The Real Deal - July 2015

32

Land of milk, honey & cash

www.TheRealDeal.com

38

Gearing up for next 421a battle

60

Is WeWork really worth $10 billion?

68

Chinese players grab local talent

N EW YO R K R E AL E STAT E N E W S

128

Faking it on Twitter

Vol. 13 No. 7 July 2015 $3.00

CROWDFUNDING 2.0 New York City players dominate, but it’s not the populist revolution that was promised p44

Ranking residential brokerage royalty Manhattan’s top agents take personal branding to new heights to nab priciest listings p52

$1.5 million in rent — for the summer?

The colorful cast of Hamptons homeowners trying to rent their mansions for mega amounts this season and how they’ve fared p42

Buyers gaining strength Leverage shifts for deals in upper price range as Manhattan condo inventory ticks higher; Brooklyn still tight p20 & 64 ILLUSTRATION BY CHRIS MANFRE

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Contents J U LY 2 0 1 5

20

Buyers gain strength

22

Banks takes baton

24

Developers fly high

22

Leverage shifts in upper price range as Manhattan inventory ticks up.

New REBNY chief takes over with key issues hanging in balance.

Builders expect boon as upgrades to NYC’s airports move forward.

John Banks, REBNY’s new president

26 At the Desk of: Jason Halpern The JMH Development founder’s glamorous life — from teaming up with big-shot partners to marrying a Ukranian model to bungee jumping in Africa.

Jason Halpern is juggling projects in NYC and Miami.

Sub Culture Every day 300,000 subway riders stream through Manhattan’s Fulton Center, their underground trek

28

JLL goes on office leasing tear

32

Milk, honey and cash

34

Billionaire shortage?

The firm has scored far more leasing gigs than its rivals this past year.

32

More developers turn to Israel’s bond market for low-cost capital.

An analysis of who can really afford NYC’s über-luxury condos.

Joseph Moinian recently raised $360 million from an Israeli bond offering.

38

38

now brightened by entertainment venues and daylight

The 421a battle plan

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The extension was a Band-Aid, and stakeholders are gearing up for a new round of politicking.

artwork by James Carpenter Design Associates, Grimshaw Architects, and Arup [OPZ THY]LS VM JVSSHIVYH[PVU PZ H UL^ IYPNO[ ZWV[ ILULH[O JP[` Z[YLL[Z Read more about it in Metals in Construction VUSPUL

42 $1 million plus — in rent?

Gov. Andrew Cuomo announced a 421a extension plan last month.

> > > 6 4 0 5 @ 6 9 .

The colorful cast of Hamptons homeowners who want to rent their mansions for mega amounts.

44 Crowd favorites NYC’s prominent crowdfunders are upending the status quo — and the sector is on the brink of another transformation.

Crowdfunder Rodrigo Niño of Prodigy Network

10 July 2015 www.TheRealDeal.com 8 October 2012 www.TheRealDeal.com

www.TheRealDeal.com March 2012 00

Architect: Skidmore, Owings & Merrill Structural Engineer: WSP Cantor Seinuk Photograph: Tex Jernigan

Contents continued 52 Ranking Manhattan’s residential royalty NYC’s top 75 agents land priciest listings by taking personal branding to new heights.

60

58

WeWork co-founder Adam Neumann

Setting up shop How big retailers — from H&M to Coach — make key NYC expansion decisions.

60 The $10B question Can office-sharing star WeWork, a Silicon Valley “unicorn,” survive a downturn?

World View While the world watched, One World Trade Center grew in both height and symbolism, its 1,776-foot crystalline form bringing unmatched views back to Lower Manhattan. A redundant structural steel frame, the result of creative collaboration between Skidmore, Owings & Merrill and WSP Cantor Seinuk, ensures that its safety is as substantial as its stature.

Read more about it in Metals in Construction online.

64

Brooklyn buyers beware

68

Chinese Chess

Condo pipeline in borough is sparse — ‘like a desert with no cactus’

Chinese firms are moving fast to poach top talent and assemble teams from the ground up in NYC.

74 Day in the Life of: Kathy Korte The Sotheby’s CEO on her dreams of being a spy, jet setting and crazy art.

Kathy Korte, CEO of Sotheby’s International Realty, oversees more than 1,800 brokers globally.

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

28 Commercial Market Report A review of significant issues in Manhattan’s commercial sector.

72 Neighborhood Dive Up close in a community getting real estate buzz.

88 A rendering of 118 East 59th Street

80 Soo Chan’s daring design

W W W . S I N Y. O R G

20 Residential Market Report

The Japanese architect’s latest NYC condo building is bold and refined, critic James Gardner says.

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

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

122 Calendar of Events Check out this month’s activities.

The anti-glamour guy 130 Moelis: The affordable housing developer on being a math nerd and on his most crucial career decision.

10 12 July October 20152012 www.TheRealDeal.com www.TheRealDeal.com

128 We Heard A lighter look at industry buzz.

www.TheRealDeal.com March 2012 00

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THE REAL DEAL N E W YO R K R E A L E S TAT E N E W S PUBLISHER Amir Korangy EDITOR-IN-CHIEF Stuart W. Elliott MANAGING EDITOR Jill Noonan DEPUTY MANAGING EDITOR Eileen AJ Connelly EDITORIAL DEVELOPMENT DIRECTOR Heather Grossmann MANAGING WEB EDITOR Hiten Samtani SOUTH FLORIDA MANAGING EDITOR Ina Cordle

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

ART DIRECTORS Ronald Gross, Keziah Makoundou SENIOR REPORTER/RESEARCH MANAGER Adam Pincus REPORTERS Rich Bockmann, E.B. Solomont, Konrad Putzier CONTRIBUTORS C. J. Hughes, Jennifer White Karp ASSOCIATE WEB EDITOR Mark Maurer

You need Rosewood Realty Group

WEB PRODUCERS/WEB REPORTERS Tess Hofmann, Katherine Kallergis, Claire Moses, Sean Stewart-Muniz, Rey Mashayekhi SOCIAL MEDIA EDITOR Kerry Barger PRODUCTION MANAGER Victoria Tuturice RESEARCHERS Kyna Doles, Will Parker, Karen Malmquist CONTRIBUTING REPORTER Ariel Stulberg CONTRIBUTING DESIGNER Juan Zielaskowski

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Rosewood Knows New York We are pleased to announce that for the year-to-date June 26th 2015, Rosewood has completed total sales of $2,091,453,050 which include: Brooklyn: Aggregate sales of

$824,262,050

79 Buildings / 3,118 Residential Units / 42 Commercial Units

PHOTOGRAPHER Marc Scrivo DIRECTOR OF MARKETING OPERATIONS Yoav Barilan NATIONAL SALES DIRECTOR Ross Fox SOUTH FLORIDA ADVERTISING DIRECTOR Chris Cuomo ADVERTISING SALES Eran Evron, Nick Mascaro, Robert Stearns, Nicki Chadi, Sigalit Levi, Marcus Guest, Barry Holland, Justin O’Garrow DIRECTOR OF DIGITAL SALES Junaid Zahid DIGITAL SALES MANAGER Eric Reyes MARKETING MANAGER Judy Levine

Manhattan: Aggregate sales of

DIGITAL MARKETING ASSISTANT Yanlin Ma

$535,201,000

WEBMASTERS Nima Negahban, Andrew LoCascio

49 Buildings / 1,203 Residential Units / 47 Commercial Units Bronx: Aggregate sales of

$486,990,000

49 Buildings / 2,937 Residential Units / 77 Commercial Units

WEB DEVELOPER Amir Ghaheri FINANCE DIRECTOR/HUMAN RESOURCES Kenneth Cyrus ACCOUNTING ASSOCIATE Karen Francis OFFICE MANAGER Virginia Durso CIRCULATION Paul Destanko

Queens: Aggregate sales of

$220,500,000

12 Buildings / 692 Residential Units / 14 Commercial Units Long Island: Aggregate sales of

$24,500,000

1 Buildings / 176 Residential Units © Copyright 2015 Rosewood Realty Group. All rights reserved.

14 July 2015 www.TheRealDeal.com

DISTRIBUTION Mitchell Newman, Patricia Hofmann, Forero Express ATTORNEY Barry J. Friedberg, Trachtenberg Rodes & Friedberg LLP ACCOUNTANTS William T. McCallum, CPA, P.C., Christine Wang The Real Deal is a registered trademark of Korangy Publishing Inc. Copyright © 2015. To contact us, call 212-260-1332 or email news@therealdeal.com.

Warning: It is illegal to photocopy or reproduce any part of The Real Deal without express written consent. For reprints and duplication rights, call 212260-1332. Principal office: 158 West 29th St., New York, NY 10001. The Real Deal is published monthly.

Annual subscriptions cost $95. Send check or money order to 158 West 29th St., New York, NY 10001.

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EDITOR’S NOTE

The race to not build NYC’s tallest building ew York City developers are known for constructing tall buildings as a testament to their egos.

But in the current skyline race, developers are going out of their way not to top one another.

This battle — or lack thereof — says a lot about the tensions raging between the civic interests and the growth of private wealth in New York City today.

Last month, the latest plans were filed for yet another “supertall” building on Billionaire’s Row, with news that Extell’s Nordstrom Tower on 57th Street will have a 1,521-foot-high curtain wall plus a rooftop spire that will reportedly top out at 1,775 feet.

So while the Nordstrom Tower would be a taller building, its spire would be one foot shorter than One World Trade Center’s, which reaches a symbolic 1,776 feet.

According to the Council on Tall Buildings and Urban Habitat, the authority on these matters, One World Trade is still the tallest building in New York, thanks to that spire. That’s despite the fact that whoever buys the top-floor penthouse at the Nordstrom Tower — and at the nearly completed 432 Park — will be higher up in the sky than anyone visiting the observation deck at One World Trade.

This is partly a symbolic deference to One World Trade, of course, which makes sense as a way to honor those who were killed in the 2001 terrorist attacks at Ground Zero.

But it does make me wonder when these condo buildings — which are increasingly being gobbled up by international investors looking for “security deposit boxes in the sky” — will officially tower over our most emotionally charged landmark. If and when that happens, it will say something significant about the character of the city.

New York’s liberal mayor is at the forefront of a national progressive movement and is pushing for more affordable housing, while developers here are simultaneously building ever-more expensive palaces for the global elite. That battle between democracy and capitalism is the backdrop for many of the stories in this issue, too.

N

When the “supertalls” on Billionaire’s Row officially dwarf One World Trade Center, it will say something significant about the character of the city.

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For example, should taxpayer money be used to subsidize for-profit housing in New York? That’s been at the center of the debate over the hugely contentious 421a program, whose fate was just decided — sort of — in Albany at the end of the legislative session (see page 38). Meanwhile, we take a look at John Banks, who will serve as a lightning rod for many of these issues as the new face of the industry’s biggest trade group, REBNY, now that he’s taken over for departing president Steve Spinola (see page 22).

Still, even though it may seem like there is a widening chasm between private wealth and the public interest in this new Gilded Age, that’s not entirely the case.

The digital age has brought a new kind of democratization to the business world, and nowhere is that on greater display than at shared-office-space provider WeWork, which was just valued at a mind-boggling $10 billion. The company (which is expanding at a breakneck pace in New York and beyond) epitomizes today’s new business culture of open floor plans and a startup mentality where everyone with an innovative idea gets heard. We look at the future of the company — and whether it will have staying power when the next recession hits or be the victim of another Internet bubble — on page 60.

There has also been a lot of talk about the democratization of real estate investment through crowdfunding — where even the little guy can get in on the big property deals, a few thousand dollars at a time. In our cover story this month, we look at that buzzedabout online investing platform — and how it might be moving away from its initial ideals. Interestingly, while crowdfunding is regarded as the hot new thing, there is a very long history of small-time investors pooling money together — it’s how the Empire State Building was built (see page 50).

Finally, in this issue, we look over the hedges in the Hamptons, with a first-ever examination of the owners behind the East End’s priciest summer rentals (see page 42).

And for more East End coverage, check out our first-ever Hamptons Market Report, which is included with this issue. Clocking in at 60 pages, it’s chock-full of stories on everything from the priciest sales to the top agents. It will undoubtedly bring you up to speed on the Hamptons real estate market even as you lounge poolside. Enjoy the issue.

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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. THE SKETCHES, RENDERINGS, PICTURES AND ILLUSTRATIONS ARE PROPOSED ONLY AND THE DEVELOPER RESERVES THE RIGHT TO MODIFY, REVISE OR WITHDRAW ANY OR ALL OF THE SAME AT ITS SOLE DISCRETION WITHOUT NOTICE. THE RENDERINGS ILLUSTRATE AND DEPICT A LIFESTYLE, HOWEVER, AMENITIES, FEATURES AND SPECIFICATIONS ARE SUBJECT TO CHANGE WITHOUT NOTICE. ALL INFORMATION IS DEEMED RELIABLE BUT IS NOT GUARANTEED AND SHOULD BE INDEPENDENTLY VERIFIED. ALL REAL ESTATE ADVERTISED HEREIN IS SUBJECT TO THE US FEDERAL FAIR HOUSING ACT OF 1968 WHICH MAKES IT ILLEGAL TO MAKE OR PUBLISH ANY ADVERTISEMENT THAT INDICATES ANY PREFERENCE, LIMITATION, OR DISCRIMINATION BASED ON RACE, COLOR, RELIGION, SEX, HANDICAP, FAMILIAL STATUS, OR NATIONAL ORIGIN. PLEASE CHECK WITH YOUR LOCAL GOVERNMENT AGENCY FOR MORE INFORMATION. ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING REPRESENTATIONS OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, MAKE REFERENCE TO THIS BROCHURE AND TO THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER OR LESSEE. THIS IS NOT AN OFFER FOR CONTRACT OR SALE IN THE STATES OF NY, NJ OR MASS. THE STATEMENTS MADE CONCERNING THE TURNBERRY OCEAN CLUB DO NOT CONSTITUTE OFFERS TO SELL, OR A SOLICITATION OF AN OFFER TO BUY A UNIT IN THAT CONDOMINIUM. NO SOLICITATION, OFFER OR SALE OF A UNIT IN THE CONDOMINIUM WILL BE MADE IN ANY JURISDICTION IN WHICH SUCH ACTIVITY WOULD BE UNLAWFUL PRIOR TO REGISTRATION UNDER THE LAWS OF SUCH JURISDICTION. INITIATION FEE AND FIRST YEAR’S ANNUAL DUES AT TURNBERRY ISLE RESORT AND COUNTRY CLUB ARE PAID FOR BY THE DEVELOPER. BUYERS ARE RESPONSIBLE FOR ALL FEES BEGINNING YEAR TWO. MARKETING AND BRANDING BY TURNBERRY AND CONWAY+PARTNERS.

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RESIDENTIAL MARKET

Buyers gain strength Leverage on deals shifts in upper price range as Manhattan condo inventory ticks higher

BY E.B. SOLOMONT or the better part of two years, sellers have dominated Manhattan’s residential market, while buyers clamored over limited and in some cases, nonexistent, inventory.

But veteran brokers say the leverage is shifting, ever so slightly, toward buyers in the luxury segment, partially as a result of a rising number of new units hitting the market. “For a long time, the seller was in control,” said Douglas Elliman’s John Gomes. “We’re seeing more opportunities for buyers. It’s almost an even market. The buyer is inching up in the control.”

To be sure, competition lives on at many price points, particularly for the hottest segments of the market, like twobedrooms asking $2 million or less.

But in the $5 million and up segment, buyers are “taking their time,” according to Compass’ Julia Hoagland. “Properties in this market sector still sell expeditiously if well-positioned,” she said. “However, multiple bid situations are less frequent and buyers in this market have the benefit of being thoughtful about their purchases.”

The same is true at the upper end of the luxury market, according to Compass President Leonard Steinberg. For example, Steinberg recently sold Bon Jovi’s penthouse at 158 Mercer Street for $37.5 million, down from the original asking

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Overall, Manhattan’s median sales price of $980,000 rose 7.7 percent during the second quarter, even as the number of sales dropped 20 percent to 2,674, according to real estate appraisal firm Miller Samuel. Listing inventory during the three-month period was 5,730, up 1.3 percent, while the absorption rate rose 25.5 percent to 6.4 months.

Not surprisingly, one of the main factors shifting the balance in buyers’ favor is the influx of new condo inventory in Manhattan. There are roughly 6,500 new condos coming to market this year, up from 2,500 last year, according to Corcoran Sunshine Marketing Group.

“Buyers have more choice in new development than they’ve had in years,” said Corcoran Sunshine’s Jeannie Woodbrey, who is the senior sales director at 45 East 22nd Street, an 83-unit tower being developed by Continuum Co. “With [many of the] anticipated towers across the city finally coming to market, those who have been waiting on the sidelines are finally ready to make a choice.”

She added that new development is gaining market share. Condominiums now represent about half of all available inventory, the highest share since 2010, she said. That “growth trend will continue for the next couple of years, based on properties in the pipeline.”

“If it’s not priced properly in the beginning, it will not sell. It’s not 2007.”

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price of $42 million. “With the volume of dollars at stake, people are more prudent about doing their homework. For the first time, I can see [the market’s] balance,” he said. “I’ve seen price reductions adjusted to reality. It’s people catching their breath.”

Several brokers said savvy buyers simply won’t tolerate overpriced apartments under any circumstances.

“They would rather wait until next year than give an unrealistic seller too big of a price,” said Brown Harris Stevens’ Greg Roache, who partners with Roger Gillen.

Warburg’s Lisa Larson said several classic sevens on the Upper East Side sat on the market this spring. “You could show a buyer five or six apartments, which was a lot compared to the year before,” she said. Larson is representing one buyer who looked at an eight-room co-op on Fifth Avenue that’s seen several price drops, and is now listed at $5.995 million. “If it’s not priced properly in the beginning, it will not sell,” she said. “It’s not 2007.”

Town’s Ryan Fitzpatrick, who is managing director of the firm’s Flatiron office, said there is a perception among buyers that there is a lot more inventory, even though in reality, there are only a few thousand more new units. “This is doubtless contributing to the slower pace of sales at the high end,” he said. And, he added, “Overall there is more of a balance between supply and demand.”

However, Warburg’s Larson said the market continues to favor sellers of properties $2 million and under, where inventory is limited and competition is as fierce as ever. “Inventory is low, the number of days it takes a listing to go into contract tumbled throughout the spring selling season, demand remained high and open houses still saw the need for a red velvet rope to control traffic,” she said.

But, she said, during the summer months, there are fewer buyers hunting for apartments. “There’s always an opportunity for buyers in the summer,” she said, “because not as many people are looking.” TRD

NEW YORK CITY

At Raveis, the broker is our customer.

We

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William Raveis Chairman and Chief Executive Officer William Raveis Real Estate, Mortgage & Insurance

Call Kathy Braddock at 917-972-2854 or Paul Purcell at 917-693-6643 if you would like to discuss the development and creation of an entrepreneur’s business plan.

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SMART AGENTS KNOW

Real Estate Photography Matters.

Banks takes baton New REBNY chief takes over with many controversial issues hanging in the balance

BY RICH BOCKMANN teven Spinola’s departure at the end of last month as the president of the Real Estate Board of New York came at an awkward time for the industry — and for his replacement, John Banks.

The changeover has, of course, been a long time in the making. Spinola, an industry veteran who has been leading REBNY for 30 years, announced a year ago that he would be leaving the job. Banks — a well-respected top government affairs director at utility giant Consolidated Edison — meanwhile, was named the new REBNY chief in December and began transitioning into the role in March.

But nobody could have predicted all that has happened since Banks’ appointment was announced.

Not only did the state legislature just wrap up one of the thorniest political sessions in recent memory, with the real estate industry taking center stage in a battle over the controversial, developerfriendly 421a tax abatement and rent regulation, but the industry is also at the center of an ongoing political scandal.

On the legislative front, Gov. Andrew Cuomo and lawmakers announced the framework for a deal that would extend rent regulations and 421a for the next four years.

However, the tax abatement extension is contingent upon hashing out key details in the next six months (see related story on page 38).

The short-term 421a solution means that developers are left with a lot of uncertainty, leaving Banks to handle a major hot-button issue at a time when he’s still learning the ins-and-outs of the industry. “I’m sure REBNY would have liked to have 421a done, but it lingers now,� said Dick Dadey, executive director of the government watchdog Citizens Union, who has followed Spinola and Banks through the years. “It will be up to John to complete the strong work begun by Spinola.�

Dadey added that while Banks is a seasoned and well-respected lobbyist, stepping into an executive role at such a powerful and diverse organization will be a test for him.

And Banks acknowledged as much at a REBNY event last month. “If I had to say one thing, it’s been getting to know the industry and the people,â€? he told a group of reporters. “Getting to learn everybody’s name, that’s probably the most difďŹ cult thing.â€? “There’s so many different players in the industry that I’ve never been associated with

S

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before,� he continued. “And [getting] to know their issues, that’s been a lot of hard work.�

Banks has, however, been doing just that.

He’s attended REBNY events and he and Spinola also spent the latter part of June in Albany, where they met with and lobbied lawmakers together.

Banks is, of course, no stranger to city and state politics. He has deep ties with top lawmakers in Albany and with Mayor Bill de Blasio, whose 421a plan REBNY has backed.

Still, if winning a more permanent deal on 421a were not a tall enough task, Banks will also have to deal with the continued fallout from the scandals involving former Assembly Speaker Sheldon Silver and former Senate Majority Leader Dean Skelos.

With the so-called “three men in a room� system of passing legislation — a reference to the governor and two top legislative leaders — now upended in Albany, sources say it may be an opportune time for someone new to step into the fray for REBNY. “The new [political] leadership team is going to do it their own way,� said Suri Kasirer, the city’s top real estate lobbyist.

She noted that Banks’ relationships in Albany will serve him well. “It’s a very important time for the industry.�

Both Silver and Skelos resigned from their leadership positions earlier John Banks this year after being charged by U.S. Attorney Preet Bharara in connection with political corruption cases involving major New York City real estate players.

The most notable of those players is Glenwood Management — identiďŹ ed only as “Developer 1â€? in the complaint against Silver — which allegedly hired a real estate law ďŹ rm run by a former Silver aide in an arrangement prosecutors have characterized as pay to play. Glenwood was not charged with any wrongdoing, but its 100-year-old founder, Leonard Litwin, an industry stalwart and honorary lifetime REBNY chairman, is now forever linked to this scandal and the company’s general counsel Charles Dorego is reportedly a cooperating witness.

In addition, current REBNY chairman Rob Speyer — who along with his father Jerry runs mega-ďŹ rm Tishman Speyer — is “Developer 2â€? in Bharara’s charges against Skelos. Prosecutors used a meeting between Speyer, who was also not charged with any wrongdoing, and Skelos’ son as an example of how the lawmaker leveraged his position for personal gain.

A spokesman for Tishman said the company was cooperating with the Continued on page 110

www.TheRealDeal.com March 2010

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BY

Flights delayed

THE

NUMBERS

Developers D evelopers expect expect boon as boon as upgrades upgrades tto o NYC’s airports airpor ts llurch urch NYC’s slowly forward slowly forward

53.2 million $400 million Number of passengers who traveled The limit, set by the PA board, on the through JFK in 2014. Meanwhile, 35.6 million used Newark and 26.9 million passed through LaGuardia.

NYC’s airport system is the world’s second largest, trailing only London.

$404.5 million Total value of 2014 retail sales at JFK,

The Port Authority is in the process of picking a developer to revamp and reopen the landmarked TWA Flight Center.

ew York City’s airport system is one of the world’s largest and busiest, but far from the most modern. Opened in the 1930s and 40s, and trendsetting at the time, the three major airports — John F. Kennedy International, LaGuardia and Newark Liberty International — are now outdated. They are each notorious for delays and poor passenger experience, but LaGuardia is decidedly the worst of the bunch. “For too long, LaGuardia has been the stepchild of our region’s airports compared to JFK and Newark International,” said RXR Realty head Scott Rechler, who also serves as vice chairman of the Port Authority of New York and New Jersey, which runs all three. The PA is getting closer to making some long-overdue upgrades. And the developers, construction firms, architecture firms and lenders that they select for those multi-billion-dollar projects will see a major boon in business. In the spring, the agency tapped a group, including construction giant Skanska and architecture firm HOK, to expand and revamp the main terminal at LaGuardia. The agency will also soon choose a developer to turn the landmarked TWA Flight Center at JFK into a hotel. Hotelier André Balazs won the original bid in 2013, but dropped out just a few months later, citing the PA bureaucracy.

“As much as that building is iconic, dealing with the Port Authority became too much and too slow-going for us,” he told The Real Deal last year. Read on for a rundown of the needs and changes at the airports.

By Ariel Stulberg

N

which has about 299,500 square feet of retail space. That’s up from $319.5 million in 2012. LaGuardia’s retailers, which occupy about 90,000 square feet, saw sales of $137.2 million last year. The airports have upped their retail game in recent years. JFK, for example, has brought on Michael Kors, men’s clothier Thomas Pink, burger joint Shake Shack and NYC BBQ pioneer Blue Smoke.

3rd As in “Third World.” “If I blindfolded someone,” Vice President Joe Biden said last year, “and took him to LaGuardia Airport in New York, he would think, ‘I must be in some third-world country.’

I’m not joking.” Gov. Andrew Cuomo later agreed. Donald Trump echoed the comment while announcing his presidential run.

$3.6 billion Cost to renovate LGA’s Central Terminal under the contract awarded in May. The group that won the bid, which will contribute $2.2 billion, is a partnership between Skanska, HOK, airport operator Vantage Airport Group and financial firms Meridiam, Morgan Stanley, Citigroup and Wells Fargo. The rest of the money will come from the PA.

17.5 million The number of passengers expected to fly from LaGuardia’s Central Terminal (Terminal B) by 2030. The Mad Men-era facility was designed to accommodate 8 million departures. About 13.5 million flew from there last year.

cost to add a “grand entrance” to the LaGuardia upgrade. The proposal for an entry portal, which would join Terminals B and C, came from a master plan for the airport conceived in a design competition pushed by Cuomo, who called the PA’s original revamp of only Terminal B shortsighted. If built, it would raise the cost of the new terminal by about 10 percent.

1.3 million Square footage of LaGuardia’s planned new Central Terminal, up from today’s 835,000. The new terminal will have three levels, 35 gates and 97,000 square feet for retail concessions, 95 percent of which will be on the gate-side of security. Right now, 95 percent of LaGuardia’s retail is located pre-security, which many say is nonsensical.

500 Number of rooms reportedly included in a proposal from JetBlue and hotel developer MCR Development for transforming the Eero Saarinendesigned TWA Flight Center at JFK. The futuristic “Jet Age” terminal opened in 1962 and closed in 2001, when TWA went under. The PA is also reportedly considering a second plan for a revamp of the landmarked building, from a group led by boutique hotelier Ian Schrager that includes the Witkoff Group.

70,000 Number of domestic and wild animals that will pass through JFK’s new animals-only terminal, dubbed the ARK. The facility, being built by a subsidiary of private investment firm Racebrook, will include 178,000 square feet of interior and up to 20,000 feet of exterior space. It will cost a projected $48 million.

Sources: Airport Revenue News, Forbes, NBC4-NY, CNN, Bloomberg News, the Wall Street Journal and TRD reporting.

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A

JASON HALPERN ason Halpern, the founder of JMH Development, is racking up frequent-flyer miles these days. The 45-yearold is juggling multiple projects in New York and Miami and teaming up with a slew of big developers to boot. The “boutique development firm,” as Halpern calls it, has completed more than $500 million in projects since 2007, including the 200-plus room Aloft South Beach in Miami, which was co-developed with Mitchell Hochberg’s Madden Real Estate Ventures and opened last month. Most recently, Halpern struck a deal with Kushner Companies and the Rockpoint Group to convert the former Wild Turkey bourbon warehouse in Williamsburg into condos. JMH converted it into a 338-unit rental building in 2010, but Kushner will take the lead on the next round. And late last year, JMH teamed up with Madison Estates to buy the Brooklyn Heights Cinema, where it’s building luxury condos. Halpern — who had a high-profile debacle several years ago when a mega project he was planning with a partner in Vegas was scrapped — is working on several other projects in Miami and is eyeing a site in Long Island City, where he is planning a hotel. The developer, whose fast-paced lifestyle is offset by fatherhood, began his real estate career at Halpern Enterprises, the Westchester firm his late father

J

founded, but launched JMH in the late 1990s. By Claire Moses

DAD’S SHOES

TEENAGE SON

NASCAR

Halpern’s father, Joel, wore these work boots to an office-building

Halpern has a 13-year-old son, Max, from a previous

Halpern’s father sponsored a racing team named for his company

groundbreaking in Tarrytown in the late 1970s. “I remember as a

marriage. He’s taken him to see the

in the late 1970s. Halpern inherited his father’s love for fast cars

kid he used to keep [boots like this] in the back of his car.” His father,

New York Giants, his family’s

and raced them himself in the early 2000s. Before the recession,

a national champion in offshore powerboat racing, was killed in

longtime team, play around the

Halpern had planned to participate in races in the South and even

a boating

accident in 1981. The company was

country, including their winning

bought a car and started to train. “I sort of wish I wouldn’t have

sold to Reckson Associates in the

bid in the 2012 Super Bowl in

given it up,” he said. But, due to the crisis, “work got too hectic.”

Indianapolis. The two also scuba

Nonetheless, he said he still finds racing “therapeutic,” and said he

dive together, with recent trips to

hopes to pick it up again in the future. “Speed relaxes me.”

late 1990s.

Costa Rica and Mexico.

YOUNG MIKE TYSON This photo of an 18-year-old

AFRICAN SAFARI A photo of Halpern’s dad on a safari in the 1970s with good friend and former New York Giants running back Tucker

Mike Tyson with legendary

FIANCÉE

manager Cus D’Amato was a gift from a friend’s father, a

Halpern is engaged to Ukrainian model Veronika

professional

photographer,

Gomeniouk. The two recently traveled to Africa

who took it. It was taken in the

together, where they celebrated fellow

Catskills, where the boxer used to train, way

Frederickson. “It’s a

developer and close friend Winston

before Tyson achieved fame (and later infamy). “I’m a big boxing

cool picture, because

Fisher’s 40th birthday. The couple

fan,” Halpern said.

Tucker Frederickson

was part of a group of eight that joined the Fisher Brothers heir.

was one of the all-time

Trip highlight? Bungee jumping

184 KENT AVENUE

great Giants,” said

off a bridge ge in Zimbabwe.

Halpern might have NYC’s easiest commute. Both his

Halpern, who’s met him

office and penthouse apartment are in the building, so

many times.

his commute entails walking across the landscaped roof deck. The rental conversion is the largest project the firm has completed. He plans

MINI EIFFEL TOWER Halpern bought this trinket at the gift shop in Mama Shelter, a boutique hotel in Paris’ 20th

to stay in his apartment even after the condo conversion. “I love my apartment,” he said.

VINTAGE WATCH

arrondissement. “It’s a better version of the Ace

A vintage Patek Philippe that belonged ed

Hotel,” said Halpern, who often returns from his

to his father, who Halpern called a

travels with inspiration for his New York City

“visionary.” His dad didn’t wear this watch ch

projects.

every day. “He actually wore a Rolex,” ,” Halpern said.

26 July 2015 www.TheRealDeal.com

PHOTOGRAPH OF JASON HALPERN FOR THE REAL DEAL BY ASHLEY WALKER

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JLL’s big Manhattan office-leasing surge The commercial firm won more landlord gigs in the last year than any of its rivals

BY ADAM PINCUS LL won significantly more new Manhattan office-leasing assignments than any of its rivals over the past year.

The commercial firm snagged more than three times as much office space as its closest competitor over the past 12 months, according to a review by The Real Deal of data from CoStar Group.

Historically, the top four firms representing office landlords in the city — CBRE, Newmark Grubb Knight Frank, Cushman & Wakefield and JLL — all win between 3 million and 6 million square feet of new business every year.

But over the past year, JLL landed more than 17 million square feet in new office-leasing gigs, TRD’s analysis found.

In part, it trumped its rivals by winning multi-building portfolios,

J

28 July 2015 www.TheRealDeal.com

such as one owned by Aby Rosen’s RFR Realty and several of Brookfield Properties’ assets.

Those accounted for at least 10 million square feet, or 59 percent of the total in new wins, TRD found.

JLL also won other large, singlebuilding leasing assignments like Fosun International’s 2.2-millionsquare-foot 28 Liberty Street (the former Chase Manhattan Plaza); Paramount Group’s 1.7-millionsquare-foot 1301 Sixth Avenue; and Edward J. Minskoff ’s 1.5-millionsquare-foot 1166 Sixth Avenue.

Cushman, a distant second on the securing new business front, won about 5 million square feet in new landlord “agencies,” including the 1-million-square-foot 14 Wall Street.

Newmark ranked third with 4.4 million square feet. And CBRE trailed the top of the pack, with just over 2 million square feet,

including Westbrook Partners 513,000-square-foot 1375 Broadway.

(It should be noted, however, that CBRE still represents far more office space overall than any of its rivals.)

TRD analyzed CoStar data spanning the last year for Midtown, Midtown South and Downtown areas for the four firms to see which leasing assignments changed hands. The database has the most comprehensive list TRD could obtain that identified firms hired

by Manhattan office landlords.

The results were shared with each firm for comment, but only Cushman confirmed its figure.

Top of the food chain Despite JLL’s huge growth spurt, it still doesn’t come close to rivaling CBRE as the top landlord-leasing firm in Manhattan.

CBRE has about 68 million

square feet overall, CoStar figures show. Newmark follows, with about 60 million square feet, and JLL and Cushman have about 50 million each. A spokesman for JLL told TRD the firm had 53.4 million square feet in office leasing assignments, but would not disclose the additional buildings. Cushman is almost certain to rise in the ranks over the next year, after it closes on its $2 billion deal to buy DTZ. Not only did JLL win a significant amount of new business, but CoStar data also indicate that with an average of about 725,000 square feet, its properties are larger than the new buildings other firms won.

In addition, the 24 buildings JLL won this year have large availabilities, which gives JLL the opportunity to lease up big chunks of space and pocket more leasing commissions.

CBRE’s new leasing assignments

are generally smaller buildings, averaging just under 250,000 square feet each. Yet on the plus-side for the firm, CoStar is showing more than 1 million square feet of available space in the 2.2 million feet total CBRE has won over the past 12 months, making it a potentially lucrative portfolio.

Poaching pays off JLL has traditionally been the smallest of the four Manhattan firms.

It began to ramp up its business a few years ago, with a series of hires that included Scott Panzer and his team from Newmark in 2009. In 2011, it added a large group of brokers from Cushman, including Mitch Konsker and Paul Glickman.

Gregg Popkin, RFR COO, said he and Rosen chose JLL. “The reality is there is a fine line differentiating the firms,” he said.

They chose JLL because of relationships and the personalities of key principals, which he said provided the confidence RFR needed to “get [us] over the hump.” TRD

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In their words...

The funniest and most insightful comments on real estate

“The idea that someone could write a check for $500,000 when so many others have been waiting rubs me the wrong way.”

Eliot Spitzer on the EB-5 program.

“I got lost [in London].

I see this one shoe in the window. It was a beautiful, beautiful shoe.”

“Their judgment that we pay too much is wrong.

What matters is how the shareholders vote.”

Douglas Elliman’s Faith Hope Consolo, explaining how she discovered shoe brand Jimmy Choo, which she then coaxed into opening its first store in NYC.

SL Green compensation chair John Alschuler on critics of the REIT’s executive pay practices.

“When these companies grow up, they’ll want a real building and a real landlord.”

Empire State Realty Trust CEO Anthony Malkin on how his company won’t lease to WeWork, and is consciously “insulating” itself from tenants catering to a “part-time” workforce.

30 July 2015 www.TheRealDeal.com

“We have a lot of lawyers running around this company right now.”

American Realty Capital CEO Glenn Rufrano, on running the company he took over from Nicholas Schorsch after an accounting scandal.

“It turns out there is no real word in Chinese for joint venture. So together, we created a cooperation.”

Forest City Ratner’s MaryAnne Gilmartin, speaking about Pacific Park partner Greenland USA, at TerraCRG’s Only Brooklyn real estate summit.

“When your heart’s not in it, it’s time to go.”

New development executive Roy Kim, on leaving Compass for Elliman after just nine months.

“I like China. I just sold an apartment for $15 million to someone from China.”

One of numerous one-liners from Donald Trump during the announcement of his presidential bid.

Sources: Associated Press and TRD reporting.

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The Israeli bond boom NYC developers increasingly turn to land of milk and honey for low-interest capital

BY REY MASHAYEKHI he $361 million the Moinian Group raised through a bond offering on the Tel Aviv Stock Exchange in May was the greatest confirmation of a growing trend in New York real estate financing.

New York-based developers are increasingly looking to Israel’s debt market for funding.

Tapping the small-but-sophisticated corporate bond market — which was valued at $80 billion last year— is not an entirely new idea. It started nearly a decade ago as a novel approach for raising cash, but it has gained serious momentum in the last two years.

Moinian’s offering, valued at 1.4 billion Israeli shekels, set a record for the largest debt issuance in Israel to date by a U.S. real estate player. But it’s a record that isn’t likely to stand for long: Jeff Sutton’s Wharton Properties is planning a $500 million offering this summer, according to a prospectus issued in May. “Lower borrowing costs and investor

T

demand have led to an Israeli bond boom,” Joseph Moinian, founder and CEO of the eponymous firm, told The Real Deal. The appeal for New York firms, he said, stems from the fact that they can issue low-interest debt on either their entire portfolio, or a large piece of it, rather than financing properties individually. That helps increase the amount of money they can raise — and spreads out the risk.

In addition, unlike U.S. markets, the Tel Aviv Stock Exchange allows companies to

Milk, honey and cash To date, 10 American real estate companies, from Gary Barnett’s Extell Development to Stephen Ross’ Related Companies to smaller firms like the Brooklyn-based Brookland Capital, have tapped the land of milk and honey for funding.

U.S. real estate companies were responsible for up to $700 million in bonds issued on the Tel Aviv Stock Exchange in 2014, and estimates have that figure swelling to as much as $2 billion this year.

New York-based real estate firms — which have been responsible for all debt offering among U.S. real estate firms in Israel to date — appear to have a competitive advantage because of the appeal of the Big Apple.

That is convincing more developers to test the waters, especially because many of them

“You don’t need to be a $2 billion, a $3 billion company to get in. You’re a big entity in Israel if you offer $200 million [in bonds].”

ORI EISENBERG, ONE HA’AM make debt-based public offerings. They do, however, have to become public companies in Israel to do so.

For the investors, all of this creates an opportunity to place a relatively safe bet on the booming New York real estate market.

have limited, if any, access to U.S. corporate bond markets.

Sources said two financial consultants in Israel, Gal Amit and Rafael Lipa, were instrumental in popularizing the use of the country’s bond markets in the U.S. Brooklyn de-

veloper Abe Leser brought them on in 2007 to help source funding for New York projects.

But when sourcing capital proved difficult, they suggested a different approach.

In the U.S., most private developers get financing on a project-by-project basis and often establish limited liability corporations for each new venture to assume the debt.

Amit and Lipa suggested that Leser’s private firm package a portfolio of asset-backed LLCs and float the portfolio on the Tel Aviv market as a public offering.

The pair’s firm, Victory Consulting, has since worked with Pinnacle Group, Lightstone Group, GFI Capital Resources, Brookland and other New York players to do the same. Lipa said Victory has been involved in the deals for 7 of the 10 U.S. firms that have issued bonds.

The approach not only allows moderately sized, private American real estate firms access to the type of corporate bond offerings usually accessible only by industry behemoths, but also gives them far lower interest rates than they could find in the U.S. In the U.S., the LLCs tend to use mezzanine loans, which generally carry rates in the double digits, whereas Israeli bonds are generally issued in the low-single digits.

“The traditional structure in the U.S. is, we do each project by an LLC and do debt based by the project. You don’t see bonds on Continued on page 116

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ARE THERE ENOUGH BILLIONAIRES TO FILL ‘BILLIONAIRES’ ROW?’ An imperfect data dive into the world of extreme wealth

BY WILL PARKER AND KONRAD PUTZIER n 1691, British philosopher John Locke proposed “the price of any commodity rises or falls by the proportion of the number of buyers and sellers.” His statement became the first commandment in the bible of modern business: Supply and demand drives everything.

But at least in New York’s ultra-luxury condo market, Locke’s words are tough to come to terms with. It’s easy enough to count supply, or number of listings. But quantifying demand becomes very tricky when faced with an increasingly global buyer pool.

This creates a serious challenge for developers, who need to know the price they can sell individual units for to decide if doing a project is worthwhile. When the buyer pool was largely local, this was easy enough.

But who today knows how many people around the world can afford an ultra-luxury apartment, and how many of them would be willing to buy one in New York?

This dilemma doesn’t just concern luxury developers, but the whole industry.

If developers are overestimating global demand for high-end New York product, they could be inflating a luxury bubble that could drag down the entire market. If they are underestimating it, the industry may well be misdirecting its resources.

With so much at stake, The Real Deal dove into the available data on supply and demand in the luxury sector. Be warned: The numbers come with several caveats, but they do provide a sense of where the market could go.

I

Fuzzy math There are at least 99 single-residence listings priced at $30 million or more in 34 July 2015 www.TheRealDeal.com

Manhattan, according to New York real estate appraiser Jonathan Miller. That’s a staggeringly high number by historical standards.

The question is, just how many potential buyers for these pads are out there?

“If they’re going to spend $30 million on a single asset, you’re really looking at someone who is a demi-billionaire,” said David Friedman, the president of Wealth-X, the global wealth data aggregator.

Wealth-X estimates there are 367 people worth half a billion dollars or more who already own a primary residence in New York City, and 8,410 individuals with that net worth across the globe.

In other words, the potential buyer pool for the 99 properties now listed is up to 8,410 individuals. For developers to sell all 99 listings at or near asking price, at least 1.18 percent of the world’s demibillionaires would have to be in the market for a $30-million apartment right now.

That’s a tall order, especially when apartments in the $10 million-plus price range are considered.

According to Friedman, ultra-high-networth individuals (people with a net worth of $30 million or more) generally hold 13 percent of their net assets in luxury real estate they actually live in.

With that thinking, most individuals who buy units that cost $10 million or more likely have a net worth of at least $100 million.

About 3,600 of the 57,300 individuals in existence who are worth $100 million-plus already have their primary home in New York City, according to Wealth-X. There are currently 455 listings at or

NUMBERS OF HIGH NET WORTH PEOPLE

NEW YORK CITY

8,655

2,410

NET WORTH $30M+

NET WORTH $100M+

211,000

GLOBAL

NET WORTH $30M+

367 NET WORTH $500M+

57,300

NET WORTH $100M+

8,410

NET WORTH $500M+

NUMBER OF CURRENT MANHATTAN RESIDENTIAL LISTINGS BY PRICE

1,744

$3.8M+

455

$10M+ $30M+

99

above $10 million in Manhattan.

This would mean around 0.8 percent of the world’s population of individuals worth $100 million or more would have to be apartment hunting in the Big Apple for supply in the $10 million-plus range to be met. That’s a more favorable ratio than for the $30 million-plus range.

In other words, the data seem to indicate that developers would be better served

Source note: Data provided by Wealth-X. Top chart shows figures for high net worth individuals by their primary residence.

building apartments at the lower end of the ultra-luxury market.

“Two million square feet, potentially, in the next few years is a little daunting,” HFZ Capital Group’s Ziel Feldman said at The Real Deal New Development Showcase and Forum in May, speaking of the volume of new ultra-luxury units being built on 57th Street alone.

Continued on page 118

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Foiled plans: AG’s office limits condo disclosures Open government advocates say action shielding early plan filings ‘contrary to law’

BY WILL PARKER o matter what New York’s next multibillion-dollar condominium project is, the details are likely to stay under wraps for longer than in the past.

That’s because the State Attorney General’s Office stopped making condo offering plans available to the public prior to their approval.

The move will save the AG’s office a lot of procedural headache and paperwork, but a noted open government advocate said the de-

N

cision was a blow to transparency and described it as “contrary to law.”

For many years, the public and the media could view developers’ submitted condo plans before they were approved, by filing a Freedom of Information Law request with the AG’s office.

But a Real Estate Finance Bureau memo dated May 8 stopped that, citing General Business Law 352-e of the Martin Act to justify the new action.

The Martin Act dates to 1921,

but rose to prominence during the tenure of AG Eliot Spitzer, then known as the “Sheriff of Wall Street,” who employed its powers to obtain information about shady practices at financial institutions.

Now the law is being wielded to scale back access to information that’s been public for years.

Why the sudden change?

A source at the AG’s office told The Real Deal the decision followed a recent uptick in requests to view pre-filed offering plans. The surge

in activity, and related paperwork, prompted a review of whether the office was required to comply with such requests in the first place. It concluded that it was not.

The interpretation of the Martin Act in the memo stated offering materials for a real estate security, such as a condo offering plan, cannot be publicly distributed until they have been officially “filed,” meaning not only submitted to the AG, but also approved.

The memo also cites Public Of-

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ficers Law 87(2)(a), which details the rules of the state’s Freedom of Information Law and the qualifying exemptions from it.

But Robert Freeman, the executive director of the state Department of State’s Committee on Open Government, dismissed this reasoning as poppycock. He maintained nothing in the law would exempt these “prefiled” offering plans from FOIL. “A policy of not accepting FOIL requests until a certain point is reached, in my opinion, is simply contrary to law,” said Freeman, who many consider the state’s de facto FOIL “czar.”

“The first exemption in FOIL refers to records which are specifically exempted from disclosure by state or federal statute,” he continued, quoting from Public Officers Law 87(2) (a). “I don’t see anything there that requires confidentiality” for these plans, he said, adding that he saw nothing justifying an exemption in General Business Law 352-e, either.

When exemptions are made, agencies need to be clear about why the disclosure of documents would do harm and who would be harmed, Freeman said. The finance bureau’s memo, however, while seeking to show that the early release of plans circumvents what are essentially consumer protections in the Martin Act, gives no specific indications as to what was harmful about condo releases, nor does it state how limiting disclosure will reduce harm going forward.

But some do see the harm of revealing too much too soon.

Stuart Saft, a top real estate attorney and partner at Holland & Knight, said he agreed with the AG’s decision.

“While an offering plan is being reviewed at the AG, it can change significantly,” Saft said. “By allowing FOIL requests of what is essentially a draft, potentially incorrect information is being disseminated, which is in no one’s best interest.”

The finance bureau memo does allow FOIL requests for submitted (but not yet “filed”) condominium and coop conversion plans, stating that current tenants of occupied buildings have a right to see plans before they are approved.

Developers may also file what’s called a CPS-1 application, which allows them to test the market with some details of a plan, including pricing information and floor plans.

CPS-1 applications will also still be subject to FOIL requests, as they can be released, the memo states, “without compromising the purpose of the Martin Act.” TRD

421a: Here to stay?

The New York State Capitol

Short-term deal has industry prepping for next round of negotiations

Gov. Andrew Cuomo WHAT HE WANTED: The governor was a key

supporter of instituting prevailing wages for construction workers on 421a projects.

WHAT HE GOT: 421a was extended for six

months, with a four-year extension contingent on a wage deal.

WHAT HE DIDN’T GET : A definitive prevailing

wage deal; the final agreement will likely be a compromise.

“If they come up with an agreement on prevailing wage, the program will continue for four years … If they don’t come up with an agreement in six months, the program will expire.”

Mayor Bill de Blasio WHAT HE WANTED: The mayor wanted to

eliminate 421a for most condo projects, but extend most of the program, to end vacancy decontrol, to create a mansion tax and a new “menu” of affordable options for developers.

BY REY MASHAYEKHI ut of a seemingly perfect storm of gridlock, an incomplete, last-minute deal on rent regulations and the 421a tax abatement program emerged in Albany late last month. But a key yet-tobe-hammered out provision could hamper developers’ ability to plan projects for the rest of the year.

In Albany, end-of-session packages are known as a “big ugly.” And in this case, the name befits the circumstances. The sudden and shocking turnover in the leadership of both houses of the legislature — Sheldon Silver and Dean Skelos gave up their respective roles atop the Assembly and Senate amid real estate-related corruption scandals during the session — helped bring what were already going to be tough negotiations to a near impasse.

That situation was exacerbated by a highly public schism between Gov. Andrew Cuomo and Mayor Bill de Blasio. The mayor proposed his own comprehensive reforms for the programs, which won the backing of the Real Estate Board of New York, but the governor labeled them “a giveaway to developers.”

The bill passed June 25 had something for almost everyone, but left unresolved the key issue of increasing wages for construction workers at 421a projects. Rent regulations were extended for four years, while 421a got six months.

By the end of the year, REBNY and the construction unions must work out an agreement on wages. If they reach a pact, 421a will be extended for four more years. If not, it could be scuttled.

WHAT HE GOT: Vacancy decontrol rent price

O

38 July 2015 www.TheRealDeal.com

“cap” was increased slightly.

421a abatements were extended to 35 years and Manhattan condo and co-op projects were excluded.

All projects that get a 421a exemption must include affordable components.

His idea of a new “menu” of options for developers of affordable housing was adopted.

WHAT HE DIDN’T GET:

Vacancy decontrol elimination plan rejected. No mansion tax. Condo projects outside Manhattan still can qualify for 421a abatement.

“We’ve secured a strong new program with most of the reforms we sought.”

REBNY WHAT IT WANTED: REBNY supported ending

421a on condo projects and a revised menu of affordable options for developers.

WHAT IT GOT: A short-term 421a extension,

giving it time to hammer out a wage deal with unions.

WHAT IT DIDN’T GET: The full extension it was Steven Spinola

hoping for, which continues the uncertainty for the industry.

“We look forward to working together to craft a longterm, comprehensive plan to ensure that a reformed 421a program can maximize the creation of affordable housing in New York City for years to come.”

(Joint statement issued by outgoing REBNY President Steven Spinola and Gary LaBarbera of the Building and Construction Trades Council )

Now, with billions dollars at stake for developers, the industry is gearing up for the next round of negotiations.

And both sides agree that ending the program, which is tapped for the vast majority of rental projects in the city, would strike a major blow to affordable housing.

“Most of our product goes to the middle-class,” Boaz Gilad of Brooklyn-based developer Brookland Capital told The Real Deal. “It’s going to be very, very difficult to build smaller-scale developments on prevailing wages, and the middle-class won’t be able to afford the rentals that are so needed in Brooklyn.”

The timeline leaves developers scrambling to get projects in the ground before the six-month extension expires, while making it more difficult to plan for new projects, especially rentals, since the cost of labor is still up in the air.

“There’s no way to know anything,” David Schwartz, a principal at Slate Property Group, told Capital New York. “We don’t even know what the issues are. We don’t know anything, and it’s impossible to make that gamble, because it’s not possible to build rentals without 421a.”

Schwartz told the website that four or five of his rental projects in the pipeline will likely be scrapped for condos.

That increases the stakes even more.

“I think there will be challenges and everybody will have to compromise,” lobbyist Suri Kasirer of Kasirer Consulting told TRD. “I think it’s going to be tough, because this was a big win for the unions, but on the other hand, everyone wants construction and development to happen.”

The 421a extension adopts several of de Blasio’s proposals: • The length of the tax abatement goes to 35 years from 25.

•All rental projects receiving the subsidy must include affordable units.

•The new law gives developers a “menu” of three affordable housing options to choose from.

The new rent laws, meanwhile, don’t end vacancy decontrol, as the mayor proposed, but do increase the threshold at which affordable units can be deregulated to market-rate, to $2,700 from $2,500.

“There will be quiet discussions among the participants [so] when they come back to repair these problems in six months, they can resolve these issues,” said political strategist Hank Sheinkopf.

Sheinkopf who added that while real estate companies and their stakeholders are significant political donors, the industry’s role in the debate was “complicated by the scandals of late, which has reduced [their] leverage.”

“If lobbyists had all the power people say they do,” he noted, “then someone could flick a switch and it would all go away.” TRD

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Insiders provide a stinging critique Study from National Association of Realtors offers frank view of challenges facing industry

BY KENNETH HARNEY hen the country’s largest real estate trade group bares some of its innermost worries, should homeowners, sellers and buyers pay attention?

They will, if they want valuable insights into current issues and problems in the housing marketplace.

It might even help save some money or avoid a bad experience with an agent or broker.

In an unusual move for a major American trade association, the million-member National Association of Realtors released a frank and sometimes searing assessment of top challenges facing the industry for the next several years.

The critiques hit everything from the professionalism and training of agents to the commissions charged to consumers and even the association’s leadership.

W

Consider these broadsides to get the flavor of the report: • “The real estate industry is saddled with a large number of part-time, untrained, unethical and/or incompetent agents. This knowledge gap threatens the credibility of the industry.” Ouch!

that will most likely become commonplace in the next five to 10 years.” The reference here is to technology-driven discount brokers who are making inroads in many markets. Baby boomers looking to downsize and millennials seeking first homes are especially interested in shaving fees to save money.

• Real estate brokerages face their own challenges, such as compliance with aggressively enforced federal regulatory policies. Among the most prominent, according to the report: The Consumer Financial Protection Bureau’s anti-kickback and referral-fee rules governing brokers’ financial arrangements with title companies, lenders and others. Though “most brokerage companies are either ignorant of the fact or believe they are in compliance,” said the report, “most are likely in violation already.”

The 160-page study, known as the “DANGER” report (www.dangerreport.com) was commissioned

by NAR’s “strategic thinking advisory committee” and authored by industry consultant Stefan Swanepoel of the Swanepoel/T3 Group. It is based on a survey of 7,899 Realtors, interviews with 74 top realty CEOs plus additional research. Other problem

The critiques hit everything from the professionalism and training of agents to the commissions charged to consumers and even the association’s leadership.

• Low entry requirements for agents are a key problem. While other professionals often must undergo extensive education and training for thousands of hours or multiple years, realty agents need only complete 70 hours on average to qualify for licenses to sell homes, with the lowest state requirement for licensing at just 13 hours.

Cosmetologists, by contrast, average 372 hours of training, according to the report.

• Professional, hard-working agents across the country “increasingly understand that the ‘not-sogood’ agents are bringing the entire industry down.”

Yet there “are no meaningful educational initiatives on the table to raise the national bar.”

• The commissions that brokers and agents charge are under attack and highly vulnerable to reductions because of pressure from cost-sensitive consumers.

While typical commission rates in this country are around 6 percent, fees in other developed countries are significantly lower. In the United Kingdom, they average 1 to 2 percent; in Australia, 2 to 3 percent; Belgium, 3 percent; Germany, 3 to 6 percent.

• In response to consumer demand for lower fees, “a growing new generation of brokers and agents [is] exploring ... new business models and pricing models

40 July 2015 www.TheRealDeal.com

areas it details concern multiple listing services, state Realtor associations and NAR itself.

Sara Wiskerchen, managing director of media communications for NAR, emphasized in an interview that the study was stimulated by the “belief that it is healthy and helpful to hear what others are saying, especially those ideas that might be uncomfortable or disagreeable.” The association is “neither celebrating or disappointed in the author’s perspectives,” she added.

Consumers will likely have several takeaways from the study. Top of the list: Since the study alleges that “a large number” of real estate agents lack sufficient training and competency, agents should expect more clients to question their experience and track record. In particular, they may ask about advanced training and certifications.

Given the report’s emphasis on the threats to traditional brokerages posed by innovative, techdriven alternatives now growing in the market, more clients may also ask about discount pricing, whether for a sale or purchase. And agents should expect a growing number of clients to try to negotiate commissions.

Ken Harney is a syndicated columnist.

4<C2?;:2;A /?623@ Mortgage lenders seek disclosure rule delay Mortgage lenders are lobbying the federal government for a nearly two-year delay in the enforcement of new consumer protection rules. The Truth in Lending and Real Estate Settlement Procedures Act, which was created by the Consumer Financial Protection Bureau as part of the regulatory response to the mortgage crisis, requires lenders to provide borrowers two sets of disclosures, at the beginning and end of the process, simplifying the current four-set system.

Richard Cordray, CFPB director The rules were slated to go into effect Aug 1. But the American Bankers Association said its members aren’t prepared for the change, blaming key software providers for dragging their feet, the New York Times reported. The bankers are supporting legislation that would prohibit the enforcement of TILA-RESPA until Jan. 1, 2016. More than 20 consumer groups have signed a letter opposing a new law. CFPB director Richard Cordray has acknowledged the banks’ difficulties but so far is sticking to the Aug. 1 deadline.

NYCHA may sell some public housing land The New York City Housing Authority is considering selling public land to developers as part of its effort to balance its finances. NYCHA’s chronic deficit is projected to reach $200 million a year by 2020, and the agency has $17 billion in unfunded capital needs. To address this, Mayor Bill de Blasio and NYCHA CEO Shola Olatoye proposed the 10-year “Next Generation NYCHA” plan, which if enacted, would close the deficit and cover $7 billion of the funding gap. One key plank would have NYCHA lease parcels of public NYCHA CEO Shola Olatoye housing land to private developers who agree to make 50 percent of the units built there affordable. The agency’s general manager, Michael Kelly, told the City Council that for the first time, the agency might also sell land outright, according to Capital New York.

Kelly declined to further clarify the agency’s plans.

City won’t purchase Williamsburg waterfront site City officials admitted there’s no room in the budget for a prime Williamsburg site the city has sought since 2005. The 11-acre EastRiver-front plot between North 10th and North 12th streets, known as CitiStorage for the owners of the warehouse that occupies it, was selected by Mayor Michael Bloomberg’s Bushwick Inlet Park administration in the 2005 rezoning of Williamsburg to become the core of the planned Bushwick Inlet Park. Instead, steep price increases in the area have prevented the purchase. The city has already spent $300 million to acquire the rest of the sites for the park, rid them of pollution, and develop them, more than double the original amount targeted for spending on the entire park, according to Crain’s.

Conversion of Forest Hills hospital to school nixed The former Parkway Hospital in Forest Hills, empty since 2008, will remain that way for the time being. The abandoned 70,000-squarefoot medical facility at 70-35 11th Street, built in 1963, was for a few years the city’s only privately owned hospital, until it was closed by the New York State Commission on Healthcare and Facilities, despite the vehement objections of its owners, The former Parkway Hospital Parkway Hospital Associates. The building has since decayed, with boarded-up windows and graffiti on the ground floor. Several attempts to auction the property have failed to gain traction. Area parents hatched a scheme in May to convert the former hospital into a school, according to DNAinfo, but those plans were quashed by the Department of Education, which rejected the idea without detailing its reasoning. Compiled by Ariel Stulberg

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THE EAST END

In the Hamptons:

BIG RENTS,

BIGGER PERSONALITIES

A look at the colorful characters trying to rent their homes for massive amounts — many above $1 million — during the summer

BY C.J. HUGHES elebrity doctors. Notorious lawyers. Philanthropists. Hedge funders. And, of course, real estate players. They are all among the East End homeowners looking to rent their Hamptons properties for astronomically high prices this year.

At the start of the summer season, The Real Deal pulled the priciest full-season rentals available on Hamptons Real Estate Online, a leading East End listing database. Then, in a first, TRD matched those listings with the owners behind them, using property records. We also tried to determine whether they actually rented for their listed amounts.

C

What we found was multiple homes with asking prices of over $1 million for the Memorial Day to Labor Day

though left it on the sales market with a roughly $21 million asking price.

stretch — plus a slew of others asking well over $600,000.

We also uncovered a colorful cast of characters. One owner has been a dentist to the Rolling Stones. Another has been accused of hiring prostitutes.

But many of these boldfaced names have been unsuccessful in finding renters.

“The high end has been slow so far,” said Douglas Elliman’s Carol Nobbs. Until early last month, Nobbs was marketing a $1 million rental in Water Mill. Without any full-season takers, the owner pulled it as a rental,

Like that property, a number of these mega rentals are also up for sale, though sussing out information in this notoriously opaque market is never easy. For starters, many of the properties are on the market as “open” listings, meaning multiple brokers are marketing them in a sort of free for all. Some listings are, however, exclusives or co-exclusives, but are not necessarily labeled as such.

Below is a sampling of some of the more colorful owners who had listed their homes for mega amounts (some as much as $1.6 million), at the start of the season.

38 TWO MILE HOLLOW ROAD, EAST HAMPTON: 38 TWO MILE HOLLOW ROAD, EAST HAMPTON: $1.6 MILLION $1.6 MILLION Asking a hefty $1.6 million in rent for the full season, this eight-bedroom waterfront home was the most expensive of the bunch. But despite it now being a month into the season, at press time it had yet to rent.

Why the astronomical price tag? It’s one of the only new-construction homes with a good stretch (200 feet) of direct oceanfront real estate, said the Corcoran Group’s Susan Breitenbach, who had the listing last month along with two other firms. The house replaced a home owned by Washington, D.C.-based power lobbyist and Clinton friend Liz Robbins, who, according to property records sold it in 2007 to an unnamed buyer for $16 million.

Robbins’ home, which was dubbed “Beautiful Joy,” was knocked down to make way for the new one, which was completed in 2013 and promptly listed for $45 million.

However, the current property — which has a pool, tennis 42 July 2015 www.TheRealDeal.com

East Hampton’s 38 Two Mile Hollow Road was up for rent for $1.6 million at the start of the season. Left, Corcoran Group’s Susan Breitenbach, who’s marketing the property. Right, lobbyist Liz Robbins, who sold a home previously on this site, which was later replaced with this new construction house.

court and cabana — did not sell and is now on the market for $39.9 million.

Elliman, Sotheby’s International Realty and Corcoran are

sharing the rental and sales listings.

On the rental front, Breitenbach said, “It got off to a slow start, but it’s getting busier.”

THE EAST END 160 ROAD,SOUTHAMPTON SOUTHAMPTON 160OX OX PASTURE PASTURE ROAD, VILLAGE: $1.2 MILLION VILLAGE: $1.2 MILLION This 12-bedroom Georgian-style estate, which was asking $1.2 million for the summer rental season, appears to have been sitting on the sales market for seven years.

The home — which was designed by architect Grosvenor Atterbury and completed in 1915 — goes by the name Linden and is currently listed for $45 million, down from $55 million in 2008, according to news reports.

Its owner, German business mogul Jürgen Friedrich, who founded the European operations of Esprit Holdings, the apparel giant, had a net worth of $1 billion in 2008, according to Forbes.

Southampton’s 160 Ox Pasture Road was asking $1.2 million at the start of the season. German business mogul Jürgen Friedrich, who owns the home, also has it on the market for $45 million.

launched in 2010 and has since donated to organizations ranging from the Fresh Air Fund to Planned Parenthood to the Central Park Conservancy, according to the foundation’s website.

Gary Siegler, however, made his money in finance, Bridgehampton’s 271 Dune Road, which was asking $1.2 million for the season. Gary and Barbara Siegler working with corporate raider own the home.

Carl Icahn and then co-founding the SC Fundamental 271 DUNE BRIDGEHAMPTON: 271 ROAD, DUNE ROAD, BRIDGEHAMPTON: Value Fund, a hedge fund. $1.2 MILLION In 2013, the Sieglers landed in the headlines when $1.2 MILLION Gary and Barbara Siegler own this oceanfront they filed a wide-ranging lawsuit against Miami’s historic Bridgehampton property and had it up for rent for a and exclusive Surf Club — a nine-acre waterfront resort that Winston Churchill and other high-profile guests massive $1.2 million, according to HREO. The couple runs an eponymous foundation, which have frequented — where they were members and

He hasn’t been on the magazine’s list of billionaires since and is currently retired in Switzerland, according to Esprit’s website, though he still serves on its board.

Still, he stands to make a pretty penny if the home, which includes bocce and tennis courts, gets anywhere near the asking price. He bought the estate in 2002 for $8.5 million, according to news reports. The property was reportedly under contract in 2012, but then went back on the market.

A representative for Friedrich declined to comment.

The Global Group’s David Schiffman, Corcoran’s Tim Davis and Elliman’s Luisa Keszler, who are all marketing the property as a rental, did not respond for requests for comment. (Keszler is also marketing the home for sale.) shareholders. Among other things, the Sieglers claimed they were harassed and suspended after complaining that the controversial $116 million price the club sold for in 2012 was too low. The buyer, a Turkish developer, is modernizing the complex with tall Richard Meierdesigned glass towers that will contain 150 condos. A pared-down version of the lawsuit is currently pending in court.

Sources say the couple’s Hamptons house is not for sale, and as of the middle of last month, the rental listing was still posted, suggesting it had not found a taker.

Sotheby’s Harald Grant, an agent on the listing, did not return calls for comment. A call left with the Sieglers’ foundation was not returned.

But with controversy surrounding their Miami apartment, perhaps the Sieglers will be content to stay put on the East End.

535 ROAD,WATER WATERMILL: MILL: 535AND AND553 553FLYING FLYING POINT ROAD,

$1 MILLION $1 MILLION Manhattan cosmetic dentist Marc Lowenberg — who has worked with celebrity clients including the Rolling Stones, Heidi Klum and Chris Rock — is asking $1 million for the season for his two adjoining Hamptons properties.

The listing includes an eight-bedroom main house and a three-bedroom guest cottage. The “compound” sits behind the protection of an electric gate, according to the listing, which is held exclusively by Elliman’s Nobbs. The two parcels, which can be separated, are also for sale with a $20.9 million price tag.

While Lowenberg had yet to find any rental takers as of press time, he seemed unfazed. He told TRD that he leased his home for April, May and June for a total of $275,000. Plus, he said others have been interested in renting it for short stays, like 4th of July weekend. “But this is not a bed-and-breakfast,”

REAL ESTATE PLAYERS WITH HOMES TO RENT … … for around $500K for the summer season

BY C.J. HUGHES everal other industry players also had their

S

Hamptons homes up for rent at the beginning of the season. Here are a few who were asking around $500,000 for the Memorial Day to Labor Day stretch, according to HREO.

Marc Lowenberg, a dentist to the stars, put this Water Mill house and an adjacent guest house up on the rental market for $1 million.

he said. “It would just be a hassle.”

For the last five years, Lowenberg said he has rented the property — last year it was listed at $1 million for the season, though it’s unclear what it rented for. He added that he usually has someone swoop in at the last minute.

“The house has every bell and whistle,” Lowenberg said, citing a sauna, gym and 15-seat movie theater.

• Manhattan residential power broker Dolly Lenz — who clocked in at No. 2 on TRD’s top Manhattan agents ranking this month with nearly $500 million in listings (see related story on page 48) — had her eight-bedroom home at 495 Ox Pasture Road in Southampton on the market for $495,000. The Corcoran Group’s Tim Davis, who had the listing, did not return a call, and Lenz and a representative didn’t respond to emails for comment.

• Real estate investor and telecom mogul Michael Hirtenstein — who sold his company WestCom Corporation for $270 million in 2005 — had his 230234 Old Montauk Highway home up for rent with a $465,000 asking

But Lowenberg, who along with his dental partners at Lowenberg, Lituchy & Kantor, is a regular go-to media source on dental trends like teeth whitening, is looking to unload the home. He is getting married soon, and his fiancée does not want to live in the house because he lived there with his ex-wife, he said.

Continued on page 114

price. He bought the home for $10 million in 2013.

Hirtenstein, a partner at the nightlife EMM Group, which owns Catch NYC in the Meatpacking District, did not return a call for comment.

• Michaela Keszler, with Douglas Elliman’s Southampton office, listed her eightbedroom Southampton Village home at 104 Foster Crossing for $560,000 for the full season. Keszler — who also develops Hamptons’ waterfront homes with her husband, Stephan — has had a good year. She was involved in the $37 million sale of 616 Ox Pasture Road in Southampton, one of the priciest sales in the Hamptons last winter. Keszler did not return a call for comment.

Additional research by Will Parker and Jennifer White Karp

www.TheRealDeal.com July 2015 43

FINANCE

CROWD FAVORITES NYC’s prominent crowdfunders are upending the status quo — and more changes are coming down the pike

BY KONRAD PUTZIER eal estate crowdfunding platforms are growing at a dizzying pace.

Observers estimate that there are now well over a hundred crowdfunding platforms — websites that raise money for development projects from everyday investors— that are based in the U.S. and specialize in real estate.

“When we first had industry meetings three years ago, real estate wasn’t even on the horizon,” said Richard Swart, a research scholar at UC Berkeley’s Haas School of Business who specializes in crowdfunding. “We were all surprised by how quickly the real estate space has grown.”

And even though it’s still young, real estate crowdfunding is on the brink of another transformation.

It’s been nearly two years since Title II of the U.S. JOBS Act, which legalized online solicitation of private investments from accredited investors, took effect.

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Fundrise Capital raised for projects: $60 million Venture funding raised: $41 million ounded in 2010 by brothers Ben and Dan Miller, Fundrise was the first functioning real estate online crowdfunding platform in the U.S. And as a result, it’s more of a household name, at least in the industry, than many of its rivals.

In New York, the company claims to have invested in just under $30 million in deals, including bonds for Silverstein

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44 July 2015 www.TheRealDeal.com

Properties’ 3 World Trade Center, which it bought on the secondary market, as well as smaller projects in Harlem and Brooklyn.

It has also pioneered the practice of prefunding deals — guaranteeing developers or real estate investors a loan upfront with its own money, and then taking that deal out to the so-called “crowd.”

Unlike some competitors, Fundrise has the cash reserves and big-money backers to do that. The firm has raised a total of $41 million in venture capital funding from in-

Now crowdfunders are not only turning to accredited investors — defined as individuals or households with an annual individual income over $200,000, joint income over $300,000 or a net worth of more than $1 million — but also to institutions to raise cash.

And business models are rapidly changing to adapt to the new landscape (see related story on page 48).

This month, TRD looked at most high-profile players based in New York or with a significant presence here, to get a sense of which companies are blazing the trail for what has become one of the hottest investment vehicles in the industry.

Quantifying the sector is difficult, both because most crowdfunding offerings are only available to accredited investors and because crowdfunding platforms are not required to reveal how much capital they’ve raised. But below are some of the companies making waves in the sector, roughly ordered based on their prominence.

vestors, including Silverstein Properties’ Marty Burger and Tal Kerret and Ackman-Ziff Real Estate Group.

Dan Miller told TRD that the firm began to pre-fund because it was seeing a “huge jump in volume and quality” of deals and felt fully confident in its ability to raise future cash.

The company, which has long focused on funding the acquisition and development of urban multifamily and mixed-use properties with sums around $1 million, is now going after much larger deals.

For two of its current projects, one in Brooklyn and one in Atlanta, Fundrise is raising $10.5 million and $15 million, Miller said. In addition to everyday investors, Fundrise, like many of its competitors, allows institutional players to invest through its website. And those institutional players now provide more than half of the funds for Fundrise’s larger deals.

Silverstein’s Marty Burger said Fundrise’s deal size has grown significantly year-over-year. www.TheRealDeal.com July 2015 45

FINANCE “Two years ago it was half a million, last year it was a million,” Burger said at TRD’s New Development Forum & Showcase in May. “It’s only a matter of time before it’s tens and hundreds of millions. That’s the quality of this investor base.”

Prodigy Network Capital raised for projects: $106 million Venture funding raised: n/a rodigy Network is an outlier among U.S. crowdfunders. It is the only major platform that also develops all of the projects it raises cash for.

In addition, unlike its rivals, it raises most of its money abroad —with a sizable chunk coming from South America. Plus, it only raises equity, and it finances sizable deals that most other platforms haven’t dared touch.

Launched in Miami by Colombia native Rodrigo Niño in 2003 (see related story on page 48), it started as a new development marketing company. But it began U.S. crowdfunding in 2012, when it went into contract to buy the office building 84 William Street, for which it raised more than $40 million. That building is now under construction as extended-stay hotel AKA Wall Street.

The firm since bought 17 John Street in Lower Manhattan, which it’s turning into co-working spaces and short-term rentals, and the AKA United Nations at 234 East 46th Street, for which it claims to have raised $32 million and $12 million, respectively. While Prodigy and its partners raise the equity for its projects from the crowd, they finance the bulk of those projects’ costs through loans from banks such as CIBC and Deutsche Bank.

In May, Prodigy went into contract to buy two former Ring portfolio buildings, 114 East 25th Street and 331 Park Avenue South, from MetroLoft for a combined $100 million, for which it plans to raise a combined $45 million from the crowd. As with 17 John Street, Prodigy plans to turn both properties into combined co-working and shared-living spaces. That puts Prodigy at the forefront of two of the hottest trends in New York real estate: shared spaces and crowdfunding.

Unlike many of its peers, Prodigy has not yet allowed institutions to invest equity in its projects, but that may change.

“We are in conversations to team up in a way that makes sense,” Niño said.

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Carlton Accredited Crowdfunding Capital raised for projects: $150 million Venture funding raised: n/a ccording to its own numbers, the Carlton Group’s crowdfunding platform has raised more money for projects than any of its peers. But so far, this is crowdfunding without a crowd.

The company, an international investment-banking firm that raises equity for large transactions, raised $150 million since launching its crowdfunding platform in April 2014. But that money came from only two wealthy investors, according to Carlton’s Chairman Howard Michaels, who declined to name them.

Moreover, Michaels explained that

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00 July 2015 www.TheRealDeal.com

while those investors looked at the projects they’d be financing online, he met them at a crowdfunding conference and closed the financing in a more traditional manner — with phone calls and site visits.

So while Carlton is taking advantage of the JOBS Act, the firm isn’t crowdfunding in the strictest sense: raising small sums from lots of investors.

But that is about to change. Indeed, while many crowdfunding platforms are opening the doors to more institutional investors, Carlton is moving in the opposite direction.

Within the next month, Carlton plans to launch a re-designed website and low-

a traditional crowdfunding model and becoming more of a technology-based conduit between institutions — with some participation from the crowd.

Founded in 2012 by former business consultant and investment banker William Skelley and former investment banking analyst Sohin Shah, the platform until now focused on funding the development and acquisition of both commercial and residential properties across the country. It claimed to be the largest U.S. crowdfunder by deal volume in early 2014, with a total of more than $20 million raised for deals. Todate, it claims to have raised $13 million for

Fundrise Co-Founders Ben Miller and Dan Miller ; iFunding Founder William Skelley

Patch of land Co-founders Jason Fritton and Brian Fritton; Carlton Chairman Howard Michaels

Sharestates founders Radni Davoodi, Allen Shayanfekr and Raymond Davoodi

writing deals yourselves,” he said, in effect dismissing a core notion of crowdfunding.

Instead, the firm no longer originates loans, but simply buys them from institutional lenders looking for cash, and then passes them on to the crowd and, increasingly, other institutional players.

Patch of Land Capital raised for projects: $24 million Venture funding raised: $25 million alifornia-based Patch of Land has so far focused on funding small fixand-flip loans for single-family residential buildings nationally, but it, too, is in the midst of a transformation. The company is now beginning to go after institutional backing as a way to land larger and more diverse deals, and is also looking to fund more projects in New York.

Jason Fritton, who co-founded the firm in 2012 with his brother Brian Fritton and partner Carlo Tabibi, said while Patch of Land started out with a focus on “residential value-add,” it is evolving. “[We] are now working to become more of a holistic commercial lender,” Fritton said.

Currently, most of its loans are under $400,000 and carry one-year terms for borrowers and investors, but Fritton said the firm will start issuing larger loans with more than three-year turnarounds for both commercial properties and larger multifamily buildings. The company, he said, currently has $50 million worth of projects in the pipeline, including several in New York City, which have not yet been made public.

The firm’s recent expansion was powered in no small part by the institutional investors it’s already captured. Last year, it secured a $25 million commitment from a hedge fund, according to Fritton, who also said that he is currently in negotiations with 14 other institutional players.

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Sharestates Capital raised for projects: $11 million Venture funding raised: n/a ong Island-based Sharestates, which launched in 2013, has a business model similar to Patch of Land: it finances fix-andflip loans with an average value of $350,000.

So far, the firm, founded by title insurance veterans Allen Shayanfekr, Radni Davoodi and Raymond Davoodi of the Atlantis Organization, has raised $11 million from the crowd for 25 projects.

But that number soon could increase dramatically. The firm is planning to add another $10 million worth of deals by the end of this month.

In May, the startup launched a partnership with the Texas-based Ranger Direct Lending Fund, which will commit up to $30 million to pre-fund Sharestates’ deals.

“In our view, Sharestates is one of the most promising real estate platforms in the direct lending industry,” Ranger executive Bill Kassul said in a statement at the time.

Kassul was not available to be interviewed for this story.

L Invest Thor founder Joe Sitt; Cityfunders Founders David Behin and Albert Behin

er its individual investment minimum to $25,000, from the current $1 million.

“The reason we went into crowdfunding is the widened scope of people that can access our transactions,” Michaels said, adding that he hopes lowering the investment minimum will give retail investors greater access — while also opening up a new investor base for Carlton.

iFunding Capital raised for projects: $30 million Venture funding raised: $4 million ew York-based iFunding has arguably made the most dramatic strategy shift of all its crowdfunding rivals.

In effect, the firm is moving away from

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projects in New York alone.

But in the first quarter of last year, one of its deals unraveled.

The firm set out to fund a portion of a $250 million, 250,000-square-foot condo tower at 90-94 Fulton Street in Lower Manhattan to be developed by the Mavrix Group. But the deal fell apart over disagreements between Mavrix and a potential development partner over control of the project, according to Skelley.

Skelley explained he eventually realized the old business model of originating loans with the help of technology wasn’t going to work in the long run.

“I don’t think you can create an algorithm and scale a business originating and under-

Continued on page 116

www.TheRealDeal.com July 2015 45

FINANCE

CROWDFUNDING WITHOUT THE CROWD As small-time investors get pushed to the sidelines, the sector is looking less like the revolution it was at the outset

BY KONRAD PUTZIER hese are exciting times for Fundrise, the Washington, D.C.-based crowdfunding platform. After spending the bulk of its five years financing small-scale projects, the firm is currently working on its biggest deals yet — by far.

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The company, one of the most high-profile crowdfunding platforms, is raising $10.5 million and $15.5 million for two undisclosed commercial properties in Brooklyn and Atlanta, according to co-founder and president Dan Miller.

The catch: most of that money won’t actually come from the so-called “crowd.”

“For larger deals, 50 percent to two-thirds [of the debt] is sold to institutions,” Miller said.

And other crowdfunding platforms — websites that have traditionally raised money for development projects from everyday investors— are following suit.

California-based Patch of Land is currently working on a $4.5 million investment that will be entirely funded by institutions, rather than Joe or Jane investor.

Other platforms are also rushing to partner up with hedge funds, private equity shops and wealthy individuals. The result is that crowdfunding is starting to look a bit less like a revolution, and more like the traditional financial sector it set out to displace.

Institutions muscle in Since September 2013, when Title II of the U.S. JOBS Act legalized real estate crowdfunding by allowing firms to raise unlimited funds from accredited investors, crowdfunding entrepreneurs have talked about democratizing real estate investment by allowing small-time savers the chance to buy stakes in buildings. Most crowdfunding firms make money on these deals by keeping a small portion of the invested sum (usually around 1 or 2 percent) as fees.

But now, the growing focus on institutional funds seems to be putting that utopian vision in doubt. It also raises an existential question for the future of the field: does the crowd still have a place in crowdfunding?

“Institutional money is already usurping the crowd,” said Sherwood Neiss, principal at industry consultant Crowdfund Capital Advisors, which advises government and financial institutions on crowdfunding. “I think this is the general direction it will go in. Unless these are opportunities in small towns, I do believe that this will be mainly institutionally funded deals.”

Neiss explained that institutions, such as hedge funds or private real estate funds, see investing through crowdfunding platforms as an opportunity to find deals they would otherwise not have access to — either because they are too small, or because they would never make it onto the institutions’ radars.

Law firm Richards Kibbe & Orbe and Wharton FinTech, a student-led financial technology initiative, recently surveyed 300 institutional investors, and found that 85 percent were interested in getting involved in peer-to-peer loans — also known as crowdfunded debt. They also discovered that 24 percent of those surveyed were most interested in real estate peer-to-peer loans — coming in a close third behind small business

46 July 2015 www.TheRealDeal.com

and consumer loans.

“These platforms can deliver assets that are more differentiated and offer higher returns. That’s why they’re interested,” said Richards Kibbe & Orbe’s attorney Jahangier Sharifi, who has worked with numerous financial firms on peer-to-peer lending.

Speeding up the money For crowdfunding platforms, working with institutions offers the chance to overcome some of the most glaring challenges involved in the business model. Although startups like Fundrise or Patch of Land rarely compete for the same deals, they are under pressure to grow more quickly than their rivals in order to win over more customers and investors.

However, the very nature of crowdfunding makes rapid growth difficult.

Most crowdfunding platforms extend loans — equity is increasingly rare — to real estate owners or developers, and fund those loans by issuing notes to a number of small investors, who can chip in as little as a few thousand dollars. But finding a large number of investors takes time, limiting the number of deals a platform can take on. Just as crucially, potential borrowers eager to close on deals often can’t afford to wait weeks until enough investors have signed on, meaning crowdfunders lose out on potentially lucrative deals.

Bringing on institutional investors is a solution to both problems: it brings cash to take on more deals, and it gives borrowers peace of mind.

Allen Shayanfekr, CEO of Long Island-based crowdfunding startup Sharestates, said the private lending space that crowdfunding companies are competing in is “inherently very fast-paced.”

“We typically have a pretty good advance knowledge of deals, but there were instances where we needed to close within a week,” Shayanfekr told TRD in the spring, shortly before the firm struck a deal with Texas-based Ranger Direct Lending Fund to invest up to $30 million through the site.

Since the announcement, Sharestates’ aggregate deal volume has more than doubled from $4.5 million to $11 million, with another $10 million expected to close by press time, according to Shayanfekr.

“Institutional investors really are critical for scale and the volume a platform needs to do at the end of the day to be profitable,” said Fundrise’s Miller. With the help of big funds, he expects to do another three to five deals in excess of $10 million this year.

“We have dealflow [institutions] otherwise wouldn’t see,” he argued.

Given the advantages of tapping into bigger money players, there is some debate about what role the crowd will play going forward.

Richard Swart, a research scholar at the University of California, Berkeley’s Haas School of Business who studies crowdfunding, believes that small-time investors will “probably not” have a role in funding commercial real estate projects. Instead, he argued, crowdfunding platforms will serve a function similar to REITs: as a way for institutional investors to diversify their holdings.

Continued on page 112

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FINANCE

Rodrigo Niño: Above the crowd How the Prodigy Network founder became New York’s most active crowdfunder

Prodigy Network founder Rodrigo Niño has the air of a politician on the campaign trail when he talks about democratizing real estate investment.

BY KONRAD PUTZIER odrigo Niño doesn’t quite fit in with his fellow crowdfunding entrepreneurs.

At 45, he is older than most of his peers.

And in a brazen defiance of the standard tech dress code of jeans and an open collar, Niño, who is well over 6 feet, dons a suit. In a field that glorifies the nerd, Niño has the slick air of a politician who sounds like he’s on the campaign trail when he talks about his vision of democratizing real estate investment.

But most importantly, Niño’s Prodigy Network pursues projects of a size other crowdfunders only dream of.

“He is the most successful real estate developer using crowdfunding in the U.S.,” said David Drake, a close observer of real estate crowdfunding as chairman of private equity advisory firm LDJ Capital and head of the Soho Loft Media Group, an event platform and advisory firm focused on startups.

Lawrence Davis, president of Shorewood Real Estate Group, which partnered with Niño on his five New York deals, calls him a “visionary.”

In the three years since Prodigy began crowdfunding in New York, Niño has funded the acquisition of three Manhattan high-rise buildings. He also recently went into contract to buy two NoMad properties in the former Ring Brothers portfolio. He claims to have raised $100 million

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from global investors — a figure no other U.S. platform even comes close to.

In fact, Prodigy’s deals are so large that many other crowdfunding platforms don’t even view the firm as a competitor.

“I have great respect for Prodigy and they’ve built a great company, but I don’t really consider them competition,” said Patch of Land’s CEO Jason Fritton.

“I think the crowd should have access to projects that were privy to the guy writing $60 million checks before. Why not?”

RODRIGO NIÑO, PRODIGY NETWORK “They compete for larger, specialized projects and their [minimum individual investments] are much larger than what most crowdfunding companies require.”

But while his deal volume, and his Wall Street office, put him in a league with some of New York’s more established real estate financiers, Niño still talks like an upstart outsider looking to shake up the business.

“Commercial real estate is a very boring asset class and I am very happy disrupting it,” he said.

And although Niño said Prodigy is in conversations with institutional investors to “team up in a way that makes sense,” he doesn’t see the firm tapping institutional funds en masse through its online platform, as some of its peers do (see related story on page 46).

“I have to admit that I consider wealth concentration [a market failure] and I think it is a problem,” he said. “I think the crowd should have access to projects that were privy to the guy writing $60 million checks before. Why not?”

A head start Like other real estate crowdfunding platforms, Prodigy raises funds for projects online from myriad private investors.

But two crucial factors set Prodigy apart: first, the firm is an equity partner in the projects it finances; second, most of its investors are foreign. Those two facts help explain why it has raised so much more money than its peers.

Niño had something of a head start in the sector. He began crowdfunding projects in Latin America in 2009.

Those overseas connections allowed him to crowdfund his first New York project in 2012. At that time, crowdfunding real estate projects from U.S. investors was still illegal, but tapping into foreign money was allowed under an exemption in the rules governed by the U.S. Securities and Exchange Commission.

By the time real estate crowdfunding in the U.S. was officially legalized in September 2013, Prodigy was already a veteran in the field. And today, foreign investors still make up 90 percent of Niño’s “crowd.”

“He had the foundation of big families [from Colombia and Argentina] that had already invested with him,” said Drake.

And while other crowdfunding platforms merely act as an intermediary between developers and investors, Prodigy co-develops all the projects it funds. This solves a glaring problem: most crowdfunding platforms raise funds on a project-by-project basis, which can take months. But developers often need to close their purchases quickly. As a result, many developers are reluctant to commit to crowdfunding, fearing that the money might not be available on the closing date. Since Prodigy is also the developer, that problem doesn’t exist.

This flexibility also enables Prodigy to pursue large deals in Manhattan.

At 84 William Street and at 234 East 46th Street, Prodigy is financing the development of two extended-stay hotels under the AKA brand, in partnership with Korman Communities. At 17 John Street in Lower Manhattan, and at its two planned Ring-portfolio acquisitions at 331 Park Avenue South and 114 East 25th Street, the firm is planning a hybrid of short-term rental apartments with shared workspace.

Niño’s partner in all these deals is Lawrence Davis’ Shorewood, which sources the deals and arranges bank financing while Prodigy raises equity from the crowd.

(Like most developers, Prodigy and its partners finance the majority of a project’s costs through loans.)

“I view crowdfunding equity as a very flexible, userfriendly form of common equity,” Davis said.

Stumbling into the crowd When Davis met Niño in 2006, the Colombia native was new to New York City, though not to real estate.

Niño grew up the son of a printing-press owner in Bogotá and went to a Swiss school there (he still speaks some German).

Continued on page 112

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FINANCE

Crowdfunding: A short history Tapping small-time investors is nothing new — it’s older than the Statue of Liberty The St Statu Statue at e o atu off LLiberty ibe ertyy wa w wass one one e fi st maj jor cro owdf w und wd u ed e off the fir first major crowdfunded projec pro projects jec e ts in n the U. U U.S. S S.

making it all but impossible to raise small sums from investors. Still, crowdfunding was far from dead.

The age of the syndicate On June 29, 1958, readers of the New York Times saw a 16page editorial supplement, offering them the opportunity to buy a small stake in the leasehold of the old GM Building. The advertiser, an entity called Motors Building Realty Company, was looking to raise $5.8 million from a large number of individual investors.

But that syndication offering would likely not have seen the light of day without legendary investors Harry Helmsley and Lawrence Wien, who pioneered the practice a decade earlier.

In the late 1940s, the duo used it to build a real estate empire. The Empire State Building, which they took control of for $65 million in 1961, eventually became their crown jewel. (Wien raised $33 million from more than 3,000 investors for that deal.)

Much like crowdfunders today, Helmsley saw syndication as a way of emancipating small savers.

“The breaking up of the large sum required into small units has brought the small investor into the real estate field,” he wrote in a 1958 article in the Analysts Journal, which covers the securities industry. “Syndicates have made it possible for him to diversify his investments.”

But while syndication was crowdfunding on its most basic level, there are important distinctions from the version being used today.

For starters, the requirement to file with the SEC meant that syndication only made sense for large projects, and sums raised from each investor were sizable. A single share in the Empire State Building, for example, cost $10,000 — the equivalent of around $80,000 today.

Bringing in the crowd

BY KONRAD PUTZIER n the summer of 1885, readers of the New York World saw an unusual offering on the newspaper’s front page: its publisher, Joseph Pulitzer, asked them to donate a small sum to a “pedestal fund” that was to help finance the base of a new statue. “Let us not wait for the millionaires to give us money,” he wrote.

His appeal was successful. The campaign raised $101,091 from roughly 160,000 investors. And with that, the Statue of Liberty, whose parts had been waiting around in a New York port, was built. The iconic statue became one of the first major crowdfunded projects in the United States.

Today’s crowdfunding entrepreneurs like to see themselves as pioneers of an entirely new practice. But they are, in fact, simply reviving one that has been around for a long time.

The history of real estate crowdfunding in the U.S. offers insights into how the financial sector has changed over time.

On the most fundamental level, crowdfunding — or funding a project with the help of a large number of (usually small-time) investors — is hardly revolutionary.

Developers have been funding projects through friends and acquaintances for centuries. The spread of print media and the growth of financial markets in the 19th and early 20th centuries allowed the practice to expand beyond that immediate circle of friends.

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50 July 2015 www.TheRealDeal.com

The pedestal fund was just one example of numerous offerings publicized in papers or by word of mouth that allowed investors to buy bonds or equity interests. But as the financial sector grew, so did abuses.

“A lot of bond deals and a lot of stocks came to market in what was described as a ‘self-regulated market.’ You have to keep a straight face saying that,” said Charles Geisst, an economist and financial historian at Manhattan College.

While states had their own rules, there were no overarching federal securities regulations, meaning issuers were subject to little oversight.

“There were companies that were reporting in the press that [they] were doing well when they weren’t,” Geisst said. In one case, he noted, an investment bank sold stocks to investors, assuring them the company was sound, even though it was bankrupt.

These excesses helped fuel the asset bubble that burst in 1929, plunging the U.S. into the Great Depression. In 1933, in an attempt to prevent these types of abuses, Congress passed the Securities Act. Among other things, the law required the issuers of almost all securities to file with the newly created Securities Exchange Commission. That turned out to be a seminal moment in the history of crowdfunding.

Filing with the SEC is expensive and time-consuming,

As decades passed, crowdfunding advocates began to campaign for legislative reform that would make it easier to raise small sums for small projects.

The movement grew out of the fact that public and private offerings were only being shopped around to “elite investors,” said Joan MacLeod Heminway, a professor at the University of Tennessee’s law school and author of several articles on crowdfunding.

“There was nothing in it from the investor side for the John Q investor,” she said.

The lobbying effort culminated in the passage of the Jumpstart our Business Startups (JOBS) Act in 2012, which set the stage for the gradual easing of restrictions on crowdfunding.

In September 2013, Title II of the JOBS Act took effect. It allowed platforms to raise unlimited funds from accredited investors without having to register with the SEC, in effect enabling modern real estate crowdfunding. Dozens of real estate platforms have sprung up since then, offering investments in properties ranging from suburban singlefamily homes to Manhattan office buildings.

But so far, crowdfunding is largely restricted to accredited investors, or people with an annual individual income over $200,000, joint income over $300,000 or net wealth over $1 million. Raising money from unaccredited investors is still restricted in size, and comes with burdensome disclosure requirements.

Title III of the JOBS Act is meant to open up the market to unaccredited investors, but it is unclear when the law will go into effect.

“We’ve been waiting over three years, but still don’t know when that’s going to happen,” said Richard Swart, a research scholar at the University of California Berkeley’s Haas School of Business. For or better or worse, the century-long evolution of real estate crowdfunding is far from complete. TRD

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TOP AGENTS

Ranking residential royalty Personal branding is ‘in’ and firms are ‘out’ for Manhattan’s top agents when it comes to landing the priciest listings

From left to right: (Top row) John Burger, Alexa Lambert, Paula Del Nunzio, Deborah Grubman, Fredrik Eklund and John Gomes (Bottom row) Carrie Chiang, Leonard Steinberg, Serena Boardman, Dolly Lenz and Raphael De Niro

BY E.B. SOLOMONT n the high-stakes world of Manhattan real estate, agents tend to fall into two camps — those brokering sales in glitzy new condo buildings and those dealing in resale units, including the trophy pads that trade for top dollar.

As in the past few years, agents who’ve associated themselves with new developments made clear gains on The Real Deal’s annual ranking of Manhattan’s Top 75 residential listing agents. But in the ever-competitive residential market, the upper echelon of the ranking saw a considerable reshuffling.

Of course, the emphasis on new development is not new, nor is it a surprise given the recent condo boom — 2015 has been called the year of the condo, after all.

And there is still plenty of money to be made selling new condos for the foreseeable future, with some 6,500 new condos expected to hit the market in Manhattan this year alone, compared with about 2,500 last year.

TRD’s ranking — which is based on listings culled from the listings portal On-

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52 July 2015 www.TheRealDeal.com

Line Residential on May 31 — includes exclusives and properties that went into contract on or after January 1. Needless to say, the ranking is not designed to capture every facet of an agent’s business — closed deals and buy-side transactions, for example, are not part of this tally. Instead it

to Elliman from CORE in 2010, racked up an impressive $541 million in listings this year, up from $535.5 million last year and $92 million in 2013. And their dominance illustrates a larger trend.

“Multi-agent teams again dominated the list of the top-producing agents in

Elliman had the biggest presence on the list with 26 brokers making the cut with a combined $4.1 billion in listings. is meant to be an across-the-board snapshot of who is marketing what.

For the second year in a row, Douglas Elliman’s Fredrik Eklund and John Gomes dominated the ranking, buoyed by their new development prowess and Eklund’s star power, courtesy of his role on Bravo’s reality real estate TV show “Million Dollar Listing New York.” Their team, which moved

Manhattan,” said Jonathan Greenspan, president of OLR. “Most of these teams gross the bulk of their income from new developments.”

Not missing a beat In the No. 2 spot, power broker Dolly Lenz, who left Elliman in 2013 to start her own firm, had more than $491 million in listings,

up from last year’s $476 million, according to OLR. She did not respond to a request for comment, but in the past she’s contented that her numbers are low because she does not input data into OLR. Still, her current listings include the Dome Penthouse at the Plaza Hotel, asking $75 million, as well as a six-unit new development at 22 Bond Street, where prices range from $9.8 million to $19.9 million.

The rest of the top 10 on the ranking are: Elliman’s Raphael De Niro; Sotheby’s International Realty’s Serena Boardman and Brown Harris Stevens’ John Burger.

They were followed by Compass President Leonard Steinberg and business partner Hervé Senequier at No. 6; BHS’ Paula Del Nunzio at No. 7; Stribling’s Alexa Lambert at No. 8, and Corcoran Group agents Carrie Chiang and Deborah Grubman at No. 9, and No. 10, respectively.

Overall, the number of listings represented by the Top 75 agents inched up marginally this year, though the dollar value of the listings made bigger gains.

ILLUSTRATION BY P.J. MCQUADE

TOP AGENTS Collectively, the top agents had 1,386 listings, up 4.8 percent from 1,322 last year. The value of those listings, however, was $12.26 billion — a 13 percent increase from last year.

In addition, Elliman agents had the biggest presence on the list with 26 brokers making the cut with a combined $4.1 billion in listings. Corcoran had the second highest tally with 13 agents and $2 billion, followed

by Stribling with eight agents and $1.2 billion.

Interestingly, despite their June 2014 jump to Compass from Elliman, Steinberg and Senequier did not miss a beat. That move seems to illustrate the importance of an agent’s own brand over that of their firm. At Compass, the pair racked up an impressive $340 million in listings, compared with nearly $332 million last year. Steinberg estimated that he left about $1 billion worth of new development work at Elliman.

“It’s the price you pay when you make a break,” he admitted. But, he said, his business quickly recovered. “Dollar-wise, we’ve recouped that and then some.”

Rising fortunes For agents landing new development deals, it’s not just the astronomical price tags for new condos that are boosting their fortunes; it’s also their cachet.

Eklund and Gomes apparently have a lot of that cachet.

Serhant’s team is currently working on 20 new development projects, up from just two in 2013, he said. He also noted that his team sold $100 million worth of real estate — including development sites, multi-family buildings and investment properties — to developers and others.

“In this day in age, you have to be a real estate concierge. You can’t just think a developer will call you and sign you onto a project,” he said. “You have to bring the site to the developer, you have to coordinate the financing.”

He added: “It doesn’t matter what firm you’re with. There are too many real estate brokers in the city, it all comes down to your personal brand.”

Steinberg agreed. Agents today, he said, create their own brands and then affiliate with a firm that can provide the resources and tools they need.

With few exceptions, that’s certainly the case among the brokers specializing in new development. And when it comes to those assignments, just one plum job can make a huge difference in a broker’s bottom line.

Sotheby’s Nikki Field, for example, soared to No. 14 (from No. 68) with nearly $231 million in listings, up from $82 million last year. That jump was largely driven by one new development project that she’s marketing: Jared Kushner’s Puck Penthouses, which accounted for $123 million of her listings. The six penthouses

“It doesn’t matter what firm you’re with. There are too many real estate brokers in the city.

It all comes down to your personal brand.”

RYAN SERHANT, NEST SEEKERS INTERNATIONAL

They are currently marketing HFZ Capital’s 11 Beach Street, a 27-unit building with a sellout total of $228.5 million, and they have more than 1,000 new units in the development pipeline, Eklund said.

Meanwhile, Elliman’s De Niro jumped to No. 3 (from No. 8) with $474.2 million in listings.

He’s currently marketing the Ralph Walker Tribeca, a condo conversion by Magnum Real Estate and CIM Group at 100 Barclay Street, where he has more than $116 million in listings.

“We’re in a new development boom right now. All the top agents are experiencing the same thing,” De Niro said.

Nest Seekers International’s Ryan Serhant, Eklund’s co-star on MDLNY, also shot up on the ranking, catapulting to No. 12 from No. 36 with $246.7 million in listings, including the Justin, a five-unit condo at 225 East 81st Street that has a $22 million sellout.

atop the famed Soho building incorporate original details like barrel-vaulted ceilings with ultra high-end finishes, and prices range from $22 million to $66 million.

Meanwhile, Elliman’s Michael Graves, who did his first real estate deal in 2010, clocked in at No. 31, up from No. 71 last year. Graves, who worked for his family’s Minnesota-based hospitality business before turning to New York real estate, had more than $150 million in listings, according to OLR. This spring, Graves listed three units on the 18th and 19th floors of Walker Tower in Chelsea that were together asking $60 million. The units are owned by developers Elliott Joseph and Kevin Maloney of Property Markets Group, who converted the building into condos with Michael Stern’s JDS Development Group.

(Graves put one of those units, 18C, which was asking $10.5 million, into contract last month.)

AGENTS WITH THE MOST LISTINGS APTS

1

TOWNHOUSES

Eklund Gomes Team

Douglas Elliman 53 | 1 | 43 | $541,913,192 A conversion project at 11 Beach Street totaling $78.3 million in listings and a penthouse at 11 North Moore for $29.95 million

IN CONTRACT

2

LISTING $ VOLUME

Dolly Lenz

3

Dolly Lenz Real Estate LLC 26 | 0 | 0 | $491,412,500 A duplex penthouse at the Ritz Carlton for $75 million

4

(Manhattan listings and in-contract sales) LISTINGS INCLUDE

De Niro Team

Douglas Elliman 38 | 0 | 31 | $474,171,500 A conversion at 100 Barclay totaling $116 million in listings, and a condo at One57 for $57 million

Serena Boardman

Sotheby’s International Realty 15 | 4 | 5 | $442,945,000 An 18-room corner duplex at 740 Park Avenue for $48 million

5

John Burger

Brown Harris Stevens 18 | 7 | 6 | $363,185,000 A 26-foot wide townhouse at 684 Park Avenue for $42 million

8

6

Leonard Steinberg and Hervé Senequier

Compass 15 | 4 | 7 | $340,345,000 A planned megamansion at 71 Franklin for $65 million and two penthouses at 7 Harrison totaling $52.45 million

Alexa Lambert

Deborah Grubman Team

Corcoran Group 12 | 4 | 2 | $254,545,000 The Baccarat Residences totaling $172.4 million in listings, including the $60 million penthouse

Paula Del Nunzio

Brown Harris Stevens 3 | 8 | 0 | $322,490,000 A penthouse at the Time Warner Center for $60 million

9

Stribling & Associates 11 | 1 | 26 | $282,375,000 A new building at 210 West 77th Street totaling nearly $156 million in listings

10

7

Carrie Chiang/ Janet Wang Team

Corcoran Group 17 | 5 | 5 | $276,943,000 A new development at 61 Fifth Avenue totaling $57.8 million in listings and a townhouse at 54 East 81st Street for $36 million*

11

Noble Black Team

Corcoran Group 17 | 0 | 10 | $247,229,000 A condo at One57 for $21.9 million

13

12

Ryan Serhant Team

Nest Seekers International 25 | 2 | 31 | $246,752,999 A triplex at 240 Riverside Boulevard for $48.5 million and a new condominium at 277 East 7th Street totaling $21.8 million in listings

Leighton Candler

Corcoran Group 12 | 4 | 2 | $245,430,000 An 11-room penthouse at 1 East 62nd Street for $28 million

14

Nikki Field Team

Sotheby’s International Realty 11 | 1 | 3 | $230,839,000 The Puck Penthouses, ranging from $22 million to $66 million

17

15

Adam Modlin

16

Modlin Group 11 | 0 | 2 | $225,105,000 A triplex at the San Remo for $75 million

Vickey Barron

19

Daniel Neiditch

River 2 River Realty Inc. 40 | 0 | 7 | $196,590,000 The Atelier condominium at 635 West 42nd Street totaling $195.2 million in listings

22

Brown Harris Stevens 5 | 0 | 8 | $218,220,000 A new development at 551 West 21st Street totaling $205.6 million in listings

18

Douglas Elliman 30 | 1 | 9 | $217,390,000 A conversion at 100 Barclay totaling $120.7 million in listings and $53.2 million in listings at Stella Tower

Erin Boisson Aries

Sabrina Saltiel

Douglas Elliman 6 | 4 | 3 | $200,925,000 A penthouse at 11 East 68th Street for $46.5 million

20

Louise Phillips Forbes Team

21

Halstead Property 16 | 0 | 19 | $169,019,000 A new development at 15 Hubert Street totaling $48.7 million in listings

Janice Chang Team

Douglas Elliman 13 | 0 | 17 | $167,230,000 A new condominium at 135 West 52nd Street totaling $100.3 million in listings, and Unit 80B at 432 Park Avenue for $44.25 million

Pamela D’Arc

Stribling & Associates 13 | 0 | 8 | $164,040,000 A new condo tower at 252 East 57th Street totaling $136.9 million in listings

www.TheRealDeal.com July 2015 53

TOP AGENTS More than half of his listings are new development condos. At Stella Tower, another PMG and JDS condominium at 425 West 50th Street, Graves has six listings worth $31.5 million.

Of course, not every new development condo lists for eight figures.

Eklund and Gomes — who have been working together for eight years and employ two drivers and two assistants for their 10-agent team — consider their bread-andbutter the $2 million to $7 million sector.

“It’s what the buyers want, and there’s a lack of inventory,” Eklund said.

The duo is also growing their resale business. “We’re trying to have a foot in each world. They are connected,” Eklund said.

Gomes added that new development buyers look to sell every few years. “We want to represent them when they sell and then help them buy in another new development,” he said.

with listings that topped $225 million, including the actress Demi Moore’s $75 million penthouse at the San Remo.

In the highest end of the market, which Modlin described as properties $25 million and up, he said there is little product.

However, at the same time, he’s wary that too much is being built along Billionaire’s Row. “Inevitably, it’s going to be a very competitive space to fight for those customers,” he said.

APTS

23

TOWNHOUSES

Lauren Muss

Douglas Elliman 11 | 3 | 0 | $163,785,000 A penthouse at 33 East 74th Street for $39 million

Shifting places

Resale redux

As in years past, several high-profile agents dropped off the list.

Top agent Kyle Blackmon, who ranked No. 14 last year with $198 million in listings, did not appear on this year’s list, for example.

Blackmon defected to Compass from BHS in late 2014. His drop-off from the ranking runs counter to the success that Steinberg and Senequier had moving

Top agents with a long-term view aren’t just focusing on new development, however.

For example, Sotheby’s Boardman — No. 4 on this year’s list with nearly $443

between firms.

Blackmon has just three listings, according to OLR, including a five-bedroom co-op at 740 Park asking $27 million, a

The number of listings held by the Top 75 agents inched up this year, but the dollar value made bigger gains.

There were 1,386 listings, up 4.8 percent. The value of those listings, however, was $12.26 billion — a 13 percent increase from last year. million in properties — is mostly listing trophy resales, including the $80 million Duke Semans Mansion at 1009 Fifth. The seller, Mexican billionaire Carlos Slim, bought the Beaux Arts mansion for $44 million five years ago.

Meanwhile, BHS’ Burger clocked in at

three-bedroom condo at 151 East 58th Street asking $9.6 million and a two-bedroom co-op at 870 Fifth asking $7.39 million.

Blackmon, through a Compass spokesperson, declined to comment.

Two heavy-hitters at Leslie J. Garfield, the boutique brokerage focusing on the

No. 5 with $363 million in listings, including a $42 million neo-Federal townhouse at 684 Park that is currently being used by the Queen Sofía Spanish Institute, but is categorized as a single-family home by OLR. He’s also marketing a pair of co-op units at the Beresford, at 211 Central Park West, for a combined $32.5 million.

Late last month Burger placed No. 2 among the top 1,000 agents nationwide on a ranking by research firm REALTrends and the Wall Street Journal with closed deals totaling $638 million in 2014. The ranking is based on surveys with brokers and backed up by data from multiple listing services and other sources.

He and other top resale brokers are clearly doing just fine.

Adam Modlin, president and founder of the Modlin Group, jumped to No. 15

townhouse market, also fell off this year’s list. President Jed Garfield and agent Matthew Pravda ranked No. 27 and No. 23 last year, respectively.

Pravda said he’s had a number of big recent sales, including a $19.3 million double-wide townhouse at 138-40 West 11th Street. “A lot of my inventory I’ve sold,” he said. “In this market, well-priced real estate flies off the shelf, period.”

Meanwhile, Corcoran’s Deborah Kern, No. 17 on last year’s list with $186 million in listings, also fell off the list. She is the senior sales director for Vornado Realty Trust’s 220 Central Park South and has “no personal sales listings at [this] particular moment,” she told TRD. That move will likely pay off in spades.

As of early May, the last time Vornado reported its earnings, it had already sold

54 July 2015 www.TheRealDeal.com

AGENTS WITH THE MOST LISTINGS IN CONTRACT

24

LISTING $ VOLUME

AndersonEhrmann Team

Douglas Elliman 11 | 1 | 5 | $161,612,000 A new development at 10 Sullivan Street totaling $94.4 million in listings, including a four-story penthouse for $45 million

26

25

LISTINGS INCLUDE

Elizabeth Leahy

Stribling & Associates 8 | 0 | 17 | $160,005,000 A new building at 210 West 77th Street totaling $125.1 million in listings

Emily Beare

CORE 8 | 3 | 2 | $159,830,000 A co-op at 1040 Fifth Avenue for $34.5 million

27

Daniela Kunen

Douglas Elliman 9 | 1 | 9 | $157,150,000 A penthouse at 1185 Park Avenue for $24.95 million and a sevenstory mansion at 29 Beekman Place for $34.5 million

30

28

Dennis Mangone

Douglas Elliman 13 | 0 | 3 | $155,950,000 A conversion at 37 East 12th Street totaling over $70 million in listings

Kirk Rundhaug

Dina Lewis and Melanie Lazenby

Douglas Elliman 8 | 0 | 3 | $148,045,000 A penthouse at 18 Gramercy Park South for $49.75 million

Thomas Guss

New York Residence, Inc. 15 | 2 | 1 | $155,355,000 A new condominium at 33 West 56th totaling $117.7 million in listings, including a $39 million penthouse

31

Douglas Elliman 10 | 0 | 4 | $150,759,000 A conversion at 37 East 12th Street totaling over $70 million in listings

32

29

Michael Graves

Douglas Elliman 11 | 0 | 3 | $150,101,000 A trio of condos at Walker Tower for a combined $60 million

33

Robert Dvorin Team

Douglas Elliman 17 | 1 | 7 | $146,531,500 A conversion at 100 Barclay totaling more than $117 million in listings

35

34

Sample Powers Team

Sotheby’s International Realty 8 | 0 | 0 | $144,545,000 A penthouse at the Mandarin Oriental for $50 million

Elizabeth Lorenzo

Stribling & Associates 14 | 0 | 7 | $144,245,000 A new condo tower at 252 East 57th Street totaling $136.9 million in listings

36

Madeline Hult Elghanayan

Douglas Elliman 6 | 0 | 1 | $143,000,000 A conversion at 37 East 12th Street totaling over $70 million in listings and a $46.5 million penthouse at 11 East 68th Street

39

37

Marie-Claire Gladstone

Corcoran Group 2 | 0 | 4 | $137,100,000 The Dome Penthouse at the Plaza for $75 million

Shelton Smith

Shelley O’Keefe

Corcoran Group 10 | 0 | 6 | $124,985,000 New condos at 505 West 19th Street totaling $86.3 million in listings

Deanna Kory Team

Corcoran Group 24 | 1 | 14 | $133,019,000 A townhouse at 372 West 11th Street for $11.9 million

40

Stribling & Associates 12 | 0 | 6 | $132,435,000 A new condo tower at 252 East 57th Street totaling $132.4 million in listings

41

38

Hilary Landis

Corcoran Group 11 | 0 | 3 | $125,444,999 Condominiums at 737 Park Avenue totaling $75 million in listings

42

Katzen Team

Douglas Elliman 14 | 0 | 11 | $124,289,500 A new development at 35VX totaling $32.7 million in listings

43

Lisa Lippman and Gerald Moore

Brown Harris Stevens 15 | 1 | 11 | $118,767,000 A penthouse at 190 Riverside Drive for $18.9 million

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1 Central Park South, 901–2–3

$38M

1 Central Park South, 515

$15.5M

WEB #3369945

1 Central Park South, 1603

$11.45M

40 Mercer Street, 37

$9M

1 Central Park South, 813

$10.75M

WEB #3421360

1 Central Park South, 1306

$2.395M

1 Central Park South, 201

$17.25M

785 Fifth Avenue 4DE

$7.8M

WEB #2332372

441 East 57th Street, Triplex

$4.75M

WEB #3260973

One of Corcoran’s Top Agents

Charlie Attias

2013 President’s Council

Licensed Associate Real Estate Broker

Top 1% Brokers in NRT Incorporated – Nationwide (of 48,000 brokers)

212.605.9381 charlie.attias@corcoran.com

Member of 2007, 2008, 2009, 2010, 2011, 2012, 2013 & 2014 Multimillion Dollar Club

The Corcoran Group | 660 Madison Ave New York, NY 10065 | 212.355.3550 Equal Housing Opportunity. The Corcoran Group is a licensed real estate broker owned and operated by NRT LLC.

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TOP AGENTS one-third of the building’s 118 units. In all, 220 CPS has a $2.8 billion sellout, with prices ranging from $12.25 million to $150 million. Already, a sale is in the works of two penthouses for a combined — and record-shattering — $250 million.

Keeping it quiet Whisper listings have always played a big role in the top reaches of Manhattan’s luxury market. But several top agents said they are quietly representing more of these offmarket listings as sellers increasingly seek a modicum of privacy.

BHS’ Del Nunzio — who had $322.5 million in listings this year, compared to $503 million last year — has several mega listings in her official tally. They include a $60 million penthouse at the Time Warner Center and the $48 million Charles Ogden mansion at 12 East 79th Street.

But Del Nunzio said she has another $178 million worth of off-market exclusives.

“They can be an important part of my business,” she said, noting that in 2014, one of her off-market listings, a brickand-limestone home at 113-115 East 70th Street, sold for $51 million. The seller was fashion designer Reed Krakoff.

Meanwhile, Modlin is also quietly marketing a townhouse off of Fifth Avenue. He said off-market sellers are typically motivated more by the desire to stay anonymous than by fetching the highest price.

“If you’re doing something quietly, you may not attract the biggest net of buyers, you may not get the highest bidder,” he said.

“But you preserve your privacy.”

Foreign connection While TRD does not tally buy-side deals into its totals for this ranking, they are an increasingly important part of many brokers’ business models. That’s especially

57

Sean Murphy Turner

Stribling & Associates 4 | 0 | 6 | $86,690,000 A new development at 180 Sixth Avenue totaling $70.9 million in listings

63

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true given the force that foreign buyers have become.

Sotheby’s Field, for one, has been riding the wave of Chinese buyers. Field said her business is “consultant-centric,” meaning she is spending time advising clients on their global residential portfolios.

“As more high-net-worth and ultra-highnet-worth individuals continue to diversify their liquid assets, I am advising my clients on focused and targeted worldwide residential purchases,” she said.

Field said teammate Kevin Brown has locked in 13 contracts at the Baccarat and the Four Seasons — all from foreign buyers.

“The brand, New York City, is number one on every international buyer’s wish list,” Field said.

Janet Wang, who works with Corcoran’s Carrie Chiang, is also a go-to broker for Chinese buyers. Chiang’s team ranked No. 9 on TRD’s list this year, with nearly $277 million in listings, including a limestone mansion at 54 East 81st Street that hit the market at $36 million, but has since been reduced to $32 million.

Meanwhile, Elliman’s Graves said he’s traveled to Shanghai, Hong Kong, Taiwan, Barcelona and London in the last five months alone. Overall, he closed upwards of $85 million in buy-side business last year, he said.

“It’s very important for someone selling luxury properties to have connections that are international,” he said. He said international buyers see New York as a bargain compared to London and Hong Kong.

Sotheby’s Elizabeth Sample and Brenda Powers, whose team ranked No. 34 with $144.5 million in listings, said they are also continuing to see interest from overseas.

“There is a tremendous amount of wealth in the world that is seeking a solid investment like New York City,” they told TRD in an email. TRD

Joan Swift

Douglas Elliman 8 | 1 | 12 | $86,334,999 A new development at 301 East 50th Street totaling $69.75 million in listings

Charlie Attias Team

Michelle Griffith

Trump International Realty 5 | 0 | 1 | $78,534,000 Two penthouses at Trump Park Avenue, for $35 million and $24.995 million

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Kristina Kaplan Wallison

Stribling & Associates 7 | 0 | 3 | $74,080,000 Condominiums at 141 East 88th Street totaling $65.49 million in listings

Maria Pashby Team

Brown Harris Stevens 6 | 0 |1 | $86,140,000 A triplex penthouse at the Plaza for $59 million

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Corcoran Group 8 | 0 | 0 | $83,490,000 A pair of adjacent apartments at the Plaza for $20.9 million

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Leslie Wilson

CORE 4 | 0 | 1 | $81,950,000 Condos at One Madison totaling $82 million in listings

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Andrew Azoulay Team

Douglas Elliman 5 | 1 | 3 | $77,285,000 A maisonette at 157 East 84th Street for $14 million

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Roberta Golubock

Sotheby’s International Realty 2 | 1 | 0 | $70,850,000 A full-floor penthouse at the Ritz Carlton at 50 Central Park South for $50 million

56 July 2015 www.TheRealDeal.com

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Diane Johnson

Douglas Elliman 7 | 1 | 3 | $76,154,000 A co-op at 1020 Fifth Avenue for $18.95 million

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Beth Benalloul Team

Corcoran Group 13 | 0 | 5 | $70,002,000 A 43rd-story apartment at Trump Place for $8.79 million

AGENTS WITH THE MOST LISTINGS APTS

44

TOWNHOUSES

Reid Price

Douglas Elliman 24 | 0 | 1 | $118,335,000 A condo conversion at the Sterling Mason totaling $84.5 million in listings

IN CONTRACT

45

LISTING $ VOLUME

Liora Yalof and Elizabeth Sahlman

Corcoran Group 0 | 0 |15 | $118,235,000 A new building at 20 East End Avenue totaling $118.2 million in listings

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LISTINGS INCLUDE

Emily Sertic

Douglas Elliman 5 | 1 | 2 | $117,387,000 A penthouse at 10 Sullivan Street for $45 million

Katherine Gauthier

Douglas Elliman 4 | 0 | 2 | $114,945,000 Two penthouse units at 33 East 74th Street, one for $39 million and one for $32 million

48

Cathy Franklin and Alexis Bodenheimer

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Corcoran Group 9 | 0 | 3 | $112,190,000 A penthouse at 1185 Park Avenue for $24.95 million

50

David Kornmeier

Brown Harris Stevens 6 | 3 | 0 | $107,023,000 A mansion at 16 East 10th Street for $38.5 million

53

Mary Rutherfurd and Leslie Coleman

Brown Harris Stevens 4 | 0 | 2 | $98,840,000 A penthouse at 795 Fifth Avenue for $63 million

Ilan Bracha Team

Keller Williams NYC 16 | 1 | 8 | $107,692,500 A mansion at 33 East 72nd Street for $59 million*

51

Cathy Taub

Stribling & Associates 7 | 0 | 5 | $106,160,000 A pair of penthouses at 151 East 78th Street listed for $29.5 million and $10.85 million

54

Tamir Shemesh Group

Corcoran Group 18 | 0 | 12 | $98,055,000 A conversion at 52 Lispenard Street totaling $29.3 million in listings

56

52

Eleonora Srugo, Michael Lorber and Maria Velazquez

Douglas Elliman 26 | 0 | 7 | $101,679,000 A new building at 333 East 91st Street totaling $42.5 million in listings

55

Stacy Spielman

Douglas Elliman 7 | 0 | 16 | $97,185,000 A new condo tower at 135 West 52nd Street totaling $97.2 million in listings

Alexander Team

Douglas Elliman 11 | 0 | 2 | $91,933,999 A co-op at 1020 Fifth Avenue for $25 million

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Ginger Brokaw Team

Town Residential 8 | 2 | 1 | $85,698,150 Full-floor condos at 1355 First Avenue totaling $51.2 million

65

Bertrand Buchin

Douglas Elliman 6 | 0 | 13 | $80,135,000 A new condominium at 301 East 50th Street totaling $60.5 million in listings

71

Kathleen Sloane

Brown Harris Stevens 5 | 0 | 2 | $74,600,000 A co-op at 778 Park Avenue for $38 million

61

Jason Karadus

Town Residential 8 | 0 | 3 | $85,653,150 A condo at 721 Fifth Avenue for $8.95 million

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Kamali Chandler

Sotheby’s International Realty 1 | 0 | 1 | $80,000,000 The top penthouse at Walker Tower for $70 million

62

Jeremy Stein Team

Sotheby’s International Realty 7 | 1 | 5 | $85,446,000 A duplex at 740 Park Avenue for $37.5 million

67

Jim St. Andre

Peter McCuen & Associates 2 | 4 | 1 | $79,040,000 A townhouse at 116 Waverly Place for $34 million

72

Darren Sukenik Team

Douglas Elliman 3 | 1 | 4 | $74,415,000 A mansion at 2 North Moore Street for $46 million

Source: Data comes from On-Line Residential and includes Manhattan residential sales listings (apartments and townhouses with no commercial/retail component) that were active or in contract on May 31 and updated within the previous 30 days. Properties were excluded if they went into contract before Jan. 1, 2015. Known teams and partnerships were counted as a single entity. Secondary team members were not included if a large portion of their listings were shared with the lead team member. Listings shared by two or more agents are counted as full listings for each agent. On-site agents who work exclusively for a developer have not been counted. However, if an agent works for a brokerage firm, he/she has been included on this list, and new development listings were included in agents’ totals. * Indicates a known price drop since TRD collected data

Welcome, Charles. charles russell brings two decades of leadership to his new role as director of jXc\j ]fi fli lgg\i \Xjk j`[\ ËX^j_`g% “ I could not be more excited to be joining Warburg at this time. Building on its reputation for professionalism and integrity, the company is expanding, rebranding and leading through its tech forward approach to the business. ” -Charles Russell

L I C E N S E D A S S O C I AT E R EAL ESTAT E B R O KER

654 Madison Avenue o.212.439.4503 | crussell@warburgrealty.com

Welcome to the Warburg Way. I\Xc \jkXk\ Yifb\ij Xe[ jXc\jg\fgc\ Xîc`Xk\[ n`k_ NXiYli^ I\Xckp GXike\ij_`g Ck[ Xi\ `e[\g\e[\ek ZfekiXZkfij Xe[ Xi\ efk \dgfcp\\j f] NXiYli^ I\Xckp% <hlXc _flj`e^ fggfikle`kp%

RETAIL

Setting up shop How retailers from H&M to Coach make key NYC expansion decisions

BY RICH BOCKMANN here is no area of the city immune to the transformative power of retail.

Any up-and-coming neighborhood with a new hip coffee shop speaks to that.

But those retail locations are obviously not selected at random, whether by Starbucks, Duane Reade, SoulCycle or a hot new restaurant. They are painstakingly chosen as part of well thought out real estate growth strategies.

As retail rents keep rising and developers and landlords battle for retailers in both established shopping districts and high-profile future sites like Hudson Yards, The Real Deal looked at the unique strategies of a handful of top retailers from different corners of the market, to see exactly what’s in play when they are deciding where to plant their flags in New York.

What we discovered was a wide variety of approaches, from rapid expansion to selective downsizings. Read on for a look at a cross section of strategies from some of the most interesting players in the market today.

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H&M ast-fashion juggernaut H&M opened its largest store in the world last month: a 63,000 square-foot flagship at Herald Center.

While the Swedish retailer generally keeps its U.S. stores looking identical, its new flagship includes some unique features, most notably a 35-foot glass façade backed by an LCD display and a 30-foot-high atrium on the second level.

“The simple fact is that we do everything the same,” H&M general counsel Hank Rouda said during a recent forum on retail, explaining that the key to the brand’s success is each location’s “commonality.”

“You will notice the same kind of design, but what we’ve done here in New York — because it’s important to the landlords here in New York — is we said, ‘You know what?

We need to make each individual location a little bit unique,’” he said. “We do these little things because we want to create that identity for that location. But the vast majority of our stores, the malls, the middle-America kind of stores, there’s a commonality there, because you can’t be scalable if you don’t have that commonality.”

In addition to helping boost a tenant’s

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Top: H&M’s new Herald Center store. Bottom: A rendering of the Zara planned for 503-511 Broadway, a building its parent company bought in January. Inset: Inditex founder Amancio Ortega.

bottom line, a flashy store can also be a boon to landlords, because it can draw attention to their properties and, in turn, raise their profile.

The newest location, owned by downtown-based JEMB Realty, brings H&M’s store count in Manhattan to 12, although the company’s space across the street at 2 Herald Square is now on the market.

Retail expert Robert Gibson, who left Cushman & Wakefield last year to join JLL, has brokered most of H&M’s big deals.

But while casual-clothing competitors like

American Apparel, with16 stores, and Gap, with 14 (including GapKids and BabyGap) have more locations in Manhattan, few, if any, have the buzz H&M generates these days when it makes a real estate move.

The retailer usually looks for footprints of 25,000 square feet in prime Manhattan shopping districts such as Soho, Times Square, Fifth Avenue and 34th Street. H&M is also working on rolling out a pair of spin-offs: “&Other Stories,” which focuses on women’s shoes and accessories and which opened a location

last year in Soho, and “Collection of Style,” a higher-end brand that is reportedly replacing the first store H&M opened in the city, at the corner of 42nd Street and Fifth Avenue.

Rouda said the company likes to ink its leases a year in advance, though there are exceptions, such as when the retailer locked in a spot at Fifth Avenue and 42nd Street about a week after it hit the market.

“We’ve got a couple of deals already approved for 2018,” he said. “So we could definitely do it if it’s a great deal.”

Zara/Inditex ara, a subsidiary of the global fashion behemoth Inditex, may not have the most stores among its fast-fashion counterparts.

But through its parent company, it does have access to some prime locations.

Zara, which opened its first U.S. store in Manhattan at Lexington Avenue and 59th Street in 1989, has a unique relationship with Inditex, which sometimes buys high-priced real estate for the retailer to open stores in.

The retailer is hailed worldwide as a model of efficient operation through its use of vertical integration: controlling the manufacturing, warehousing, distribution and logistics aspects of its business.

Through its real estate investment arm Ponte Gadea, the Spain-based Inditex owns more than $800 million worth of Manhattan retail property.

Among Ponte Gadea’s prime spots is a retail condo, now leased to Banana Republic, it purchased in 2006 for $107.5 million across the street from Zara’s 59th street location. (Zara remains in the space today, but Inditex does not own it.) It followed the 2006 purchase with the high-profile 2011 acquisition of a $324 million retail condo at 666 Fifth Avenue, and a $94 million retail property in the Meatpacking District in 2013.

And in 2012, Inditex launched another one of its longtime clothing brands in New York, opening a Massimo Dutti on Fifth Avenue in a storefront owned by Vornado Realty Trust.

Inditex — founded by Forbes’ fourth-richest person in the world, billionaire-dozensof-times-over Amancio Ortega — has not let up on making the real estate the cornerstone of its business strategy.

In January, its real estate arm paid $280 million in an aggressive move to create and buy a 47,000-square-foot retail condo at 503-511 Broadway in Soho, where it will open Zara’s eighth Manhattan location.

Inditex chairman and CEO Pablo Isla called the opening “a significant milestone” for the store’s expansion strategy in the U.S. “The growth model for the US market consists of a combination of flagship store openings and online sales growth underpinned by strong support from American shoppers,” Isla said in a statement earlier this year, “and this acquisition dovetails perfectly with this strategy.”

Ripco Real Estate’s Jeff Paisner, who represents Zara, explained that the acquisitions also make sense as a pure real-estate play for Inditex. “They’re cash rich, and they just want to have some cash in America,” he said.

Industry pros suspect that the propen-

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www.TheRealDeal.com January 2014 35

RETAIL sity to buy real estate and the coordination with the clothing brands come from Ortega himself.

“That’s the mothership making the decision,” one commercial real estate executive said.

Apple biquitous” is an understatement when it comes to the way Apple’s products have infiltrated everyday life, so it may come as a surprise that the company still has not conquered a number of major retail frontiers in the city.

More than a decade after opening its first New York store at the corner of Prince and Greene streets in Soho in 2002, the company is just now planning new stores in Queens and Brooklyn.

“I think the boroughs have always been chasing them,” said Faith Hope Consolo, chair of Douglas Elliman’s retail group. “I think Brooklyn was a natural move; it was just a matter of the right space and the right time.”

Apple opened its first outer-borough store at the Staten Island Mall in 2005. Now, as the company looks to expand its footprint (especially in China) it has plans to open stores on Bedford Avenue in Williamsburg and the Queens Center Mall in Elmhurst.

Those two, along with another planned location at the World Trade Center, would bring the tech company’s store count in the city to 10, up from four in 2009.

“This is actually a typical luxury-expansion strategy,” into secondary markets, said Consolo, who added that the company’s 2011 redesign of its flagship Fifth Avenue store was modeled after a flagship store in Shanghai.

In her 2014 book, “The Liar’s Ball,” author Vicky Ward detailed some of the surprised reactions to how well the store at the base of the GM Building did in such an unconventional space.

Fried Frank attorney Rob Sorin, upon visiting the store for the first time, lamented he hadn’t negotiated a larger percentage rent from Apple for his client, then-building owner Harry Macklowe. “‘Apple really had no idea what this store was going to do in business per year, and we negotiated the ‘stop’ at a level that turned out to be horrendously low,’” he told Ward. “‘The first year, they made $1 million a day.’”

Boston Properties CEO Mort Zuckerman, who bought the building from Macklowe, is quoted in the book saying that the store gives him a special sense of pride. “‘Whenever I want to cheer myself up, I just take a walk around the Apple Store,’ he said.

‘They make $665 million a year for 10,000 square feet — in a windowless basement.’ He smiled. “Think about that.’”

Apple uses a single broker across the country, Texas’ Open Realty, which works exclusively in Manhattan with Robert Futterman’s brokerage RKF and in Brooklyn with Chris DeCrosta and Hank O’Donnell of Crown Retail Services. DeCrosta did not respond to requests for comment.

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MetroPCS/T-Mobile he wireless providers MetroPCS and its parent company, T-Mobile, are not only

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00 July 2015 www.TheRealDeal.com

among the city’s largest chain retailers, but they are also the fastest growing.

Separately, the two brands ranked in the city’s top 10 retailers last year with a combined 471 locations, according to the Center for an Urban Future’s 2014 edition of its annual report ranking chain retailers by number of locations.

A little more than 60 percent of those locations belonged to the prepaid provider MetroPCS. The two companies each grew their store counts by more than 13 percent from the prior year, adding a net of 56 combined New York City locations from 2013 to 2014.

Its real estate expansion strategy has been in the making for a while.

Back in 2007 when it was trying to catch up with competitors, T-Mobile launched a

In April, TRD reported that T-Mobile signed a lease for $8 million a year, or about $2,000 per square foot, to lease roughly 4,000 square feet at Vornado’s 1535 Broadway in Times Square. In addition, the retailer is on the hook for another $5 million to lease LED signage above the store.

JLL’s Paul Berkman represented the cellphone provider in the deal.

Coach ot all retailers have a voracious appetite for space. Since the handbags and accessories company hired designer Stuart Vevers as creative director last year to revitalize its brand, Coach has embarked on a plan to reduce its footprint in North America by about

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CBRE vice president Richard Hodos, who represents Coach, said the company is not unique in its strategy to contract and upgrade.

He said retailers are increasingly using their stores as “showrooms,” that allow consumers to peruse items they later purchase online.

“Retailers aren’t talking about adding stores,” he said. “In most cases, they’re talking about closing stores, getting rid of the lower stores in ‘B’ and ‘C’ malls and investing in ‘A’ street stores.”

“That’s good for New York, because where do people want to put their bigger flagships?

They want to put them in New York, Chicago, L.A.,” he said. “For the most part retailers want to focus there.”

Starbucks fter opening its first New York City store on the Upper West Side more than 20 years ago, Starbucks now boasts the largest footprint of any chain in Manhattan.

But last year, the retailer that has marked the gentrification of many New York neighborhoods closed more stores than it opened.

Now, like many retailers, it is using New York City to test out some new concepts.

With the help of broker David Firestein of the Shopping Centers Group, Starbucks expanded from its first store at 87th Street and Broadway to nearly 300 locations across the five boroughs last year.

While the Seattle-based company has just a little more than half the number of stores across the five boroughs of its New England-based competitor Dunkin’ Donuts, Starbucks does have the edge in Manhattan with 205 stores, according to the Center for an Urban Future’s survey.

But that number was down by seven from the previous year, and sources said that as Starbucks leases inked during its expansion years expire, the company is reassessing its locations.

That includes the high-profile store at the corner of 17th Street and Union Square West, where the asking rent has more than doubled to $650 per square foot since the coffee house signed its lease 15 years ago.

The buzz term now at corporate headquarters is “disciplined expansion” — the discipline, that is, to be more selective in choosing locations to open in, instead of being hell-bent on saturating a market.

Part of the strategy is testing out concepts such as 500-square-foot express stores with limited menus and, on the other end of the spectrum, a high-end-style café that will mimic the feel of an independent coffee shop.

Because the Starbucks brand is so established, observers said, customers are willing to go the few extra steps for their cup of Joe, so Starbucks doesn’t necessarily need to be on every prime corner.

“I think that they took these great corners years ago as they were expanding and now that their customers are addicted feel they can go off the corner,” said Jeffrey Roseman of Newmark Grubb Knight Frank, who is marketing Starbucks’ space on Union Square West. “They feel they don’t have to be on Main and Main anymore.” TRD

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The recently revamped interior of the Coach flagship at Time Warner Center

Left to right: JLL’s Robert Gibson; Ripco’s Jeffrey Paisner; CBRE’s Richard Hodos; Newmark’s Jeffrey Roseman

retail-growth initiative that allowed outside companies to run its branded stores. (It’s not quite a franchise, as T-Mobile doesn’t collect franchising fees.)

And while T-Mobile is still far behind industry leaders Verizon Wireless and AT&T Mobile in terms of customers, it is adding customers at the fastest pace in the industry, closing in over the past few years on Sprint, the No. 3 provider.

The stores are scattered across the city in almost every kind of retail space imaginable, with T-Mobile preferring footprints in the range of 1,000 to 2,400 square feet and MetroPCS usually taking 1,000 square feet or smaller.

“Our competitors had a stronger foothold in branded distribution,” Michael Sentowski, vice president of T-Mobile’s national dealer programs, told the blog WirelessWeek in 2012. “We felt the best way to get there was with third-party partners.”

T-Mobile declined to discuss its strategy for this story, but the company is also inking big deals that raise its profile.

20 percent, and to focus instead on reinvesting in and upgrading its prime locations.

Between 2000, when the company went public, and 2008, Coach grew to more than 350 stores plus nearly 200 outlets, including 10 in Manhattan. But as sales slumped, company executives determined the expansion diluted the designer’s luxury brand.

Coach started closing stores last year, including its uptown stores at 85th Street and Madison Avenue and 84th Street and Broadway. The remaining locations, including its Flatiron store at 79 Fifth Avenue and 595 Madison Avenue in the East 50s, will get remodels, with features like industrial-chic finishes, LED screens and iPad-wielding sales associates — all intended to reflect the new strategy, which aims to heighten the brand’s cache.

The jewel in the Coach crown is its flagship store at the Time Warner Center, where it debuted its new look just in time for the 2014 holiday season. And the company is planning to open another high-profile location at Hudson Yards.

www.TheRealDeal.com July 2015 59

STARTUPS

The $10 billion question Can office-sharing star WeWork, a “unicorn” in Silicon Valley for its skyrocketing mega valuation, survive a downturn?

Budding real estate entrepreneurs are also eager to piggyback on the company’s success, with “We’re like WeWork, but for…” becoming a common sales pitch. WeWork, it seems, is everywhere.

But is it here to stay? Some argue that the firm’s lightning growth makes it vulnerable.

“I definitely don’t think that now, at an all-time high [for office rents], they should expand,” said Juda Srour, founder of rival shared-office provider Jay Suites. “There’s a huge risk.”

Others consider the firm overhyped and overvalued.

So will WeWork continue speeding ahead, or is it bound for a crash? The Real Deal took a closer look at the budding giant to get to the bottom of its business, its numbers and its prospects for the future.

What emerges from talks with insiders, onlookers and investors is the portrait of a company that is less vulnerable than one might think.

Strength in numbers

WeWork co-founder Adam Neumann

BY KONRAD PUTZIER hen news broke in November that the shared-office provider WeWork raised $150 million from a number of high-profile investors, including Boston Properties’ Mort Zuckerman, the deal valued WeWork at $1.5 billion and catapulted it into the limelight. It was suddenly a “unicorn,” Silicon Valley-speak for a company that races to a $1 billion-plus valuation based on fundraising.

Over the next few weeks, there was little news from the startup, save for a couple of conference talks by co-founders Adam Neumann and Miguel McKelvey and a new lease signing at the Durst Organization’s 205 East 42nd Street. Then, on Dec. 15, the firm

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60 July 2015 www.TheRealDeal.com

made another announcement: It had just raised an additional $355 million, valuing the company at $5 billion.

In just 10 months — from the first announcement in February 2014 to December of that year — WeWork had tripled in value.

It was suddenly worth more than twice as much as global brokerage giant Cushman & Wakefield. And if that isn’t enough, at press time the firm announced yet another round of funding that valued the company at a staggering $10 billion.

Real estate is a slow-moving business.

Skyscrapers take years to build. Families amass fortunes over decades, and hold on to them for generations. By these standards, WeWork, launched just five years ago, is the

industry’s equivalent of Jamaican sprinter Usain Bolt, widely considered the fastest runner on Earth.

The firm has leased more than 3 million square feet of office space globally, with 1.85 million square feet of that in New York, making it one of the city’s largest office tenants.

But its impact eclipses its physical footprint.

Landlords now say WeWork shapes their design decisions, and it’s changed the way startups think about their office needs.

“There are a lot of companies that start out in a WeWork environment, and that has influenced the design of our building,” said developer Toby Moskovits, CEO of Heritage Equity Partners, who is planning an office project in Williamsburg.

If you think a multi-billion dollar valuation seems lofty for a startup, you’re not alone.

“I don’t understand their valuation,” said a real estate tech entrepreneur who spoke on the condition of anonymity. “They seem to be valued the way a tech company is valued, but they are a commercial real estate company.”

Even Neumann, in an interview with the Wall Street Journal after the $5 billion valuation, acknowledged that if it were viewed as a traditional real estate concern, its valuation wouldn’t be as steep.

WeWork declined to provide any information for this article, and doesn’t disclose its earnings, but sources said at $5 billion it was valued around 100 times earnings.

That’s an extraordinarily high price tag and is even higher with the latest infusion of cash. SL Green Realty, the city’s largest commercial landlord, currently trades at 20 times its earnings. Regus, the world’s largest shared-office provider and a WeWork rival, trades at 34 times earnings. The average for all stocks listed on Nasdaq is 23.

And yet, the valuation is hardly an outlier during a venture-funding boom that has some observers worrying about a new dotcom bubble.

“At least from a dollars and cents perspective, we’ve seen crazier things,” said a partner at a venture capital firm that hasn’t invested in WeWork but holds stakes in other real estate tech startups. Another venture investor, also unaffiliated with WeWork, said the valuation is high but “could be very justified” in the long run. (Both were speaking after the $5 billion valuation.)

Tech startups attract funding based less on their current earnings and more on the promise of future growth. And if Neumann has his way, the growth will be immense. “In the next five years, we’re going to take over more than 50 million square feet [of office space],” he said at the TechCrunch Disrupt technology conference in May. ILLUSTRATION

BY P. J. McQUADE www.TheRealDeal.com January 2014 35

STARTUPS WeWork rents out large tracts of office space with terms of 10 to 15 years, and then sublets small chunks to firms on a month-to-month basis. In exchange for this flexibility, as well as a plethora of amenities and networking opportunities, WeWork’s customers, dubbed members, pay a significant premium.

Zachary Ehrlich, founder of brokerage Mdrn., estimated that he pays up to $200 per square foot at WeWork’s 261 Madison Avenue location. WeWork pays rents starting in the low-$40s per square foot for the space, according to real estate data firm CompStak. This very likely allows for a comfortable profit margin, even after accounting for the company’s large investments in renovations, on-site management and amenities.

In some cases, landlords provide WeWork with discounted space in exchange for its commitment. Rudin Management, for example, gives WeWork a discount at 110 Wall Street.

Michael Rudin, a vice president at the family firm, argued that the discount makes business sense because WeWork is leasing the entire 300,000-square-foot building — which was previously 60 to 70 percent occupied — and is assuming much of the cost of renovation.

“At the end of the day, we have this growing company that’s taking the entire building and doing a nice buildout, and we are spending significantly less than we would have with a complete repositioning,” Rudin said. “Worst case, if WeWork went out of business, we would be left with a better building than before Hurricane Sandy.”

WeWork is getting similar discounts at a minimum of six of its 15 current New York locations, according to CompStak. Observers guess that each location generates millions in profits for the company, and its potential for profitability only increases with each new location, as does the appeal of its much-touted member network.

Jason Bauer, whose brokerage Voda Bauer is headquartered at a WeWork space on East 42nd Street, said the rent premium he pays is more than offset by the business he gets from other WeWork members. Voda Bauer is WeWork’s official residential partner in New York, giving it first crack at a huge pool of potential clients.

The founders’ unusual backgrounds — Neumann grew up on a kibbutz in Israel, McKelvey in a five-mother collective in Oregon — led WeWork to place huge emphasis on community, something that has clicked with investors.

“I thought they really did think not just about real estate space but about establishing a community, which I thought then, and still think now, would attract a lot of people,” Mort Zuckerman, co-founder and chair of Boston Properties, told TRD. He said he chose to invest based on his belief in both WeWork’s business model and in Neumann, whom he described as “enjoyable,” “inspiring” and having “a great feel” for his work.

“I am, shall we say, very happy [with the investment],” Zuckerman added.

The test to come Rapid growth and glowing assessments like Zuckerman’s have led many to con00 July 2015 www.TheRealDeal.com

clude that the future belongs to WeWork.

It’s certainly managed to attract top talent.

Recent hires include Arthur Minson, former CFO of Time Warner Cable; Michael Gross, former CEO of Morgans Hotel

by Bloomberg.

“Everyone said our business wouldn’t succeed then because it’s a downturn,” he said, referring to WeWork’s predecessor Green Desk. “And now they’re saying it

because it seems like there are not just tech startups there. I think they’ve done a pretty good job of building out their diversity.”

WeWork is often portrayed as a haven for tech startups, but that’s only partially

An office at the WeWork location at 1 Little West 12th Street in the Meatpacking District

WeWork co-founder Miguel McKelvey

WeWork’s Todd Bassen, former head of New York acquisitions for Invesco

WeWork’s Arthur Minson, former CFO of Time Warner Cable

The lounge at WeWork’s Soho West location at 17 Varick Street

“Everyone said our business wouldn’t succeed then because it’s a downturn.

And now they’re saying it won’t succeed because it’s a bubble. I think that whole idea is bullshit. Because as we all know sitting in this room, the world has changed completely.”

Group; and Todd Bassen, former head of New York acquisitions for Invesco.

But doubts persist about WeWork’s ability to weather a downturn. The firm is signing long-term leases at historically high rates, despite the favorable terms it may get. Will it still be able to charge members, who make only short-term commitments, the rates it needs to stay profitable if the real estate market, or the economy as a whole, tanks?

At an April event in Brooklyn, McKelvey addressed this question, as first reported

MIGUEL MCKELVEY, WEWORK won’t succeed because it’s a bubble. I think that whole idea is bullshit. Because as we all know sitting in this room, the world has changed completely.”

A third venture investor unaffiliated with WeWork, also speaking on the condition of anonymity, said he goes “back and forth” on the question of the company’s viability.

“Because you look at their spaces,” he continued, “and it’s all these small businesses, and if there’s a major downturn in the economy, do they get fucked? I don’t know,

correct. Walking through the hallways one is also likely to see lawyers, flacks, budding hoteliers and tailors, among others. What is true though, is that small businesses make up the bulk of WeWork’s membership.

Conventional wisdom says that small firms are vulnerable to downturns. However, a look at the available data shows that heavy reliance on small businesses may not be a disadvantage during tough economic times — on the contrary.

Continued on page 112

www.TheRealDeal.com July 2015 61

Vanke-Wanda pact could lead to big moves in NYC

CHINA WATCH

Experts analyze the partnership potential of two Chinese development giants

BY ARIEL STULBERG he recently announced alliance between China’s two largest real estate developers, China Vanke and Dalian Wanda Group, could have a significant impact on their international activity, especially in global hubs like New York City.

The firms are among China’s most successful companies, and operate on a scale that makes New York’s giants look small.

Wanda’s website puts its assets in 2014 at $85.6 billion, with a portfolio of more than 225 million square feet. Vanke’s assets totaled $82 billion, and its portfolio 410 million square feet, according to Fitch.

Still, both companies have felt the effects of a Chinese housing market slump. Publicly traded Vanke posted 2014 revenue of $23.6 billion, but first-quarter 2015 profit fell nearly 60 percent year-over-year, to $105 million.

Wanda reported 2014 profit of $2.1 billion on revenue of $38.8 billion. Profit rose 14 percent from 2013, but sales margins narrowed. The company does not issue quarterly reports.

“The old model was: ‘If you build it, they will come.’ That model is played out,” said

T

Patrick Chovanec, chief strategist at investment advisor Silvercrest Asset Management and a prominent Chinese economy analyst.

Vanke and Wanda both shifted in the last year to an “asset-light” strategy, and said they’d seek outside capital for land purchases. Both also deployed REIT-like securitized loans, and are looking to get into crowdfunding.

“They want to get away from having to put a huge amount of capital into every project,” said Su Aik Lim, director of Asia Pacific Corporates at Fitch Ratings. Partnering will allow them to pool capital and spread risk, Lim said, and also to share their investor networks.

So far, the asset-light strategy is focused inside China, Lim said. Abroad, “they’re still investing quite heavily on their own.”

Yet both firms have relatively small overseas profiles. They own a combined 13 real estate properties outside China, versus 367 at home for Vanke and 244 for Wanda.

New York is “definitively one of the important markets’” for both companies, said Vincent Mo, CEO of SouFun Holdings, one of the largest Internet real estate portals in China, who works with both companies.

Chinese investors spent $3 billion on New York properties in 2014, and experts predict that 2015 activity will dwarf that figure.

Since 2013, Vanke bought six major properties outside China, according to Real Capital Analytics, including two in New York. It paid $125 million for a controlling stake in the 30-story Bryant Park office building known as Bush Tower, and bought into Aby Rosen’s 100 East 53rd Street, a Norman Foster-designed condo project.

Wanda owns seven properties outside China, according to Real Capital, but so far none in New York. It is also active in other industries, including owning British yacht maker Sunseeker and AMC Theaters, the largest U.S. theatre chain. It was reportedly working on a deal in 2013 to build a luxury hotel and apartment build in Manhattan, but that project never panned out.

That appears, however, to be Wanda’s goto combination. In January, it bought two buildings near the Sydney Opera House for a combined $383 million. It plans to invest about $1 billion to build a five-star, 160-room hotel with accompanying luxury apartments

and retail. Wanda’s One Nine Elms project in London, purchased in 2013, followed the same prime-location, luxury-mixed-use blueprint.

Wanda and Vanke “have been disciplined,” said Borja Sierra, U.S. head of capital markets at Savills Studley. “They’ve said ‘No’ to a lot of opportunities. They don’t only want to have an asset. They want to buy the right place.”

In the short-term, Vanke and Wanda will continue to work with local partners on international investments, Mo predicted. “They’re accumulating experience,” he said, and “will not try to do everything themselves.”

And outside China, other barriers make it tough to operate at the scale they are used to.

“In other markets, it’s not so easy to develop megaprojects,” said Omer Ozden, a managing partner at Beijing Capital Equity and former acquisitions director at rival Xinyuan Real Estate. “It depends on the type of economy, the type of political system.”

Sierra believes there’s much more to come from the partnership in the states. “They’re great companies with great teams in the U.S.,” he said. “If they were powerful before, now they’ll be super-powerful.” TRD

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Brooklyn buyers beware Condo pipeline in borough is sparse — ‘like a desert with no cactus’

BY TESS HOFMANN ondo buyers in Brooklyn are in for a rude awakening for the next few years.

While there are plenty of new development rentals to choose from, the pipeline of for-sale units in the already inventory-starved borough is paltry.

This month, The Real Deal looked at all of the condominiums slated for Brooklyn, and found that the trickle of projects in the works will not be enough to meet the demand.

TRD combed through Department of Buildings records and found 23,700 Brooklyn residential units in the pipeline across 137 projects. Of those, only 1,900 (or about 8 percent) are expected to be condos. Plans are unclear for 4,200 of the units, while rentals account for the bulk: 17,600.

“I think that there’s not enough on the market right now and there’s not going to be even in a year,” said Ofer Cohen, founder and president of Brooklyn commercial brokerage TerraCRG, who regularly works with residential developers looking for sites to build on. “It’s going to take a long time for condo inventory to get into this pipeline, and for the foreseeable future there’s not going to be enough of it.”

The landscape is already a frustrating one for buyers, said Ralph Modica, a Douglas Elliman broker based in Williamsburg. “It’s definitely like a desert with no cactus. It’s really sparse.”

C

The 278-unit 550 Vanderbilt

The lucky few

“It’s going to take a long time for condo inventory to get into this pipeline, and for the foreseeable future there’s not going to be enough of it.”

OFER COHEN, TERRACRG The 378-unit 388 Bridge Street

Playing catch-up The imbalance in the market is largely an echo of the recession. The 2008 downturn, of course, made lenders hesitant to underwrite condo projects in Brooklyn. In the years that followed, rentals also seemed like the logical choice for developers who wanted to protect themselves against market fluctuations. As a result, the vast majority of projects that got off the ground were rentals.

“People got pretty burned during the last downturn doing condos,” Cohen said. “I think that coming out of the recession there wasn’t even a conversation. No one even thought they wanted to do condos again, because there was no need. The residential mortgage market hadn’t come back yet.”

But with a new generation of buyers hungry to move to (and buy in) Brooklyn, there is simply not enough supply to meet the demand.

And while some of these new Brooklynites were renting at first, they are getting older and starting to look for premium for-sale product.

“They expect relatively large space. They expect a lot of light. They expect floor-to64 July 2015 www.TheRealDeal.com

ceiling windows,” said Brooklyn-based Ideal Properties Group co-founder Aleksandra Scepanovic. “Old or existing condo and coop stock really can’t offer it.”

And developers can only respond so quickly.

“Everything takes a couple of years to kind of catch up,” Elliman’s Modica said.

Cohen said he doesn’t expect to see a noticeable uptick in condo inventory for two or three years.

The 108-unit Pierhouse. Inset: David Von Spreckelsen.

The 42-unit 1 John Street.

Inset: Jared Della Valle

The relative dearth of condos in the pipeline leaves a select few projects in a sweet spot with a very captive audience.

That, not surprisingly, is quickening absorption rates and driving up prices.

Indeed, the median price of a Brooklyn home shot up 25 percent in just one year to $550,000, according to the Corcoran Group’s first-quarter market report.

Cohen predicted that condo pricing would “not level off anytime soon.”

One of the biggest in the borough’s pipeline is 550 Vanderbilt, a 278-unit condo building that’s part of Greenland Forest City Partners’ mega-project near Barclays Center. Formerly known as Atlantic Yards, the development was rechristened Pacific Park late last year.

Prices at the project will range from $550,000 for the least expensive studios to $5.5 million for some of the maisonette and penthouse units. Sales launched in midJune, and the building should be ready for move-ins by the end of 2016.

“We anticipate being sold out by then, no problem,” said Jodi Ann Stasse, managing director of new development for Citi Habitats, who is marketing the building.

Other major condo buildings include Xin Development’s 216-unit Oosten in Williamsburg, where prices start around $710,000 and soar up to $6.5 million.

Units at the Oosten — like those at several other Brooklyn condo buildings where construction is not yet complete — are selling fast. StreetEasy data shows that at least 132 units are already sold or in contract since sales launched in September.

Meanwhile, at the Boerum, a 128-unit condo building, developer Flank launched sales in December and was 50 percent sold by March. There were only 28 apartments in the building, which has a 2016 occupancy, that remained unsold as of mid-June, though not all were listed yet, a Flank representative said.

There are a handful of other high-profile projects on the market, including Toll Brothers’ Pierhouse, the Stahl Organization’s 388 Bridge Street and Alloy Development and Monadnock Construction’s 1 John Street.

But all of those projects have already sold 50 percent of their units or more.

The big switch Industry players in Brooklyn are buzzing about developers switching their projects from rental to condo. Sources say that switch is being considered by developers who originally conceived their projects as Continued on page 110

www.TheRealDeal.com January 2014 35

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FOREIGN INVESTMENT

C H I N E S E C H E S S Fast-growing Chinese firms are making moves to poach top talent and assemble NYC teams from the ground up

BY RICH BOCKMANN he adage “all real estate is local” takes on new meaning when it’s uttered half a world away.

As Chinese developers and investment firms ramp up their activity in New York City, they’re also building local real estate teams from the ground up.

To do that, these firms, which are mostly based in Beijing and Shanghai, have been poaching talent from some of the city’s top real estate firms, including Extell Development, Vornado Realty Trust and Silverstein Properties.

“They need people who are very familiar with the U.S. real estate market,” said Scott Hileman, director of the real estate group at the global consulting firm Deloitte.

The competition for top talent is especially intense, Hileman said, because it comes in what’s already a tight market, even for premier New York real estate companies.

“The market is so strong; if you’re trying to hire people, it’s difficult in general,” he said.

For the most part, these New York hires do not speak Chinese. Some companies deal with the language barrier by hiring junior bilingual staffers or moving mid-level teams over from China to help facilitate communication between New York and company headquarters.

T

68 July 2015 www.TheRealDeal.com

In some cases these companies “parachute in” executives from China who assemble local teams to pull the levers on their projects.

This month, The Real Deal looked at some of the fastest-growing Chinese real estate firms in New York and the players they are tapping to help plant permanent flags here. Read on for a closer look:

Fosun Fosun International struck a deal to buy the 2.2 millionsquare-foot One Chase Manhattan Plaza for $725 million in October 2013. But the investment arm of China’s largest privately held company had no local team to manage the project.

So the following May, the firm sent 10-year company veteran Bo Wei to New York from Shanghai to build one.

Wei, who speaks little English and communicates mostly through a translator, is Fosun’s chief U.S. representative and vice president of its real estate division, Fosun Property.

“I want to emphasize that Fosun is a multi-national company with headquarters in Shanghai and lots of investment overseas and all over the world,” he told TRD through his interpreter. And “one principle we always hold is to respect the local market and local culture.”

Wei said that repositioning One Chase Manhattan Plaza, which Fosun rebranded as 28 Liberty, required finding New York industry players to bring on board. So he hired architecture firm Skidmore, Owings & Merrill; a leasing team led by Peter Riguardi, the president of New York operations for JLL; and CBRE as the property manager — all firms Fosun has relationships with in China as well.

In order to build an in-house team, the company turned to a recruiter to find someone who knew the market inside out.

Two months after Wei’s arrival, Fosun brought on industry veteran Erik Horvat, who was then heading the World Trade Center development at the Port Authority of New York and New Jersey, as managing director.

“They found me through a recruiter process,” Horvat said.

“It makes sense for a new firm to do that.”

Continued on page 70

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FOREIGN INVESTMENT He noted that one of the things that convinced him to make the move was the chance to build a U.S. real estate team that has the support of a huge, global player.

“Fosun, as large as it is, in America, it’s really in an entrepreneurial place,” he said.

Horvat spent the last five months hand picking real estate pros to join a team that now numbers about a dozen professionals.

And while most of the high-level staffers Fosun has poached from NYC competitors don’t speak Chinese, the majority of the office is bi-lingual, thanks to a number of Chinese-American hires and a team sent over from Shanghai.

The company landed several key hires from other major New York real estate firms and organizations.

For example, Jason Berkeley, who was brought on as Fosun’s head of development and construction, spent about six years at Larry Gluck’s Stellar Management, overseeing some 1.5 million square feet of Manhattan office space. James Connors, tapped as head of asset management, was general manager of the Empire State Building Company before heading the development of the National September 11 Memorial & Museum. And Tom Costanzo, who last month came on to head leasing at 28 Liberty, came from Vornado Realty Trust.

Those new hires have now allowed Fosun to begin expanding its presence in New York beyond 28 Liberty.

The company announced in May that it is partnering with JD Carlisle to codevelop a 47-story residential tower at 126 Madison Avenue.

Horvat said that as the company’s scope grows here, Fosun will continue hiring.

“We continue to grow and make good progress on the hiring side, but we want to be prudent in hiring,” he said. “We have two deals and I think we’re finally getting there.

There will be more though.”

Xinyuan Real Estate Of the Chinese firms with a presence in New York City, Xinyuan Real Estate is the most established. The company got its start here in 2008 when early investors, including billionaire Equity International Chairman Sam Zell, took it public on the New York Stock Exchange.

Today, the company has a staff of about 20 in the city and is in the sales phase of its 216unit, ground-up residential development in South Williamsburg. The Peter Poondesigned condo building, dubbed the Oosten, is nearly 50-percent sold.

John Liang, the managing director of the company’s U.S. operations, said the fact that more than half of Xinyuan’s board is made up of American citizens gave the company a running start.

“They are well-connected in New York,” he said.

Liang came to the United States from Beijing in 1991 to study architecture at the University of Arkansas. After several

70 July 2015 www.TheRealDeal.com

years designing buildings, he jumped to the development side and enrolled at the Wharton School at the University of Pennsylvania. After graduating, he landed a gig as an asset manager at General Growth Properties overseeing a portfolio of some 30 malls on the East Coast. He then did stints at Lerner Heidenberg Properties, a New

main regulatory agencies in both the U.S. and China — the Securities and Exchange Commission and the China Securities Regulatory Commission.

Kuafu Properties Last year, Forbes referred to the “U.S.-based (but Chinese-named)” Kuafu Properties as

Kuafu Properties’ team now includes, from left: Christopher Sameth, Shang Dai, Zengliang “Denis” Shan, Jeffrey Dvorett and Stephen Muller. The company went into contract to buy a $300 million site last month.

From left: Erik Horvat, Fosun’s Managing Director; I. Fei Chang, who oversees U.S. operations for the state-owned Greenland Holdings; and John Liang, managing director of Xinyuan Real Estate’s U.S. operations.

Jersey-based retail owner, and in the real estate division of the A&P supermarket chain.

In 2012, he connected with Xinyuan chairman Yong Zhang through a mutual acquaintance.

Liang said trying to find top-level talent in America for a Chinese company presents a classic Catch-22 situation.

“There’s a dilemma: You can find good real estate people who speak Chinese, but have never been in a senior management role, who had never run big companies,” he said. “On the other side, you may have some people who are senior enough, but they don’t have U.S. real estate operational experience.”

Liang’s hires include vice president of acquisitions Can Tavsanoglu, who came over from the Lightstone Group, and residential broker Cindy Morin from Halstead Property, a Beijing native who speaks Mandarin.

He said having a bi-lingual residential sales director on staff is crucial, considering that Xinyuan is marketing a third of its units to buyers in China.

In fact, about half of the staff is bilingual, which is especially important in the accounting department. Liang pointed out that the company is overseen by the

the “mystery real estate company” planning a 47-story tower on a $62 million development site in Hudson Yards it bought with partner Siras Development.

Indeed, the company’s principals, Shang Dai and Zengliang “Denis” Shan, are new to development.

Dai came to the U.S. from Chicheng, a rural town about 50 miles north of Beijing, in 2002 and started his own law firm in Flushing, Dai and Associates, catered largely to Chinesebased companies looking to do business in the U.S. Shan, who founded China’s largest private architecture and design firm, CCDI Group, arrived a decade later in 2012.

The two teamed up that year and began building Kuafu.

The pair took “two years to fully understand and get traction on deals and navigate the waters,” said Stephen Muller, who joined the company in February as its chief investment officer.

“They had really relied on their relationships in America to source everything, from deals to personnel.”

Muller, formerly a managing director at the Midtown-based real estate investment bank the Greenwich Group International, said he met Dai at a Washington, D.C. con-

ference last year hosted by the Association of Foreign Investors in Real Estate.

Kuafu’s first key hire was Christopher Sameth, who was previously a principal at the investment firm Investcorp where he invested in debt funds active in the city’s commercial real estate market.

Late last year, the company added Jeff Dvorett, the Extell Development executive who oversaw development of One57, as head of development.

The company now has nine employees, and is looking to hire more as it expands its portfolio, which in addition to the Hudson Yards tower, includes the 223,000-squarefoot, mixed-use tower it’s co-developing with Stillman Development at 151 East 86th, dubbed 86th and Lex. Kuafu last month also went into contract to buy a $300 million development site on the Upper East Side across from Bloomingdale’s, where it could build up to 280,000 square feet.

Greenland Holdings State-owned developer Greenland Holdings had a memorandum of understanding in place to invest $1 billion in a Downtown Los Angeles mixed-use project in 2013 when it sent I. Fei Chang to the U.S. to oversee the development and source more deals.

Chang, who studied architecture at Yale and speaks fluent English, quickly built a pair of teams to work on projects on each coast to handle the company’s growing portfolio. In New York City, Greenland inked a deal in December 2013 with the Forest City Ratner Companies to buy a 70-percent stake in the 6,430-unit residential portion of the Pacific Park project in Downtown Brooklyn.

To oversee the project, Chang hired development manager Scott Solish from the New York City Economic Development Corp., who as vice president of real estate was responsible for projects such as the new Whitney Museum of American Art in the Meatpacking District and the sale of a development site at the northwest corner of Central Park in Harlem, where a 75,000-square-foot residential development is planned.

Chang still serves as Greenland Holdings chief representative in the U.S., scouring deals and working with decision makers back in China.

“I’m still the head of acquisitions,” she said. “I make decisions and recommendations to headquarters.”

The New York City team now has 15 employees, including chief financial officer Jianhong Zhang, who came here from Shanghai, and deputy CFO Clifford Schwartz, who was at Silverstein Properties where he served as treasurer.

“On the States-side team, being bilingual is not the priority,” Chang said. “The most important thing is their expertise and desire to progress.” TRD

NEIGHBORHOOD DIVE

A MORE CHIC CHINATOWN Change around the edges is moving to heart of neighborhood

BY KERRY MURTHA or decades, Chinatown was spreading out and engulfing its neighbors, particularly Little Italy, growing to encompass about 40 blocks. But the community, known for its Old World cuisine, open-air markets and tightly packed tenements, is now seeing the reverse trend, as changes in popular neighbors

F

like Tribeca, Soho and the Lower East Side advance from the edges of Chinatown to its core. High-end stores are moving into areas once known for discount shops.

Luxury rentals, condos and boutique hotels are rising where tenements and garment factories stood. This onceoverlooked neighborhood is drawing a younger, less ethnic set, and as a result, the number of Chinese residents has

fallen by nearly 15 percent. Surging demand, coupled with the borough-wide inventory crunch, is contributing to significant sale and rental price hikes. Even the rich and famous are taking note. Pop star Rihanna leased a duplex penthouse in a former industrial building at 129 Lafayette Street, the same building in which a $1,000-square-foot ground floor commercial condo fetched $7.5 million.

Development purchased the site for $18 million the domed landmark Citizens Savings Bank, earlier this year. The building is being designed is owned by Alex Chu and is being designed

by Studio C Architects and will be completed

by Peter Poon. in 2017.

A nine-story building will soon rise Three lots at 223-227 Grand Street at 89 Bowery, where an apartment will be the site of a new seven-story building was taken down after being mixed-used building. The developer, damaged during the construction 223 Grand Street Property Inc., of the adjacent Wyndham Garden which purchased the lots a few Hotel, which opened in November. years ago for $8.5 million, is Michael Kang, a familiar architect in planning a 75-foot building Chinatown, is heading the project, with 15,200 square feet of a commercial building that residential space across will include nearly 20,000 21 apartments. Amenities square feet of office space. will include bike storage Completion is scheduled and a second-floor for next summer. recreational terrace.

A former Exxon Mobil A rendering of 2 Pike Street Some commercial space site at 2 Pike Street will has also been earmarked. house a 13-story 70,000-square-foot tower Clothing designer Alberto Makali and with office condos, ground-floor retail, a real estate investment firm Empire Capital new restaurant and underground parking.

Holdings bought 35-37 East Broadway, Shing Wah Yeung of Yeung Real Estate

a six-story mixed-used building, at a government auction for $20.2 million last summer. The property, which was used as an illegal gambling den before it was seized by the government last year, is partially occupied, with leases on a monthby-month basis. The new owners have yet to reveal their plans for the space.

Retail Scene

Neighborhood Notables:

Price Trends

Retail rents range from $120 to $200 per square foot, a 20 percent jump from last year.

The neighborhood’s core is still dominated by Chinese-owned restaurants, herb shops and trinket stores aimed at tourists, but there are an increasing number of bars and pubs catering to the non-Chinese population, particularly on the edges bordering Tribeca, Soho and the Lower East Side. Vacancies are still relatively rare, but the area is ripe for new development.

Fashion designer Sandy Liang grew up in Chinatown in the 1970s.

Feminist artist Judith Bernstein has called Chinatown home for five decades.

TOP DEVELOPMENTS A new 229-room Joie de Vivre Hotel, New York’s first representation of the boutique brand, will rise at 50 Bowery, a spot some preservationists believe once housed the colonial-era Bull’s Head Tavern, frequented

by George Washington. The 22-story rectangular glass tower, which will rise above

Joie de Vivre Hotel

Local Lore

A Residential Broker’s Take Tai chi in Columbus Park

Columbus Park on Chinatown’s western flank, is where residents practice tai chi in the morning and play Mahjong on sunny afternoons. The spot is considered the center of “Five Points,” a notorious slum of the 1800s made famous in the movie “Gangs of New York.” It was also one of the city’s first integrated neighborhoods, home mainly to African-Americans and Irish immigrants, before Chinatown expanded west.

Recent commercial sales Most expensive:

Recent residential sales Most expensive:

21 Catherine Street

158 Hester Street, #6G

five-story, 15-residential units, $8.8 million

1,383-sq-ft condo, $1.8 million

Least expensive:

Least expensive:

173 East Broadway #C4

50 Bayard Street, #8U

310-sq-ft commercial unit, $155,000

765-sq-ft, 1-bedroom condo, $202,800

72 July 2015 www.TheRealDeal.com

“Right now there are a lot of changes on the Bowery side of Chinatown, but eventually that will spread into the heart of the neighborhood,” said Michael Chen, a broker with Bond Real Estate Agency.

25% Increase from last year in price per square foot for a condo, which now averages $2,000

$1.09 million Median sales price, 10.6% lower than the median sales price in all of Manhattan

32.4% The appreciation of sales prices in the past 5 years

Signs of Change Dimes at 49 Canal Street, a cafe with California-style fare, opened in September 2013. Owners Alissa Wagner and Sabrina DeSousa pack in crowds for breakfast, lunch and dinner. Menu items range from warm banana bread with cardamom butter and sea salt to red curry mussels with a housemade paste of ginger, shallots, lemongrass and coconut milk.

A Commercial Broker’s Take

Changes planned for 35-37 East Broadway have not yet been revealed.

“There was a time when Chinatown faced its challenges, but multi-million dollar projects in surrounding neighborhoods like Tribeca and Soho are spilling over,” said Andrew Barrocas, CEO of MNS Real Estate. “Developers are now looking to invest here because there is less risk.”

$2,200 Average rental price for a one-bedroom, up from $1,800 last year

$1,180 Gap between average rental price in Chinatown and all of Manhattan, at $3,380.

151 Canal Street

Demographic changes from 2000 to 2010: Population: 108,408, down 0.8% from 2010, up 5.6% from 2000 Median Income: $52,029, up 3% from 2010, up 56% from 2000 White Collar: 63.2% Blue Collar: 36.8%

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148 Madison Street, #A, 485-square-foot condo for $450,000. TRD

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Kathy Korte, the president and CEO of Sotheby’s International Realty.

DAY IN THE LIFE OF:

Kathy Korte

The Sotheby’s CEO on dreams of being a spy, jet setting and the Green Bay Packers

athy Korte sits at the top of the Sotheby’s International Realty food chain, overseeing 42 offices and more than 1,800 brokers and agents globally. TRD’s latest residential firm ranking found that the firm’s two NYC offices had $1.4 billion of listing, 231 brokers and an average listings price of roughly $8.8 million. Korte, 53, joined Sotheby’s in 1984 as an administrative assistant, fresh out of Franklin & Marshall College in Pennsylvania. She rose through the ranks and, in 2006, was named president and CEO. Needless to say, the job is fast-paced and Korte — who lives in New Providence, New Jersey — is often jet setting to Sotheby’s locations around the globe. She takes at least two trips a month and aims to attend at least two sales meetings a year in each office. And she is one half of a Sotheby’s powerhouse team: Her husband, Philip White, runs Sotheby’s International Realty Affiliates globally. She also has two stepchildren.

K

5:30 a.m. I get on the treadmill down the hall from my bedroom. I try for a steady three-mile jog, which takes about 40 minutes.

7:15 a.m. I hop on a train from New Jersey to our main office [at 38 East 61st Street].

After going through my emails and the Wall Street Journal on the train, I read legal thrillers, like “The Bone Tree” by Greg Isles.

If I hadn’t gone into real estate, I would’ve been a lawyer. We’re always careful that we’re doing things legally and acceptably. Having that legal understanding can help you make the right business decision. Espionage fiction also intrigues me. I want to be a spy in my next life.

8:30 a.m. I arrive at the office and have my second cup of coffee. I try to have yogurt 74 July 2015 www.TheRealDeal.com

or some cottage cheese and fruit to get a little bit of protein. I look through all of our transactions for the past day: new listings, closed deals and listings that went under contract. There could also be referrals going from New York to Palm Beach or Los Angeles, for example. I may pick up the phone and say to a manager, ‘Hey, I can’t believe my agent Downtown just placed a referral in Lake Geneva for 80 million euros.’

the real estate. Recently, we sold a client’s Manhattan townhouse for $7.5 million and the auction house sold one of their Cezanne paintings for $41 million. We talked about doing a joint marketing proposal for a property in Los Angeles with the auction house. So many of the trends in real estate begin in California ... you’ve got to have your ear to the ground to know what’s coming next.

Korte’s favorite candy sits in a jar on her desk.

6:30 p.m. I attend events we hold at

10:30 a.m. I meet with brokers and their clients. I recently met with Nikki Field, her team and the Kushners to review our plans for the Puck Building in Soho, which we’re marketing. We discussed the prospective clients and possible challenges. Everyone has different taste. Some say the units are not big enough, or families with little kids don’t want the terraces. In one instance, a divorce has to be finalized before one of the parties can move forward with purchasing a unit. I think we’re going to see Penthouse 2 [asking $35.1 million] pop any day now.

Sotheby’s auction house. In April, we sponsored an event with them called the Designer Showcase. Or I have dinner with friends, my brokers’ managers, auction house colleagues, clients, or my niece, who works at Morgan Stanley. My go-to dinners in the city are the black cod with miso and sashimi salad at Nobu and Dover sole at Antonucci Café.

7:30 p.m. If I have nothing going on in the city, I’ll head home by car service or train.

The best thing in the world is having dinner at home. My cats greet me at the door. I marinate the halibut and prepare the lemon butter sauce, salad and rice. My husband throws the halibut on the grill.

Legal thrillers hrillers top her leisure re reading.

12:30 p.m. Lunch is a moving target. Most of the week, I go out with brokers, because I need to hear what’s happening on the street.

My favorite places are Fred’s at Barney’s and Amaranth [on East 62nd Street]. Doubles, a club at the Sherry-Netherland, is nice for taking people who want something more private. Based on talking to brokers, there’s good morale in just about every market we’re in. There’s just not enough inventory throughout the U.S. We could be driving more business if we had more listings.

2:00 p.m. I have a conference call with some of my 38 managers to talk about recruiting.

Perhaps our manager in Southampton could help the manager in Soho, because she has a connection. We have high-caliber agents, but

Nobu’s famous black cod with miso is a favorite dinner in the city.

the door is open for agents we think could work well with the Sotheby’s brand.

4:00 p.m. California has had time to wake up. I check in with Frank Symons, our chief operating officer, who oversees all operations on the West Coast. We work closely with Sotheby’s auction house [the firm’s parent company], which will often pitch the art consignment for a seller and we will pitch

9:00 p.m. I’m an early bird. I try to get in bed now, if I’m not on an overseas call. I recently spoke to two agents who are marketing their properties at the Sotheby’s spring auction in Hong Kong. There is still a lot of interest from Asian buyers to move their money into the U.S. Many of them are buying and leaving the units vacant for now, not even renting them out. It used to be all about the rental. It doesn’t have to be an investment, or have an immediate return. Afterward, I like to unwind by watching “House of Cards.”

The minute football starts, I’ll watch any game. My family is from the Midwest and I was a Green Bay Packers fan growing up.

PHOTOGRAPH OF KATHY KORTE FOR THE REAL DEAL BY TOBIAS TRUVILLION

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WH AT TH E Y ’ R E READING NOW

Real estate pros share picks for books about the fall of corporate giants, military strategy and revitalizing challenged cities Where do you look for insight and inspiration?

To find out, The Real Deal asks leaders in the industry what they’re reading

Robert Dankner President, Prime Manhattan Residential What are you reading right now?

“The Art of War,”

by Sun Tzu, the sixth century Chinese manual on military strategy and tactics.

What spurred you to read that book?

I re-read it every other month or so. It’s fascinating, so current, so real and simply practical.

What in it has stuck with you?

The book explains when and how to engage opponents in order to prevail in difficult situations. Instead of describing the logistics of warfare, the author shows the reader how to succeed by motivating soldiers and leveraging tactical advantages. In short, he explains how to win the battle of wits.

Victoria Rong Kennedy

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76 July 2015 www.TheRealDeal.com

Licensed associate real estate broker, Citi Habitats What are you reading right now or what did you finish most recently?

I just finished reading “The AIG Story,” by Maurice Greenberg and Laurence Cunningham.

Greenberg, the main author, was chairman of AIG from 1967 to 2005, until he was forced out by thenAttorney General Eliot Spitzer. The book chronicles the company’s rise and fall from his perspective. Under Greenberg’s four decades of leadership, the insurance giant grew to be worth $180 billion.

However, after his ouster, the new management radically changed the firm’s business model, exposing AIG to the heat of the 2008 financial crisis, and nearly destroying it. It’s a Shakespearian tragedy set in the world of modern business.

What spurred you to read that book?

The magnitude and historical significance of the financial collapse compelled me to

read about this topic. As a Beijing native, AIG is of particular interest to me. The company was founded in Shanghai in 1919 and broke ground opening up markets in the Far East.

Has anything you read in it stuck with you? Would you recommend it to others?

AIG’s post-Greenberg involvement in the risky mortgage-backed security industry was in sharp contrast to the former chairman’s more disciplined style. But as in life, when you gamble, sometimes you lose. What’s important is that you take personal responsibility for your actions.

I would recommend this book to anyone who wants to learn more about big business, as well as human nature.

Gregory Cola Director of acquisitions and investments, The Peebles Corp.

What are you reading now or what did you recently finish?

I recently finished “Detroit City is the Place to Be,” by Mark Binelli. I just started reading, “The Inevitable City,” by Scott Cowen, which is about Hurricane Katrina and New Orleans. Both books have similar themes of leadership and revitalization after crisis strikes a city.

What spurred you to read the Detroit book?

I have analyzed a few properties in the Detroit area. After a visit, I started to fall in love with the city’s rebirth and now track what is happening there. I wanted to learn more about Detroit’s history of the American Dream (a frequent topic of discussion at the Peebles Corporation) and its future plans. Unfortunately, the story of Detroit reinventing itself is not always the focal point of the media’s coverage of the city. Everyone roots for the underdog, and there’s none more fitting than the story of Detroit.

Has anything in it stuck with you?

Detroit is a diverse city full of pride.

The book is very engaging and gives you Detroit from all angles. Some of the stories within the book are hilarious too.

Compiled by Ariel Stulberg www.TheRealDeal.com March 2010

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? 2.9 2 @A.A2 5 6@A<?F 1971: VACANCY DECONTROL TAKES EFFECT, TEMPORARILY andlords rejoiced as decades-old controls on New York apartment rents were put aside, 44 years ago this month.

The Urstadt Law, named after Charles Urstadt, Gov. Nelson Rockefeller’s housing commissioner, forbade the city government from enacting more stringent rent regulations than those enacted by the state legislature.

The law also removed controls from around 1.3 million apartments, plus 400,000 more under rent stabilization, allowing landlords to raise rents when tenants voluntarily moved out.

Gov. Nelson Rockefeller Benjamin Altman, then city housing commissioner, predicted rent on decontrolled apartments would rise by an average 60 percent, and 200,000 families with children would to be forced to move to the suburbs.

A few years later, the Rockefeller-appointed Temporary State Commission on Living Costs and the Economy, formed as part of the Emergency Tenant Protection Act of 1974, found that rents had in fact risen 52 percent, while operating costs for landlords increased by just 7.9 percent. The panel also found a 30 percent drop in renovation spending, as landlords were able to raise rents substantially on decontrolled apartments without making any improvements.

These findings led the legislature to reverse itself. In 1974, state lawmakers passed the Emergency Tenant Protection Act, re-regulating 99 percent of the decontrolled apartments.

The Urstadt Law remains in place, with efforts made to repeal it and return control of rent regulations to the city as recently as last year.

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1948: PLANS FILED FOR NEW BROOKLYN JAIL uilding plans were filed for the Brooklyn Remand Shelter and City Prison at 275 Atlantic Avenue, designed to replace the antiquated Raymond Street Jail, 67 years ago this month.

The structure, projected to cost $5.5 million ($54 million today), would occupy the entire block bounded by State Street, Boerum Place, Atlantic Avenue and Smith Street. The limestone-walled, 11-story facility was planned to house about 700 inmates, watched over by 120 staff.

The facility, designed by Alfred Hopkins and Associates, aimed to house the maximum number of prisoners while requiring the fewest possible guards.

Construction faced myriad delays, modifications, reports, hearings, capital reallocations and other bureaucratic drags.

It finally opened in 1957, costing a total $10.6 million, nearly The Brooklyn Detention Complex opened in 1957. double its original estimate.

The building served as an interim center for adolescent prisoners for 12 years, until 1969, when that population was moved to Rikers Island en masse to clear the way for yet another round of renovation and repurposing.

The jail was closed for a decade before reopening in 2012. It is known today as the Brooklyn Detention Complex and used to house adult male inmates.

B

1921: CITY’S LARGEST CONCRETE BUILDING OPENS he Western Electric Company building at 395 Hudson Street, New York’s largest concrete edifice to date, opened 94 years ago this month.

The 11-story, 595,000-square-foot building took up the entire block bordered by Hudson, West Houston, Greenwich and Clarkson Streets in the West Village.

On the 10th floor, Western Electric, by then a subsidiary of AT&T, created a special room to demonstrate the latest in electrical household devices, farm lighting apparatus and other cuttingedge gear.

It was built by the Turner Construction Company with the help of architects McKenzie, Voorhees & Gmelin, utilizing reinforced concrete throughout, with the exception of a brick veneer on the exterior walls.

The building was an early example of the use of Built in 1921, 395 Hudson Street still stands. reinforced concrete outside of industrial construction.

In an earlier era, builders used structural steel, brick, stone and terra cotta. Reinforced concrete had only recently become economical, thanks to a shift in prices for labor and steel.

The building now houses the headquarters of the New York City District Council of Carpenters, as well as the New York offices of WebMD. Compiled by Ariel Stulberg

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78 July 2015 www.TheRealDeal.com

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ARCHITECTURE REVIEW

|

JA M E S G A R D N E R

Flat, not crowded, and very hot Soo Chan’s latest, on 59th, synthesizes design ideas on the edge of Midtown

T

he little stretch of Manhattan along 59th Street from Park to Lexington is covered in scaffolding from three distinct projects.

Two of these involve the recladding or restoring existing buildings. But one has to do with the actual construction of a building, a new high-rise that will soon occupy 118 East 59th Street.

The undistinguished four-story building that stood on that site, home to a former tuxedo shop, is demolished and construction is set to begin. Brown Harris Stevens Development Marketing will begin selling the units in September.

The 38-story building will rise on the south side of 59th between Park and Lexington Avenues. The development has been in the news: The Times reported that this project, developed by Euro Properties, represents the first entirely Chinese real estate development in the city (as opposed to partnerships between Chinese and local firms). It also is one of the most important new developments, certainly residential developments, to arise on East 59th Street, at that crucial juncture where Midtown turns into the Upper East Side.

The new building is designed by Singapore-based SCDA Architects. This is the second time in less than a year that this firm has made a potent claim upon our attention, the first being the distinguished design for 515 Highline, a residential tower on West 29th Street.

Of late, the work of SCDA Architects, led by Soo K. Chan, has borne a certain resemblance to that of such contemporary Japanese architects as Fumihiko Maki, Yoshio Taniguchi and Tadao Ando, all of whom have built or are about to build in New York City. The style that seems to dominate his work and theirs is that of a pared-down modernism, strictly rectilinear and very pure.

The new building will contain 29 units and all of them will be full-floor properties.

Some of the higher ones promise views of Central Park. The remaining floors will serve as common areas, including a private dining and catering facility, a fitness center and spa, and a lounge with outdoor gardens. Because of the narrowness of the site, which is only a little wider than a townhouse, the street-level area will have space only for the lobby, rather than for any commercial use.

There is a certain metallic modernism to Chan’s aesthetic in designing the building, especially at street level and on the floor above it. Its attractive entrance consists of a strong, cantilevered canopy that juts out over the sidewalk — positively shrieking “residentiality” in the commercial district — even as the

80 July 2015 www.TheRealDeal.com

entranceway recedes sharply back into the building. In both of these energetic, almost Baroque movements, the architect A rendering of the condo building rising at 118 East 59th Street.

Inset, architect Soo K. Chan.

is playing off the emphatic flatness of the rest of the entrance, which clicks into place so as to seem flush along the street line. At this level, there is also a rich interplay of segmented lines: mostly vertical, but also horizontal at points. The lobby to the left of the entrance is visible from the street through a single giant and indivisible pane of glass. But on the second floor, the glass has been applied in a curtain wall of a dozen or so thin strips, topped by a metallic passage of minutely serried groves that look as though they are concealing some mechanical core.

Interesting things happen to the building as it progresses beyond that point.

The structure as a whole recedes from the by Eric Bunge and Mimi Hoang. At the street line in a setback that continues all same time, the sequencing of passages the way to the top. But it is not a flat-curtain or blocks of floors up the entire length of the façade brings to mind One Madison, designed by Cetra/Ruddy, on West 23th Street. But it may be that the most powerful precedent is the as-yet unbuilt 80 South Street, whose fine design was the work of Santiago Calatrava, before it fell victim to the economic downturn. There, what look like a series of cubes, one atop the other, were supposed to rise over a thousand feet into the sky.

Chan appears to have learned from all of these precedents. Like so many other architects in New York these days, he is clearly striving to make his mark with a distinctive and innovative structure. And 118 East 59 Street will indeed stand out and draw attention to itself. But it will do so as much through the general pallidness of its neighbors as through its own daring design. It is very much a grown-up building, unlike the Switch Building or its southern neighbor Blue, designed by Bernard Tschumi, which have an almost impish recklessness to them. On 59th Street, by contrast, Chan never looses control and the result is a stately, refined, competent and expensive product.

It is notable that 118 East 59th Street, on the outskirts of Midtown, is set to rise in an area that has not traditionally been seen as ripe for residential development.

But now, with the condo-mania that has overtaken Manhattan in the past decade or so, there is no part of the city that is not ripe for new residential architecture, and that is just as true of East 59th Street as of anywhere else. What is perhaps more striking is that this new development is not being marketed — as might have been the case in the past — as occupying the southern edge of the Upper East Side, but rather as standing in enviable proximity to “Billionaires Row” (which is to say 57th Street) and specifically to 432 Park Avenue, which is around the corner and two wall at this point, but blocks down. rather a sequence of Surely the Upper East alternating switches Side is still a repository of oldthat alternately recede world charm, and an enduring or protrude to the right destination, indeed, the center or left. Each of these switches is four stories of one’s homing, for all those buyers in tall, and there are nine of them in all. At the search of a certain gentility and burnished summit, order is restored as a two-story tradition. But with so many areas of the curtain wall, parallel to the street line, city, and especially of Manhattan, being signals the end of this constantly, restlessly redefined as residential zones, the once venerable neighborhood no longer has shifting movement.

Several local precedents for this design the caché it once had.

That said, it may be that 118 East 59th motif come to mind. Perhaps the most relevant is the Switch Building, at 109 Street, when completed, will seem to be Norfolk Street on the Lower East Side, a worthy enhancement of both Midtown which was completed in 2008 to designs and the Upper East Side. TRD

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2488 Main St, P.O. Box 1251, Bridgehampton, NY 11932. 631.537.5900 | Š 2015 Douglas Elliman Real Estate. All material presented herein is intended for information purposes only. While, this information is believed to be correct, it is represented subject UP FSSPST PNJTTJPOT DIBOHFT PS XJUIESBXBM XJUIPVU OPUJDF "MM QSPQFSUZ JOGPSNBUJPO JODMVEJOH CVU OPU MJNJUFE UP TRVBSF GPPUBHF SPPN DPVOU OVNCFS PG CFESPPNT BOE UIF TDIPPM EJTUSJDU JO QSPQFSUZ MJTUJOHT BSF EFFNFE SFMJBCMF CVU TIPVME CF WFSJÌFE CZ ZPVS PXO attorney, architect or zoning expert. Equal Housing Opportunity.

Q&A

Catalysts for change in Midtown East One Vanderbilt tower and a rezoning could help spark new era of office construction near Grand Central

BY ARIEL STULBERG anhattan office vacancies are low and prices keep rising. But while the fast-growing technology and media sectors colonize Midtown South, and new construction at the World Trade Center and Hudson Yards draws major corporations to Downtown and Midtown West, one traditional office center is lagging.

Midtown East, with its aging office buildings and infrastructure weaknesses, has seen little new development and few marquee tenants signing high-profile leases recently.

Last month, the city approved rezoning a five-block area near Grand Central Station dubbed the “Vanderbilt Corridor,” a move that will allow SL Green Realty to build a 63-story office tower, while providing a series of upgrades to nearby transportation links.

The deal with SL Green addresses some of the problems former Mayor Michael Bloomberg aimed at with his plan to rezone a much broader swath of the neighborhood, but Mayor Bill de Blasio is taking a more limited approach. The Real Deal spoke to developers and brokers knee deep in the Midtown East market to suss out whether the

new tack represents a path forward for the neighborhood, or a marginal one-off that won’t address larger issues.

“The three biggest challenges facing Midtown East today are its aging commercial inventory, a solidified perception of the area as a district for certain types of businesses and not for others, and uncertainty about the administration’s future intentions for the area,” said Seth Pinsky, executive vice president at RXR Realty, who served as president of the city Economic Development Corp. during the Bloomberg years.

He praised the Vanderbilt Corridor plan, and argued for similar public-private cooperation schemes elsewhere in the area, along with more comprehensive zoning reform.

Other panelists bemoaned the administration’s small-bore approach.

“I think that Mayor Bloomberg’s original plan was an excellent one and should be implemented,” said William Montana, senior managing director at Savills Studley. “A piecemeal approach is not the right path.”

For more on the Midtown East office market, we turn to the experts.

William Montana

Eric Anton

M

Senior Managing Director, Savills Studley What impact do you think SL Green’s tower will have on the surrounding area? What other development are you expecting in that five-block area?

The new tower will bring much needed modern office space to an area that has very old, outdated building stock. Larger companies, in particular, require large floors, efficient space and “green” space with light and air. The new tower will also add a shot of vibrancy to a stodgy, older area. With regard to other sites in the fiveblock area, the Milstein property at 335 Madison Avenue is a prime candidate to be redeveloped.

Former Mayor Bloomberg unsuccessfully lobbied to rezone a much larger area of Midtown East. Mayor de Blasio has said he’s in favor of a broader rezoning, but has added more requirements for developers. What do you think of de Blasio’s approach and his timeline?

It’s essential that Midtown East get rezoned, so it’s good that the current mayor recognizes it. I just hope that special interests don’t hijack the process to promote their agendas. What’s good for the hotel workers union for example, is not what’s important to New York: The area around Grand Central needs buildings that will attract modern companies and the jobs that they bring.

What do you think should be done zoningwise with Midtown East in general and why? Are you concerned that not 82 July 2015 www.TheRealDeal.com

rezoning it, or doing it in pieces, could hold up development?

I think that Mayor Bloomberg’s original plan was an excellent one and should be implemented, but with more specificity on what investments will be made on infrastructure upgrades and commitments to pay for them. A piecemeal approach is not the right path. I am also concerned about efforts to preserve buildings without architectural value. Such buildings should be razed so that new and hopefully beautiful modern office space can be built.

Do you think any rezoning should allow for residential development?

This is not the place for residential development. This is a commercial area and needs to be preserved for that use. Grand Central is one of the main transportation hubs and it’s essential that modern office space be located near that hub, so that commuters can easily get to and from work. Residential development does not need to be so close to a transit hub.

How is leasing activity in Midtown East doing and how does that compare to Manhattan’s other submarkets? Downtown and Midtown South have obviously been attracting media and tech tenants.

How is that impacting Midtown East?

Leasing activity is fairly robust. It’s not as hot as Midtown South, but that’s the hottest market in the country, so it’s not really a fair comparison. However, rents in Midtown South have risen to a point where many companies have been priced out. Office tenants, the [technology, advertising, media and information] sector included, when faced with overly high rents in their preferred location, will be receptive to considering other, more affordable submarkets.

Senior Managing Director, HFF What impact do you think SL Green’s tower will have on the surrounding area? What other development are you expecting in that five-block area?

I think it’ll have a very big impact. I’ve spent 95 percent of my career within a two-block radius of Grand Central. I love Grand Central. But clearly, we need to upgrade the office space and the transportation access points need refurbishment. I think it will have a great impact in attracting more of the [financial, insurance and real estate] industry and hopefully, the TAMI industries too. There are two development sites that I know of. Both are confidential and in the site assemblage mode.

What do you think of de Blasio’s approach to rezoning and his timeline?

I think it is reasonable to request from the private development community a bigger payment for the additional air rights.

That being said, we shouldn’t make it too onerous or too complicated. Even though we’re in a boom time, planners need to make sure the process is streamlined.

Otherwise, we’ll delay and delay and delay, and may be out of the boom time before anybody can build something.

Do you think any rezoning should allow for residential development?

The current zoning allows for residential.

If one wanted to build an apartment building right in the center of the Grand Central district, you could do that. I would like to see more residential, though the

primary function of Midtown and Grand Central is office. I don’t see it as a future family-type neighborhood. But pied-áterres and very high-end, luxury small apartments ... would be an excellent compliment to Midtown’s 24/7 nature.

Proponents of a larger Midtown East rezoning argue that the area’s aging office supply cannot compete with other world-class international cities for major office tenants. How big an issue is that?

I think it’s partially true. And it’s going to be very difficult to assemble blocks of square footage that can accommodate the massive banking operations and trading floor operations for global banks. So I’d be surprised if we see more than two or three of the really large-scale buildings. I think any of the massive corporations that need that kind of floor plate are most likely going to go over to the West Side, where there’s more land and more room for development, and for customized headquarters construction. But, I think Midtown East can compete better than the West Side or Lower Manhattan for hedge funds, private equity firms, sales operations, marketing operations, advertising companies that don’t necessarily need 40- or 50,000-square-foot floor plates. I think the future can be very bright for boutique buildings and high-end buildings.

Are you seeing properties listed or preparing to sell as assemblages in anticipation of a rezoning? On the flip side, are sellers holding off until there’s more certainty about rezoning?

I think for the moment sellers are holding off. We’re not seeing a large amount of assembles being listed or sold. I think the uncertainty is dampening assemblages, yes.

Continued on page 84

www.TheRealDeal.com July 2015 83

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Q&A

Seth Pinsky Executive Vice President, RXR Realty What do you think should be done zoning-wise with Midtown East?

The administration and City Council should move as quickly as they can to clarify the direction in which they intend to proceed with respect to zoning.

Additionally, to the extent that they propose changes (which I believe to be necessary to ensure continued investment in the area), the administration and Council should focus on how to keep this area, first and foremost, a commercial district, generating the jobs, economic activity and tax revenue that are so critical to the continued prosperity of our city.

Do you think any rezoning should allow for residential development?

While creating more housing in the city is, appropriately, a priority for the de Blasio administration, it should not be its only priority. It is becoming increasingly difficult for businesses in the city (especially small businesses) to find reasonably priced real estate. In the long run, the squeeze on businesses and the jobs that go with them will have as pernicious an impact on the ability of New Yorkers to afford to live in the city as the rising cost of housing. We, therefore, must focus — especially around our most important transit nodes — on preserving and expanding the overall supply of commercial space.

Do you think there’s tenant demand for more new Class A offices in Midtown East given all of the new and planned office space at the World Trade Center, Hudson Yards and Manhattan West?

New York City contains approximately 400 million square feet of office space.

This total has not changed meaningfully in many years, due to residential conversions and the horrible events of 9/11. The projects Downtown and on the West Side only begin to make up for the dearth of modern supply that has come to market in recent years. Because of its incredible transit accessibility, regardless of what happens elsewhere in the city, there will always be interest in Midtown East, provided that there is modern office space in the area to accommodate demand.

What are the biggest challenges that the Midtown East market faces?

The three biggest challenges facing Midtown East today are its aging commercial inventory, a solidified perception of the area as a district for certain types of businesses and not for others, and uncertainty about the administration’s future intentions for the area. The best way to address all three of these challenges is for the administration to come forward as soon as 84 July 2015 www.TheRealDeal.com

ly 2015

possible with a plan that encourages investment and development in the area to preserve its role as one of the world’s most important central business districts.

What do you think of tying project approvals with a requirement that developers pay money toward public improvements as part of a rezoning deal?

Leveraging development to provide a portion of those resources is a smart move on the part of the city, subject to two caveats.

First, it would be foolish for us to believe that such private investments can substitute for the significant public investment that is increasingly needed to keep our transportation system up to standard.

Second, government must be careful, in negotiating for public contributions to infrastructure, that the price that it is exacting is not so high that it ends up inhibiting development altogether — a risk that government seems to have, to its credit, skillfully avoided with the Vanderbilt project.

A. Mitti Liebersohn Principal and President, Avison Young New York office Do you think the “Vanderbilt Corridor” carve out for SL Green was justified and do you think developers at other nearby sites could make the case for getting on that same fast track?

The carve out is in line with prior plans for the area, and given that it delivers first-class office space to an area that has demand, the rezoning was appropriate.

The only remaining “corridor” sites that would seem to have real “fast track” potential are located on the block between 44th and 45th Streets, where the MTA already controls half the block, and, to a lesser extent, the Roosevelt Hotel.

How many development sites do you think exist in the Midtown East district?

How many new office towers would you like to see in the next 10 years?

There are approximately 18 potential development sites that have been identified. Given that most of those are buildings encumbered with commercial tenant leases, it will take close to 10 years just to gain occupancy of a typical site and to commence a project, unless significant buyouts occur.

What are the biggest challenges that the Midtown East market faces?

Having the existing Class B buildings — the ones already known not to benefit from the proposal — to continue to upgrade and improve their assets. The longer they remain on the sidelines, the more difficult it will be for them to compete for the upper rents in the market.

What are the most surprising trends you’re seeing in the Midtown East market?

Our statistics show a tight correlation between changes in asking rents and changes in vacancy. Right now, they are in near lockstep with little to no lag, which is unusual.

opers commit funds and expertise to improve the local infrastructure in exchange for the opportunity to create or change building envelopes. Ultimately, the requirements may thwart some development, which is a good thing as well.

Anything else you can add about the Mideast East market that we didn’t cover?

Midtown East needs to allow for a broader area within which there is a fluid market for the excess Transferable Development Rights (TDRs) of landmark property owners. These include Saint Patrick’s, Saint Bartholomew’s, Central Synagogue and Grand Central Terminal. The sale of their TDRs is an important source of capital that can enable them to fund the costly preservation of these treasures that the city has deemed worthy of preserving.

How many development sites do you think exist in the Midtown East district?

How many new office towers would you like to see in the area?

The current main development sites in the Midtown East district are at varying stages. At 390 Madison Avenue, there is a $240 million construction project underway, which is an as-of-right development to add 8-10 stories at the top of the building and increase the ceiling heights. There are other potential development projects at 425 Park Avenue, the Solow site on the East River between 36th and 41st Streets and the Roosevelt Hotel site on Madison Avenue between 45th and 46th Streets.

Clearly, a rezoning will add additional projects to the pipeline, and I would like to see as many new office towers in this area as the market bears.

Dana L. Moskowitz President, EVO group What impact do you think SL Green’s tower will have on the surrounding area?

The new tower will definitely have a significant visual impact on the Vanderbilt Corridor, and will enhance people’s perception of the area.

A successful leasing campaign of the SL Green tower with rents near and above the triple digits will spur additional development opportunities.

What do you think should be done zoningwise with Midtown East in general and why? Are you concerned that not rezoning it, or doing it in pieces, could hold up development?

Zoning changes must allow for larger buildings to accommodate today’s tenancies. Doing it in pieces could work, as long as there is continuity. Not making any changes would definitely be to the detriment of the area.

What do you think of tying project approvals with a requirement that developers pay money toward public improvements as part of a rezoning deal?

Rather than making it a requirement, I believe developers should be incentivized by receiving bonuses for public spaces.

Chris Helgesen Executive Vice President and Managing Director, DTZ What do you think of de Blasio’s approach to rezoning?

Clearly, there is a positive outcome from the partnership approach that would have devel-

Do you think there’s tenant demand for more new Class A offices in Midtown East given all of the new and planned office space at the World Trade Center, Hudson Yards and Manhattan West?

There is always demand for new Class A office space. Our research predicts that evolving market fundamentals in the near term will see supply diminish across Manhattan, despite new construction.

Demand will be slightly greater yearto-year as an effect of job growth, and rents will therefore increase. This may justify the decisions to move to new or re-constructed office product. WTC, Hudson Yards and Manhattan West suffer from transportation issues. They’ve been resolved in part, but travel distance cannot be eliminated. Midtown East is convenient because it’s central, and will be improved with the Second Avenue subway line.

How is leasing activity in Midtown East?

I have seen far improved activity in Midtown East over the past 18 months.

Almost 2.7 million square feet have been absorbed, with the availability rate dropping to 8.5 percent. … In more than a few instances, we moved tenants to Midtown East. For two reasons: First, it’s an economically viable alternative for mature, low margin businesses in Midtown South who would not consider Downtown for commuting reasons, but would not add 50 to 75 percent increases to their rental structure. And second, the area caters to Midtown tenants looking for slightly larger blocks of space with economically attractive rental structures.

Empirically, I am seeing far fewer 25,000 square foot and larger options and rents have grown 10 percent during this time. TRD

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

SOUTH FLORIDA REPORT

Rent Versace’s manse The Nakash family has put Casa Casuarina, formerly known as the Versace Mansion, up for lease, less than two years after buying the storied property.

Cushman & Wakefield confirmed that it is marketing the estate at 1116 Ocean Drive in Miami Beach, where Italian fashion designer Gianni Versace was murdered in 1997.

The three-story property fea-

The mosaic pool area at Versace Mansion. Inset: Joseph Nakash

tures 10 luxury suites, a wellness spa, restaurant, 24-karat gold-lined swimming pool, rooftop lounge and an event space. It was built in 1930.

Nakash’s Jordache Enterprises paid $41.5 million for the famed site at an auction in 2013. It was sold with the furnishings, stained glass and mosaics arranged in the eccentric, baroque style of Versace.

The listing describes potential uses for the mixed-use property, including luxury retail, financial advisory services office, high-end dining and lounge space, a hotel, auction house or art gallery.

The Nakash family has other holdings in South Florida, most recently, in December, paying

nearly $90 million for the Setai Hotel in South Beach.

Miami prices flatten Downtown Miami condo prices and rental rates are leveling out after two years of rapid appreciation, in another sign of change in the market as supply and demand shift, according to the Miami Downtown Development Authority’s Q2 2015 residential market report.

The report, prepared by Integra Realty Resources, found a trend toward a market correction, and cited

the impact of foreign currencies sliding against the dollar among the catalysts, because it has reduced the pool of potential buyers.

Average condo unit pricing leveled off in the first three months of the year at $430 per square foot, following annual increases Nearly half of of 22 percent and 16 BrickellHouse condos are percent in 2014 and for rent.

2013, respectively.

Rental rates also stabilized, as new condos came online and owners listed them for rent.

For example, 45 percent of BrickellHouse‘s 374 condos have listed for rent.

The Greater Downtown Miami market is in the midst of expanding by nearly 10,000 units, or 27 percent of the market size.

$4B SoLé Mia unveiled Heralding the start of their $4 billion, 183-acre master-planned community in North Miami that is aimed at revitalizing a longvacant former landfill site, LeFrak and Turnberry Associates broke ground on SoLé Mia last month.

A rendering of SoLé Mia. Inset: Richard LeFrak

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86 July 2015 www.TheRealDeal.com

The Soffer LeFrak joint venture will include 12 residential buildings with 4,390 units, nearly 1 million square feet of commercial space, 37 acres of parks, two swimmable lagoons and 4,171 parking spaces. The partnership will put in about $150 million for the development, originally called Biscayne Landing.

Turnberry principal Jackie Soffer said that they’re talking to major national and local tenants for the retail component, which will include a dine-in movie theater, gourmet grocery store, and a Warren Henry Group auto dealership.

Biscayne Landing languished for many years after attempts to develop the site fell apart early last decade.

SoLé Mia is slated for completion in 2018. By Ina Cordle and Katherine Kallergis

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

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Malibu, California

New rental developments like DSF Group’s Halstead Square in Vienna, Virginia, aim to draw tenants with luxe amenities like pool rooms and common areas filled with high-tech equipment.

A recent court ruling in Boston left open the question of whether brokers are contractors or employees.

Olympian, reality TV star and transgender pioneer Caitlyn Jenner bought a secluded 3,500-squarefoot, four-bedroom, three-and-a-half bath mountaintop home in Malibu for $3.6 million.

The James Hernandez-designed house sits on just over 11 acres, and features open-plan living spaces, indoor and outdoor fireplaces, as well as a swimming pool and spa with unobstructed ocean views.

Dallas

BOSTON re real estate brokers employees or contractors? The Supreme Judicial Court of Massachusetts ruled on the question last month, but refused to resolve it. The case, Monell v. Boston Pads, was brought by a group of brokers in 2011. They accused their firms of requiring them to perform employee-like tasks, including supervised administrative work in the office, while offering few benefits and charging the brokers “desk” and “farm” fees.

A

CHARLOTTE, N.C. A rendering of a hotel project underway in Charlotte

A hotel building boom is underway in Charlotte that will add 1,900 rooms, increasing capacity by 42 percent.

A combination of pent-up demand from the latest recession, low interest rates and a strong travel market is fueling the growth. Hotels in Mecklenburg County, which encompasses Charlotte, saw an occupancy rate of 70.3 percent in the first three months of this year, up from 66.7 a year ago, and ahead of the U.S. national average of 61.1 percent, the Charlotte Observer reported.

The average daily room rate and revenue per available room also rose. The boom is part of a national trend in the hospitality sector, sprouting new large hotels in Houston, Washington, D.C. and elsewhere. More than 70 new hotels are in various stages in Manhattan, and more are underway in the outer boroughs.

LOS ANGELES A rendering of the Millennium Hollywood project

A recent court ruling in Los Angeles could chill development in a market already known for heavy regula88 July 2015 www.TheRealDeal.com

The defendants said that the brokers were contractors despite the extra duties. The Boston Globe reported that the court ruled for the plaintiffs, saying the brokers had not been misclassified, but nonetheless agreed with a lower court that the state’s law governing independent contractors doesn’t clearly indicate brokers’ status in general. The court called for further discussion of the question, and, if necessary, a legislative fix.

tion. A Los Angeles Supreme Court judge ruled that New York-based Millennium Partners, developers of the billion dollar mixed-used Millennium Hollywood project, must halt construction over what the court declared were dodgy environmental review practices. Millennium’s review failed to address traffic concerns from the California Department of Transportation, among other things, said Judge James Chalfant, according to the Los Angeles Times. Millennium is considering an appeal, but may be forced to produce a new review. Opponents of the ruling, the city government among them, maintain that the court has placed extraordinary demands on the developers.

BOULDER, COLORADO

Boulder, Colorado, is considering limiting Airbnb-type rentals.

The city of Boulder, Colorado, is debating an ordinance that would limit short-term vacation rentals, such as those found on sites like Airbnb and VRBO, to owners renting their primary residences. The proposal is a response to fears about the rapid growth of such services and the increase in apartments being used solely for short-term rentals.

Critics say the influx could threaten community cohesion and crowd out other kinds of rentals, the Denver Post reported. A counterproposal from community members would permit all owners to rent short term, but would limit the total number of such rentals citywide. Boulder follows other cities, such as San Francisco, that have moved to set legal limits on short-term rentals, or, in the case of New York, attempting to enforce existing statutes that exclude Airbnb-like rentals. Compiled by Ariel Stulberg

Hall of Fame quarterback and Fox NFL analyst Troy Aikman sold his three-story French Normandy-style home in Highland Park for $5.4 million. The fivebedroom 10,700-squarefoot house features a wine cellar and a home theater with a concession stand. Aikman bought the property in 2013 for $4.25 million.

Santa Ynez Valley, California Neverland Ranch, the former home of the late King of Pop Michael Jackson, is for sale for $100 million under its original name, Sycamore Valley Ranch. The 2,700-acre property 150 miles north of Los Angeles features a six-bedroom main house, as well as a train station, a 50-seat movie theatre and two lakes.

Jackson added a zoo and a small amusement park to the property after he purchased it in 1988, but they’ve since been removed.

Las Vegas Magician and actor Penn Jillette of Penn & Teller conjured up $3.3 million for a 7,800-squarefoot mansion outside of Las Vegas. The home has five bedrooms and seven bathrooms, and features a twostory great room, a family room with wet bar, a movie room, and views of the mountains and the Vegas Strip.

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SCORECARD

Last month’s Manhattan reports revealed key price increases and hints of growth yet to come. A rise in Manhattan office availability may be on the way and hotels could be on the cusp of serious RevPAR gains. But it was Brooklyn that saw some of the biggest changes this spring with meteoric increases in condo sales.

RESIDENTIAL NEW DEVELOPMENT

“Next year, Brooklyn will have already reached $300M in condo sales.”

STEPHEN KLIEGERMAN, HALSTEAD PROPERTY

New development condo sales $1.77 B Manhattan

$73.1 M

Brooklyn

$1.49 B $18.4 M Jan-May 2014

Jan-May 2015

Jan-May 2014

Jan-May 2015

Source: Halstead Property

Share of new building applications by borough Jan. 1 - May 31, 2015

Brooklyn, 45% Manhattan, 20%

Brooklyn accounted for 45% of permits filed for residential buildings with at least 15 units or 15,000 square feet between Jan. 1 and May 31.

Queens, 24% Bronx, 11%

TRD Analysis of DOB residential permit applications

NEW CONDO SALES RISE

BY WILL PARKER oth Manhattan and Brooklyn new development condominium sales are on the rise according to year-over-year comparisons in May from Halstead Property. But in the case of Brooklyn, the rise has been meteoric. Brooklyn condo sales are up nearly 300 percent from where they were by the end of May in 2014, coming in at $73.1 million, Halstead reported. Manhattan still accounted for over $1 billion more in total sales volume, but Brooklyn’s gains were significant. Halstead’s Stephen Kliegerman expects the spurt to go even further.

“Next year, Brooklyn will have already accounted for $300 million in sales,” he said.

Those weren’t the only dramatic increases for the two boroughs. The number of new rentals on the market also jumped this May, according to a Douglas Elliman report.

And zooming in closer on the Manhattan rental market revealed that doorman one-bedroom rental prices rose to a 13-month high of $4,259 a month, according to a report by MNS. MNS CEO Andrew Barrocas said those prices are likely to stay high, and added that many building owners will opt for conversion. “We’re going to see a lot of rental buildings converted to condos,” he said, citing a shortage of smaller units in current condominium stock. TRD

MANHATTAN RENTALS

“We’re going to see a lot of rental buildings converted to condos.”

B

ANDREW BARROCAS, MNS

Average Manhattan one-bedroom rents over past year $4,200

$3,825

$3,450

$3,075

$2,700

5/14 6/14 7/14 8/14 9/14 10/14 11/14 12/14 1/15 2/15 3/15 4/15 5/15

Source: MNS

Number of new rental units delivered May 2014 vs. May 2015

Manhattan

1,200

10, 000

Brooklyn

1,079

1,000

5,931

800 600

5, 000

400

3,205

200

225

0

0 May 2014

May 2015

May 2014

May 2015

Source: Douglas Elliman/Jonathan Miller

COMMERCIAL MANHATTAN SALES

HOTELS HIT $4B IN SALES

MANHATTAN LEASING

2015’s Top Manhattan commercial brokerage firms by sales volume (as of June 16)

BY WILL PARKER astdil Secured led all commercial brokerage firms in total sales volume between Jan. 1 and June 16, with nearly $9 billion in completed sales, based on transactions of at least $2.5 million, according to data from Real Capital Analytics.

May office leasing

JLL

$777.9 million

Hodges Ward Elliott

$862 million

Cushman & Wakefield

E

$875.7 million $4.9 billion

CBRE Eastdil Secured

$8.95 billion

Source: TRD analysis of Real Capital Analytics data, which include all Manhattan sales $2.5 million and up

Sales by type, number of deals and total dollar volume (as of June 16) Office

83 Hotel

14 Apt

200 Retail

128 Dev site

39

$14.39 billion $4.14 billion $4.11 billion $3.46 billion $2.77 billion

The chart shows the total commercial sales volume in Manhattan between Jan. 1 and June 12 for office, hotel, apartment, retail and development site transactions.

Source: TRD analysis of Real Capital Analytics data, which includes all Manhattan sales $2.5 million and up.

“Hotel demand has never grown faster than in New York City in the last five years.”

MARK ELLIOTT, HODGES WARD ELLIOTT

90 July 2015 www.TheRealDeal.com

And looking at completed sales across the commercial market, hotels are having a high moment in Manhattan, coming in at over $4 billion in sales by mid-June.

The second half of the year should mirror the first, said Mark Elliott, partner and senior vice president with Hodges Ward Elliott, who predicted gains in revenue per available room, an important measure of hotel performance, on the horizon. “Hotel demand has never grown faster than in New York City in the last five years,” Elliott said, adding that demand will continue, and buying now will allow hotel owners to cash in once supply decreases and room rates rise.

In commercial leasing, a Newmark Grubb Knight Frank report showed that since last May, Manhattan asking rents rose 5 percent, while availability dipped slightly. However, Jonathan Mazur, NGKF’s director of research, predicts availability will rise soon, as highly anticipated trophy spaces in Midtown begin leasing.

“There will be more opportunities to satisfy the top tier of the market,” Mazur said. TRD

1,964,392

3,124

53

Total square feet of office space leased in Manhattan in May. The average lease size was 5,744 square feet for the month.

Median lease size for May office leases.

The largest lease was 144,987 square feet for Foot Locker corporate offices at 330 West 34th Street.

Number of completed office leases in the Plaza District, the neighborhood with the most office transactions in May.

Source: TRD analysis of CoStar Group data

Manhattan availability and asking rent Average Asking Rent (Price/SF)

$70

Availability (%) 13%

$67

12%

$64

11%

$61

10%

$58

9%

$55

8% 05/14

07/14

09/14

11/14

01/15

03/15

05/15

In May, asking rents finished at $68.04 per square foot, up 5 percent year-over-year from $64.80. Over the same period, availability was down slightly.

Source: Newmark Grubb Knight Frank

“There will be more opportunities to satisfy the top tier of the market.”

JONATHAN MAZUR, NEWMARK GRUBB KNIGHT FRANK

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 5/18/15 to 6/12/15. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

1133 Avenue of the Americas

115,000

Bank of America / Robert Alexander, Ryan Alexander, Ramneek Rikhy and Emily Jones, CBRE

Durst Organization / Tom Bow and Rocco Romeo, Durst Organization

The bank re-signed its lease in the building.

55 Hudson Yards

83,000

Boies, Schiller & Flexner / Arthur Mirante, Bill Morris and Greg Kraut, Avison Young

Related Companies and Oxford Properties / Howard Fiddle of CBRE and Stephen Winter of Related Companies

The firm signed a lease.

909 Third Avenue

65,000

AlixPartners / Silvio Petriello, Ben Friedland and Mike Wellen, CBRE

Actavis / Howard Fiddle, Anthony Dattoma and Evan Fiddle, CBRE

The financial company signed a 12-year sublease.

1325 Avenue of the Americas

53,110

Olshan Frome Wolosky / Robert Yaffa and Wayne Van Aken, DTZ

Paramount / Doug Neye, JLL

The firm signed a 15-year lease.

280 Park Avenue

50,000

GIC / Frank Doyle, Clark Finney and Barbara Winter, JLL

SL Green Realty and Vornado Realty Trust / CBRE

The Singaporean government-owned fund manager signed a 15-year lease to relocate its office for $100 per square foot.

330 Madison Avenue

41,210

American Century Investment Management / Joseph Fabrizi, Michael Wellen, Sam Seiler and Zach Weil, CBRE

Vornado Realty Trust / Frank Doyle and David Kleiner, JLL; Glen Weiss and Andrew Ackerman, Vornado Realty Trust

The company signed a lease to relocate its office.

345 Hudson Street

40,000

Rent the Runway / Sam Mann, Robert Sattler and Marcus Rayner, Cresa New York

Michael Liss, Bruce Surry and Ben Fastenberg, CBRE

The company signed a lease.

1440 Broadway

34,000

The Gap / n/a

New York REIT / David Falk, Eric Cagner and Jason Greenstein, Newmark Grubb Knight Frank

The clothing company signed a lease.

246 Fifth Avenue

33,000

The Yard / Evan Margolin and Lance Leighton, Savills Studley

HH Realty Equities / Ariel Akkad, HH Realty Equities

The co-working space provider signed a 15-year lease.

1 Worldwide Plaza

33,000

Prometheus Global Media / Chris Mongeluzo and E.N. Cutler, Newmark Grubb Knight Frank

George Comfort & Sons, RCG Longview, DRA Advisors and New York REIT / Peter Duncan and Matt Coudert, George Comfort & Sons

The company signed a lease for less than half of its former location.

505 Fifth Avenue

32,000

Norges Bank / Silvio Petriello and Nicholas Weld, CBRE

Fifth @ 42nd LLC / Paul Glickman and Diana Biasotti, JLL

The bank signed an expansion lease.

6 East 32nd Street

30,720

Dataminr / Matthew McBride, CBRE

Himmel + Meringoff Properties / Jason Vacker, Himmel + Meringoff Properties

The real-time information company signed a lease.

55 Prospect Street (Brooklyn)

27,000

Frog / Keith Caggiano, CBRE

Kushner Companies, RFR Realty and LIVWRK / n/a

The design firm signed a lease to relocate from Manhattan to Brooklyn.

540 President Street (Brooklyn)

20,000

Brooklyn Creative League / n/a

PDS Carroll Street LLC / n/a

The shared working space signed an expansion lease.

77 Sands Street (Brooklyn)

18,800

Alexis Bittar / Freddie Fackelmayer and Ross Zimbalist, CBRE

Kushner Companies, RFR Realty and LIVWRK / n/a

The luxury jewelry retailer signed a lease to move its office headquarters.

375 Pearl Street

18,000

NYPD / n/a

Sabey Data Center Properties / n/a

The NYPD is moving several units from its headquarters at 1 Police Plaza to 375 Pearl Street.

200 Vesey Street

16,000

Bliss Spa / Joseph Genovesi and John Harte, Savills Studley

Brookfield Properties / David Cheikin and Clayton Kline of Brookfield Properties, John Wheeler of JLL

The national beauty brand signed a lease to relocate its corporate headquarters.

225 Greenwich Street

14,607

Icahn School of Medicine at Mt. Sinai / Jonathan Serko and Frank Cento, Cushman & Wakefield

Jack Resnick & Sons / Dennis Brady and Brett Greenberg, Jack Resnick & Sons

Mt. Sinai signed a 15-year lease to operate an executive health and wellness center on a portion of the fifth floor.

1001 Avenue of the Americas

12,017

Schulman Lobel / Jay Casely, ABS Partners Real Estate

1001 Sixth Associates LLC / Jay Caseley, ABS Partners Real Estate

The accounting firm signed a full-floor lease.

640 Fifth Avenue

10,532

HS Management Partners / Paul Revson, Zev Holzman and Chase Gordon, Savills Studley

Vornado Realty Trust / Jared Solomon, Vornado Realty Trust

The financial services firm signed a lease.

10 West 33rd Street

10,303

Fast Forward / David Levy, Adams & Company

Ten West Thirty Three Associates / David Levy, Adams & Company

The company signed a 10-year renewal and expansion lease.

9 East 37th Street

10,000

Partners in Human Resources International / David Berke, Cushman & Wakefield

9 East 37th Street Associates / Ron Zimmerman, Andrew Udis, Ian Weiss, Gregg Schenker and Earle Altman, ABS Partners Real Estate

The consulting firm re-signed its lease for an additional three years.

Industry City (Brooklyn)

9,197

Chipotle / Diana Boutross, Winick Realty Group

Industry City / n/a

Chipotle Mexican Grill is leasing the Industry City space for creating and testing interior designs for its restaurants.

530 Seventh Avenue

9,000

Yummie / Jonathan Schindler and Conor Kenny, DTZ

Savitt Partners / Bob Savitt, Brian Neugeboren and Nicole Goetz, Savitt Partners

The women’s shapewear line signed a relocation lease for a new showroom.

1 World Trade Center

8,590

Symphony Communication Services / Rob Lowe and Nicholas Dysenchuk, Cushman & Wakefield

Durst Organization / Karen Kuznick of the Durst Organization, Tara Stacom, Alan Stein, James Searl and Justin Royce of Cushman & Wakefield

The communications firm signed a lease.

250 Park Avenue

8,100

R.A. Cohen / Benjamin Blumenthal and Norman Bobrow, Norman Bobrow & Company

AEW Capital Management / David Hoffman, Robert Billingsley and Whitnee Williams, DTZ

The real estate management and investment firm signed a lease.

71 West 23rd Street

7,000

Art Department / Robert Mitchell, Byrnam Wood

Trustees of the Masonic Hall and Home / Herb Goldberg, City Connections Realty

The artist representation company signed a lease.

92 July 2015 www.TheRealDeal.com

OfďŹ ce leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

915 Broadway

6,000

Stanford University / Aaron Maltz, Newmark Grubb Knight Frank

915 Broadway Associates / James Caseley, Carol Sacks and Alex Kaskel, ABS Partners Real Estate

The college signed a lease to host a pilot program for New York City-based classes.

71 West 23rd Street

5,800

J.M. Kaplan Fund / Andrew Foley, Denham Wolf Real Estate Services

Trustees of the Masonic Hall and Home / Herb Goldberg, City Connections Realty

The ďŹ rm signed a lease for a portion of the ďŹ fth ďŹ&#x201A;oor for $59 per square foot.

1370 Avenue of the Americas

5,600

Vince Camuto Shoes / Jeffrey Rosenblatt, Coldwell Banker Commercial Alliance

Principal Real Estate Investors / Patrice Meagher, Jackie Marshall and Paul Amrich, CBRE

The shoe company signed a lease to expand its presence in the building.

149 Fifth Avenue

5,500

CORE / John Greenstein, Newmark Grubb Knight Frank; Shaun Osher, CORE

William Colavito / John Greenstein, Newmark Grubb Knight Frank

CORE signed a lease for its fourth Manhattan ofďŹ ce.

1 World Trade Center

5,451

Olam Americas / Jonathan Fein and Dan Dâ&#x20AC;&#x2122;Agnes, Cushman & WakeďŹ eld

Durst Organization / Karen Kuznick of the Durst Organization, Tara Stacom, Alan Stein, James Searl and Justin Royce of Cushman & WakeďŹ eld

The company signed a 10-year lease.

9 East 37th Street

5,000

Mind Gym USA / David Goldberg, Redwood Property Group

9 East 37th Street Associates / Ron Zimmerman, Andy Udis and Ian Weiss, ABS Partners Real Estate

The company signed a lease for its new headquarters.

915 Broadway

4,462

Contech / Newmark Grubb Knight Frank

915 Broadway Associates / James Caseley, Carol Sacks, Alex Kaskel, Gregg Schenker and Steven Hornstock, ABS Partners Real Estate

The company signed a 5-year, 2-month lease.

297 Seventh Avenue

4,000

GIT Seven / n/a, Harris Bulow Lee & Associates NYC

LMS 297 LLC / Albert Tawil, Kassin Sabbagh Realty

The tenant signed a lease.

242 West 38th Street

3,600

Skyline Genesis Event Marketing / Craig Berman and Ryan Herzich and Michael Gasparino, Joseph P. Day Realty

242 W 38 LLC / Barry Bernstein, EVO Real Estate

The tenant signed a lease.

44 Wall Street

3,440

Leo J. Shapiro & Associates / EJMB Commercial

44 Wall Owner / Gregg Schenker, Keith Lipstein, Jason Kreisberg and Joe Dâ&#x20AC;&#x2122;Apice, ABS Partners Real Estate

The ďŹ rm signed a 5-year, 1-month lease.

7 West 51st Street

3,207

Dr. Elizabeth Kavaler, Total Urology of New York / Stanley J. Piesh, Prime Manhattan Realty

7 West 51st Street LLC / Joshua Augenbaum, Augenbaum Realty

The urology ofďŹ ce signed a full-ďŹ&#x201A;oor direct lease.

" QSPGFTTJPOBM PSHBOJ[JOH DPNQBOZ TQFDJBMJ[JOH JO NBOBHJOH FTUBUFT QSFQBSJOH /: .FUSP SFBM FTUBUF GPS SFTBMF

&TUBUF DMFBS PVUT Ĺ&#x2014; %F DMVUUFSJOH Ĺ&#x2014; 3F TBMF QSFQ Ĺ&#x2014; 4UBHJOH info@doneanddonenyc.com

94 July 2015 www.TheRealDeal.com

917-426-7942

www.doneanddonenyc.com

OWN DIFFERENT. A MENIT Y RICH LI V ING .

INTRODUCING SKY BEACH.

NOW PAYING 6% BROKER COMMISSION .

LUXURY S T UDIOS , ONE , T WO & THREE BEDRO OMS FROM THE $ 4 00’ S . COND OMINIUM RE SIDENCE S AL SO AVAIL A BLE .

NEW ON-SITE SALES GALLERY: 551 NORTH FORT LAUDERDALE BEACH BOULEVARD, FORT LAUDERDALE, FLORIDA, USA 866 947 9996 | THEOCEANFORTLAUDERDALE.COM

EXCLUSIVE SALES & MARKETING

ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING REPRESENTATION OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, MAKE REFERENCE TO THIS BROCHURE AND TO THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY DEVELOPER TO A BUYER OR LESSEE. THE PROPERTIES OR INTEREST DESCRIBED HEREIN ARE NOT REGISTERED WITH THE GOVERNMENTS OF ANY STATE OUTSIDE OF THE STATE OF FLORIDA. THIS ADVERTISEMENT DOES NOT CONSTITUTE AN OFFER TO ANY RESIDENTS OF NJ, CT. HI, ID, IL, OR ANY OTHER JURISDICTION WHERE PROHIBITED, UNLESS THE PROPERTY HAS BEEN REGISTERED OR EXEMPTIONS ARE AVAILABLE. PLANS, FEATURES AND AMENITIES SUBJECT TO CHANGE WITHOUT NOTICE. ALL ILLUSTRATIONS AND PLANS ARE ARTIST CONCEPTUAL RENDERINGS AND ARE SUBJECT TO CHANGE WITHOUT NOTICE. CONRAD® IS A REGISTERED TRADEMARK OF HLT CONRAD IP, LLC, AN AFFILIATE OF HILTON WORLDWIDE INC. (“HILTON”). THE RESIDENCES ARE NOT OWNED, DEVELOPED, OR SOLD

BY HILTON AND HILTON DOES NOT MAKE ANY REPRESENTATIONS, WARRANTIES OR GUARANTIES WHATSOEVER WITH RESPECT TO THE RESIDENCES. THE DEVELOPER USES THE CONRAD® BRAND NAME AND CERTAIN CONRAD TRADEMARKS (THE “TRADEMARKS”) UNDER A LIMITED, NON-EXCLUSIVE, NON-TRANSFERABLE LICENSE FROM HILTON. THE LICENSE MAY BE TERMINATED OR MAY EXPIRE WITHOUT RENEWAL, IN WHICH CASE THE RESIDENCES WILL NOT BE IDENTIFIED AS A CONRAD BRANDED PROJECT OR HAVE ANY RIGHTS TO USE THE TRADEMARKS.

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

915 Broadway

3,051

Starpower / Cushman & Wakefield

915 Broadway Associates / James Caseley, Carol Sacks, Alex Kaskel, Gregg Schenker and Steven Hornstock, ABS Partners Real Estate

The company signed a 1-year lease.

210 11th Avenue

2,989

Public Clothing / ABS Partners Real Estate

n/a / Audrey Novoa, Joseph LaRosa and Gregg Schenker, ABS Partners Real Estate

The company signed a 3-year, 2-month lease.

333 West 39th Street

2,850

Dunch Arts / Lauren Davis, Denham Wolf Real Estate Services

n/a / Neil Joffee, Newmark Grubb Knight Frank

The arts management firm signed a 5-year lease.

401 Broadway

2,695

Shadid & Company / Lansco

n/a / James Caseley, Alan S. Cohen and Jonathan Cohen, ABS Partners Real Estate

The company signed a 3-year lease.

450 Seventh Avenue

2,600

National Mah Jongg League / Michael Heaner, Kaufman Organization

Kaufman Organization / Barbara Raskob, Kaufman Organization

The tenant signed a lease.

551 Fifth Avenue

2,519

Secured Worldwide / ABS Partners Real Estate

n/a / Jason Kling, ABS Partners Real Estate

The company signed a 3-year, 2-month lease.

12 West 37th Street

2,500

JDX Consulting / Elliot Zelinger and Greg Lafayette, Savitt Partners

n/a / Daniel Breiman, Olmstead Properties

The London-based firm signed a lease to relocate its office for $46 per square foot.

401 Broadway

2,449

Magus / ABS Partners Real Estate

n/a / James Caseley, Alan S. Cohen and Jonathan Cohen, ABS Partners Real Estate

The company signed a 3-year, 1-month lease.

20 West 22nd Street

2,309

Bandier Holdings / John Brod and Charles Conwell, ABS Partners Real Estate

ABS Partners Real Estate / Jason Fein and Robert Finkelstein, ABS Partners Real Estate

The company signed a 5-year office lease.

200 Park Avenue South

2,264

Nicada NY / ABS Partners Real Estate

ABS Partners Real Estate / Alan Friedman, Charles Conwell, John Gols, Gregg Schenker, Earle Altman, Steven Hornstock, ABS Partners Real Estate

The company signed a 7-year, 2-month lease.

110 West 40th Street

2,063

Ilene Danchig / David Levy and Brett Maslin, Adams & Company

n/a / David Levy and Brett Maslin, Adams & Company

The tenant signed a lease.

8 West 38th Street

1,689

Zenga Baruffa / Wharton Property Advisors

n/a / Andrew Udis and Ron Zimmerman, ABS Partners Real Estate

The company signed a 7-year, 2-month lease for part of the 10th floor.

20 West 22nd Street

1,433

Reactive Core / Signature Partners

Elk Realty / Jason Fein, Robert Finkelstein, Gregg Schenker, Steven Hornstock and Earle Altman, ABS Partners Real Estate

The company signed a 3-year lease.

174 Broadway

1,200

Landlord Guard / n/a, NY Citi Realy Group

174 Broadway LLC / Albert M. Manopla and Albert Tawil, Kassin Sabbagh Realty

The tenant screening company signed a 10-year lease.

44 Wall Street

271

Weinstein & Holtzman of NY / ABS Partners Real Estate

44 Wall Owner LLC / Gregg Schenker, Keith Lipstein, Jason Kreisberg and Joe D’Apice, ABS Partners Real Estate

The firm signed a 7-year, 5-month lease.

787 11th Avenue

n/a

Pershing Square Capital Management / n/a

Ford Motor Company / Darcy Stacom and Bill Shanahan, CBRE

The tenant signed a lease.

Landlord / Representative

Notes

Retail leases Address

Size

Tenant / Representative

100 West 125th Street

40,000

Raymour & Flanigan / n/a

Wharton Properties / n/a

The furniture chain signed a lease.

200 Vesey Street

16,000

Bliss Spa / Joseph Genovesi and John Harte, Savills Studley

Brookfield Properties / David Cheikin and Clayton Kline of Brookfield Properties, John Wheeler of JLL

The national beauty brand signed a lease to relocate its corporate headquarters.

279 McKibbin Street (Brooklyn)

15,830

Blue Bottle Coffee / Matt Seigel and Ben Soley, Thor Retail Advisors

McKibbin Holdings / Andrew Clemens and Benjamin Weiner, Ripco Real Estate

Blue Bottle Coffee leased the formerly vacant industrial warehouse.

1117 Atlantic Parkway (Brooklyn)

7,000

Modell’s Sporting Goods / Joshua Augenbaum, Augenbaum Realty

Urban Scape / Joshua Augenbaum, Augenbaum Realty Corporation

The sporting goods chain signed a 10-year lease.

113 Reade Street

5,400

Serafina / DLL Real Estate

n/a / David Abrams, RKF

The tenant signed a lease.

285 St. Nicholas Avenue

5,000

Harlem Café / Faith Hope Consolo, Joseph Aquino and Arthur Maglio, Douglas Elliman Real Estate

n/a / Faith Hope Consolo, Joseph Aquino and Arthur Maglio, Douglas Elliman Real Estate

The restaurant signed a lease.

93 Worth Street

4,750

ICE NYC / Albert Manopla and Morris Sabbagh, Kassin Sabbagh Realty

Izaki Group / Spencer Levy and Michael Yohai, RKF

The fitness center signed a 10-year ground lease.

270 Park Avenue South

4,325

Morton Williams Wine & Liquor / David Abrams, RKF

n/a / Joshua Strauss and David Abrams, RKF

The chain signed a lease.

101 West 85th Street

4,300

All My Children Daycare & Nursery School / Eastern Consolidated

n/a / David Abrams and Gary Alterman, RKF

The daycare center signed a lease.

67 Spring Street

4,200

Joe and the Juice / CBRE

n/a / Joshua Strauss and Taryn Talmadge, RKF

The tenant signed a lease

328 Bowery

4,114

Kenneth Cole / Matthew Siegel and Skye Taylor, Thor Retail Advisors

RWN Real Estate Partners / Ariel Schuster, Brian Segall and Taryn Talmadge, RKF

The footwear company signed a lease to open a new store.

315 West 46th Street

4,000

315RR LLC / Andrew Stern and Gary Alterman, RKF

n/a / Andrew Stern and Gary Alterman, RKF

The tenant signed a lease.

476 Broome Street

3,960

Tomorrowland USA / Josh Strauss, Taryn Talmadge, RKF

62 Wooster LLC / Joshua Siegelman and Aaron Fishbein, Winick Realty Group

The retailer signed a lease.

40 North 4th Street (Brooklyn)

3,925

Orange Theory Fitness / n/a

n/a / Sonya Smith and Spencer Levy, RKF

The fitness center signed a lease.

96 July 2015 www.TheRealDeal.com

Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

286 Madison Avenue

3,800

Panache Lingerie / Bert Rosenblatt, Vicus Partners

APF Properties / Joshua Goldman and David Rosenbloom, Cushman & Wakefield

The lingerie brand signed a lease.

787 Seventh Avenue

3,650

Pret A Manger / Ariel Schuster, Jackie Totolo, Michael Paster and Joshua Strauss, RKF

n/a / CBRE

The restaurant chain signed a lease.

251 Church Street

3,137

Two Hands / Andrew Stern and Chris Johnson, RKF

n/a / Andrew Stern and Chris Johnson, RKF

The tenant signed a lease.

10 West 33rd Street

3,092

Accessories House NY / David Levy, Adams & Company

Ten West Thirty Third Associates / David Levy, Adams & Company

The tenant signed a lease at the Fashion Accessory center.

210 Joralemon Street (Brooklyn)

3,000

Maison Kayser / Paul Berkman, JLL

United American Land / Jason Pennington, Ripco Real Estate

The bakery signed a 12-year lease.

59 Thompson Street

2,750

Mind + Body Studio by Exhale / Ed Ezra and Ernie Getz, RKF

n/a / Sinvin

The tenant signed a lease.

961 East 174th Street (Bronx)

2,723

Burger King / Richard Senior and Chris Walther, Ripco Real Estate

Ashkenazy Acquisition / Evan Schuckman and Chris Masson, Schuckman Realty

The tenant signed a 20-year lease at the Pathmark-anchored shopping center.

806 Columbus Avenue

2,564

Chipotle / Kenneth Hochhauser, Winick Realty Group

Stellar Management and Chetrit Group / Kelly Gedinsky, Charles Rapuano and Jeff Winick, Winick Realty Group

The chain signed a lease.

144 West 37th Street

2,500

Balade / Jeremy Wintner and Aaron Fishbein, Winick Realty Group

A&R Properties Group / Nathan Rehanian, A&R Properties Group

The restaurant signed a 10-year lease.

916 Flatbush Avenue (Brooklyn)

2,400

ModernMD / Albert Manopla and Marc Sitt, Kassin Sabbagh Realty

Sol Goldman Investments / Albert Manopla and Marc Sitt, Kassin Sabbagh Realty

The medical urgent care chain backed by Brooklyn Hospital signed for their second retail location as part of a double digit expansion plan.

246 Fifth Avenue

2,400

Chef & Co. / Francesco Bardazzi, PD Properties

HH 246 FIFTH, LLC / n/a

The tenant signed a lease.

1248 Fulton Street (Brooklyn)

2,300

ModernMD / Albert Manopla and Marc Sitt, Kassin Sabbagh Realty

Bawabeh Brothers No 2 / Albert Manopla and Marc Sitt, Kassin Sabbagh Realty

The medical urgent care chain backed by Brooklyn Hospital signed for their third retail location of a double digit expansion plan.

2366 University Avenue (Bronx)

2,300

ScriptX / Albert Manopla and Marc Sitt, Kassin Sabbagh Realty

Conford Realty Associates / Albert Manopla, Kassin Sabbagh Realty

The beauty supply pharmacy chain signed a lease.

150 Kenilworth Place (Brooklyn)

2,100

Café Bene / Richard Bailey, Kassin Sabbagh Realty

Campworth / Richard Bailey, Kassin Sabbagh Realty

The tenant signed a lease.

153 West 36th Street

2,100

Dunkin Donuts / Marc Sitt, Kassin Sabbagh Realty

Shing Lin Corp / Marc Sitt, Kassin Sabbagh Realty

The tenant signed a lease.

210 11th Avenue

1,934

Pink Tartan / ABS Partners Real Estate

n/a / Audrey Novoa, Joseph LaRosa and Gregg Schenker, ABS Partners Real Estate

The company signed a 3-year lease.

1446 Myrtle Avenue (Brooklyn)

1,740

Ridgewick / Andrew Clemens and Benjamin Weiner, Ripco Real Estate

Silvershore Properties 70 / Andrew Clemens and Benjamin Weiner, Ripco Real Estate

Ridgewick signed a lease for this former vacant space in Bushwick.

1 New York Plaza

1,620

Naya Express / Albert Manopla, Kassin Sabbagh Realty

Brookfield Properties / Steven Baker and Kenneth Hochhauser, Winick Realty Group

The Mediterranean fast causal restaurant signed for their third Naya Express location.

862 Sixth Avenue

1,500

Si Soleil Spa / Albert Manopla and David Chera, Kassin Sabbagh Realty

Justin Management / Albert Manopla and David Chera, Kassin Sabbagh Realty

The spa signed a 10-year lease for a new location at $50 per square foot.

2464 Coney Island Avenue (Brooklyn)

1,500

JC Cell / Meyer Tawil, Kassin Sabbagh Realty

2462 Coney Island Avenue LLC / Meyer Tawil, Kassin Sabbagh Realty

The cellphone store signed a 5-year lease.

549 West 235th Street (Bronx)

1,500

Montefiore / Miles Mahony and Chris Walther, Ripco Real Estate

Midwood Management Corporation / Miles Mahony and Chris Walther, Ripco Real Estate

Tenant signed a lease for this space.

1400 Broadway

1,500

Chipotle / Kenneth Hochhauser, Winick Realty Group

Empire State Realty Trust / Jared Lack, Newmark Grubb Knight Frank

The chain signed a lease.

250 Vesey Street

1,498

Drybar / Steven Greenberg, Greenberg Group

Brookfield Properties / Mark Kostic of Brookfield Properties and Stephen Plourde of McDevitt Group

The hair salon signed a 10-year lease.

246 Fifth Avenue

1,400

All Frontier America / Namiko Sako, Sumitomo Real Estate

HH 246 FIFTH, LLC / n/a

The tenant signed a lease.

3672 Nostrand Avenue (Brooklyn)

1,300

AQA Services / David Chera, Kassin Sabbagh Realty

Greenriver Management / David Chera, Kassin Sabbagh Realty

The tenant signed a lease.

2358 Marion Avenue (Bronx)

1,200

Perfect Brows NYC / Albert Manopla, Kassin Sabbagh Realty

JEM Management / Albert Manopla, Kassin Sabbagh Realty

The chain signed their 34th location.

787 Lexington Avenue

1,200

SJ 21 Inc / Albert Tawil, Kassin Sabbagh Realty

Harran Holding Corp. / Albert Tawil, Kassin Sabbagh Realty

The tenant signed a lease.

259 Utica Avenue (Brooklyn)

1,200

Zt Mobile / Josh Augenbaum, Augenbaum Realty

259 Utica Beauty Corp. / n/a

The tenant signed a lease.

64 Court Street (Brooklyn)

1,200

Dos Toros Taqueria / Adam Langer, Zelnik & Company

n/a / Tivon Forman, Rolling Stone Realty

The Mexican food chain signed a lease.

246 Fifth Avenue

1,200

Caffe Bene / Andy Kim and Bijoy Guha, BLU Realty Group

HH 246 FIFTH, LLC / n/a

The tenant signed a lease.

918 Third Avenue

1,100

Wok Chi / Adam Weinblatt, Newmark Grubb Knight Frank

Solil Management / Brett Weinblatt, Solil Management

The tenant signed a lease for its first NYC location.

285 Madison Avenue

1,038

Taylor Street Baristas / Fritz Kemerling and Joe Mastromonaco, Dartmouth Company

n/a / Jordan Claffey, RFR Retail

The tenant signed a 10-year lease for its first U.S. location.

2143 Adam Clayton Powell Boulevard

900

Oui Oui Crepes / Steven Pollan, Kassin Sabbagh Realty

Treetop Development / Steven Pollan, Kassin Sabbagh Realty

The tenant signed a lease.

933 Flatbush Avenue (Brooklyn)

900

Perfect Sight / Meyer Tawil, Kassin Sabbagh Realty

Ash Management / Meyer Tawil, Kassin Sabbagh Realty

The tenant signed a 5-year lease for $80 per square foot.

98 July 2015 www.TheRealDeal.com

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Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

815 Hutchinson River Parkway (Bronx)

900

Beyond Vape / Andrew Clemens and Benjamin Weiner, Ripco Real Estate

MD Hutch Plaza Associates 3 / Miles Mahony and Dillion Fraiolli, Ripco Real Estate

The tenant signed a lease in the former vacant space.

393 East 149th Street (Bronx)

800

Horizon Wireless / Albert Manopla, Kassin Sabbagh Realty

Melrose LLC / Albert Manopla, Kassin Sabbagh Realty

Horizon opened its ninth store.

32 West Burnside Avenue (Bronx)

800

Perfect Brows NYC / Albert Manopla, Kassin Sabbagh Realty

JEM Management / Albert Manopla, Kassin Sabbagh Realty

The chain signed their 33rd location.

1384 Broadway

800

Coco Fresh Tea & Juice / Marc Sitt, Kassin Sabbagh Realty

Broadway 1384 / Marc Sitt, Kassin Sabbagh Realty

Tenants signed their 11th location.

192 First Avenue

800

Juice Vitality / Dave Chera and Abie Dweck, Kassin Sabbagh Realty

Emmes Management / J. Gilbert and Jannsen Hasen, Newmark Grubb Knight Frank

The café signed a 7-year lease.

119 Hester Street

750

STO Express / Brian Lam, Longines Realty

Hester Rb / Jeffrey Angel, RES Commercial Group

The shipping store signed a 5-year lease for $75 per square foot.

2143 Adam Clayton Powell Boulevard

700

A & S Deli / Steven Pollan, Kassin Sabbagh Realty

Treetop Development / Steven Pollan, Kassin Sabbagh Realty

The tenant signed a lease.

741 Second Avenue

700

Studio 34 Salon / Jeffrey Znaty, Kassin Sabbagh Realty

n/a / Jeffrey Znaty, Kassin Sabbagh Realty

The tenant opened its second location in New York, asking rent was $8,000 per month. Tenant signed a 15-year lease.

926 Second Avenue

700

All About Smoke & Beer / Albert Manopla, Kassin Sabbagh Realty

N Chi / Jeff Chi, Halstead Property

The company signed their fourth New York City location.

60 East 8th Street

700

Pure Green / Albert Manopla, Kassin Sabbagh Realty

Aspenley CO LLC / Louis Joachim and Bruce Spiegel, Rose Associates

The chain signed a standalone location.

342 East 6th Street

700

Udon Noodle Bar / Dean Valentino and Mark Tergesen, ABS Partners Real Estate

n/a / SKH Realty

The restaurant signed an 8-year lease.

350 Fifth Avenue

600

Starbucks / n/a

n/a / n/a

The chain signed a lease in the Empire State Building.

2851 Valentine Avenue (Bronx)

600

Texas Burger & Chicken / Albert Manopla, Kassin Sabbagh Realty

Chestnut Holdings / Albert Manopla, Kassin Sabbagh Realty

The chain signed a lease.

455 West 34th Street

600

Italian Café / Yeshia Berger, Kassin Sabbagh Realty

Babad / Yeshia Berger, Kassin Sabbagh Realty

The café signed a 7-year lease.

231 East 58th Street

513

Adel Atelier Hair Salon / ABS Partners Real Estate

ABS Partners Real Estate / Dean Valentino, Jason Fein, Mark Tergesen, Michael Sass and Earle Altman, ABS Partners Real Estate

The salon signed a 10-year lease for the ground floor.

255 East 167th Street (Bronx)

500

Boost Mobile / Marc Sitt, Kassin Sabbagh Realty

1212 Grant LLC / Marc Sitt, Kassin Sabbagh Realty

The tenant signed a lease.

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MEET THE TEAM People and relationships are at the heart of every real estate transaction.

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100 July 2015 www.TheRealDeal.com

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Contact me to learn more

Call 1.917.674.0199 VISIT OUR OFFICE 780 Third Avenue, 16th Floor New York, NY 10017

1. Available only to EverBank Home Builder Advantage program participants.

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Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

1 Bennett Avenue

466

Tampopo Ramen / in-house

I Bennett Holding / Jeffrey Angel, RES Commercial Group

The ramen noodle restaurant signed a 10-year lease for $110 per square foot.

710 Ninth Avenue

425

Perfect Brows NYC / Albert Manopla, Kassin Sabbagh Realty

Vickers Realty / Albert Manopla, Kassin Sabbagh Realty

The chain signed a lease for its 36th location.

20 West 14th Street

400

Perfect Brows NYC / Albert Manopla, Kassin Sabbagh Realty

Fourteen Street Realty Owner / Marc Durst, Shalom & Zuckerbrot Realty

The chain signed their 32nd location.

114 East Fordham Road (Bronx)

400

Perfect Brows NYC / Albert Manopla and Marc Sitt, Kassin Sabbagh Realty

114 Fordham Associates / Albert Manopla and Marc Sitt, Kassin Sabbagh Realty

The chain signed a 10-year lease for its 35th location.

123 West Third Street

400

Jupioca / Albert Manopla, Kassin Sabbagh Realty

MSA Service Associates Inc. / Oren Smila, Spire

The beverage café signed a 5-year lease.

388 East 149th Street (Bronx)

350

Honey Cosmetics / Albert Manopla, Kassin Sabbagh Realty

JEM Management / Albert Manopla, Kassin Sabbagh Realty

The cosmetic chain signed its 7th location.

861 Atlantic Avenue (Brooklyn)

326

Top Tech Security / Andrew Clemens and Benjamin Weiner, Ripco Real Estate

Silvershore Properties 77 / Andrew Clemens and Benjamin Weiner, Ripco Real Estate

The locksmith leased this formerly vacant retail location.

101 Macdougal Street

325

ICE NY / n/a

KC3 - 101 Macdougal Street / Jeffrey Angel, RES Commercial Group

The ice cream concept store signed a 5-year lease for $285 per square foot.

151 East 43rd Street

300

Valley Shepherd 442 / Jeffrey Angel, RES Commercial Group

Fox 153 Realty / Cornerstone Management Services

Meltkraft signed a 10-year lease for $375 per square foot.

293 Mercer Street

192

Darma Diagnostics / Joshua Siegelman, Winick Realty Group

Eleven Waverly Associates / Joshua Siegelman, Winick Realty Group

The retailer signed a lease.

70 Pine Street

four stories

Spotted Pig / n/a

Rose Associates / n/a

The restaurant signed a lease for four stories of the building.

123 Smith Street (Brooklyn)

n/a

Modern Anthology / Sagirah Abraham, AC Lawrence Real Estate

n/a / Vanessa Twyford Real Estate

The men’s clothing and furniture retailer signed a lease.

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

150 West 34th Street

3 stories, 78,000 sf

Vornado Realty Trust / Adam Spies and Doug Harmon, Eastdil Secured

Starwood Capital Group and Crown Acquisitions / Adam Spies, Doug Harmon, Eastdil Secured

The Old Navy building sold for $355 million.

787 11th Avenue

8 stories, 387,617 sf

Georgetown Company and Bill Ackman / Adam Flatto, Georgetown Company

Ford Motor Company / Darcy Stacom and Bill Shanahan, CBRE

The building being marketed for $230 million sold for an undisclosed price, with plans for a rooftop tennis court.

224 West 57th Street

170,000 sf

Eretz Group / Ray Cecora, CIA Group

M1 Real Estate / Ray Cecora, CIA Group

The building sold for $213.8 million.

11-15 Broadway (Queens)

two 8-story buildings, 144 residential units

E&M Associates / Aaron Jungreis, Rosewood Realty Group

Related Fund Management / Aaron Jungreis, Rosewood Realty Group

The two-building package, which includes 30-50 21st Street, sold for $72.3 million. Includes 30-50 21st Street.

12205 Flatlands Avenue (Brooklyn)

318 units

Pinnacle Group / n/a

Taconic Investment Partners; Ares Management / Aaron Jungreis, Rosewood Realty Group

The remaining 318 units of the condominium complex sold for $53 million.

40 East End Avenue

6 stories, 40 residential units, 3 commercial units

Lightstone Group / Adam Mahfouda, Oxford Property Group

Emanuel Cherney / Terry di Paolo, Citi Habitats

The residential building sold for $32.5 million. The firm plans to demolish the building and replace it with an 18-story, 30-unit condominium.

298 St. Johns Place (Brooklyn)

75 residential units, 77,000 sf

E&M Associates / Victor Sozio and Shimon Shkury, Ariel Property Advisors

ELH Management / Victor Sozio and Shimon Shkury, Ariel Property Advisors

The buildings that nclude 304 and 310 St. Johns Place, and 212-220 Crown Street, sold for $28.85 million.

580 Saint Nicholas Avenue

6 stories, 93 residential units, 1 commercial unit, 60,078 sf

private investor / n/a

Sugar Hill Capital Partners / Michael Guttman, Rosewood Realty Group

The six-story elevator building sold for $25.5 million.

92 Fulton Street

2 buildings

Lightstone Group / n/a

Fisher Brothers / n/a

The buildings sold for $23.25 million. Includes 94 Fulton Street.

1 Edgewater Street (Staten Island)

269,000 sf

Steven Wu / Brian McGowan, Casandra Properties

LNR Property / Jacklene Chesler, Richard Madison and Jeffrey Oram, Colliers International

The Staten Island office building sold for $21.5 million.

640 10th Avenue

19,000 sf

SPI Holdings / David Schechtman and Abie Kassin, Meridian Capital Group

Michael Wahba and Salomon Smeke of Salt Equities / David Schechtman and Abie Kassin, Meridian Capital Group

The building sold for $21 million.

1004-1008 Second Avenue

5 stories, 25 residential units, 2 commercial units, 15,605 sf

n/a / Ricky Braha, JTRE Holdings

n/a / Clint Olsen, Cushman & Wakefield

The mixed-use building sold for $20 million.

734 Broadway

5 stories, 12,500 sf

Thor Equities / Jonathan Butwin and Scott Dweck, Town Commercial

Extell Development / n/a

The property sold for $17 million.

25 West 47th Street

2 stories, 4,477 sf

Extell Development / n/a

Toback Realty / n/a

The property sold for $15.4 million.

438 West 51st Street

28,600 sf

n/a / Jonathan Stravitz and John Aires, BIOC Commercial Real Estate

438 West 51st Street / Alan Shmaruk and Michael Sherman, Manhattes Group

The building sold for $15 million.

50 West 47th Street

36 stories, 488,000 sf

Gemological Institute of America / n/a

Extell Development / n/a

The Gemological Institute of America purchased an office condominium on the ninth floor for $13 million.

142 East 126th Street

7 stories, 30 residential units, 6 commercial units

n/a / HPNY

n/a / HPNY

The seven-story elevator building sold for $12.6 million.

401 State Street (Brooklyn)

3 stories, 12,000 sf

NoVo Foundation / Mark Kennedy, Douglas Elliman Real Estate

Joseph Streicher / Ofer Cohen, Dan Marks, Peter Matheos and Michael Hernandez, TerraCRG

The non-profit purchased the building for $10 million, $2.5 million over the original asking price.

350 West 18th Street

6 stories, 19 residential units, 9,864 sf

350W18 Stone LLC / Shoy McKen, Besen & Associates

Richard Sachs Interiors Inc. / Shoy McKen, Besen & Associates

The West Chelsea property sold for $10 million.

1193 Eastern Parkway (Brooklyn)

53,908 sf

n/a / Jake Blatter, Rosewood Realty Group

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

The three contiguous four-story buildings sold for $9.7 million, 13.98 times the current rent roll.

Includes 1199 and 1205 Eastern Parkway.

102 July 2015 www.TheRealDeal.com

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Buys continued Address

Size

Buyer / Representative

Seller / Representative

Notes

3191 Rochambeau Avenue (Bronx)

6 stories, 60 residential units, 75,610 sf

private investor / Raphael Toledano, Truman Realty

3191 Rochambeau Associates / Aaron Jungreis, Rosewood Realty Group

The building sold for $9.435 million.

3191 Rochambeau Avenue (Bronx)

6 stories, 60 residential units, 75,610 sf

n/a / Aaron Jungreis, Rosewood Realty Group

3191 Rochambeau Associates / Aaron Jungreis, Rosewood Realty Group

The six-story elevator building sold for $9.44 million.

1339 Jerome Avenue (Bronx)

90,000 sf

American Self-Storage / Kalmon Dolgin Affiliates

n/a / Kalmon Dolgin Affiliates

The building sold for $9 million.

106 Convent Avenue

5 stories, 35 residential units, 24,105 sf

n/a / Michael Guttman, Rosewood Realty Group

106-108 Convent Residences LLC / Michael Guttman, Rosewood Realty Group

The five-story walk-up building sold for $9 million.

51 Monroe Street

two 5-story buildings, 35 residential units, 19,260 sf

Winward Real Estate / Eric Lupo, Friedman-Roth Realty Services

Chatam Management / Amit Doshi, Besen & Associates

Chinatown properties including 53 Monroe Street sold for $9 million.

220 Lafayette Street

3 stories

n/a / Ivan Hakimian, HPNY

n/a / Ivan Hakimian, HPNY

The three-story retail building sold for $8.5 million, with approved plans for a single-family townhouse off of Spring Street.

53 Ludlow Street

5 stories, 16 residential units, 2 commercial units

Sky Management / Ivan Hakimian, HPNY

n/a / Ivan Hakimian, HPNY

The five-story walk-up building sold for $7 million.

2655 Frederick Douglass Boulevard

two 5-story buildings, 26 residential units, 6 commercial units, 21,508 sf

2655 Realty LLC / Alan Zucco, Besen & Associates

Crp 2655 Fdb Annex LLC / Amit Doshi and Shallini Mehra, Besen & Associates

The two-building package, which includes 2657 Frederick Douglass Boulevard, sold for $6.6 million.

409 East 87th Street

5 stories, 20 residential units, 8,590 sf

n/a / John Corrado, Weichert Realtors - Franzese Group

n/a / Thomas Gammino and Bob Knakal, Cushman & Wakefield

The apartment building sold for $6.5 million.

88-92 Linden Boulevard (Brooklyn)

7 stories, 12,000 sf

Brookland Capital / Matt Cosentino, Peter Matheos and Eric Satanovsky, TerraCRG

INK Property Group / Matt Cosentino, Peter Matheos and Eric Satanovsky, TerraCRG

The property sold for $6.5 million.

507 Osborn Street (Brooklyn)

2 stories, 44,700 sf

Knight’s Collision Experts / n/a

Tuck-It-Away Self Storage / Chris Halliburton and Brandon Himmel, Halstead Properties and Kalmon Dolgin Affiliates

The property sold for $6.4 million, or $157 per square foot.

304 West 151th Street

6 stories, 25 residential units, 16,158 sf

304 West 151 Realty LLC / Greg Corbin, Besen & Associates

304 W 151 LLC / Greg Corbin, Miguel Jauregui and Saadya Notik, Besen & Associates

The West Harlem property sold for $6.11 million.

1466 St. Nicholas Avenue

4 stories, 12 residential units, 2 commercial units, 15,592 sf

710 East 138 St Bronx LLC / Jackie Himmelstein, Besen & Associates

710 East 138 St Property LLC / Amit Doshi and Shallini Mehra, Besen & Associates

The Washington Heights property sold for $5.2 million.

Includes 1468 St. Nicholas Avenue.

482 East 167th Street (Bronx)

n/a

local investor / Marcel Fridman, Barcel Group

n/a / Marcel Fridman, Barcel Group

The package that Includes 956 Sherman Avenue sold for $5 million.

104 July 2015 www.TheRealDeal.com

Citibank is the place…for your next great opportunity.

We are here to support you and contribute to your success.

Our Products The breadth and depth of our products and programs create solutions to fit many client needs.

Jumbo loans up to $8 million, or more on an exception basis, with fixed and adjustable rate options.

Programs for non-warrantable condos with LTVs up to 90% with no mortgage insurance.1

Our Dedicated Fulfillment Team Our Operations and Sales Teams are aligned to ensure excellence in client service.

World-class fulfillment services. Our On-Time Closing Guarantee2 proves our commitment to quality service.

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Take the next step towards becoming a Citibank Home Lending Officer. Contact us today.

Brad Wayman

Sascha McGarrell

Divisional Lending Executive 212-559-4601 bradley.wayman@citi.com NMLS# 1240753

Mortgage Recruiting, Metro NY/NJ Markets 718-248-1208 sascha.n.mcgarrell@citi.com

John Bach

Vincent DeCicco

Area Lending Manager – Manhattan Central & Metro 212- 559-4425 john.bach@citi.com NMLS# 30487

Area Lending Manager – Manhattan East & West 212-559-0024 vincent.decicco@Citi.com NMLS# 626909

Lori Ribler

Gary Tamboer

Area Lending Manager – Manhattan Midtown 914-217-0817 lori.ribler@citi.com NMLS# 727325

Area Lending Manager – Manhattan Downtown & NJ 201-539-1443 gary.tamboer@citi.com NMLS# 726465

To apply to any of our open positions, please visit http://careers.citigroup.com.

Citi is an Equal Opportunity Employer

1 These projects are subject to Full Lender Review. The project must be approved by the Citi Condo Project Team/Credit Policy prior to taking the loan application.

2 If your client is purchasing a home, we guarantee to close by the date specified in the purchase contract, unless prohibited by federal law,* and further provided that the date is at least 30 days after the application date and the date of the purchase contract. If the loan fails to close on time due to a delay by Citibank Mortgage, your client will receive a credit toward closing costs of $1,500. Offer not available for refinance loans, co-ops, unapproved condos, residences under construction, some community lending programs and government loans. In Texas, the credit may not result in cash back. (*Federal law requires certain disclosures be delivered to the borrower at least 3 business days before consummation. The guarantee to close does not apply if such disclosures are required and the closing is delayed due to the 3-business-day waiting period.)

Citigroup Inc. and its subsidiaries (“Citi”) are equal opportunity employers Minority/Female/Disabled/Veteran and do not discriminate on the basis of any legally protected status or characteristic. This is not a promise or offer of employment. © 2015 Citibank, N. A. Equal Housing Lender, Member FDIC. NMLS# 412915. Citi, Arc Design and Citi with Arc Design are registered service marks of Citigroup Inc.

Buys continued Address

Size

Buyer / Representative

Seller / Representative

Notes

140 17th Street (Brooklyn)

4 stories, 18 residential units, 1 commercial unit, 13,442 sf

n/a / Aaron Jungreis, Rosewood Realty Group

140 17th Street Residences LLC / Michael Guttman, Rosewood Realty Group

The four-story walk-up apartment building sold for $4.73 million.

39-32 Bell Boulevard (Queens)

2 buildings, 2 stories, 4 residential units, 2 commercial units, 5,200 total sf

n/a / Jimmy Ma, Golden Bridge Realty

n/a / Stephen Preuss, Cushman & Wakefield

The two contiguous buildings sold for $3.8 million.

2886 Briggs Avenue (Bronx)

6 stories, 31 residential units, 30,425 sf

n/a / n/a

n/a / Karl Brumback, Cushman & Wakefield

The multi-family building sold for $3.1 million.

26 Fort Charles Place (Bronx)

20 residential units

private investor / Peter Von Der Ahe, Scott Edelstein, Seth Glasser and Rafi Moskowitz, Marcus & Millichap

private investor / Peter Von Der Ahe, Scott Edelstein, Seth Glasser and Rafi Moskowitz, Marcus & Millichap

The 20-unit apartment building sold for $2.92 million.

5401 Northern Boulevard (Queens)

9,500 sf

25 Street LLC / Anand Melwani, ARM Real Estate Group

5401 Nb LLC / n/a

The property sold for $2.8 million.

649 Grand Street (Brooklyn)

4 units

n/a / n/a

private developer / Shaun Riney, Michael Salvatico and James Saros, Marcus & Millichap

The property was sold for $2.8 million in an all-cash transaction.

71-74 Parsons Boulevard (Queens)

6,385 sf

n/a / Steven Siegel and Michael Kook, Marcus & Millichap

financial/bank institution / Steven Siegel and Michael Kook, Marcus & Millichap

The property sold for $2.6 million.

48 West 22nd Street

6 stories, 2,300 sf

Kassin Sabbagh Realty / Abie Dweck, Kassin Sabbagh Realty

n/a / Vincent Santoro and Anita Grossberg, n/a

The retail co-op sold for $2.49 million.

413 South 5th Street (Brooklyn)

3 stories, 5 residential units

n/a / HPNY

n/a / HPNY

The three-story walk-up building sold for $2.1 million.

303 Harman Street (Brooklyn)

3 stories, 6 residential units

local investor / Yona Edelkopf, EPIC Commercial Realty

n/a / Justin Zeitchik, EPIC Commercial Realty

The property sold for $1.8 million.

2381 Belmont Ave (Bronx)

6 stories, 7 residential units, 2 commercial units, 10,874 sf

non-profit investor / Jason Gold, Scot Hirschfield and Victor Sozio, Ariel Property Advisors

private investor / Jason Gold, Scot Hirschfield and Victor Sozio, Ariel Property Advisors

The six-store property sold for $1.8 million.

66 Hendrix Street (Brooklyn)

three 3-story buildings, 6 residential units

local investor / Marcus Jecklin, EPIC Commercial Realty

n/a / Marcus Jecklin, EPIC Commercial Realty

The three-building package sold for $1.6 million.

99 Starr Street (Brooklyn)

3 stories, 6 residential units, 5,250 sf

n/a / David Scheer, Rosewood Realty Group

99 Starr Street Brooklyn LLC / Bijan Djafari, Rosewood Realty Group

The three-story walk-up building sold for $1.53 million.

976 Anderson Ave (Bronx)

5 stories, 9 residential units, 12,160 sf

n/a / n/a

n/a / Mitchell Levine, James Nelson and David Simone, Cushman & Wakefield

The multi-family building sold for $1.525 million.

1424 Flatbush Avenue (Brooklyn)

3 stories, 4 residential units, 2 commercial units, 5,850 sf

G-Way / Marcel Fridman, Barcel Group

Nigel Hopkinson / Bart Zimmermann, Barcel Group

The building sold for $1.25 million, or 11 times the rent roll.

860 Melrose Avenue (Bronx)

2 stories, 4,200 sf

private investor / Jason Gold, Scot Hirschfield and Marco Agbaba, Ariel Property Advisors

private investor / Jason Gold, Scot Hirschfield and Marco Agbaba, Ariel Property Advisors

The two-story building sold for $1.2 million.

17-27 Harman Street (Queens)

3 stories, 6 residential units, 4,875 sf

1727 Harman LLC / Bart Zimmermann, Barcel Group

n/a / Marcel Fridman, Barcel Group

The six-unit Ridgewood building sold for $1.1 million or $225 per square foot.

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

7 West 21st Street

17 stories

Friedland Properties / n/a

Wells Fargo Bank / New York State Housing Finance Agency

A $182 million mortgage loan was secured by the firm to fund a residential development.

95 Morton Street

205,000 sf

Brickman / Jay Marshall, Christopher Peck and David Fowler, Holliday Fengolio Fowler

national REIT / n/a

A $38.1 million preferred equity investment as arranged.

509 East 77th Street

366-unit co-op

Cherokee Owners Corporation

NCB

A $26.5 million first mortgage and $3 million line of credit were arranged for the cooperative. Includes 515 East 77th Street, 517/523 East 77th Street, 508/514 East 78th Street, 516/522 East 78th Street.

99 Madison Avenue

124,382 sf co-op

Windsor Management / Steven Klein and Jonathan Rosner, Holliday Fengolio Fowler+C37

Voya Investment Management / n/a

The firm placed a 15-year, $25 million fixed-rate refinancing loan with Voya Investment Management.

89-15 Parsons Boulevard (Queens)

358-unit co-op

Jamaica Towers Owners

NCB

An $8 first mortgage and $2 million line of credit were arranged for the co-op.

Includes 160-10 89th Avenue.

39-60 54th Street (Queens)

222-unit co-op

39-60 54th Street Owners

NCB

A $7.7 million first mortgage and $750,000 line of credit were arranged for the co-op.

240 West 23rd Street

18-unit co-op

240 West 23rd Owners Corporation

NCB

A $2 million first mortgage and $250,000 line of credit were arranged for the co-op.

547 Broadway

10-unit co-op

547 Broadway Realty

NCB

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

510 Kappock Street (Bronx)

32-unit co-op

Carroll Gardens Owners Corporation

NCB

A $1 million first mortgage and $250,000 line of credit were arranged for the co-op. Includes 512 Kappock Street.

170 East 92nd Street

18-unit co-op

170 East 92nd Street Owners

NCB

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

149 Clinton Avenue (Brooklyn)

32-unit co-op

Clinton Avenue Owners Corporation

NCB

A $700,000 first mortgage was arranged for the cooperative. Includes 153 Clinton Avenue.

11 Jay Street

4-unit co-op

11 Jay Street Owners Corporation

NCB

A $500,000 first mortgage and $200,000 line of credit were arranged for the cooperative.

166 Mulberry Street

27-unit co-op

166-168-170 Mulberry Street HDFC

NCB

A $500,000 line of credit was arranged for the cooperative. Includes 168-170 Mulberry Street

18 Monroe Place (Brooklyn)

5-unit co-op

18 Housing Corporation

NCB

A $350,000 first mortgage and $100,000 line of credit were arranged for the cooperative.

106 July 2015 www.TheRealDeal.com

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Other Deals BLDG Management secures $251M for Midtown rental tower

Foot Locker moving HQ to Vornado’s 330 West 34th Street Foot Locker is moving its corporate headquarters to Vornado Realty Trust’s 330 West 34th Street office building near Penn Station. The sports apparel retailer has committed to the new space on floors two through four of 330 West 34th Street for at least 10 years, with asking rents at the 18-story, 700,000-squarefoot building reportedly in the $60s per square foot. A JLL team of Rob Martin and Christine Tong represented Foot Locker, with Vornado executives Craig Panzirer and Jared Silverman representing the landlord in-house, according to Crain’s. Foot Locker will be moving from its 145,000-square-foot corporate offices at 112 West 34th Street, where the company recently signed a lease with Empire State Realty Trust to retain its retail flagship store.

Vornado plans to spend hundreds of millions of dollars to upgrade its properties in the Penn Plaza district around Penn Station.

330 West 34th street

Lloyd Goldman’s BLDG Management has secured $251 million in financing for a rental tower at 222 East 44th Street, according to property records filed with the city. The New York State Housing Finance Agency and the Bank of China provided the loan. Goldman bought the site for $32 million last year and applied for a permit application to construct the 449-foot-tall building in January, as The Real Deal reported. Goldman’s plans include 429 apartments — 87 of which will be affordable — across more than 360,000 square feet, according to the developer’s permit application with the Department of Buildings. Lloyd Goldman The building is located between Second and Third avenues. Although SLCE is the listed architect of record, Handel Architects won a competition to design the new residential tower.

Amenities will include a swimming pool and a basketball court. BLDG is also developing a $35.5 million project in the East Village.

David Boies’ law firm signs on as first tenant at 55 Hudson Yards

Friedland secures $182M loan for Flatiron resi project

Law firm Boies, Schiller & Flexner has inked a lease at 55 Hudson Yards on the Far West Side. The firm is taking 83,000 square feet at the 1.4 million-square-foot Mitsui Fudosan, Related Companies and Oxford Properties Group-developed tower, according to the Wall Street Journal. Boies, which currently occupies 94,000 square feet at 575 Lexington Avenue, will take up three floors of the 51-story skyscraper.

Boies’ firm is the first to sign a lease at the building. The developers started construction on the massive tower without signing on any tenants. “We have tremendous momentum at the moment, and we David Boies have a lot of deals cooking at various stages,” Jay Cross, president of Related Hudson Yards, told the Journal. “Announcing Boies, Schiller will hopefully accelerate those decisions.” Avison Young’s Arthur Mirante, Bill Morris and Greg Kraut represented Boies.

Friedland Properties secured a $182 million mortgage to fund its planned 17-story residential development at 7 West 21st Street in the Flatiron District, according to property records filed with the city. The Lenox Hill-based, Friedland family-owned 7 West 21st Street real estate investment received funding from Wells Fargo Bank, through the New York State Housing Finance Agency, for the mixed-use development located between Fifth and Sixth avenues. Friedland closed the financing deal May 28, records show. The residential project will house 230 market rate apartments as well as 58 affordable housing units, according to mortgage documents, while the building will also include 8,000 square feet of retail space and a 200-car underground parking garage.

Morris Adjmi Architects is designing the single-building, through-block development, which is slated to rise on a parking lot Friedland acquired in 2013. Friedland Properties did not respond to requests for comment.

Crown and Oxford pay $652M for rest of Olympic Tower base

641 Fifth Avenue

The Chera family’s Crown Acquisitions and Oxford Properties Group now own the entire office and retail base of the Olympic Tower, after paying $652 million for the remaining 50 percent that was owned by Onassis Foundation-related entities. The mixed-use building sits at 641 Fifth Avenue and occupies the entire block between East 51st and 52nd streets. The upper portion is comprised of condos. The partners paid $418.9 million for 49.87 percent in 2012, and has now purchased the other 50.13 percent for $651.6 million, the New York Post reported. All of the 400,000 square feet of office space in the tower is leased to the National Basketball Association, luxury goods company Richemont, and Michael Dell’s MSD Capital. The 105,000 square feet of retail is occupied by Cartier, Armani/ AX, H. Stern, Versace, and Jimmy Choo. Aristotle Onassis, the late shipping magnate, originally developed the building.

Vornado buys Herald Square Old Navy for $355M Vornado Realty Trust closed June 2 on the $355 million acquisition of the Old Navy building in Herald Square, just over a year after a partnership between Starwood Capital Group and Crown Acquisitions bought it for $252 million. With the deal for the three-story, 78,000-squarefoot building at 144-150 West 34th Street, the Steven William and Rick Friedland Roth-led real estate investment trust gains control of another prime retail property in a neighborhood where it has been assembling assets for decades. The site on which the property sits could be redeveloped into a 300,000-square-foot retail and hotel tower, using unused air rights, according to sources. Old Navy has about five years remaining on its lease, which industry insiders described as far below market-rate. Retailers have been bullish on the area as the local anchor, Macy’s, has seen its annual sales surge from $600 million to $1 billion over the past five years, one industry source said. Eastdil Secured’s Adam Spies and Doug Harmon represented both parties in the deal.

Apple opened new Upper East Side store last month Apple’s latest retail store opened last month in a historic Beaux Arts building on the Upper East Side that features a historic interior design.

The location, at 940 Madison Avenue near the corner of East 74th Street, originally housed the U.S. Mortgage & Trust bank in the 1920s.

Apple store The building’s architecture and previous use lends the store a vintage look that includes tall ceilings and marble features. Apple added six metal chandeliers in the location to reproduce originals from old photographs of the bank, according to the New York Daily News, while a heavily reinforced bank vault was restored and will be used as a special entrance for VIP customers. The tech giant signed up last year at the 12,580-square-foot property, which is owned by real estate executive Khedouri Ezair.

The store is Apple’s sixth location in the city.

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To view more deals visit our website: www.TheRealDeal.com 108 July 2015 www.TheRealDeal.com

DOUGLAS ELLIMAN REAL ESTATE

proudly congratulates

ALEX MARONI for achieving a

RECORD BREAKING SALE IN BROOKLYN Cobble Hill townhouse sets record for the most expensive home sale in Brooklyn at $15.5M

575 MADISON AVENUE, NY, NY 10022. 212.891.7000 | © 2014 DOUGLAS ELLIMAN REAL ESTATE. ALL MATERIAL PRESENTED HEREIN IS INTENDED FOR INFORMATION PURPOSES ONLY. WHILE, THIS INFORMATION IS BELIEVED TO BE CORRECT, IT IS REPRESENTED SUBJECT TO ERRORS, OMISSIONS, CHANGES OR WITHDRAWAL WITHOUT NOTICE. ALL PROPERTY INFORMATION, INCLUDING, BUT NOT LIMITED TO SQUARE FOOTAGE, ROOM COUNT, NUMBER OF BEDROOMS AND THE SCHOOL DISTRICT IN PROPERTY LISTINGS ARE DEEMED RELIABLE, BUT SHOULD BE VERIFIED BY YOUR OWN ATTORNEY, ARCHITECT OR ZONING EXPERT. EQUAL HOUSING OPPORTUNITY.

Brooklyn

from page 64

a rental, but are still early enough in the development process to make changes, or for existing rentals buildings.

“We are talking to a number of developers right now who were thinking about rentals, but are now thinking about switching to condo, but nothing’s firmed up yet,” said Stephen Kliegerman, president of Halstead Property Development Marketing.

TerraCRG’s Cohen said he has heard similar rumblings, but that developers are not ready to reveal their revised plans.

Greystone Property Development Corp. is one developer, however, who has reversed course. At WaterBridge 47, a 25-unit project in Vinegar Hill, Greystone was planning rentals, but decided early on in the development process to go condo instead, according to a company representative.

Sales launched in December, with apartments priced from $850,000 to $2.2 million. According to StreetEasy, 14 of the units are currently in contract.

The borough’s highest-profile condo conversion project is a partnership between Kushner Cos., Rockpoint Group, and LIVWRK at 184 Kent Avenue.

In April, the developers bought the 338-unit rental building on the Williamsburg waterfront for $275 million from developer Jason Halpern’s JMH Development (see related story on page 26). They are now planning to convert it into

the Austin Nichols Condominium, with units ranging from $800,000 to $3 million, though they have not yet said if the unit count will shrink as part of the conversion.

Nearby at the Edge, Douglaston Development has broken ground on phase three of its waterfront development. In December, the New York Times reported that the project is slated as 550 market-rate rentals, but Elliman’s Modica said he has a sneaking suspicion that it could flip to condo.

“It would make sense when it comes to market two or three years down the road,” said Modica, who has no inside information.

Representatives from Douglaston did not reply to a request for comment.

Where to go?

Though it’s clear that there is no shortage of demand, it’s difficult to build large-scale condo buildings in the most desirable, prime Brooklyn neighborhoods.

That’s because they may be less likely to qualify for zoning variances, and many of the most expensive areas have density limitations.

Alloy’s Jared Della Valle, whose 1 John project is in Dumbo, said there are just not a lot of big condo projects, of say, “300,000 square feet.” “We just don’t see those sorts

of condo projects in Brooklyn,” he said.

David Ruff, a principal of Nava Companies and the developer of 210 Pacific Street in Cobble Hill, echoed that point. “The limited-height district creates a happy neighborhood feel, but it will also drive a demand-supply offset,” he noted.

Cohen sees Park Slope as ripe for development, because it’s an area that hasn’t seen any major condo projects recently.

“There’s a real need in Park Slope for for-sale housing options. It’s an area that’s been attracting a lot of families and there’s not enough of it,” he said.

He also cited Crown Heights, Bedford-Stuyvesant, Clinton Hill, and “to some extent Bushwick and ProspectLefferts Gardens” as possibilities for the next condo boom areas, given that units in those locations can still be priced between $400,000 and $700,000 — attractive prices for a first-time homebuyer.

At 782 Hart Street in Bushwick, a 24-unit rental that went up in 2012, the landlord isn’t wasting any time capitalizing on the trend. In early May, residents received notice that a condo conversion plan is underway.

And potential buyers continue to swarm the borough.

“I think that we are nowhere near that saturation point,” Ideal’s Scepanovic said. “We’re at maybe not ground zero, but we’re at ground one out of at least 10 levels to come.” TRD

REBNY

from page 22

authorities, and REBNY did not comment.

The charges against Silver and Skelos were born out of the 2013 anti-corruption investigation Cuomo launched (and later abandoned), which was looking into 421a abatements granted to Extell Development, Silverstein Properties, Thor Equities and other top developers.

While Banks obviously did not play a role in those scandals, he will no doubt be dealing with the industry’s reputation in Albany.

So far, Eileen Spinola, Steve’s wife, is the only topranking REBNY official who will be leaving as part of the transition. Industry veteran Joseph Barbaccia took her place as head of REBNY’s residential and commercial brokerage divisions. But he appears to be the only new hire on the staff. And it’s unclear if Banks plans to bring in his own team.

What’s also unclear is what kind of public face Banks will put on the real estate industry.

“Spinola had welcomed the role of being a lightning rod and deflecting attention from his board. It’s been part of his job and he’s embraced it,” said John Kaehny, executive director of the government watchdog group Reinvent Albany. “Looking at REBNY from the outside [and] as a major political force, it’s hard to see that having new leadership will change the public perception.”

“We don’t know what the Banks era looks like,” he added. “It’s too early.” TRD

CORRECTIONS A N D C L A R I F I C AT I O N S A caption for a photo accompanying the May magazine story “There are experts and then there are ‘experts’,” incorrectly LGHQWLÀHG WKH EURNHUDJH WKDW -RUGDQ 6DFKV UXQV 7KH ÀUP·V QDPH LV %ROG 1HZ <RUN

110 July 2015 www.TheRealDeal.net

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TOWN Residential LLC (“TOWN”) is a licensed real estate broker and a partnership with Buttonwood Residential Brokerage LLC and Thor Equities, LLC. No representation is made as to the accuracy of any description. This is not intended to solicit property already listed. The number of bedrooms listed above is not a legal conclusion. Each person should consult with his/her own attorney, architect or zoning expert to make a determination as to the number of rooms in the unit that may be legally used as a bedroom. TOWN owns the following subsidiary licensed real estate brokerages: TOWN Astor Place LLC; TOWN Fifth Avenue LLC; TOWN Flatiron LLC; TOWN Gramercy Park LLC (“TOWN Gramercy”); TOWN Greenwich Street LLC (“TOWN Financial District”); TOWN Greenwich Village LLC; TOWN Soho LLC; TOWN West Village LLC; and TOWN 79th Street LLC (“TOWN Upper East Side”). TOWN New Development Sales HUK 4HYRL[PUN 33* PZ H SPJLUZLK YLHS LZ[H[L IYVRLY HUK H WHY[ULYZOPW VM )\[[VU^VVK 9LZPKLU[PHS )YVRLYHNL 33* HUK ;OVY ,X\P[PLZ 33* >LZ[ [O :[YLL[ [O Å VVY 5L^ @VYR 5@ ;OL JVTWSL[L [LYTZ HYL PU HU 6Ɉ LYPUN 7SHU H]HPSHISL MYVT [OL :WVUZVY -PSL 5V *+ :WVUZVY! ;OL *OHYSLZ *VUKVTPUP\TZ 33* -PM[O (]LU\L [O Å VVY 5L^ @VYR 5@ ,X\HS /V\ZPUN 6WWVY[\UP[`

WeWork

from page 61

Data from the federal Small Business Administration Office

Midtown office leasing data compiled by Savills Studley

able chunk of that money in its expansion, it will also be

of Advocacy show that small businesses didn’t disappear

corroborates Ravesloot’s observation. Offices with less

able to set aside cash reserves. This, observers say, will

at a higher rate than their larger counterparts during the

than 5,000 square feet saw asking rents dip significantly

boost its ability to weather a downturn despite the high

economic crisis that began in 2008. In fact, the number

on average in 2009 and 2010, but the decline was short-

rents it’s paying.

of larger firms with between 100 and 499 employees saw

lived. In comparison, rents for larger office spaces recovered

the steepest decline. Meanwhile, the number of firms with

far slower in 2010 and 2011.

Stewart Butterfield, CEO of the corporate-messaging app Slack, said in a recent New York Times interview that

less than 10 employees, which make up a large chunk of

Still, no two crises are equal, and just because Regus

raising as much capital as possible now makes sense for

WeWork’s members, barely budged. The takeaway: Demand

fared well during the last downturn doesn’t mean WeWork

startups because it makes them more resilient to vagaries

from small firms for shared office space is unlikely to fade

will do as well during the next one.

of the market.

in an economic crisis.

According to Ravesloot, Regus tends to sign leases during

“It’s a hedge, and a hedge that’s unbelievably good for

This is exactly what Regus experienced in 2009. “They

market troughs, when rents are cheaper, and has remained

us,” he said. “In the case where everything turns to [exple-

did extremely well during the last downturn, when a lot of

reluctant to commit to large chunks of space in Manhattan

tive], we will look pretty smart.” This argument applies

people were downsizing, especially in the financial sector,”

over the past year. WeWork, on the other hand, is piling on

to WeWork as well.

said CBRE’s Mark Ravesloot, who has represented Regus

leases at peak pricing. But expanding during a boom comes

So, with fat cash reserves and a rapidly growing customer

in New York for nearly a decade. Firms tend to be wary of

with a big plus: it has arguably never been easier to raise capital.

base, WeWork is likely to stay hungry. But just how big can

making long-term overhead commitments during a crisis,

To date, WeWork’s founders have raised nearly $970

it get? Take it from McKelvey. On a recent Thursday, he sat

he said, meaning many prefer short-term leases despite the

million from investors and have given up at least a 41

on a panel in blue jeans, bright green sneakers and a green

fact that they are pricier. Moreover, staff reductions mean

percent ownership stake, according to Pitchbook, a

plaid shirt. When the moderator said in passing: “I don’t

the demand for the kind of shared services — such as ac-

data firm that tracks private capital markets, and TRD

know how much more space you’re going to acquire in New

counting, legal and IT — provided by WeWork and Regus

calculations. No other real estate startup raised even

York City,” McKelvey interjected, jokingly: “All of it.” TRD

is likely to grow.

remotely as much. While WeWork looks to invest a size-

Niño

from page 48

After college, in 1996, he briefly started an ad agency in

“The timing couldn’t have been worse,” he recalled.

Bogotá (“we were really, really bad”). Two years later, he

As the market tanked, sales stalled, and Niño found

William Street] and he had said that he was very successful

launched a real estate brokerage that specialized in finding

himself with little to do. In hindsight, the stalling of his

in Colombia and looking to export this model to U.S.,” Davis

apartments for Latin Americans to buy in Miami, a city he

condo-marketing career proved fortuitous, because it led

recalled. “It came about organically.”

knew well from vacations with his parents. He eventually

him to shift his firm’s focus from marketing to crowdfunding.

While Niño came to crowdfunding almost by chance,

got a job as vice president of sales at the Miami brokerage

In 2009, a Spanish developer named Emilio Borella ap-

he also credits attention deficit disorder with helping him

Fortune International, before setting out in 2003 to launch

proached him with plans to build Bogotá’s tallest skyscrap-

Prodigy Network as a new development marketing firm.

er. “I thought he came to me for sales of condos,” Niño re-

“Over time, I learned that people with ADD have a 300

“We had been discussing [the possibility of buying 84

become a successful entrepreneur.

Niño rode the Florida real estate boom, growing his busi-

called. But Borella wanted Niño to tap his network to raise

percent higher chance of becoming entrepreneurs,” he said.

ness to 80 people by 2007, while honing his development chops

money for the project through crowdfunding, a practice

“When you’re an entrepreneur, you need to be doing

on the side by building multifamily properties in Panama.

that has long been legal in Colombia. Niño ultimately raised

50 million things at the same time, so it fits the profile of

$220 million for the tower, which is dubbed BD Bacatá.

somebody with ADD perfectly,” he added. “So I think I

In 2006, he moved Prodigy to New York and in 2007 began marketing the Sapir Organization’s Trump Soho and the William Beaver House at 15 William Street.

Crowdfunding sans crowd

That success convinced him to try crowdfunding in New York, where he was still living.

necessity, probably.” TRD

from page 46

Miller, however, said he believes there is still real value in the crowd.

“It’s important to us that institutions don’t crowd out the

While Miller, Fritton and others believe the crowd will continue to play a role, they argue that regulatory changes are needed for the crowd to remain truly relevant.

space,” he said, adding that he is sticking with the crowd by

So far, the JOBS Act gives platforms easy access to

keeping accredited investors in the mix and even opening

money from accredited investors — households with an

up deals to unaccredited investors in part to “stay true to

income of more than $200,000 per year or net wealth of

our business model.”

$1 million. But they are only a tiny fraction of U.S. savers.

Patch of Land’s Jason Fritton, whose firm has secured a

Raising funds from unaccredited investors, in contrast, is

$25 million commitment from a hedge fund and is working

limited in size and comes with added paperwork, making

on deals with several other institutions, said keeping small-

true crowdfunding cumbersome.

time investors in the mix is important.

“My crowd is my redundancy and my flexibility,” he

crowdfunding from unaccredited investors, has yet to be passed. The SEC is currently working on formalizing the

the spigot during downturns, while at least some small

proposed rules, but is unlikely to get it done before next year.

retail investors are likely to continue investing. The more

In the meantime, firms have little choice but to bank on

individual members a platform has, the more likely it will

institutions.

be able to continue raising cash in rocky economic times.

“Over time, regulations will ease,” said Miller. “At that

“That’s where the real power of crowdfunding is going to

point we may be able to access more retail investors.” TRD

be. Not right now, but when the market changes,” he added.

&

Title III of the JOBS Act, which would liberalize

said. The way Fritton sees it, institutions often turn off

112 July 2015 www.TheRealDeal.net

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Hamptons

from page 43

82PHEASANT PHEASANTCLOSE CLOSENORTH, NORTH, SOUTHAMPTON SOUTHAMPTON 82 $850,000 VILLAGE: VILLAGE: $850,000 This nine-bedroom home belongs to Manhattan real estate broker Victoria Shtainer and her husband Alfred Shtainer, a urologist.

After 12 years at Elliman, Victoria Shtainer decamped for upstart brokerage Compass in May. At Elliman, Shtainer, a former litigator for Allstate Insurance, handled about $500 million in sales, mostly in Manhattan, she said.

Completed in December 2014, the new-construction Pheasant Close North home replaced a house the Shtainers bought in 2013 for $2.6 million. At the start of the season, that new house, a 1.8-acre spread with 11 baths, a pool and tennis court, was listed for rent at $850,000 in an open listing.

Though the couple didn’t rent it for the full season, they did get a July tenant, who will be paying “over $200,000,” Shtainer said. At press time, the house was still available for

Southampton’s 82 Pheasant Close North, which was asking $850,000 for the season, is owned by Manhattan broker Victoria Shtainer.

August with an asking price of $300,000.

For her part, Shtainer is spending time in Saint-Tropez, France, for a few weeks this month.

“I haven’t been to Europe in the summer for a long time,”

said Shtainer, who was born in Ukraine when it was still part of the Soviet Union.

In Manhattan, meanwhile, the couple lives at One Beacon Court, where Shtainer has also brokered a number of deals.

suspended Heller’s law license for misconduct, including stealing money from his clients, according to news reports.

He appears to be back to practicing, but he could not be reached for comment.

Nonetheless, this is not the first time that Heller has put his home up for rent.

it this season along with Global Group, Elliman and Nest Seekers International. The 7,000-square-foot, somewhat dated 1930s-era house sits on three acres and is discreetly tucked into the dunes.

In June, Heller had not yet found a renter for the property, which has 350 feet of ocean frontage, according to Falco. But, Falco noted, someone from the Middle East had inquired about taking it from July 1 through September 15, for “near close to ask.”

He added, “It is a little higher than [the renter] wanted, but there aren’t a lot of choices.”

A “Saudi royal” leased it for $20,000 — a night — in 2012, said Halstead Property’s Gabriel Falco, who is marketing

In the meantime, Falco said Heller and his family are using the house, which is not up for sale.

396 MEADOW LANE, SOUTHAMPTON VILLAGE:

$800,000 Mark Heller, a criminal defense attorney whose clients have run the gamut from “Son of Sam” serial killer David Berkowitz to troubled actress Lindsay Lohan, owns this 10-bedroom. At the start of the season, the price tag was $800,000.

Heller is as colorful as his clients, so much so that in 2010, the New York Times published a nearly 3,000-word profile of him, tracing his entire career and noting that his “on-andoff law firm” Heller & Heller “can be seen as two parts of the same person: ‘Good Mark’ and ‘Bad Mark.’”

On the “bad” side, in the 1990s a judicial panel temporarily

210 MEADOW LANE, SOUTHAMPTON VILLAGE:

$750,000 Just down the beach from Heller is this six-bedroom home, which was listed as a full-season rental for $750,000. It’s owned by an LLC named Mid-Summer Dream, which is connected to Janna Bullock, a Russian socialite and real estate investor currently shadowed by financial issues.

Bullock is accused of both failing to pay about $42,000 in common charges at her penthouse condo at 120 East 87th Street, as well as loans on two townhouses on East 82nd Street, according to news reports.

In addition, a few years ago, she was forced to step down from the board of the Guggenheim Museum after her then-husband Alexei Kuznetsov — the couple divorced in 2013 — was charged in Russia with stealing

Attorney Mark Heller

reports. A phone number connected to Bullock’s New York office was disconnected; an email to her was not returned.

James Giugliano, a broker at Nest Seekers who is marke ting the rental, declined to Southampton’s 210 Meadow Lane is owned by Russian socialite Janna Bullock and was up for rent for $750,000. hundreds of millions of rubles. If convicted, he faces life comment; Elliman, Global Properties and Brown Harris in prison in Russia.

Stevens also appear to be marketing it.

The 8,500-square-foot home is also listed for sale, Aaron Kaufman, an agent with Town & Country Real last at $29 million, a hefty increase from the roughly $15 Estate, who is on the sale listing, did not return a call for million Bullock paid for it in 2005, according to news comment.

The sale price had not yet hit public records at press time. Bern bought the property for $7 million in 2000.

65 FIRST NECK LANE, SOUTHAMPTON VILLAGE:

$750,000 Scandal also swirls around this First Neck Lane ninebedroom, which was listed for rent at $750,000 early in the season. But the home was pulled off the rental market because it sold, according to Brown Harris Stevens’ Mary Terry, one of several agents on the open rental listing.

Owner Marc Bern, a Sept. 11 injury lawyer, could not be reached for comment. But Bern might be busy; he’s locked in a nasty spat with his law partner Paul Napoli, who in a lawsuit accused Bern of hiring prostitutes, according to the New York Post. TRD did not, however, see the complaint, which was later sealed.

However, related court proceedings revealed that Napoli himself stands accused of mismanaging firm 114 July 2015 www.TheRealDeal.com

34 COBB HILL LANE, WATER MILL:

$600,000

Southampton’s 65 First Neck Lane is owned by lawyer Marc Bern.

funds, which he denies. Meanwhile, lawyers for Bern deny any wrongdoing and say Napoli’s claims are nothing more than a diversion.

This 10-bedroom belongs to Daniel Shak, a former hedge-fund investor who in 2013 was banned by federal officials from trading crude oil after having manipulated the markets. It was listed for $600,000 for the season.

Shak, who could not be reached, is also a semi-pro poker player. Sotheby’s Deborah Srb did not return a call; it also appeared to be listed with Elliman and Coldwell Banker Beau Hulse Realty Group . The home does not appear to be up for sale. According to StreetEasy it last sold for $8.5 million in 2010.TRD Additional research by Will Parker and Jennifer White Karp

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Israeli bonds

Crowdfunders

from page 32

a corporate level, unless youâ&#x20AC;&#x2122;re a huge REIT,â&#x20AC;? said Boaz Gilad, co-founder of Brookland, which raised $35 million last year.

Gilad said the ďŹ rm has a six-year bond, but is already exploring the possibility of issuing another round before the end of the year.

Ori Eisenberg of One Haâ&#x20AC;&#x2122;am, a New York-based ďŹ nancial advisory ďŹ rm that worked on the Moinian bond issuance, said â&#x20AC;&#x153;the entry barrier is much lowerâ&#x20AC;? for small companies. â&#x20AC;&#x153;You donâ&#x20AC;&#x2122;t need to be a $2 billion, a $3 billion company to get in,â&#x20AC;? he said. â&#x20AC;&#x153;Youâ&#x20AC;&#x2122;re a big entity in Israel if you offer $200 millionâ&#x20AC;? in bonds.

Mutual love The process of accessing capital in the markets in Israel isnâ&#x20AC;&#x2122;t easy.

Some American ďŹ rms have ex-

plored the possibility of bond offerings, but pulled back or failed in their attempts.

Companies that sell bonds in Tel Aviv must clear hurdles like domestic Israeli ratings agencies that grade their debt, for instance.

Still, the enthusiasm New York companies are showing toward the Tel Aviv Stock Exchange is being matched by Israeli investors.

Eisenberg said demand for Moinianâ&#x20AC;&#x2122;s debt offering approached $550 million.

Israeli investors â&#x20AC;&#x153;like New York because of the transparency and liquidity in the market,â&#x20AC;? Eisenberg said. â&#x20AC;&#x153;If youâ&#x20AC;&#x2122;re investing in Detroit or L.A., itâ&#x20AC;&#x2122;s much more difďŹ cult to ďŹ nd out details [on speciďŹ c property assets]. In New York, you have every deal being reportedâ&#x20AC;? in the press.

Of course, many of the cityâ&#x20AC;&#x2122;s real estate developers and ďŹ nanciers still have reservations regarding the Israeli bond market. At a panel last month at the CUNY Graduate Center, RXR Realty president Michael Maturo said his ďŹ rm has explored the possibility of a debt issuance, only to ďŹ nd â&#x20AC;&#x153;hidden costsâ&#x20AC;? related to currency translation.

Maturo also noted that an offering would require RXR to become a public company in Israel. â&#x20AC;&#x153;If youâ&#x20AC;&#x2122;re a private company and you donâ&#x20AC;&#x2122;t want the world to learn what youâ&#x20AC;&#x2122;re doing, itâ&#x20AC;&#x2122;s a problem,â&#x20AC;? he said.

At the same panel, however, developer Steve Witkoff said the market offers companies access to â&#x20AC;&#x153;single-digit capital,â&#x20AC;? and pointed to â&#x20AC;&#x153;really smart guys with access to the U.S. marketsâ&#x20AC;? who have opted to raise money in Israel. TRD

& #*$$

CityFunders Capital raised for projects: n/a Venture funding raised: $1 million he latest addition to New Yorkâ&#x20AC;&#x2122;s crowdfunding ďŹ eld, CityFunders launched in June.

Its founders are David Behin, of brokerage MNS, his brother Albert, as well as Jerry Swartz and Ayush Kapahi of capital markets brokerage HKS Capital Partners. The startup made a notable entrance: one of its inaugural offerings is a $1 million equity slice in Simon Baron Developmentâ&#x20AC;&#x2122;s 467-unit rental development at 29-26 Northern Boulevard in Long Island City. â&#x20AC;&#x153;We thought it was really a great deal,â&#x20AC;? said David Behin, explaining that the projectâ&#x20AC;&#x2122;s land cost basis is favorable because Baron bought the site a year ago, when prices were far lower. â&#x20AC;&#x153;Investors want to be in this type of project.â&#x20AC;?

Being late to the game, CityFunders was able to skip a few steps in platform development. Rather than start exclusively with small projects, it jumped straight to skyscraper ďŹ nancing. It is also pre-funding its deals right out of the gate, with the help of a $40 million credit line provided by high-net-worth backers, whom the ďŹ rm declined to name. The minimum individual investment is $5,000.

T

Invest Thor

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F =::67D9 F #,

Capital raised for projects: n/a Venture funding raised: n/a ittle is known about the crowdfunding venture that Joe Sittâ&#x20AC;&#x2122;s Thor Equities is preparing to launch. â&#x20AC;&#x153;Invest Thor, itâ&#x20AC;&#x2122;s going to be called,â&#x20AC;? Thor CFO Michael Schurer revealed on May 14 during a panel discussion hosted by the tax-advisory ďŹ rm WeiserMazars.

Thor declined to comment futher on its plans.

If and when it does launch, however, it could have an enormous impact on the crowdfunding ďŹ eld. For starters, Thor is one of the biggest real estate investors in New York City.

The private fund manager bought $2.8 billion worth of New York properties last year alone, meaning if it launches, its crowd investors could have access to an asset pool far larger than other crowdfunding platforms in the game.

But more importantly, Thor would be the ďŹ rst major real estate investor and developer to launch its own crowdfunding division. With the exception of Prodigy, all of the other major crowdfunding platforms are run by entrepreneurs or capital markets brokers, acting as middlemen between developers and investors.

Thor could upend that model.

By the looks of it, Thorâ&#x20AC;&#x2122;s platform would cut out the middleman entirely and tap directly into the crowd. If others follow suit, the crowdfunding ďŹ eld could see its next big transformation.

Gabriel Silverstein, head of investment banking at advisory ďŹ rm Angelic Real Estate, said he thinks more will follow in Sittâ&#x20AC;&#x2122;s footsteps. â&#x20AC;&#x153;I think personally the coming of age deal for crowdfunding was the Silverstein WTC bond deal that Fundrise did,â&#x20AC;? he said. â&#x20AC;&#x153;It wasnâ&#x20AC;&#x2122;t a major piece of that deal, but it puts the credibility of crowdfunding very high with that level of sponsorship, that level of deal visibility, and that location and product.â&#x20AC;? â&#x20AC;&#x153;Thor,â&#x20AC;? he added, â&#x20AC;&#x153;is one of many that will develop their own or private label crowdfunding platforms over the next few years.â&#x20AC;? TRD

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116 July 2015 www.TheRealDeal.com

from page 45

Wealth

from page 34

Commercebank Feldman is shying away from the highest price points, and is instead offering what

And with every month, the limits of luxury seem to be shifting.

he calls “affordable luxury.” At his latest

In January a penthouse at Extell’s

High Line development, the Bjarke

condo tower One57 sold for $100.5

Ingels-designed 518 West 18th Street,

million, the highest price ever

Feldman is keeping apartments small, so

recorded in the city. Vornado’s nearby

that prices stay below $10 million, despite

development 220 Central Park South

a high rate per square foot.

could easily shatter that record. As The

Emily Beare, a top-producing luxury

Real Deal recently reported, a Qatari

broker at Core who has four listings above

buyer is looking to combine several

$20 million, said she sees continued

units into a single $250 million mega

strong demand for über-luxury units.

penthouse.

But she also argued that the demand-

“It’s almost as if there’s a new class of

to-supply ratio may be more favorable

billionaires emerging in Manhattan,” said

for sellers at lower price points. “I think

Town Residential’s co-founder and CEO

the $5 million and below range is where

Andrew Heiberger. “These are the über-

we’re seeing a little bit of a [listings] void,”

billionaires.”

she said.

“This is the second luxury asset class where we are seeing this trend, the

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pensive apartment in your surrounding

want to buy one.

square mile may just be part of the nat-

Furthermore, according to Leonard

ural trajectory of self-expression for the

Steinberg, president of Compass, buyers

ultra-wealthy, with its final destination

often break the rule that they shouldn’t

at the nearest benefit gala.

“The general wealth display starts by first going out to fancy dinners,” said

“I would have been the first person to

Steinberg, “then buying fancy clothing,

believe that,” he said, “but I was proven very

renting a fancy apartment, then buying

wrong on many occasions. I’ve seen people

a fancy apartment, then buying artwork,

whose financial statements were closer to

and then, getting into charity.”

$50 million spend half of that on a home.”

But generalizations only go so far, as

Steinberg offered other examples,

the buyer pool includes “a huge variety

such as individuals who receive an

of cultures and a huge variety of levels of

inheritance of $65 million and put as

wealth and age of wealth,” he said.

Additionally, buyers of ultra-luxury

And as for the number of people

units can sometimes be a group of

who qualify as ultra-high-net-worth

investors, such as at One57’s $91.5 million

individuals, Steinberg thinks it’s probably

“Winter Garden” penthouse.

much higher than Wealth-X’s estimate.

In sum, data may help paint a

The real question, he said, is who is

better picture of the luxury market, but

actually interested in buying an ultra-

precisely quantifying demand remains

pricey pad to begin with? “No one knows

out of reach. Despite its flaws though,

the exact response to that,” he said.

a look at the numbers conforms to the observations of some market insiders:

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penthouses do not depreciate.”

afford an apartment, doesn’t mean they

much of half of that into a single home.

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“The main difference is über-luxury And planting a stake in the most ex-

single asset.

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first being the mega yachts,” he added.

glaring is this: Just because someone can

invest too much of their wealth in a

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There are admittedly several caveats

Why do people pay so much for apartments? After all, one could imagine

there appears to be too much supply in the über-luxury segment, compared to lower price ranges.

that many buyers with effectively

“I don’t think I have ever in my career

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seen such a disconnect between what

Paulo C. Garcia

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at home in a “middle-class millionaire”

is desperately needed to be built and

apartment priced in the high seven or

what is being built,” Miller said. He

low eight figures (and Steinberg says

argued that while demand for the most

many are).

expensive units is strong, developers

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At the same time, both Steinberg

are “over-enthusiastically” building

and Friedman see steady demand for

too many of them. Meanwhile, lower

penthouse-in-the-clouds trophy homes

price points are being neglected, in

in New York City.

part because the high cost of land often

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118 July 2015 www.TheRealDeal.com

Member

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makes them unfeasible.

said of the ultra-high-net-worth crowd.

The oversupply in the super-luxury

“It’s part of their DNA to have unique,

market, Miller added, is “probably the

luxury, owner-occupied residences.”

world’s worst kept secret.” TRD

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120 July 2015 www.TheRealDeal.com

U.S. Real Estate Showcase & Forum SHANGHAI Shangri-La

S E P T E M B E R 1 0 – 1 2, 2 0 1 5 Join The Real Deal in Shanghai to meet more than 6,000 real estate investors and professionals hungry for access to the U.S. market.

The event will feature panels and workshops as well as a showcase of residential and commercial developments.

Our featured panelists include:

ELIOT SPITZER

Spitzer Enterprises

FREDRIK EKLUND Douglas Elliman

ANDREW HEIBERGER Town Residential

STEVE WITKOFF

The Witkoff Group

NICHOLAS MASTROIANNI II U.S. Immigration Fund

MIKI NAFTALI Naftali Group

NIKKI FIELD

Sotheby’s International

MIAMI BEACH

For more info and sponsorship opportunites: China@TheRealDeal.com | 212.260.1332

J U L Y The Real Estate Investors Association of NYC presents “Profits from Paper,” a workshop on investing in defaulting mortgages. Fuquan Bilal, president of National Note Group, is the featured speaker. 6 p.m. at TRYP Times Square, 345 West 35th Street. Fee: $15 for members in advance, $20 at the door. $30 for non-members in advance, $40 at the door.

Information and registration: www.reianyc.org.

8

CALENDAR 1 2 3 4

The American Institute of Architects, N.Y. chapter, presents a forum, “Is Preservation Elitist?”

Speakers include Tia Powell Harris, Weeksville Heritage Center president; YIMBY founder Nikolai Fedak and others. 6:30 p.m. at the Museum of the City of New York, 1220 Fifth Avenue. Fee: Free for museum and AIA members; $16 for non-members. Information and registration: aiany.org.

20

5 The Museum of the City of New York looks at the public art works of Isamu Noguchi in“Everything is Sculpture.” Art historian Deborah Goldberg and Noguchi Museum Curator Dakin Hart will focus on Noguchi’s projects in NYC buildings, including the sunken gardens at the Chase Manhattan Plaza building and his “Red Cube” at 140 Broadway. 6:30 p.m. at the Museum of the City of New York, 1220 Fifth Avenue. Fee: Free for members; $16 dollars for nonmembers. Information and registration: www.mcny.org.

14

The Council of New York Cooperatives & Condominiums presents a two-session course for co-op board members, “Introduction to Co-op Board Responsibilities: An Intensive Seminar for New Directors,” with instructors Marc Luxemburg of Gallet Dreyer & Berkey and Gregory Carlson of Carlson Realty. 6 p.m., continues July 21, at CNYC, 250 West 57th Street. Fee: $125 for members; $200 for non-members, $15 extra at the door if not pre-registered. Information and registration: www.cnyc.com.

14

6 7 8 9 10 11 12 13 14 15

The New York City Bar Association presents a panel discussion, “Careers in Real Estate,” for law students and attorneys. Moderator Erica Buckley of the Office of the New York State Attorney General will lead a panel of real estate attorneys.

6:30 p.m. at the New York City Bar Association, 42 West 44th Street. Fee: $15 for members; $30 for non-members. Information and registration: www.nycbar.org.

21

The Real Estate Board of New York offers a two-day training course for buyer agents interested in earning the Certified Buyer Representative designation. The course will be taught by Marie Spodek, DREI. 9 a.m., REBNY Mendik Education Center, 570 Lexington Avenue. Fee: For members, $129.50 for one day, $259 for both. For non-members: $149.50 for one day, $299 for both.

(Both days are required to receive the designation.) Information and registration: www.rebny.com.

21

16 Commercial Real Estate Women of New York holds its “Leading Ladies Breakfast,” the second in a series of three, featuring a speech by Merle Gross-Ginsburg, founder of the Association of Real Estate Women. 8:30 a.m. at Akerman, 666 Fifth Avenue. Fee: $30 for members; $60 for non-members. Information and registration: www.crewny.org.

14

The Historic Districts Council’s “Six to Celebrate” program leads a walking tour of the Lost and Found Murals of East Harlem, highlighting the Latin American tradition of socially significant public art. Meet at 6 p.m. at East Harlem Preservation, 1622 Madison Avenue.

Fee: $10 for members; $20 general admission. Information and registration: www.6tocelebrate.org.

16

CapRate Events hosts the Newark CRE Summit, a daylong informational and networking conference, part of its National Multifamily Investment Series. Speakers will include Mike Myer, managing director of development for The Kushner Companies; Jose Cruz, senior managing director of HFF; Thomas Walsh, vice president, New York Capital Markets for JLL and others. 7:30 a.m. at the Newark Club, 1085 Raymond Boulevard, Newark, NJ. Fee: $225. Information and registration: cre-events.com.

16

122 July 2015 www.TheRealDeal.com

17 18 19 20 21 22 23 24 25

The Building Owners and Managers Association, N.Y. chapter, holds its monthly “Asset Management Roundtable.” Chuck Laven, president of Forsyth Street, will make a presentation on affordable housing programs from the 1970s onward. 8:30 a.m. at BOMA/NY, 11 Penn Plaza. No fee. Information and registration: www.bomany.org.

23

The New York Building Congress holds its annual golf outing and dinner, featuring a putting contest, cigars, awards presentations, raffle drawings and a live auction in the evening. 9:30 a.m. with dinner at 6:30 p.m., the Westchester Country Club, 99 Biltmore Avenue, Rye, New York. Fee: $825 per individual; $3,250 per foursome; $300 for dinner only. Information and registration: www.buildingcongress.com.

27

26 27 28 29 30

The New York State Association of Realtors offers a two-day course on working with clients over 50 years of age.

Professionals who complete the course will earn a “Seniors Real Estate Specialist” credential. 9 a.m., continuing July 30, at 60 South Broadway, White Plains, NY. Fee: $295 for members; $320 for non-members.

29

0

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RE:CAP A roundup of real estate-related happenings last month COMPILED BY ANN IMPERATORE

LUXE Wednesday Martin does a James Frey and fudges details (including her own name) in her “memoir,” “Primates of Park Avenue.”

We’d love to hear what Oprah has to say about this!

BROOKLYN

“Kids can learn to swim a lot faster.”

Soori High Line developer Ashwin Verma suggests having a pool in the living room is family-friendly.

Speaking of water frolicking, Town’s Antonio del Rosario and Jack Elliot Heard treat new homeowners to a jet ski tour of NY Harbor.

What happens in Bushwick stays in Bushwick: A recent Freakonomics radio broadcast speculates on whether Vegas could become the new Brooklyn.

The New Yorker chronicles “high-rent blight” — how rent spikes are sadly forcing longstanding West Village businesses to close or relocate.

Would-be co-op owner reports Woodstock Tower board for requesting she bring her child to the interview to determine if she can buy in the building.

FAIL

“The Liar’s Ball” — about Harry Macklowe’s battles to own the GM Building — is being made into a movie!

Designer Karim Rashid explores the power of social media by crowdsourcing on Facebook, allowing his fans to select his new Soho building’s facade...

In recent New Yorker piece “Package Tour,” author Sam Lipsyte considers time travel for real estate: A couple he meets regrets not buying in Cobble Hill in the ‘70s when property was affordable, often wishing they had a time machine to hop out, buy a building, and head back.

Durst Organization bids for marijuana growing license ...

Xome Sweet Xome: Swipe and click mortgage services makes the mortgage process as fun and easy as online dating.

Social media shows its “support” for the #TrumpforPresident campaign

These “under construction” signs throughout the city, commissioned from famed street artist de la Vega

by Paladino Construction.

This cheeky “Mr. Rogers” silent auction item at the Big Brother Big Sister charity event, with bids starting at just $450.

De Blasio forms an emergency task force to investigate abuse after a NYT series highlights the misdeeds and conditions at “three-quarter” homes that rent shared rooms to the homeless.

A Community Service Society of NY study finds the 3 least gentrifying areas of NYC in the last 12 years are: Canarsie and Bay Ridge in Brooklyn, and Staten Island’s South Shore.

To promote “Seinfeld” airing on Hulu, the streaming service recreates Jerry’s UWS apartment in four-day NYC pop-up event.

“Downtown may have the High Line, but uptown we have the High Bridge,” Bronx borough president Ruben Diaz Jr. says at the ceremony reopening the pedestrian/ bike link between his borough and Northern Manhattan.

LOW RENT 124 July 2015 www.TheRealDeal.com

...which may explain this jacket! (Douglas at daughter Anita Durst’s chashama 20th Anniversary Gala, which raised $400K to provide underused real estate space to artists.

WIN

These flyers seen in the East Village warning would-be renters about much-hated landlord Steve Croman.

“Papa Silverstein’s Smokin’ Hot BBQ Sauce,” featuring Larry riding a bull on the label, given out at a Western-themed open house for brokers at 4WTC.

50 Cent @50cent Me and NY Real Estate MOGUL Howard Lorber talking Big business.

Rep for Skyline Properties’ Robert Khodadadian sends a forged — and potentially illegal — court document to TRD demanding an old, negative story be taken down from the website.

The Rent is Too Damn Low?!?

While de Blasio petitions Albany to extend and strengthen rent regulations, Citizens Budget Commission issues report contending stabilization hurts the housing market.

A Town two-fer: Town brings all in the NYC RE industry one degree closer to Kevin Bacon by hosting an event featuring the Bacon Brothers Band.

This tweet: ...out of four equally outlandish choices.

A Carroll Gardens condo conversion is twice vandalized with gay slurs and lewd drawings, but building’s owners won’t call it a hate crime.

“We are two weeks away from our first closing,” part-owner Howard Schneider said.

“This is the last thing I would want.”

We fear StreetEasy’s former marketing guru is morphing into a cult leader from her recent Facebook posting and picture.

It’s not over ‘til the (not-so-) fat lady … prevents condo construction! There is finally an NYC-real estate-related opera, inspired by the long feud between community activist Jane Jacobs and master builder Robert Moses.

Mysterious East Village blogger who started EV Grieve in 2007 to document the growing number of businesses closing in the East Village unmasks himself as John Elsasser.

Tenants at 101 W. 78th St. will get to live rent-free for 2 years due to dust, noise and potentially unsafe conditions from conversion construction.

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COMINGS & GOINGS Mack-Cali names Mitch Rudin as CEO

Movers and shakers

ack-Cali Realty Corp. named former top Brookfield executive Mitch Rudin as its new CEO last month.

Rudin, who was the CEO and president of Brookfield Office Properties’ U.S. commercial operations until June 2014, succeeded Mitchell Hersh, who ran the real estate investment trust for 16 years.

In addition, ad former Lehman Brothers and Vornado Realty Trust executive Michael DeMarco was named Mack-Cali’s president and COO. DeMa “We are excited to have attracted senior leaders with such a broad and “W comp complementary range of skills and experience to lead the company forward,” William Mack, chairman of the company’s board, said in a statement.

Willia Rudin joined Brookfield Office Properties in 2011 after a stint as CBRE’s triRu state CEO. Under his tenure, the Canadian firm redeveloped Brookfield Place, st formerly the World Financial Center, in Lower Manhattan, and began work on the mixed-use megaproject Manhattan West.

In 2013, the firm’s parent, Brookfield Property Partners, took Brookfield Mitch Rudin Office Properties private, setting off a reshuffle that led to Rudin’s departure.

According to sources cited by Crain’s at the time, the decision to leave was mutual. In a statement, the firm said Rudin’s “capabilities would not be fully utilized going forward.”

At Mack-Cali, Rudin will oversee a somewhat different portfolio. While Brookfield is a big player in Manhattan, Mack-Cali focuses on suburban office properties in the Northeast. The REIT is the largest office owner in New Jersey. By Konrad Putzier

Colliers International named Robert Taylor as senior managing director focused on corporate real estate services and tenant representation.

He was previously a managing director at SRS Real Estate Partners. Colliers also recently hired Hubert “Reggie” Willis, formerly of DTZ and Cushman & Wakefield, as an Hubert “Reggie” Willis associate director.

HFF hired Geoffrey Goldstein and Isaac Shabot to work in the firm’s New York office. Goldstein, formerly of Helaba Bank, joined as a director and will focus on debt and equity placements.

Shabot, most recently of Ripco Real Estate, was named an associate director, working on retail investments primarily in Queens and the Bronx.

Isaac Shabot David Broderick joined DLA Piper’s New York office as a partner focused on the firm’s real estate finance work. Broderick was most recently a partner at Latham & Watkins.

Compass hired luxury residential broker Victoria Shtainer, formerly of Douglas Elliman.

JLL named Susan Silverman a senior vice president in its project and development service group, focusing on health care projects.

V tor Vic t ia a Shtainer Shtain Sht a er ain e Victoria Michael Hammerslag joined Avison Young’s New York office as a principal and senior director based in Manhattan. Hammerslag’s most recent post was as managing director at Savills Studley.

Stroock & Stroock & Lavan brought on eight new attorneys, including Marc Hurel, who joined the firm’s New York office as a partner.

Christopher Barbaruolo joined Loeb & Loeb’s New York office as a partner in the real estate department. He was formerly a partner at Duval & Stachenfeld.

Carmel Caramagna was named a Christopher Barbaruolo senior vice president/director and Jason Gordon a senior vice presidents at Westcor Land Title Insurance Company. Caramagna was most recently a senior vice president at Houston Casualty Company.

Gordon was previously a vice president and counsel with Fidelity National Title Insurance Company Moran Sellam was promoted to vice president of development at HAP Jason Gordon Investments. She previously worked for HAP Israel, as a licensed attorney in its legal department.

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Rockefeller Group taps Equity Office’s Goldban he Rockefeller Group, co-developer of the $850 million mixed-use Flushing Commons project in Queens, last month hired a top retail-leasing executive from Equity Office Properties to head its regional development efforts.

Michael Goldban, EOP’s former vice president of leasing, is now the Rockefeller Group’s senior vice president and regional development officer for New York, New Jersey, Pennsylvania and New England.

The hire is the most recent in a string of developers poaching retail experts.

In April, Vornado Realty Trust hired Edward Hogan away from Brookfield Office Properties to head retail leasing, after former leasing director Sherri White decamped for Witkoff.

Rockefeller Group president and CEO Atsushi Nakajima said Goldban’s experience “will be instrumental as we become increasingly active throughout the Northeast over the next few years.”

In his new position, Goldban is overseeing projects such as the redevelopment of a 5.5-acre municipal parking lot in Downtown Flushing into a mixed-use project with some 600 residential units and 420,000 square feet of retail and office space.

Michael Goldban While at EOP, which is wholly owned by the giant private equity firm the Blackstone Group, Goldban oversaw leasing of the company’s retail properties, including 5 Bryant Park, “the Cubes” nearby at 120 West 42nd Street and 1095 Sixth Avenue, also known as 3 Bryant Park, which Ivanhoe Cambridge and Callahan Capital Properties bought last year for $2.2 billion.

Prior to working at EOP, Goldban spent a dozen years at Forest City Ratner.

Late last year the Rockefeller Group gave up plans to develop a Times Square site when it sold a pair of parcels there for $49 million. By Rich Bockmann

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Galen joins Related to work on Hudson Yards elated Cos. last month appointed Timur Galen as executive vice president, with Galen joining the senior executive team for the development of the company’s massive Hudson Yards project.

Galen will help oversee the development of more than 7 million square feet of commercial office space at 10, 30, 50, and 55 Hudson Yards, Related said in a statement.

Related CEO Jeff Blau cited Galen’s “35 years of diversified real estate and corporate business experience, and expertise in complex, large-scale commercial office projects” as an “ideal fit” for the developer.

Galen formerly served as global co-head of corporate services and real estate at Goldman Sachs, where he led the development of the financial giant’s global headquarters at 200 West Street in the Financial District.

Related’s 17 million-square-foot Hudson Yards project includes 8 million square feet already underway and an additional 9 million square feet to come, Blau said.

Timur Galen Japanese development firm Mitsui Fudosan paid around $259 million for a stake in 55 Hudson Yards late last year, and Related was recently in talks with restaurateur Danny Meyer to open a new food hall at 10 Hudson Yards. By Rey Mashayekhi

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126 July 2015 www.TheRealDeal.com

Also on the move Jamie Goldman joined RealConnex as senior vice president of product marketing … Sabret Flocos joined Perkins Eastman as a principal … First Nationwide added Fern Haughton-Owens as title officer/senior commercial reader… Christopher Hagerup joined EVO Real Estate Group as a real estate adviser… Brian Powers was hired by Casandra Properties to work in retail leasing and residential sales …

Corcoran Sunshine Marketing Group appointed Jeannie Woodbrey as senior sales director at 45 East 22nd Street …

Andrew Wiener was named director of leasing at L&L Holding Company.

Christopher Hagerup Compiled by Ariel Stulberg

#JustKidding, in 140 characters or less WE H E A RD

Comic relief — and commentary— fills the fake Twitter accounts of industry leaders

ov. Andrew Cuomo’s announcement of a deal with legislators to extend the 421a tax abatement was greeted with this tweet from @LeonardLitwin: “So where’s the partay? Looking for an impromptu celebration. We will plan something grandiose after.”

Two days later, as the Albany negotiations continued, U.S. Attorney Preet Bharara asked, “YALL FINALLY WRAPPING UP THE SESSION SO I CAN START ARRESTING FOLKS AGAIN?” The tweets were real. The writers behind them? Not so much.

The Litwin handle belongs not to the 100-year-old developer embroiled in the state’s corruption scandals. As the account’s bio states, it’s “obviously a parody,” one that was quite active during the rent regulation and 421a negotiations, frequently noting the power of $1 million in political donations.

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The real Litwin, unsurprisingly, doesn’t appear to use Twitter.

Wannabe Bharara posts under the name @NotPreetBharara. The federal prosecutor’s actual tweets can be found through the official The avatar for the fake @LeonardLitwin.

U.S. Attorney account at @SDNYNews. And the U.S. Attorney can rest easily.

The real thing has 6,645 followers compared to NotPreet’s 44.

Parody accounts were likely born the day after cofounder Jack Dorsey sent his first tweet on the social media network in 2006. The NYC real estate community has certainly not been immune over the years.

The social-media savvy Aby Rosen of RFR Realty has an impersonator, @BabyJRosen, which tweets as “Aby Rosen’s

Where art and real estate collide Annual chashama gala tops fundraising goal; real estate execs can expect calls here else but chashama’s annual gala might you see Douglas Durst don a technicolor dream jacket?

The 20th anniversary event to raise money for the organization founded by Durst’s daughter, Anita, last month drew hundreds of the industry’s finest, many

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wearing some of their, well, artsiest threads.

The gala, co-chaired by CBRE’s Darcy Stacom, exceeded its goals in more than just the fashion choices. Anita Durst happily reported it pulled in over $375,000, above the

Left-most photo: chashama founder Anita Durst, with two of the evening’s performance artists; Second from left photo: Douglas Durst, left, with Susanne Durst and the event’s honorees, Barbara and Donald Tober; Middle photo: Julie Laenkholm with architect Bjarke Ingels; Second from right photo: Alan Stein, left, CBRE Vice

Her majesty’s apartment purchase near the UN has some subjects chagrined

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128 July 2015 www.TheRealDeal.com

targeted $350,000. She also said the organization, which partners with commercial landlords to provide otherwise underutilized space to artists, is reaching out to more real estate firms to expand the amount of space it offers. Right now, it has more than 300 artists on its waiting list.

The event transformed the former Condé Nast office space in Times Square into a series of studio spaces hosting performances, visual art and installations that highlighted 30 of the group’s supported artists. By Ann Imperatore

Chairman Darcy Stacom, the chashama gala co-chair, CBRE Vice Chairman William Shanahan and Peter Sibilia of JPMorgan; Right-most photo: Ronni Anderson, owner Anderson Contemporary Gallery, left, Gene Seidman, consultant at Martin Lawrence Galleries Soho and David Sturner, principal at Murray Hill Properties.

Royal kerfuffle unfolds in Midtown he recent purchase of a swanky New York City condo in the name of Queen Elizabeth II got some members of the New Zealand government in a tizzy.

An apartment at Zeckendorf Development’s 50 United Nations Plaza was purchased by “Her Majesty the Queen in Right of New Zealand,” according to property records filed with the city on June 19.

Naturally, the Queen doesn’t need a chic, new apartment. She has plenty of holdings across the Commonwealth where she can comfortably stay, even if she must vacate Buckingham Palace while it undergoes millions of pounds worth of renovations.

It turned out that the $8 million, three-bedroom apartment on the 18th floor of the Lord Norman Fosterdesigned tower will be occupied by the head of the New Zealand mission to the United Nations, Gerard van Bohemen. Since the queen is considered the head of the

Ego.” For the record, the social universe seems more interested in what the real Rosen, whose handle is @AbyRosen, has to say: he has 448 followers, to BabyJRosen’s 51.

There’s also several parody accounts attributed to Related Chairman Steven Ross, although tweets from the likes of @StephenRossFake are more concerned with his role as owner of football’s Miami Dolphins than the construction of Hudson Yards. An earlier account that used his name, but without the “fake” notation, appears to be taken down.

One popular tack is accounts featuring “voices” related to events, like tweets from the crane atop One57 that collapsed during Superstorm Sandy, @One57Crane, which has been inactive since 2013. There’s also more long-lasting feeds, like the masquerade of the luxe tower @432ParkAveNYC. A tweet from this account on a recent hot day captured the controversy regarding ultra-tall towers, and the role of parody accounts, with characters to spare: “I hope all of you @NYC residents complaining about the heat are enjoying my free shade. I’ll throw some more later.” By Claire Moses

Left: Queen Elizabeth II, Kate Middleton and Prince William with baby Charlotte.

government, the purchase was made in her name.

Not all of New Zealand, however, agreed with the purchase. The country’s Labour party called the buy too extravagant. An opposition representative told the Otago Daily Times that the foreign minister was “completely out of touch with the lives of real people.”

The spokesperson called the sprawling, roughly

3,000-square-foot apartment a “flash pad for our man in New York.” The new digs will be used for working and event space for the delegation, as well as living quarters.

“While Kiwis are working hard to afford their own house, the Government is buying lavish penthouses … frankly, it’s outrageous,” he told New Zealand news website stuff.co.nz.

To pay for the new digs New Zealand is looking to sell its former residence, which is also located on the Upper East Side.

But just because the Queen won’t be camping in Manhattan, doesn’t mean that New Yorkers are completely missing out on a British royal presence.

Princess Beatrice, daughter of Prince Andrew and Sarah Ferguson, and seventh in line for the throne, is reportedly relocating to New York to share space with her American beau.

Her younger sister, Princess Eugenie, settled here in 2013.

Even closer to the crown, the Duke and Duchess of Cambridge, William and Kate, may not be looking for a Manhattan pied-a-terre, but several reports have the royal couple searching for a Hamptons summer home. By Claire Moses

PHOTOGRAPH OF ANITA DURST AND STACOM GROUP BY SUNNY NORTON; PHOTOGRAPHS OF INGELS AND ANDERSON GROUP BY SAMANTHA NANDEZ

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THE CLOSING

WITH RON

MOELIS Ron Moelis is CEO and chairman of L+M Development Partners, which he co-founded in 1984. L+M has been responsible for $4 billion worth of real estate development, construction and investment. In a joint venture with BFC Partners and Taconic Investment Partners, the firm is developing the 1.9-million-square-foot, mixeduse Essex Crossing project on the Lower East Side.

It’s also constructing a 108-unit building on Avenue D. In addition, last year, L+M and BFC acquired a 50 percent stake in 900 apartments in the NYC Housing Authority’s portfolio for $250 million. Moelis graduated from the University of Pennsylvania’s Wharton School and earned a law degree at New York University. In 2008, Moelis and his longtime business partner, Sanford Loewentheil, gave up full ownership of the firm and turned it into an employee-owned operation in which company staffers own shares.

NAME: RON LEE MOELIS

BORN: JULY 6, 1956 HOMETOWN: NEW ROCHELLE, N.Y. MARITAL STATUS: MARRIED CHILDREN: THREE We hear you’re a pretty avid sports fan. Do you also play?

I played hoops regularly until a few years ago. This fall, some of the kids in my office put a team together and convinced me to play. I’m about twice the age of everyone on the team. I try to find somebody on the other team who’s not going to move around me too fast.

Are you generally a competitive person?

I like to win. I sometimes focus more on my last $10 golf bet than I do on a real estate deal. That’s sort of a healthy way to let it out because it doesn’t matter that much.

Who do you root for?

I’ve been an avid Knicks, Mets and Giants fan my whole life; as a kid, we’d go to the theater and I’d be listening to the Mets game. I’ve been to every winning Super Bowl the Giants have played. My family’s had Knicks season tickets for 48 years, though I may give them up.

Why? The seats were 15 rows behind the Knicks’ bench, but we moved last year and the seats aren’t as good.

Growing up, what were your career aspirations?

I watched Perry Mason, and I wanted to be a courtroom lawyer.

Did you go right to law school after college?

I took a year off. I moved to San Francisco, slept in my car for a couple of weeks and sold college textbooks. I’d work from 9 a.m. to 3 p.m. and then I’d go to Carmel or Monterey and hang on the beach. After a year, I decided to come back to New York. I went to law school at NYU and clerked for a federal judge. I loved both. But then I went to a law firm and realized it wasn’t for me. One day I went 130 July 2015 www.TheRealDeal.com

in and just quit. Next to getting married, it was probably the most important decision of my life.

Did you have a backup plan?

I had been playing around in real estate in law school.

My brother and I and a friend had been investing in apartments that were going co-op. We didn’t have any money, but [tenants] were getting insider prices and we’d pay them a 20 percent premium. Then we’d fix up the apartment and sell it at a slight [market] discount.

How did you get your start in affordable housing?

[Singer] Harry Chapin and his brother, Steve, were trying to buy two buildings on Avenue B from the city, but the city was giving them a hard time. Harry was killed in a car accident on the LIE in 1985 and right after that, the city sold the buildings to his brother for $1 [as long as] 25 percent of the units were affordable… Six months later, Steve needed to sell and he came to us [to sell one of the buildings]. We got to the closing and the title company said, ‘How do we know you’re going to do it?’

We went down to HPD. I didn’t know what HPD was at the time. HPD said, ‘If you do these things, we’ll give you a certificate. We won’t give you money for it but we’ll tell the title company you did it properly.’ We built 30 units, eight of them affordable, and we sort of lucked out. We were able to sell before the market crashed in ’88.

Why’d you stick with affordable housing?

The way you keep score in business is by how well you do. With affordable housing, I can also do something I feel good about. It’s also intellectually challenging. I’m very into math; I wouldn’t say I’m a quant, but I’m into numbers. There are people who are really into design and branding and selling high-end condos. I can’t do that. I’m not a glamour guy.

You’ve weathered a few real estate busts. Which was the worst?

In 1988, I was young and didn’t know what was going to happen. Not that I knew in 2008, but I had a little bit more visibility that we’d come out of it.

Now that you’re company is employee-owned, how much is your stake?

I actually don’t own anything. [Loewentheil] and I have warrants [similar to stock options] for about 50 percent, so we have an economic interest. It also ends up being a great retirement plan.

So you get a salary?

Not the biggest salary in the company, but I do get a salary. I could pay myself a higher salary, I guess, but that’s awkward.

What’s been your proudest professional accomplishment?

The fact that I’ve been able to build a company that does well economically, but has also done well in the community — despite not thinking of myself as a great manager.

Why do you say you’re not a good manager?

I’m a good leader. I’m a balanced person. I’m fair, passionate and very energetic. I’m probably not the most organized person. People like working here but they complain that there’s not a structure in place.

Do you have any regrets?

I wish I had spent a few years in government. It would be fascinating to be on that side of the table and a great way to learn. Sometimes I dream about it, thinking, ‘OK, what’s my next act?’ And that’s one possibility.

By E.B. Solomont PHOTOGRAPH FOR THE REAL DEALJuly

BY STUDIO www.TheRealDeal.com 2006SCRIVO 00

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