the owners said.

“When you pitch an exclusive right now, one of the first things a seller wants to know is, ‘How are you going to expose my property?’ ” Bellmarc’s Friedman said. “We have such an enormous network, and affiliates in all these different countries, and one of most trafficked websites in the country.”

Binder is betting that the name will help him break into the higher-end Manhattan market. In particular, he hopes the new Coldwell Banker Previews division will give Bellmarc more international exposure, since Previews has its own website, where buyers can search for luxury properties worldwide. Binder said he also plans to open a number of new offices specifically targeted at the high-end consumer, although he didn’t say specifically when that would occur.

“Putting together a relationship with the rest of the Previews community is powerful,” Binder said. “It is something only people of a certain caliber will be a part of.”

Already, Binder said the company has been getting referrals from franchises in Asia and Europe, so many that he’s already set up a referral department, though he wasn’t planning to do that until later on. Binder installed Darla Delayne, formerly a sales manager at Bellmarc’s office at 16 East 12th Street, as director of referrals and relocation.

Ann Guttman, who was a managing director and top agent at CBHK, agreed that Coldwell Banker’s national networking events can indeed result in lucrative referrals, as long as agents take advantage of them. “You really need to work” the system, said Guttman, who is now at Keller Williams NYC. Purcell said it’s possible that this incarnation of Coldwell Banker will be the one that sticks.

“It remains to be seen how [Bellmarc] plays this out,” he said, “how they use the Coldwell Banker name, and does that name mean something to us in our marketplace.”

Room to grow?

Other real estate insiders were more skeptical, saying that Bellmarc has never really competed with the top firms in

the city, despite its size. At the time of TRD’s 2013 brokerage ranking, Bellmarc had only 115 exclusive sales listings, down 23 percent from the previous year, despite the fact that it doubled its agent count during that time, thanks to the merger with AC Lawrence.

Binder acknowledged that Bellmarc hasn’t grown much in some areas since the 1990s, when it began to focus on acquiring investment properties in addition to brokerage.

In recent years, Broxmeyer’s absence and the recession have compounded the situation.

“We pretty much were staying at a standard level of performance,” Binder said.

And he realizes that the Coldwell Banker name is a “tool, not a cure-all.”

Still, firm executives told TRD that they’ve already seen an increase in agents showing interest in the firm because of the Coldwell Banker brand. They said they are currently in negotiations with a number of well-known brokers to join the Previews division, though they declined to give specific names.

“The power of a franchise is having a strong brand and strong local operators,” Friedman said. “And if you put those two together, a franchise will be very powerful. If you have one without the other, it’s not going to work.” TRD C O R R E C T I O N S A N D C L A R I F I C AT I O N S In the August story “Manhattan’s biggest managing agents,” TRD incorrectly stated that Brown Harris Stevens had previously managed the condos at 50 Central Park South. In fact, BHS has never managed the building.

In an August story, “Red flags for real estate,” Green Street Advisors is described as a Manhattan-based firm. In fact, the company is based in Newport Beach, Calif.

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TEL: 212.219.0910 EXT.4004

Commercial market report

from page 24

firm to a smaller space in the building it’s currently in, but on more desirable higher floors. It was done to make way for a larger office tenant at the base of the building.

Shavolian said he poured nearly $1.3 million into preparing the space with marble floors and new air-conditioning for his own tenants. They include an attorney who works with South African businesses, a local mortgage company, a China-based fabric showroom, and a local TV casting company, he said.

“It’s mostly young professionals, or startups, and they stay with us for a year or two, and then they grow out,” he said.

Shavolian declined to comment on the rent, but in May, a full-floor in the building was leased with an asking rent of $47 per foot.

That’s far below the average asking rent in Midtown, which rose by 17 cents to $67.05 per foot from $66.88 per foot. The availability rate declined by a modest 0.2 points to 12 percent in July, the Colliers numbers revealed.

Midtown South While the Department of Homeland Security lease should boost leasing volume in Midtown South, it won’t do much to impact the availability rate because it’s a renewal.

But there are some spaces in the Midtown South market, currently the tightest market in Manhattan, coming on-

The continuing trend to convert Lower Manhattan office buildings into residential apartment towers took a big bite

out of office space in the market last month. For example, Class B buildings like the 370,000-square-foot 346 Broadway and the 141,311-square-foot 350 Broadway are both being converted to residential.

Indeed, the availability rate fell by 0.8 percent, to 15.1 percent from 15.9 percent in July, according to Colliers. At the same time the average asking rent rose by 9 cents to $46.98 per foot.

The former AIG building at 74 Wall Street contributed to that large drop in availability, Colliers Chief Economist Peter Kozel told TRD, noting that 300,000 square feet of office space at the 19-story tower was taken off the market.

The space, he said, will likely be converted to another use such as residential or hotel.

The building, which fronts Pearl and Pine streets, is currently divided into two commercial condominium units.

One covers the space below the fourth floor in addition to parts of the sixth, seventh and eighth floors. The other covers the rest of the tower.

In 2011, Chinese real estate and home furnishings firm SouFun Holdings paid $46 million for the upper condo unit, which it will likely redevelop.

SouFun did not respond to a request for comment, but Kozel said, “It has been known that SouFun Holdings has the intention of developing the property for some other use than office space.” TRD

Without a plane, Greene’s commute to Manhattan from his waterfront compound near Sag Harbor could take more than three hours. But by plane, the trip is just 35 minutes — the Cessna lands on the bay outside his home. In fact, Greene got the idea to buy the plane after seeing that musician Jimmy Buffett was landing his plane on the same bay.

High-end Caravan seaplanes typically cost more than $2 million, though Greene too declined to comment on how much he paid.

He employs two full-time pilots for the plane, and is working to get the necessary certification to rent it when he isn’t using it, which Greene said he hopes will turn a profit — or at least cut down on the overhead costs. For now, Greene said, he and his wife use it for roughly 40 to 50 hours a month for themselves and their friends.

“We have cell phone service for most of the time, too,” Greene said of traveling by plane. “It’s been a wonderful asset.” TRD

what’s going on. The budget has swollen 50 percent over inflation. I think it’s time to say, ‘stop.’

places that we can be more efficient.

line. One is the entire 19th floor at 315 Park Avenue South, a building that Spear Street Capital purchased from BCN Development for $234 million in May, city records show.

And the newly listed space is not the only available space in the building. There’s also an 84,370-square-foot block on the second through the eighth floors that was listed in the second quarter of this year, but has yet to be spoken for, according to data from CoStar. Credit Suisse occupied that space, but moved out after budget cuts. The bank first put the space on the sublease market in 2011, CoStar data shows, but Spear is now offering it directly.

Meanwhile, the 19th floor was home to a trading company called Phoenix Partners Group. The firm was struck a heavy blow when the Lower Manhattan–based financial firm GFI Group (not affiliated with the real estate firm GFI Capital Resources) poached its CEO and other top dealmakers in May. Phoenix could not be reached, but insiders said the firm no longer occupies the space.

Average asking rents in Midtown South fell by 48 cents per foot last month to $51.54 per foot, down from $52.02 per foot in July, the Colliers statistics revealed. At the same time, the availability rate was flat at 9.2 percent.

Downtown

Private planes from page 70 his plane, but high-end Mooneys retail for $500,000 to $650,000, according to Plane & Pilot magazine.

Billionaire developer and entrepreneur Jeff Greene said traveling via his Cessna Caravan seaplane saves him valuable time.

Though Greene has homes in Palm Beach and the Hamptons, much of his business is in Manhattan, including two new condominium projects he’s developing, at 100 Vandam Street and 576 Broome Street.

Mayoral Q&A from page 59 Lhota: There is no doubt that the city government needs to partner with the private sector [for both] development and redevelopment [projects]. The process needs to be transparent and open.

Catsimatidis: I like partnerships, especially if the developer delivers a free school to the city. As for transparency, I am not taking any money from anybody. [Catsimatidis is self-financing his campaign.]

Quinn: They can be extremely beneficial for the city, but we must make sure that we engage the local communities and collect input before making any permanent decisions.

Weiner: I support them but would expand the city’s partners to include more minority- and women-owned business enterprise opportunities.

What changes, if any, do you think need to be made to the property taxes paid by homeowners, developers and landlords in New York City?

Catsimatidis: On Jan. 3, I will freeze all property taxes [the only tax the mayor has direct control over], whether it’s by assessment, or by rate, until we take control of

116 September 2013 www.TheRealDeal.com

Lhota: We need an evaluation of our entire real property tax system and a resulting overhaul.

De Blasio: I have called for a change to the tax treatment for vacant land — from the lower residential rate to the higher rate for commercial property — to discourage long-­term speculation that leaves lots vacant in our neighborhoods, and to encourage the construction of more affordable places to live.

Quinn: The question of whether we have the right taxes is really a question of what New Yorkers want from their city government. I have long called for a more progressive tax structure that should be balanced with pro-growth tax policies. … I have proposals to build new housing, increase access to healthcare, and improve schools, that I have carefully balanced by identifying cost savings in areas like Medicaid claims, overpayments for contracting … and a host of other savings expected to total more than $700 million. My administration would continue many of the city’s existing high-quality services, particularly in the areas of workforce development, reform agencies like NYCHA that are grossly ineffective, and identify other

Liu: We should take a look at some equity issues across property classes.

Weiner: Nobody is happy with the byzantine New York City real estate tax formula. Residents of one- to three-family homes have seen their taxes rise by 169 percent despite seeing their real incomes barely budge. Coop owners on Park Avenue pay less in real estate taxes than renters in Washington Heights. And office space owners spend millions in legal costs trying to figure out their opaque tax assessment. All of this is the result of a long-unexamined hodgepodge of legal precedents, state laws and institutional inertia. New York needs a property tax commission that ensures we have a system that is clear, fair and transparent.

Answers have been edited and condensed for clarity. TRD

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Web hits: The month in review 211 Central Park West

Joan Swift

Real estate’s red flags

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Tennis legend John McEnroe sells Beresford home

By Katherine Clarke Tennis ace John McEnroe, the longtime owner of a co-op in the Beresford at 211 Central Park West, has sold the apartment for $3.1 million, according to public records filed with the city last month. The former top tennis player, who made famous the phrase “you cannot be serious” during his altercations with umpires, sold the property to mergers and acquisitions attorney Gregory Ostling and his partner Angela Tu, records show. Stribling & Associates’ Lorraine Dauber represented McEnroe. Neither McEnroe nor Ostling responded to requests for comment.

The one-bedroom apartment was listed in April and went into contract one month later, according to StreetEasy. It was not clear when McEnroe purGrand Central chased the property. The Emery Roth–designed building is reportedly comedian Jerry Seinfeld’s John McEnroe main residence.

Most popular stories

Top deals of the month

Agent

Firm

Serena Boardman, Nancy Elias and John Burger

Sotheby’s International $23 million Realty, Brown Harris Stevens

640 Park Avenue

Roderick Waywell

Rutenberg Realty

$21 million

960 Fifth Avenue

Joan Swift

Douglas Elliman

$13.75 million

62 Beach Street

Daniela Kunen

Douglas Elliman

$13.5 million

1185 Park Avenue

John Burger

Brown Harris Stevens

$10.55 million 1 West 72nd Street

Price

Address

Source: StreetEasy and The Real Deal. Data is for closed deals filed with the city between Aug. 1 and Aug.23, where both a broker and an address can be identified. Chart includes only listing brokers.

Most popular stories Corcoran, Nest Seekers, Rapid brokers run afoul of state law

By Adam Pincus Some 33 New York City residential brokers from firms including the Corcoran Group, Nest Seekers International and Rapid Realty have faced sanctions in the last year from state licensing regulators, according to a review of public records by The Real Deal. The New York State Department of State infractions ranged from keeping unearned commissions to conducting business under an unlicensed corporation, generating fines that ranged from $500 to $4,500. In one of the most intriguing cases, Corcoran’s Grace Chan, an associate broker in Manhattan, in 2010 was accused of using the title “vice president” without being an officer at the firm, as required by law. Chan received the violation nearly three years before the DOS clarified the rules on broker titles.

The year’s biggest moneymaker: 250 West

By Hayley Kaplan How much do New York’s new development condos really rake in? Using figures from the real estate database CityRealty, TRD last month ranked the Manhattan new developments that made the most money from closed sales in the first half of 2013. The Elad Group’s 250 West in Tribeca topped the list, with $313 million in closed sales of 93 units. The boutique condo Abingdon at 607 Hudson Street in the West Village placed second with $136 million in closed sales for nine units.

The Zeckendorfs’ 18 Gramercy Park rounded out the top three with $80 million in sales and five units closed. Other buildings on the list included: The Touraine in Lenox Hill, La Celia in East Harlem, 345meatpacking, 46 Lispenard in Tribeca, Copper Hill Condominium in East Harlem, 250 Bowery in Nolita, and the Pell Building in Chelsea.

250 West

122 September 2013 www.TheRealDeal.com

1) Keller Williams says adios to “MDLNY” star Luis Ortiz 2) Real estate’s red flags 3) New York City’s best commercial firms to work for 4) Inside Related/Oxford’s financing of Hudson Yards 5) Million Dollar Listing NY’s would-be star speaks out 6) TV star Ortiz lands at Elliman after KWNYC firing 7) Secrecy at One57 and 432 Park stresses gulf between brokers and owners 8) Is Ridgewood the next Williamsburg?

9) Manhattan’s biggest managing agents 10) Extell angling to convert Park Avenue Christian Church annex

Reader comments Real estate’s red flags “I’m weary of this ‘economic recovery’ as well and can see the entire market shak[ing] up by the end of the year.”

Pig, out! Extell’s One57 bans swine – and a lot more “There are 10 types of dogs that are deemed dangerous and most buildings do not accept them. You cannot blame such a high-end building for requesting a picture to prove such a dog is not on this list.”

How common are NYC’s ‘poor doors’?

“It makes no sense to require the distribution of low-income rental units throughout a market-rate condominium, and it will greatly limit the ability of those market rate condos from being able to [create] affordable housing in the first place.”

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COMINGS & GOINGS Big Mack attack

W

ith real estate investment firm AREA Property Partners set to be acquired by Los Angeles–based Ares Management, AREA co-founder William Mack and his sons Richard and Stephen last month announced a new company, Mack Real Estate Group.

Richard Mack, previously North America CEO of AREA, will head the new development and investment company as CEO. His father, who is in his 70s, will serve as chairman.

Stephen (husband to Kelly Kennedy Mack, president of Corcoran Sunshine Marketing Group) is also a co-founder of the company, though MREG declined to elaborate on what his specific role will be.

Industry insiders said the formation of the new company likely comes from a desire to shift investment strategies.

“When you’re in a private equity shop, there’s a certain lifespan to [each] deal — you have to exit the deal at a certain point,” said Ron Solarz, managing partner at Brookfield Financial, who has worked with the Macks. “Now that it’s Richard Mack a family business, [Richard Mack] can do what he likes, and probably what he likes is to build wealth, which generally means developing and holding great assets.”

He added: “I think Richard is a very smart guy, and I sense that he’s going to be just as successful [as he was at AREA], if not more so. There’s no reason to doubt this guy — he’s a superstar.”

Movers and shakers Tom Elliott has left his post as senior vice president of sales at the Elad Group to take on independent consulting projects.

“Once you are a more established company,” he told The Real Deal, “there is less of an enTom Elliott

trepreneurial bent. I am looking for my next big adventure.”

Chagit Sofiev-Leviev, daughter Africa Israel CEO Lev Leviev, has been tapped to head the company’s U.S. arm, succeeding CEO Tamir Kazaz. The company owns the lower floors of the former New York Times headquarters at 229 West 43rd Street, and the Casa Moderna Hotel & Spa at the Marquis Residences

Elliman goes on post-Lenz hiring spree

in Miami.

ega-brokerage firm Douglas Elliman saw a wave of personnel changes this summer, hiring several high-profile agents after longtime super-broker Dolly Lenz’s departure.

Last month, Elliman hired “Million Dollar Listing New York” star Luis Ortiz after Keller Williams NYC fired him, reportedly over his involvement in the Bravo reality show. And two top brokers from the boutique firm CORE also recently joined Elliman: top producer Michael Graves and Vickey Barron, with Barron taking with her the exclusive marketing assignment for the high-profile Walker Tower condominium at 212 West 18th Street. When asked why he chose Elliman, Ortiz said through a spokesperson: “Everything is new — new apartment, new company, new season, new life.” And Graves told The Real Deal that he’s looking to utilize Elliman’s “many powerful tools and connections in order to grow my business.”

Elliman declined to comment on its recruiting strategy, but industry insiders said the high-profile broker hires are likely an effort to fill the void left by Lenz, who left to form her own brokerage. “Dolly leaving, it opens up a vacuum,” said Kathy Braddock, Rutenberg Realty co-founder and a former Elliman executive. Not only is Elliman likely looking for top brokers to bring in pricey listings, but Lenz’s departure makes the company more Dolly Lenz attractive now that there is room for other agents to shine.

“Some people want to be in that limelight where they are considered to be the top,” Braddock said.

“When [Lenz] was there, clearly that was going to be a very limited [option] for people. So I think it opened up space for somebody to come in and perhaps take that position over.”

Of course, brokers already at Elliman are also jockeying to fill the top spot vacated by Lenz. Elliman’s Lisa Simonsen took over a $95 million listing at the Sherry Netherland when Lenz left. And Rick Friedberg is now the sole broker marketing a $12.5 million townhouse at 116 East 61st Street, which he previously co-listed with Lenz.

the National Office & Industrial Property Group at Marcus &

M

Richard Lechtman has been hired as eastern director of Millichap Real Estate Investment Services, where he will oversee 12 offices from Boston to South Florida. He was previously managing director at Ackman-Ziff Real Estate Group.

Howard Schreiber and Carl Schwartz have been named coheads of Hunton & Williams’ Global Real Estate Practice Group, replacing former practice head William Walsh Jr. The firm has 800 lawyers in 19 offices around the world.

David Gialanella has been hired as executive managing director for DTZ’s New York Tri-State Region, a new position created to accelerate the company’s penetration in the New York area. He previously worked at CBRE, where he was executive vice president of business development for the New York TriState region.

Also on the move Town Residential hired Beverly Cole from Douglas Elliman, Jennifer Lauren Hoxter and Pat Serby Hoxter from Halstead Property, Sandra Sugata from Urban Compass and Anne Zelmati from Urban Living. Eastern Consolidated hired Carlos Olson, Stewart Davis and Andrei Danshes as associate direc-

HPD’s Wambua heads for private sector

O

ne of many city officials preparing for life after Bloomberg, Department of Housing Preservation and Development Commissioner Mathew Wambua last month announced plans to move to the private sector as head of RHR Funding, the mortgage-lending arm of Connecticut-based affordable housing developer the Richman Group.

In his new role, Wambua will be responsible for growing the mortgage lender and expanding its debt platform, the company said. Wambua, who was not available for comment, isn’t the only public official to decamp for the real estate industry recently. In July, Seth Pinsky left his post as president of New York City Economic Development Corporation to join Aby Rosen’s RXR Realty. And Rafael Cestero, Wambua’s predecessor as head of HPD, also departed for the private sector: After a stint at L+M Development, Cestero is now CEO of the nonprofit housing group Community Preservation Corporation.

“Real estate in New York is more connected to government than in almost any other city,” said Larry Longua, senior managing director at the advisory firm United Realty Partners and former associate professor at New York University’s Schack Institute of Real Estate. “If I were a real estate company, I would love to reach out to someone in the city administration and bring them Mathew Wambua on board. It’s almost a seamless hand off.” More of such defections are to be expected as the Bloomberg administration winds down, Longua said.

Wambua will be succeeded by RuthAnne Visnauskas, who until now has been HPD’s deputy commissioner for development. But industry sources said Visnauskas is unlikely to stay in her new post for long. The usual protocol is for previous administration personnel to tender their resignation to the new mayor. “If I’m coming in after as long and powerful an administration as Bloomberg’s, I want to set up my own infrastructure,” Longua said. “I don’t want anyone who’s leftover.” Stories by Julie Strickland

126 September 2013 www.TheRealDeal.com

tors. CORE hired Scott Kreitzer from Douglas Elliman. Lehrer, the construction services consulting company, hired Norbert Young as executive vice president.

Announcements Retail broker Kim Mogull, founder and CEO of Mogull Realty,

married

BlackBer-

ry Chief Marketing Officer Frank Boulben on August 10th Among

in East Hampton. the

guests

were

Mitch Rudin of Brookfield, Hamptons developer Michael Newmark and former DOT Commissioner Lou Riccio.

Elizabeth Berger, the head

Kim Mogull and Frank Boulben

of the Alliance for Downtown New York, who led efforts to revitalize the area following Sept. 11 and Hurricane Sandy, passed away Aug. 5 at age 53 from pancreatic cancer.

Compiled by Sanna Chu

Manhattan brokers dress to impress

From suits to leather boots, what to wear depends on the nabe

F

Fifth, I’m definitely wearing a suit,” said Lawrence Rich of Elliman, noting that he often opts for pinstripes or gray flannel.

Below 34th Street, however, suits come

Top: Elizabeth Stribling in her trademark designer suit.

Right, Bond New York broker Christa Lawrence, a real estate “rockand-roll girl.”

WE HE AR D

▼

or New York City real estate brokers, “dress for success” is more than a saying.

Choosing the right style of clothing signals competence and savvy to clients, brokers said, and the appropriate attire varies widely depending on the neighborhood.

Brokers who work on the Upper East Side — traditionally the city’s most exclusive, conservative neighborhood — dress in polished, classic clothes, according to Elizabeth Stribling, the founder of the eponymous residential brokerage.

“One should always look professional,” Stribling said. “For me, a beautiful designer suit presents oneself as someone who hopefully has a mark of success, and therefore, of confidence.” Proper attire signals that a broker will put great thought and consideration into a deal, she added.

Similarly, no self-respecting male broker would be caught dead north of 59th Street without a suit, with most choosing traditional cuts and colors.

“If I know I’m going to show [on] Park or Madison or

in more daring colors, “cut a little shorter, [and] fit a little tighter,” said Kane Manera of Elliman.

In the East Village and on the Lower East Side, however, the rules change drastically.

Christa Lawrence, a Bond New York broker and longtime East Village resident, describes her on-the-job style as “leather and chunky, heavy-duty silver jewelry.” Her boss Douglas Wagner, executive director of leasing at Bond, described her as “the rockand-roll girl,” an image she happily embraces.

“I think if I showed up wearing all Lilly Pulitzer, they’d be like, ‘Who is this person, and why is she trying to convince me to live here?’” Lawrence said. “When you see me, you’re like, ‘Oh, okay, Downtown chick.’”

Beyond conveying the vibe of a neighborhood, the clothes brokers choose can help clients relate to them.

Financiers identify with a broker in a basic suit, for example, while a Downtown gallerist may breathe a sigh of relief at colorful skirts and funky lines.

“There’s something to be said for human beings liking others with a similar mindset, similar creative ideals,” Manera said. “Like attracts like.” By Julie Strickland

The Whole Foods guarantee Grocery store is a powerful draw for tenants

Y

ou’ve heard of mortgage contingencies. How about a Whole Foods contingency? The organic grocery store is so popular that at least one retail tenant on Brooklyn’s Fourth Avenue insisted on a lease that voids the deal if the under-construction Gowanus Whole Foods fails to open by a certain date.

Montreal-based Blinds to Go, a window-treatment retailer, signed a lease in May for 4,200 square feet of space at 340 Fourth Avenue, but the deal is contingent on the opening of the incoming Whole Foods.

That type of arrangement is common in shopping centers, but rare in noncontiguous retail spaces, said Schuckman Realty managing director Ari Malul, who represented both the tenant and landlord BPY Capital in the deal.

“I have not heard of a deal in the 11 years I’ve been doing this where one deal was contingent on another outside of a shopping center,” Malul said.

Malul said when he first suggested the Brooklyn location to Blinds To Go, the proposed Whole Foods was the

A rendering of the under-construction Gowanus Whole Foods. Inset, John Mackey, founder of Whole Foods.

subject of complaints from local residents and questions about the site’s zoning. That made the tenant nervous that the grocer wouldn’t end up opening. Without Whole Foods nearby, Blinds to Go feared it would have trouble drawing customers to the still largely industrial area.

“They were hesitant,” Malul explained. “Even though Whole Foods had possession of the site and it looked like they were beginning work, there was no guarantee they’d

actually be able to open. So it became apparent that we’d have to ask the landlord to treat it as if it was a shopping center and make one deal subject to the other.”

After hammering out the details, BPY agreed. Under the terms of the deal, if the Whole Foods does not open by a certain date (which Malul declined to disclose), Blinds to Go has the option to terminate the lease.

In the end, though, it turned out to be mostly a moot point. By the time the lease was signed, Whole Foods “was really up and out of the ground,” Malul said.

The grocery store is slated to open in mid- to late fall, according to a company spokesman, and Blinds to Go is aiming for a first-quarter 2014 opening. By Julie Strickland

Heard around town Sutton makes a Deal Retail deal-maker Jeff Sutton is planning to demolish his 12,000-square-foot waterfront mansion at 91 Ocean Avenue in Deal, N.J., sources told TRD’s Adam Pincus. Sutton purchased the home for $22.6 million last year. In its place, he will build a new house about 50 feet farther from the beach, to give him a larger backyard.

The new house should be ready by 2015. Deal is a popular summer enclave among New York’s Syrian Jeff Sutton Jewish community, and Sutton’s next-door neighbor is competitor and sometime-partner Joseph Sitt of Thor Equities.

128 September 2013 www.TheRealDeal.com

Greene thumb

South Beach Diet. Greene said retired boxer Mike Tyson, a family friend, was also planning a visit to the estate.

Trump card Ivanka Trump, who is expecting her second child with husband Jared Kushner, was spotted at Citi Field taking in a Mets game on Aug. 20.

MDL star mixes and mingles Jeff Greene’s North Haven estate.

Real estate mogul Jeff Greene and his wife, Mei Sze, who is pregnant with the couple’s third son, gave TRD’s Katherine Clarke a tour of their 55-acre waterfront estate on North Ferry Road in the Hamptons. Greene paid $36 million for the spread in 2011. On the day of TRD’s visit, Greene was preparing to hit the tennis court with cardiologist Arthur Agatston, the creator of the

“Million dollar listing New York” star Ryan Serhant attended a party last month at the Residences at W New York Downtown to promote the indie film “Ain’t Them Bodies Saints.” The Nest Seekers International broker was accompanied by Mitchell Moinian, developer Joseph Moinian’s son. Serhant and Nest Seekers colleague Scott Sporn also made a weekend trip to Korea to meet with investors. Evidently “MDLNY” is popular overseas: Serhant told TRD he was recognized by fans of the show while there. Compiled by TRD staff www.TheRealDeal.com November 2012 105

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THE CLOSING

ROBERT LAPIDUS

Robert Lapidus is the president and chief investment officer of L&L Holdings, the company he co-founded with David Levinson in 2000. L&L owns numerous trophy properties, such as the 76-story Metropolitan Tower at 142 West 57th Street and 150 Fifth Avenue, a 200,000-squarefoot office and retail building. L&L is also developing a 650,000-square-foot office tower at 425 Park Avenue. The company paid $140 million in July to buy a 90 percent stake in the property from Lehman Brothers Holdings. An attorney by training, Lapidus attended the University of Pennsylvania and Benjamin N. Cardozo School of Law. What is your full name?

Robert Tod Lapidus.

When were you born?

Feb. 12, 1961. I was born on Abraham Lincoln’s birthday, and I’m named after Abraham Lincoln’s eldest son, Robert Todd Lincoln, but my father didn’t like the two Ds. Where did you grow up?

On Long Island, in a town named Bellmore in Nassau County. It was a great suburban upbringing — we played outside until dark every day, and the door was never locked.

What did your parents do?

My dad was an optometrist, and my mom went back to school to become an optometric technician. They worked together for many years.

Did you ever think of going into the optometry business?

My dad worked six days a week and we sort of lived hand-to-mouth. That wasn’t the existence I wanted.

What were you like as a kid?

My mother thought I was perfect, but I was probably a bit of a wise-ass. Once in eighth grade, the teacher told my mother, ‘Your son is very smart, but he thinks he’s smarter than I am.’ My mother said, ‘That’s because he is.’

Where do you live now?

I live in Tenafly, N.J. We’ve been there for about 13 years.

But now that our children are grown up, we’ll probably move back into the city. We also have a place on Long Island, in Bridgehampton.

How old are your kids?

Alexandra, my daughter, is 21. She just graduated from Lehigh [University]. My son, Brian, who’s 19, will be a sophomore at the University of Michigan. Alexandra wants to get into the [real estate] business.

What’s your house in Bridgehampton like?

We live next to [Hamptons developer] Joe Farrell’s “Sandcastle” house. Joe built my house first, about five years ago, and then his. Mine is a small little house compared to his, but it has pretty much every amenity you can imagine. You never have to leave.

130 September 2013 www.TheRealDeal.com

Farrell has rented his house to a number of celebrities.

Do you have any good celebrity gossip?

Not really. Jay-Z and Beyoncé were next door last year for a month. They were very quiet. One night at three or four in the morning, one of their guests buzzed on my door by mistake because we share a driveway. I didn’t see Madonna at all when she stayed.

the business side, I did.

How long have you been married to your wife, Carol?

We just had our 30th wedding anniversary. We had a big party with about 200 people at our house in Bridgehampton. I met my wife when I was 19. The day I met her, I told my dad, ‘I met the girl I’m going to marry today.’ I just knew. We met through a mutual friend on the beach — I was a cabana boy at the beach club in Atlantic Beach [on Long Island]. So my wife married the help, basically [laughs].

How are you and David different?

He’s much more formal. I’m most comfortable in a Grateful Dead T-shirt and shorts, and he’s very dapper and dresses very elegantly.

What was it like being a cabana boy?

I got paid a salary of $87 a week, but I got $600 a week in tips because I hustled. Hustle pays off. It helped me pay for my wife’s engagement ring.

How did you end up getting into real estate?

I worked for a law firm in New Jersey called Wolff & Samson. I represented a lot of people in the real estate business, and I said, ‘I could do that.’ When I left my law firm, I went to work as a real estate lawyer for my landlord, a big public company called Bellemead Development Corporation. I learned the business while I was there, and when I had the opportunity to move over to

How did you and David Levinson decide to start L&L together?

David was a top broker, and we had very similar philosophies. We both wanted to go out on our own, so we held hands and jumped off a cliff together.

What’s the most interesting deal you’ve ever worked on?

The building we’re working on now, 425 Park, has definitely had the highest highs and the lowest lows. It’s a once-in-a lifetime opportunity to build a new office tower on Park Avenue. The frustrating thing was that our partner was [the now-defunct] Lehman Brothers. That brought a lot of angst and uncertainty.

What car do you drive?

I drive a Maserati convertible. It’s black with tan leather.

It’s my fun little fantasy car.

What are your hobbies?

I like sports. David and I both have an ownership interest in the Yankees. We acquired it about seven years ago.

I don’t collect art, so I thought, ‘What the hell?’

By Katherine Clarke

PHOTOGRAPH FOR THE REAL DEAL BY MARC SCRIVO00 www.TheRealDeal.com July 2006

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